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"title": [
"",
"Introduction",
"Background",
"Technical Aspects",
"Plutonium",
"Pits",
"The Pit Production Process",
"Life Extension Programs",
"Pit Production Capacity: How Much Is Needed?",
"Plutonium-238",
"Key Regulatory Terms",
"Facility Aspects: Buildings to Support Pit Production",
"Existing Buildings at Los Alamos for Plutonium Work",
"Chemistry and Metallurgy Research (CMR) Building",
"PF-4 (Plutonium Facility 4)",
"Radiological Laboratory/ Utility/Office Building (RLUOB)",
"A Sisyphean History: Failed Efforts to Construct a Building to Restore Pit Production",
"Complex 21",
"Modern Pit Facility",
"Consolidated Nuclear Production Center",
"Complex 2030",
"Chemistry and Metallurgy Research Replacement Project",
"Two Other Failed Attempts",
"Options for Congress",
"Analysis of Alternatives",
"The Role of the National Environmental Protection Act (NEPA) Process in an Analysis of Alternatives",
"Potential Options",
"Option 1. Focus PF-4 on Pit Production; Move Other Tasks Elsewhere as Needed",
"Option 2. Build CMRR-NF",
"Option 3. Build a New Building Combining PF-4 and CMRR-NF Functions at LANL",
"Option 4. Build a Building Combining PF-4 and CMRR-NF Functions at Another Site",
"Option 5. Refurbish the Chemistry and Metallurgy Research (CMR) Facility",
"Options 6-12 Overview: Matching Plutonium Tasks to Buildings",
"Option 6: Conduct Plutonium-238 Work at INL or SRS",
"Option 7: Conduct Some or All Analytical Chemistry at LLNL or SRS",
"Option 8. Use RLUOB As Is for Analytical Chemistry, with PF-4 Conducting the Balance of Pit Work",
"Option 9. Convert RLUOB to Hazard Category 3 for Analytical Chemistry",
"Option 10. Use RLUOB, with Regulatory Relief, for Analytical Chemistry, with PF-4 Conducting the Balance of Pit Work",
"Option 11. Build a Copy of RLUOB Minus the Office, with Regulatory Relief, for Analytical Chemistry, with PF-4 Conducting the Balance of Pit Work",
"Option 12. Build Modules Connected to PF-4 for High-MAR Plutonium Work",
"Making RLUOB/PF-4 Options Safer and More Efficient",
"Increasing Safety",
"Reducing the Risk of Building Collapse",
"Reducing the Risk of Fire",
"Reducing the Amount of Plutonium Consumed in a Fire",
"Minimizing the Amount of Plutonium Oxide Lofted into the Air",
"Dose Would Be Very Low Even Without Mitigation",
"Increasing Efficiency",
"Increasing Space for Pit Production and Supporting Tasks",
"Increasing Efficient Utilization of Space",
"Gathering Information on Various Options",
"Concluding Observations"
],
"paragraphs": [
"",
"Of all the problems facing the nuclear weapons program and nuclear weapons complex over the past several decades, few, if any, have been as vexing as pit production. A \"pit\" is a hollow plutonium shell that is imploded, creating an explosion that triggers the rest of the weapon. The Rocky Flats Plant (CO) manufactured pits on a large scale during the Cold War until production halted in 1989. It took until FY2007 for the United States to produce even a small quantity, 11 pits per year (ppy), for the stockpile. Yet the Department of Defense (DOD) calls for a capacity to produce 30 ppy by 2021 as an interim goal and 50 to 80 ppy by around 2030. At issue is how to reach the higher capacity.\nThis report is intended primarily for Members and staff with a direct interest in pit issues, including Members who will be making decisions on pit projects that could total several billion dollars. Since the issues are complicated, this report contains technical and regulatory details that are needed to understand the advantages, drawbacks, and uncertainties of various options. It may also be of value for Members and staff with an interest in nuclear weapons, stockpile stewardship, and nuclear policy more broadly. This report begins with a description of plutonium, pits, and pit factory problems. It next considers several pit production options. It notes studies that could provide information to assist Congress in choosing among options, and concludes with several observations. There are several Appendixes, including a list of abbreviations.\nThe pit issue is important because of the relationship between pit production infrastructure and national goals, as shown in Figure 1 . National goals include minimizing the risk of nuclear war and, for the longer term, \"the peace and security of a world without nuclear weapons,\" as President Obama declared in his 2009 Prague speech. The Nuclear Posture Review sets out policy objectives, such as \"preventing nuclear proliferation,\" \"reducing the role of U.S. nuclear weapons in U.S. national security strategy,\" \"maintaining strategic deterrence and stability at reduced nuclear force levels,\" \"strengthening regional deterrence,\" and \"sustaining a safe, secure, and effective nuclear arsenal.\" Various strategies, such as deterrence, counterproliferation, and arms control, seek to implement policy. In turn, delivery systems, such as heavy bombers and long-range ballistic missiles, are one means of implementing strategy. Nuclear weapons (a term used in this report to refer to nuclear bombs and warheads) arm delivery systems. The Nuclear Posture Review declares, \"The United States will not develop new nuclear warheads.\" Accordingly, the United States will retain the weapons in its arsenal for the foreseeable future. Yet weapons deteriorate over time. Extending the service life of existing weapons requires replacing or modifying some components. While \"life extension programs\" (LEPs) for some weapons can use existing pits, DOD and the Department of Energy (DOE) state that LEPs for other weapons will require newly manufactured pits. The current infrastructure cannot produce pits at the capacity DOD requires, and many efforts stretching back to the late 1980s to produce pits have been canceled or have otherwise foundered. A concern is that if a type of nuclear weapon could no longer perform satisfactorily, an inability to make new pits in the quantities required so the weapons could be replaced could lead to that weapon type being removed from service. That, in turn, would leave missiles and bombers without those weapons, which would undermine strategies, the policies they seek to implement, and the ability to attain national goals.",
"This section begins by discussing plutonium, pits, pit production, programs to extend the service life of nuclear weapons, and production capacity required. It next turns to current plutonium facilities and provides a brief history of unsuccessful efforts to build a facility to produce pits on a scale larger than about 10 per year. It concludes by presenting important regulatory terms.",
"",
"Plutonium is a radioactive metal that is 1.75 times more dense than lead. It has several undesirable characteristics, and is difficult to work with. According to Siegfried Hecker, a plutonium metallurgist and a former director of Los Alamos National Laboratory (LANL),\nPlutonium is an element at odds with itself—with little provocation, it can change its density by as much as 25 percent; it can be as brittle as glass or as malleable as aluminum; it expands when it solidifies; and its freshly-machined silvery surface will tarnish in minutes, producing nearly every color in the rainbow. To make matters even more complex, plutonium ages from the outside in and from the inside out. It reacts vigorously with its environment—particularly with oxygen, hydrogen, and water—thereby, degrading its properties from the surface to the interior over time. In addition, plutonium's continuous radioactive decay causes self-irradiation damage that can fundamentally change its properties over time.\nTo make plutonium more stable, it is typically alloyed with other materials, such as gallium.\nHandling and safeguarding plutonium poses significant risks. Plutonium is hazardous: if minute particles are inhaled and lodge in the lungs, their radiation (in the form of alpha particles) can cause lung cancer. In addition, terrorists might be able to build an improvised nuclear device if they were to obtain enough plutonium, so facilities holding more than a small quantity of certain plutonium isotopes require extremely high security.\nPlutonium does not occur in nature except in trace amounts. It is manufactured by exposing uranium fuel rods to neutrons in nuclear reactors, and then using chemical processes to separate it from other elements in the fuel rods. The result is a mix of plutonium isotopes. The isotope desired for nuclear weapons is plutonium-239, which fissions readily when struck by slow or fast neutrons. Weapons-grade plutonium (WGPu) consists mainly of plutonium-239 and a small fraction of other plutonium isotopes. (Note: When an isotope of plutonium is mentioned, such as plutonium-239, it is abbreviated using its chemical symbol, e.g., Pu-239.)",
"A pit is the trigger for detonating a thermonuclear weapon, or hydrogen bomb. It is a hollow shell of plutonium and other materials surrounded by chemical explosives. When the explosives detonate, they create an inward-moving pressure wave (an implosion wave) that compresses the plutonium enough to make it supercritical. It undergoes a runaway fission chain reaction, that is, an explosion. Various means are used to augment the explosion. This part of the weapon is called the primary stage. The weapon is designed so that energy from the primary stage explosion implodes the weapon's secondary stage, in which nuclear fission and fusion release most of the weapon's total explosive force.\nWhile some pits in older weapons were made of uranium and plutonium (\"composite pits\"), modern pits use only plutonium because much less of that material is required to generate a given explosive force, permitting nuclear weapons to be smaller and lighter. Reducing the size and weight of weapons was important during the Cold War to maximize the number of weapons that could be fitted on a missile and to maximize the explosive force of a weapon of given weight. All nuclear weapons in the current U.S. nuclear stockpile were designed and tested during the Cold War; all but a handful were built during that time.\nBecause plutonium decays radioactively, there was concern that pits could deteriorate in ways that would cause them to fail. However, several studies have projected increased pit life. In 2003, pit life was thought to be 45-60 years; a 2007 study placed life for most pits at over 100 years; and a 2012 Livermore study placed the figure at 150 years. A 2013 Los Alamos study raised uncertainties on the latter claim:\nSince 2006, plutonium aging work has continued at a low level. That research does not indicate any [e]ffects that would preclude the possibility of pit reuse. However, additional studies that had been planned were never undertaken, leaving some aging questions unanswered for the range of plutonium alloys in the stockpile, and for the potential applications of pit reuse now under consideration.\nPenrose Albright, then Director of Lawrence Livermore National Laboratory, testified in 2013,\nAnd there has been a pretty concerted effort at both Los Alamos and at Livermore over the last decade or more that has been looking at plutonium aging, and we actually have samples that we keep in our laboratory—and Los Alamos does the same—that are 40, 50, 60 years old that so far show no—that support the conclusions that the last decade of study has implied, which is that these pits are good for many, many more decades to come.\nLonger pit life means that a stockpile of given size can be maintained with a lower pit production rate and opens the possibility of reusing retired pits.",
"Pits must be made to exacting standards in order to function as designed. This requires precision in fabricating them and in supporting tasks.\nAs plutonium decays, it produces other elements, such as americium. That radioactive element increases the radiation dose to workers and is an impurity to weapons-grade plutonium. Plutonium scrap, such as from old pits or from faulty castings, may pick up other impurities. Accordingly, plutonium must be purified for use in new pits. This may involve nitric acid processing, high-temperature processing, electrorefining, and other processes. Such processes result in a substantial stream of waste contaminated with radioactive material, acid, and other harmful substances. This waste must be processed and disposed of; waste processing requires a substantial infrastructure.\nPits are fabricated as \"hemishells\" (half-pits) that are welded together. Rocky Flats Plant made pits using a wrought process, in which sheets of plutonium were run through rollers to attain the desired thickness, then punched into a die. LANL, where pits are currently made, uses a cast process, in which plutonium is melted in crucibles in a foundry, poured into a mold, and finished. The plutonium is analyzed chemically, and each hemishell is inspected through such techniques as physical measurements and x-ray imaging to ensure that there are no flaws. Given the many steps required, it typically takes three months to make a pit.\nVarious tasks support production. Materials characterization (MC) examines bulk properties of plutonium samples, such as tensile strength, magnetic susceptibility, and surface characteristics. Such properties must be determined to be correct to assure that a pit will, for example, implode symmetrically. MC is generally used to qualify manufacturing processes and to troubleshoot production problems. As such, it does not generate a large number of samples during production, and that number is largely independent of the number of pits to be produced. Of relevance to options considered below, MC does not require a large amount of laboratory floor space.\nIn contrast, analytical chemistry (AC) is performed across the entire manufacturing process, from metal purification through waste processing. Samples are analyzed for isotopic composition of plutonium and for the type and amount of various impurities. AC is performed on an average of 22 samples per pit. Metal samples taken directly from hemishells are typically 5 grams each. In preparing for AC, these samples are cut into smaller pieces. Most of the smaller pieces are dissolved in acid because most AC instruments do not use samples in solid form. The resulting plutonium-acid mixture is split into still smaller samples, many of which contain milligram or microgram quantities of plutonium. Each sample must be prepared in a specific way, and analyzed using specific equipment, depending on the type of analysis that it is to undergo. In addition, before plutonium ingots are used for a hemishell, their purity must be assayed. This involves taking a sample from a piece of the purified product as well as plutonium standard and reference materials for comparison. In order to provide one assay result for the plutonium, the assay process is typically run 10 times.\nPit fabrication generates waste, such as the plutonium-acid samples used in AC, the MC samples, and any shavings or trimmings from finishing hemishells. Accordingly, pit production requires a way to handle the waste. It is treated two ways at Los Alamos; in some cases by extracting plutonium, and in other cases by solidifying it for burial at the Waste Isolation Pilot Plant (WIPP) (NM).",
"While pits may last for many decades, other weapon components do not. Weapons contain organic components like explosives and adhesives that deteriorate under the influence of heat and radiation given off by plutonium; they may change characteristics over time. Some components, such as electronics, become hard to support after several decades, would be even harder to support several decades from now, and would be difficult to make compatible with new delivery systems like aircraft. Beyond that, some in the National Nuclear Security Administration (NNSA) and DOD want to increase the surety (safety, security, use control, and use denial) of weapons. (NNSA is the semiautonomous DOE agency responsible for nuclear weapons maintenance, several nuclear nonproliferation programs, and all naval nuclear propulsion work.) Accordingly, the Nuclear Weapons Council, a joint DOD-NNSA body that oversees and coordinates nuclear weapon programs, plans a life extension program (LEP) for each weapon type, including some LEPs that may combine two or more weapon types. LEPs range in scope from replacing a few components to a major overhaul that includes new pits, new electronics, and new surety features. Some dispute the need for LEPs that do more than the minimum needed to keep a weapon in service. They argue, for example, that features to further enhance surety are unnecessary given the perfect safety record of U.S. nuclear weapons and that these features add greatly to cost and may impair weapon performance. Nonetheless, LEPs are underway for the W76 warhead for the Trident II submarine-launched ballistic missile and the B61 bomb, and both Congress and the Administration support them. Additional LEPs are being planned.",
"Some LEPs can use the original pit and replace other components, while other LEPs might reuse pits from retired weapons if that proves feasible, and still other LEPs are expected to require fabrication of new pits. U.S. policy, as stated in the Nuclear Posture Review, is specific on its preference among these choices:\nThe United States will study options for ensuring the safety, security, and reliability of nuclear warheads on a case-by-case basis, consistent with the congressionally mandated Stockpile Management Program. The full range of LEP approaches will be considered: refurbishment of existing warheads, reuse of nuclear components from different warheads, and replacement of nuclear components.\nIn any decision to proceed to engineering development for warhead LEPs, the United States will give strong preference to options for refurbishment or reuse. Replacement of nuclear components would be undertaken only if critical Stockpile Management Program goals could not otherwise be met, and if specifically authorized by the President and approved by Congress.\nThe need for new \"nuclear components,\" pits in this case, drives pit capacity requirements. However, the pit production capacity considered has varied greatly, from 10 to 450 pits per year. The Nuclear Weapons Council has decided that, to meet the likely demands of future LEPs, a production capacity of 50 to 80 ppy is needed. Andrew Weber, Assistant Secretary of Defense for Nuclear, Chemical, and Biological Defense Programs, testified in April 2013 that \"there is no daylight between the Department of Energy and the Department of Defense on the need for both a near-term pit production capacity of 10 to 20 and then 30 by 2021, and then in the longer term for a pit production capacity of 50 to 80 per year.\"\nWhile this range of pit production drives the planning for the U.S. plutonium strategy, it is not a precise range based on a careful analysis of military requirements. When asked to explain the basis for this range, Linton Brooks, former Administrator of NNSA, and John Harvey, then Principal Deputy Assistant Secretary of Defense for Nuclear, Chemical, and Biological Defense Programs, responded:\nMR. HARVEY: We established that requirement back in 2008 for a capability to produce in the range of 50 to 80 per year. That evolved from a decision to basically not take the path that we originally were taking with the Modern Pit Facility, but to go and be able to exploit the existing infrastructure at Los Alamos to meet our pit operational requirements. The capability at Los Alamos was assessed to be somewhere in the range of 50 to 80 per year that they could get with the modernization program they anticipated. The Nuclear Weapons Council looked at that number. It's a capacity-based number, and said it's probably good enough. We'll have to accept some risk, but it's probably good enough.\nMR. BROOKS: So you can't tie it to a specific – you can't tie it to a specific deployment schedule or something. It's a judgment that is a combined judgment on yeah, you can probably do this, and yeah in the most reasonable world this will be enough.\nMR. MEDALIA: But there's a big difference in the facilities, between 50 and 80. Is it 80 or is it 50 to 80?\nMR. HARVEY: We understood that the capability to deliver, based on the anticipated modernization at Los Alamos which would include the CMRR or equivalent, coupled with the PF-4 production, appropriately reconfigured, could deliver in that range. So it was a range. I mean, it's always been cited as single shift range. By going to double shifts you could probably get the higher end of that range.\nMR. BROOKS: But no person now living can tell you for sure the answer to that question. I mean, you know, beware of spurious precision. … Fifty to 80 is probably as precise as the facts will allow people to be, although people will say other things.\nNNSA was also imprecise as to required production capacity. It stated in a 2013 report, \"Preliminary plans call for pit production of potentially up to 80 pits per year starting as early as FY 2030. NNSA continues to develop options to achieve a higher production rate as part of the plutonium strategy.\" John Harvey subsequently added, \"The level of 50-80 ppy was consistent with existing PF-4 production capacity plus the analytical chemistry capacity anticipated for the planned CMRR-NF. However, NNSA officials in 2006 believed that a capacity in the range of 125 ppy was needed to respond to anticipated requirements and provide some resilience to surprise. Thus the 50-80 ppy level, while the best that could be done, accepted significant risk in their view.\"\nIt may be possible to reduce the capacity required below 80 ppy and still meet DOD's requirements. This might be done in several ways:\nOne option under serious study is reusing retired pits in LEPs. Whether this could be done for a particular LEP depends on details of the LEP, whether there are suitable pits available, and whether such pits are available in the quantity required; decisions would have to be made on a case-by-case basis. In some LEPs, it may be possible to simply reinstall a weapon's original pit. Neither that method nor reuse of retired pits from other weapons require AC or foundry work. By producing new pits while another LEP is underway with retired or original pits, LANL could use its otherwise-unused capacity to produce pits ahead of schedule for a LEP requiring new pits. Stockpiling new pits would enable lower rates of production and of AC to produce the aggregate number of pits needed by the time they are needed, even if the maximum production rate attainable is less than 80 ppy. In addition, keeping the pit production and support line in continuous operation would be useful if not essential for maintaining processes, equipment, and worker skills, and for training new workers. On the other hand, LEPs require considerable planning and design work, and designs for new pits would have to be certified. In the near term, it might not be possible to do this work far enough in advance to permit continuous production. Since the figure of 80 ppy was based on LANL's presumed pit production capacity using PF-4 and CMRR-NF (an existing building and one that has been deferred for at least five years), not on a strategic analysis of military needs, and since the range cited is 50 to 80 ppy, a capacity of less than 80 ppy might suffice.\nThe Union of Concerned Scientists stated regarding required pit production capacity:\nIf pits last 150 years or more, there is no need to replace aging pits for the foreseeable future, and no rationale for expanding production capacity beyond the existing 10 to 20 annually for this purpose. Even if the NNSA finds that pits will last only 100 years and that all need to be replaced by 2089, production capacity of 50 per year would be adequate.\nThe NNSA could replace all existing pits by 2089 if it started doing so in 2019, based on the agency's conservative assumption that the U.S. stockpile will remain at 3,500 warheads. However, the United States is likely to reduce its arsenal in coming decades. In that case, the NNSA could either wait longer to begin producing replacement pits … or reduce the annual rate of production. …\nThus, even under the most conservative assumptions about pit lifetime and arsenal size, there is no need to expand pit production capacity beyond 50 per year to replace aging pits. Because both pit lifetime and the future size of the arsenal are uncertain, it makes no sense to expand production capacity until it is needed.\nIn contrast, John Harvey argues that there is risk in not providing margin to accommodate unknowns:\nRequired pit production capacity cannot be based solely on known LEP requirements. We must consider the possibly of surprise: either technical problems in the stockpile that arise unexpectedly or geopolitical reversals. For example, we cannot anticipate at this point a need to increase stockpile size based on renewed threats, but we should not rule out that possibility in setting our pit production needs. Some reserve production capacity is required above and beyond known LEP needs to ensure we have some ability to respond to surprise.\nThis is entirely consistent with the President's NPR [Nuclear Posture Review] vision for a responsive nuclear infrastructure. The longer we wait on achieving needed capacity, the greater the risk we are accepting in not having responsive capabilities.\nIt could be argued that an ability to meet the higher requirement—the most challenging case—would enable the United States to meet lower requirements and would put this nation in a better position to meet higher requirements should that be deemed necessary. Further, if 80 ppy proves unattainable, an effort to reach that goal might increase the likelihood that this nation could reach 50 ppy, the lower end of the range.\nOn the other hand, it could be argued that it is not desirable to have a goal of 80 ppy if that is excess to needs. According to Greg Mello, Executive Director of Los Alamos Study Group,\nIt is not clear that efforts to reach a larger pit production capacity will enable lesser pit production capacities. History shows that efforts to acquire pit production capacity above that which is clearly needed, have failed. Facilities to support a larger-than-needed pit production capacity cost more for construction and operation than smaller facilities, and are more likely to encounter political objections. So trying for 80 pits per year may decrease the probability of successfully acquiring 50 pits per year, and trying for 50 pits per year may decrease the probability of achieving 30 pits per year. It may be far better to acquire the minimum necessary pit production capacity, and include a contingency plan that can be activated should conditions warrant.\nBecause of concern over required pit production capacity, Section 3147 of the FY2013 National Defense Authorization Act, P.L. 112-239 , directed the Secretary of Defense, in coordination with the Secretary of Energy and the Commander of the U.S. Strategic Command, to \"assess the annual plutonium pit production requirement needed to sustain a safe, secure, and reliable nuclear weapon arsenal.\" The accompanying Joint Explanatory Statement of the Committee of Conference states that the assessment shall include \"an assessment of cost and national security implications for various smaller and larger pit production rates from the current 50-80 pit requirement. The conferees note that rates including 10 to 20 pits per year, 20 to 30 pits per year, 30 to 50 pits per year, 50 to 80 pits per year, and larger should be included as part of the analysis.\" Note that reducing required capacity would reduce facility requirements and might permit delaying facility construction.\nThe purpose of this report, however, is not to address contending arguments on the capacity needed, but to discuss options for acquiring the maximum capacity DOD states that it needs, 80 ppy, by 2030. Even if in 16 years it turns out that a lower capacity would suffice, it is difficult at best to know that so far in advance.\nThe difference between 50 and 80 ppy has consequences. As discussed above, the Nuclear Weapons Council reasoned that a capacity to build 50 ppy in single-shift operations could be scaled up to produce 80 ppy in double-shift operations, that is, double-shift operations can produce 1.6 times as many pits as single-shift operations. But if the actual need is 50 ppy, then by using the same ratio, a capacity to build approximately 30 ppy in single-shift operations could be scaled up to 50 ppy by using two shifts. Deploying and operating a smaller capacity would be less costly and easier to implement.",
"Pu-238 is an isotope of plutonium. While it is not used in pits, it figures prominently in several pit production options presented later in this report. It has very different properties and applications than Pu-239. Pu-238 has a much shorter half-life than Pu-239 (87.7 years vs. 24,110 years), so is 275 times more radioactive. Because of its intense radioactivity, it is so hot that a lump of it glows, as Figure 2 shows. This radioactivity makes it useful in applications requiring a long-lived power source. It is used to provide heat to generate electricity for deep space probes and for defense purposes. At the same time, according to Los Alamos,\nPu-238 is not desirable for using in pits because it has a relatively short half-life (87.7 years) and the associated decay generates large amounts of heat in the material. Pu-238 is listed in the [DOE] Safeguards Table (DOE 474.2) as attractiveness level D (Low-Grade Materials) because its half-life and associated properties would make it extremely difficult to fabricate into a pit, handle, and may cause problems for surrounding materials [in a nuclear weapon] such as electronics, plastics, etc.",
"Statutes, regulations, DOE orders, etc., as described in Appendix A , use many terms. While they are often technical and complicated, understanding several of them is essential for understanding facilities, presented next, and options. Selected terms are presented here; they provide a basis for discussing constraints on plutonium buildings, various ways to comply with these constraints, and how the constraints might be modified.\nDose: The amount of ionizing radiation a person receives, measured in rem.\nRem: This is a unit of measure of the biological effects of all types of ionizing radiation on people. One expert lists a dose of between 0 and 25 rem as having \"no detectable clinical effects; small increase in risk of delayed cancer and genetic effects,\" a dose of 25 to 100 rem as \"serious effects on average individual highly improbable,\" and for 100-200 rem \"minimal symptoms; nausea and fatigue with possible vomiting.\" Note that cancer risks in exposed populations generally increase with dose and number of people exposed.\nPlutonium-239 equivalent: Weapons-grade plutonium (WGPu) consists mainly of Pu-239 but includes small quantities of other plutonium isotopes. Some are much more radioactive than Pu-239, and there are many other radioactive substances. It is convenient to convert all radioactive materials to a single standard for purposes of assessing the radiological hazard from a building in the event of an accident. That standard is \"plutonium-239 equivalent,\" abbreviated as Pu-239E in this report. Because WGPu is more radioactive than pure Pu-239, 1 gram (g) of WGPu has the radioactivity of 1.49 g of Pu-239. Similarly, Pu-238 is very much more radioactive than Pu-239; 1 g of Pu-238 has the radioactivity of 275 g of Pu-239.\nHazard Categories (HCs) and Radiological Facilities : Nuclear facilities are categorized in several ways. One is by the hazard they could pose in the event of a major accident. HCs are based on \"the consequences of unmitigated releases of hazardous radioactive and chemical material.\" 10 CFR 830, \"Nuclear Safety Management,\" Appendix A, \"General Statement of Safety Basis Policy,\" divides these consequences into three categories; Table 1 also includes a related category.\nHazard Categories are determined by the amount of Pu-239E a building is designed to hold; each category has the potential for certain consequences in the event of a major accident. 10 CFR 830, Appendix A, states that \"the hazard categorization must be based on an inventory of all radioactive materials within a nuclear facility.\" The HC structure builds in a conservative feature: \"The final categorization is based on an 'unmitigated release' of available hazardous material. For the purposes of hazard categorization, 'unmitigated' is meant to consider material quantity, form, location, dispersibility and interaction with available energy sources, but not to consider safety features (e.g., ventilation system, fire suppression, etc.) which will prevent or mitigate a release.\" Hazard Categories apply to the design and construction of a building, not to its operation. For example, a building intended to hold 5,000 g of Pu-239E must be designed to HC-2 standards, while a building intended to hold 1,000 g of Pu-239E must be designed to HC-3 standards, which are less stringent.\nClosely related, and central to some options discussed later in this report, is the category \"Radiological Facility.\" A Radiological Facility holds less Pu-239E than an HC-3 building. It is not part of the HC system because the amount of material is so small as to pose little threat; a hospital, for example, might be a Radiological Facility. The Radiological Laboratory/Utility/ Office Building (RLUOB) figures in several options below and is discussed in \" Existing Buildings at Los Alamos for Plutonium Work .\" As a Radiological Facility, HC standards limit it to 38.6 g of Pu-239E, or 26 g of WGPu, far less than enough to perform the AC needed to support production of 80 ppy.\nDesign Basis Earthquake (DBE): The DBE is used to set standards for the resilience to earthquakes that buildings in various HCs must have. LANL provided the following information:\nThe design basis earthquake is defined as the ground motion that has an annual frequency of 4 x 10 -4 or [once in] 2,500 years. This is the ground motion that structures, systems, and components (SSCs) are designed for using national consensus codes and standards. This approach would lead to a failure probability of the SSCs for loads associated with the design basis ground motion of 1-2%. Using this approach it is also expected that at ground motion associated with an annual frequency of 1 x 10 -4 , or [once in] 10,000 years, the failure probability of the SSCs would be about 50%.\nDesign Basis Accident (DBA): This is the accident scenario against which a nuclear facility must be designed and evaluated. Each HC building is required to be built to survive a DBA, the worst-case accident that could plausibly affect the building. Because each building will face different threats, the DBA is necessarily building-specific. For one building, the DBA might be a flood; for another, an explosion of a nearby gas main; for a third, a tornado; and for a fourth, an earthquake. For the plutonium buildings at Los Alamos, described next, the main threat is an earthquake, so the DBA involves (1) an earthquake more powerful than the DBE that (2) collapses a building and (3) starts a fire that involves all material at risk in the facility and (4) releases a certain fraction of the plutonium into the air as plutonium oxide particles. The fraction, in turn, is based on (1) the Airborne Release Fraction (ARF), the fraction of the MAR that the postulated fire could release into the air; (2) the Leak Path Factor (LPF), the fraction of ARF that actually escapes from the building into the air; some of it would be trapped, such as by the collapse of the building; and (3) the Respirable Fraction (RF), the fraction of the plutonium oxide particles released into the atmosphere that are of a size (3 microns or less) that could readily be inhaled and lodge in the lungs, where they would cause biological damage and, quite possibly, lung cancers; larger particles would fall to the ground or would be trapped in the nose. Other variables enter as well; Appendix B discusses them in detail.\nThe frequency of the DBA is much less than the frequency of the DBE because several steps must occur for the DBE to result in the DBA. NNSA commented on this difference:\nThere is also margin in the assumed accident frequencies (e.g., once in 5,000 years); these were based on the structural failure probabilities and did not consider other conditional probabilities, such as the conditional probability of a large fire starting and growing within the facility and progressively effecting and engaging all of the assumed material at risk; this refinement would reduce the frequency of the event from once in thousands of years to once in hundreds of thousands of years.\nThe difference between DBE and DBA is crucial because the path from the one to the other can be interrupted at many places and in many ways in order to reduce the probability of the DBA, as discussed in \" Increasing Safety ,\" below.\nRadiological Facilities like RLUOB do not have a DBA and do not have to be designed to survive a DBA because they have so little radioactive material, though, as discussed in Appendix E , RLUOB was built (but not certified) to HC-3 standards. If RLUOB were to be converted to an HC-3 building, it would need a DBA and might need structural and other upgrades to be able to survive it. Appendix D describes some of the tasks needed to convert RLUOB to HC-3.\nMaterial At Risk (MAR): DOE defines this term as \"the amount of radioactive materials (in grams or curies of activity for each radionuclide) available to be acted on by a given physical stress.\" For purposes of this report, it is a measure of the amount of plutonium that might be dispersed in a DBA. Molten plutonium or plutonium shavings in a crucible that topples over in an earthquake, spilling plutonium onto the floor, would be MAR because a fire would create plutonium oxide particles, while plutonium in specially designed containers that are fire-resistant and rugged enough to survive a building collapse would not face this risk and thus would not be counted as MAR.\nMaximally-exposed Offsite Individual (MOI) and other exposure standards: An MOI is a hypothetical person located at the spot—outside the site boundary but nearest to a specific building—where a member of the public could reasonably be, such as a dwelling or a public road. The guideline set by DOE is that the MOI should receive a dose of no more than 25 rem for an exposure of 2 hours (or up to 8 hours in certain situations). \"The value of 25 rem TEDE [total effective dose equivalent] is not considered an acceptable public exposure either. It is, however, generally accepted as a value indicative of no significant health effects (i.e., low risk of latent health effects and virtually no risk of prompt health effects).\" To avoid \"challenging\" the 25-rem dose, another DOE document sets the dose at 5 rem, and sets a guideline of 100 rem TEDE for nearby (\"collocated\") workers.\nDocumented Safety Analysis (DSA): Once an HC-2 or HC-3 building is built, a DSA must be prepared for it. A DSA is an agreement on how much MAR it can contain in order to stay within the dose limits for a collocated worker (for an HC-3 building) or an MOI (for an HC-2 building). The DSA MAR limit is typically less than the upper bound for an HC-3 building; for an HC-2 building, the DSA MAR limit is a specific figure because HC-2 sets no upper bound. For two HC-2 buildings at LANL, CMR and PF-4, discussed below, the agreement is between NNSA and Los Alamos National Security, LLC, the site contractor. The MAR permitted is building-specific based on hazard analysis, including accident scenarios, and on multiple measures designed to contain radioactive material in an accident. For CMR, the MAR permitted by the DSA is 9 kg of Pu-239E; for the main floor of PF-4, the comparable figure is 2,600 kg. A DOE document provides detailed standards for preparing a DSA. No DSA is required for a Radiological Facility because MAR is so small that such facilities fall outside the Hazard Category system.\nSecurity Category (SC): DOE places uranium and plutonium into SCs depending on their attractiveness level, such as to terrorists. SC I and II pertain to facilities with Special Nuclear Materials (SNM, mainly uranium highly enriched in the isotope 235 and plutonium) in quantities or forms that would pose a severe threat if seized by terrorists. The highest level, SC-I, includes assembled weapons and 2 kg or more of plutonium ingots. SC I and II require armed guards, a special security fence, and similar measures. SC-IV requires much less security. It includes less than 200 g of metallic plutonium and less than 3 kg of solutions of less than 25 g of plutonium per liter. Table C-1 shows amounts of plutonium in various hazard and security categories.\nSafety Class, Safety Significant: 10 CFR 830.3 defines safety class structures, systems, and components (SSCs) as SSCs, \"including portions of process systems, whose preventive and mitigative function is necessary to limit radioactive hazardous material exposure to the public, as determined from the safety analyses.\" In contrast, safety significant SSCs \"are not designated as safety class structures, systems, and components, but whose preventive or mitigative function is a major contributor to defense in depth and/or worker safety as determined from safety analyses.\" LANL added this explanation: \"Safety-class systems must operate in conditions that otherwise would result in an unacceptable risk (dose) to the public. Relative to the public, safety-significant systems support safety-class systems with additional protections that might help in an accident, but are not counted upon to do so.\"",
"",
"The nuclear weapons complex (the \"Complex\") consists of eight sites that maintain U.S. nuclear weapons; during the Cold War, the Complex designed, developed, tested, and manufactured these weapons. The Department of Energy (DOE) and its predecessor agencies used to own and set policy for the Complex. Beginning in 2000, the National Nuclear Security Administration (NNSA), a semiautonomous agency within DOE, took over these functions. Contractors operate Complex sites at the direction of NNSA. One of these sites, Los Alamos National Laboratory (LANL), has three buildings relevant to pits:",
"This building was designed beginning in the late 1940s; most of it was completed by 1952, with another part completed in the early 1960s. It was used mainly for plutonium R&D, and at present provides AC and some MC to support pit production and all other plutonium missions in PF-4.\nCMR is showing signs of age. In 2009, a congressional commission found that it and a uranium processing building at the Y-12 National Security Complex are \"genuinely decrepit and are maintained in a safe and secure manner only at high cost.\" In 2010, the staff of the Defense Nuclear Facilities Safety Board (DNFSB), which monitors safety and health issues at the nuclear weapons complex, \"questioned CMR's ability to detect promptly ventilation system failure, a particularly important function given the system's age and lack of local alarms to notify facility workers.\" In a 2010 report to Congress, DNFSB stated that CMR and Y-12 uranium processing facilities \"are structurally unsound and are unsuitable for protracted use.\"\nCMR suffers from another problem. As Los Alamos is on several seismic faults, earthquakes pose the greatest threat to CMR. It is not seismically robust. Its design, in the late 1940s, gave little consideration to seismic loads. Further, when it was constructed, there was a steel shortage due to a steel strike and the Korean War. To save on steel, each concrete beam in CMR is reinforced with only two steel reinforcing rods, which are of different diameters, while the concrete floor between the beams is 2 to 4 inches thick, reinforced with chicken wire. A Los Alamos seismic expert calculates that, for CMR, \"the annual probability of failure [i.e., building collapse, is] somewhere between 1 in 370 years and 1 in 333 years.\" This means that for ground motion that might be associated with an earthquake that may occur approximately every 250 years, there is a 50% probability of collapse. This expert also calculates that the probability that CMR would survive a Design Basis Earthquake, in this case one occurring once in 2,500 years, is less than 0.2%. Another calculation using these data is that CMR has a 1 in 36 chance of collapsing in 10 years. DNFSB arrived at a similar calculation:\nSeismic fragility of building: There is a 1 in 55 chance of seismic collapse during a 10-year timeframe, which would result in release of nuclear material and injury/death of facility workers.\nThe Board is concerned that prolonged operations in the existing CMR facility pose a serious safety risk to workers. In late 2010, the NNSA limited material-at-risk in the facility to reduce the public dose consequence following an earthquake to a value below the Evaluation Guideline of 25 rem.",
"PF-4 is the nation's main building for plutonium work. It manufactures pits and supports many other plutonium projects. It produces Pu-238 heat sources for deep space probes and defense purposes. It houses the Advanced Recovery and Integrated Extraction System (ARIES), which converts the plutonium in pits into plutonium oxide for use in mixed oxide nuclear reactor fuel. It is the venue for pit surveillance, in which pits from deployed weapons are returned to Los Alamos for detailed inspection to search for actual or potential problems. It used to recover americium, a decay product of plutonium, for use in smoke detectors and industrial gauges, and is reestablishing that capability. It conducts plutonium R&D.\nDNFSB expressed concern about PF-4's vulnerability to an earthquake:\nPF-4 was designed and constructed in the 1970s and lacks the structural ductility and redundancy required by today's building codes and standards. In 2007, a DOE-required periodic reanalysis of the seismic threat present at the Los Alamos site was completed. It indicated a greater than fourfold increase in the predicted earthquake ground motion. Total facility collapse is now considered a credible event. … In response to this increased seismic threat, LANL undertook a series of actions to improve the safety posture of PF-4.",
"Design of this building was completed in 2006. The building was completed in FY2010, office operations began in October 2011, and laboratory operations are expected to start in 2014. As a Radiological Facility, it is permitted to hold 26 grams (g) of WGPu. It has 19,500 square feet (sf) of laboratory space, as compared to 22,500 sf of lab space planned for the Chemistry and Metallurgy Research Replacement Nuclear Facility (CMRR-NF), a building planned but not built, as described in \" A Sisyphean History: Failed Efforts to Construct a Building to Restore Pit Production ,\" below. RLUOB (pronounced \"rulob\") was intended to conduct unclassified R&D on plutonium and some AC in support of pit production; the latter amount was to be very small because CMRR-NF was intended for that purpose. Nonetheless, the design of RLUOB is suitable for AC because it uses open hoods instead of gloveboxes as in PF-4; hoods are more efficient for most AC because it is much easier to work with small samples in them, but they require a powerful ventilation system, which RLUOB has, as shown in Figure 6 . Indeed, a LANL report stated that \"RLUOB has effectively perfect alignment with analytical chemistry activities.\"\nWhile RLUOB was intended to be a Radiological Facility, it was constructed to a much higher standard than was required:\nRLUOB was built as a \"radiological-plus\" or robust radiological facility. The engineering controls associated with worker radiation protection are on par with those inside of PF-4 and well in excess of those in the 1950s-era CMR Building. Additionally, the RLUOB uses modern HEPA filtration, which protects the environment from a release of contamination, and contains a state-of-the-art operations center for managing facility operations including ventilation. In an overarching sense, the RLUOB was built with a focus on the Nuclear Quality Assurance (NQA)-1 standard, which technically is only required for hazard category 3 facilities, but was constructed as such to provide lessons-learned to aid in constructing the CMRR-NF. However, despite its inherent robustness, the RLUOB does not meet the standards established for either a hazard category 2 or 3 nuclear facility because it was by design intended to work in conjunction with a hazard category 2 nuclear facility (the CMRR-NF).\nRLUOB was designed to withstand the design basis earthquake (DBE), in this case an earthquake anticipated to strike RLUOB once in 2,500 years. The force of the DBE was based on seismic calculations made in 1995. Accordingly, it is more resilient to earthquakes than PF-4 was as originally built, since PF-4 was designed to an earlier, less energetic DBE. (Upgrades have increased PF-4's resiliency.) As detailed in Appendix E , Los Alamos estimates that \"collapsing RLUOB would take an earthquake with 4 to 12 times more force than an earthquake that would collapse CMR.\" However, the current DBE is more energetic than the 1995 DBE; it is unclear what measures, if any, would be needed to strengthen RLUOB to withstand the current DBE.",
"Beginning in 1952, the United States made pits on a large scale at the Rocky Flats Plant (CO), sometimes over 1,000 ppy. Operations there halted in 1989 as a result of an FBI raid investigating safety and environmental violations. At that point, Rocky Flats was producing pits for the W88 warhead to be carried by Trident II submarine-launched ballistic missiles, but W88 production was not complete. DOE initially considered restarting operations at Rocky Flats, but ultimately decided not to. The United States has not had the capacity to make more than about 10 ppy since 1989.\nThe history of efforts to restore pit production capacity on a larger scale is voluminous. The key takeaways from the brief summary that follows are: (1) many projects have been proposed over the years; (2) none has been successfully completed; and (3) key parameters, such as cost, schedule, proposed facility site, and capacity, have changed from one proposal to the next.",
"As the Cold War was winding down, Congress, in Section 3132 of the National Defense Authorization Act for FY1988 and 1989 ( P.L. 100-180 , December 4, 1987), directed the President to conduct a study on nuclear weapons complex modernization and to \"formulate a plan … to modernize the nuclear weapons complex by achieving the necessary size and capacity determined under the study.\" The report was submitted in January 1989, but as Secretary of Energy James Watkins noted in January 1991,\ndramatic world changes forced further reassessments of the future Nuclear Weapons Complex.\" A DOE report resulting from the reassessments \"presents a plan to achieve a reconfigured complex, called Complex-21. Complex-21 would be smaller, less diverse, and less expensive to operate than the Complex of today. Complex-21 would be able to safely and reliably support nuclear deterrent stockpile objectives set forth by the President and funded by the Congress.\nIn addition to a No Action alternative, the study proposed two Reconfiguration alternatives. One would downsize existing sites and modernize them in place. \"As an exception to the existing site theme, the functions of the Rocky Flats Plant (RFP) would be relocated.\" The second, \"maximum consolidation,\" would\nrelocate RFP and at least one other NMP&M [Nuclear Materials Production and Manufacturing] facility to a common location. The Pantex Plant and the Oak Ridge Y-12 Plant are candidates for collocation with the Rocky Flats functions, either singly or together. … The probable outcome of this option would be an integrated site which could consolidate much of the NMP&M elements at a single site.\nAs part of this effort, DOE would develop a Programmatic Environmental Impact Statement \"to analyze the consequences of alternative configurations for the Complex,\" with completion of that statement expected in early FY1994. \"Complex-21 should be fully operational early in the 21 st century and will sustain the nation's nuclear deterrent until the middle of that century.\"\nWhat emerged was a two-pronged approach to restore pit production. After conducting an environmental impact statement (EIS) process, DOE issued a Record of Decision (ROD) on Stockpile Stewardship and Management in December 1996 that included reestablishing pit production capability at PF-4 while raising the prospect of a larger-capacity facility. Los Alamos would build a small number of pits for W88s so DOE could replace W88 pits destroyed in an ongoing surveillance program that monitored their condition. Producing these pits, and certifying them as \"war reserve,\" that is, meeting standards for use in the nuclear stockpile, took many years; PF-4 produced its first war reserve W88 pits, 11 of them, in 2007. This small capacity would also serve as a pilot plant for developing production techniques for a larger plant. Since the total number of additional W88 pits required was small, about 30, there was no need for PF-4 to achieve high manufacturing rates. Producing these pits and certifying them as war reserve without nuclear testing was a major early challenge for the stockpile stewardship program.",
"The second prong was to build a facility able to produce large numbers of pits. This was the Modern Pit Facility (MPF). NNSA approved Critical Decision 0 (mission need) for MPF in FY2002. The capacity of MPF was left to be decided, for reasons a National Environmental Policy Act (NEPA) document of May 2003 noted:\nClassified studies have examined capacity requirements that would result from a wide range of enduring stockpile sizes and compositions, pit lifetimes, emergency production needs (referred to as \"contingency\" requirements), and facility full-production start dates. Although the precise future capacity requirements are not known with certainty, enough clarity has been obtained through these ongoing classified studies that the NNSA has identified a range of pit production capacity requirements (125-450 ppy) that form the basis of the capacity evaluations in this EIS. The EIS evaluates the impacts of a MPF designed to produce three capacities: 125 ppy, 250 ppy, and 450 ppy. A pit lifetime range of 45-60 years is assumed.\nCongress initially supported MPF, but became increasingly concerned with the lack of study of alternatives, a lack of clarity on the production capacity required, and uncertainty on pit aging and pit life. Finally, Congress eliminated funds for MPF in the FY2006 budget cycle.",
"Another effort to reconfigure the nuclear weapons complex began in 2004, when the House Appropriations Committee sought to have DOE link the nuclear weapons stockpile with the nuclear weapons complex that would support it:\nDuring the fiscal year 2005 budget hearings, the Committee pressed the Secretary on the need for a systematic review of requirements for the weapons complex over the next twenty-five years, and the Secretary committed to conducting such a review. The Secretary's report should assess the implications of the President's decisions on the size and composition of the stockpile, the cost and operational impacts of the new Design Basis Threat, and the personnel, facilities, and budgetary resources required to support the smaller stockpile. The report should evaluate opportunities for the consolidation of special nuclear materials, facilities, and operations across the complex to minimize security requirements and the environmental impact of continuing operations.\nThe Secretary of Energy Advisory Board (SEAB) formed the Nuclear Weapons Complex Infrastructure Task Force to carry out this study. The task force issued its report in July 2005. It recommended immediate design of a Reliable Replacement Warhead (RRW). RRW was a concept in which Cold War aspects of nuclear weapon design, notably maximizing the explosive yield of the weapon per unit weight (the \"yield-to-weight ratio\"), would be traded off for design features more suitable to the post-Cold War world, such as ease of manufacture, enhanced confidence without nuclear testing, reduced use of hazardous materials, and enhanced surety features. The task force envisioned RRW as a \"family of weapons,\" with RRWs ultimately making up most if not all of the future stockpile. The task force also recommended a Consolidated Nuclear Production Center (CNPC), \"a modern set of production facilities with 21 st century cutting-edge nuclear component production, manufacturing, and assembly technologies, all at one location … When operational, the CNPC will produce and dismantle all RRW weapons.\" CNPC would have an SNM manufacturing facility, part of which would support plutonium operations. \"All of the functions currently identified in the proposed Modern Pit Facility (MPF) will be located in this building\" except for plutonium R&D. CNPC would not manufacture non-nuclear components. Regarding capacity, the report stated:\nA classified Supplement analyzes the issue of timing for the CNPC for a stockpile of 2200 active and 1000 reserve [weapons] and the expected pit manufacturing capacity of the future Complex. The conclusion is that if the NNSA is required to: 1) protect a pit lifetime of 45 years, 2) support the above stockpile numbers, and 3) demonstrate production rates of 125 production pits to the stockpile per year, the CNPC must be functional by 2014. If one accepts the uncertainty of pit lifetime of 60 years, the CNPC can be delayed to 2034. In either case TA-55 is assumed to be producing 50 production pits to the stockpile per year.",
"The FY2007 National Defense Authorization Act, P.L. 109-364 , directed the Secretary of Energy to develop a plan for transforming the nuclear weapons complex to provide a responsive infrastructure by 2030, and to submit this plan to Congress. The report was submitted in October 2006. The goal was to implement U.S. policy on strategic deterrence as called for in the 2001 Nuclear Posture Review, which recognized the need to transform U.S. nuclear forces from deterring the U.S.S.R. to responding to emerging threats. Regarding the stockpile, NNSA envisioned a smaller stockpile that, by 2030, would be composed mainly if not entirely of RRWs. While the nuclear weapons complex of 2030, \"Complex 2030,\" would continue to have eight sites, quantities of SNM requiring high levels of security would be \"only present at production and testing sites.\" As to labs, in Complex 2030 \"No laboratory operations require Category I/II SNM levels of security. Laboratory facilities are not used for nuclear production missions.\" Unlike the SEAB report, Complex 2030 would not have a Consolidated Nuclear Production Complex but would have \"full operations of a consolidated plutonium center at an existing Category I/II SNM site in the early 2020s.\" Further, \"By 2022, LANL will not operate facilities containing CAT I/II quantities of SNM. The location and operator of the consolidated plutonium center will be determined following completion of appropriate National Environmental Policy Act (NEPA) reviews.\" NNSA would \"Plan, construct, and startup a consolidated plutonium center for long-term R&D, surveillance, and manufacturing operations. Plan the consolidated plutonium center for a baseline capacity of 125 units [i.e., pits] per year net to the stockpile by 2022.\" NNSA would \"Upgrade LANL plutonium facilities at Technical Area 55 to support an interim production rate of 30 to 50 RRW war reserve pits per year net to the stockpile by 2012.\" Regarding another building, NNSA would \"Complete and operate the Chemistry and Metallurgy Research Replacement (CMRR) as a CAT I/II facility up to 2022 (use as a CAT III/IV facility and focal point and for material science thereafter) to support plutonium operations at LANL, closure of existing LANL Chemistry and Metallurgy Research (CMR) facility, and the removal of CAT I/II quantities of plutonium from LLNL [Lawrence Livermore National Laboratory].\"\nImportantly, the plan for Complex 21 shifted capacity from a range of 125 to 450 ppy examined in the MPF EIS to a baseline of 125 ppy.",
"While nuclear weapons production was at issue, so was R&D on SNM, with a focus at LANL on plutonium. The CMR building had significant problems due to aging and design. As described in a Government Accountability Office report of 2013,\nDOE's and NNSA's plans for replacing the CMR have changed over the past several decades. In 1983, DOE first decided that the CMR was outdated and began making plans to replace it. Over the next nearly 2 decades, several large replacement projects were proposed, but none progressed beyond conceptual stages. … NNSA has taken a number of steps to develop the CMRR nuclear facility or some facility to replace the CMR, but its plans have continued to change over time.\nOne such project was the Special Nuclear Materials Research and Development Laboratory Replacement Project at LANL. It would have replaced CMR, and would have included a laboratory and facilities for laboratory support, offices, utilities, and waste pretreatment. According to a LANL document of 1990, funding was $10 million for FY1988 and $22 million for FY1989. Anticipated milestones included completion of preliminary design in January 1990, completion of an EIS in 1991, site work start in mid-1991, and construction completed in the fall of 1994.\nThis project did not happen. Instead, it eventually morphed into the Chemistry and Metallurgy Research Replacement (CMRR) project. In 2002, NNSA reached Critical Decision 0, approve mission need, for the project. In 2003, NNSA completed an environmental impact statement on the project, and in 2004 NNSA issued a Record of Decision (ROD) on it. The preferred option in the ROD included two buildings. The Chemistry and Metallurgy Research Replacement Nuclear Facility (CMRR-NF) was to be a laboratory building that would have provided support, such as AC, for pit production. A separate building, RLUOB, would have provided offices, utilities for both buildings, and laboratory space for R&D. Because the amount of plutonium RLUOB would have held under then-current regulations was so small, at most 6 grams of WGPu, it was expected to do only a small amount of AC to support weapons production work. In 2005, \"NNSA authorized the preliminary design (Critical Decision 1 or CD-1) for the CMRR project.\" In 2008, NNSA issued an ROD to keep plutonium manufacturing and R&D at Los Alamos and to build CMRR-NF there to support these tasks. RLUOB was completed in FY2010, but CMRR-NF was still in preliminary design at that time.\nCongress initially approved the project, but concerns grew as the cost escalated and the schedule slipped. Concurrently, the need to replace CMR became more urgent. Michael Anastasio, then Director of LANL, testified that CMR \"is at the end of its useful life,\" that CMRR \"is critical to sustaining the nation's nuclear deterrent\" and to other missions, and that \"to successfully deliver this project, it will be important to have certainty in funding and consistency of requirements throughout the project.\" Also, as noted earlier, CMR was \"decrepit\" and not seismically robust. In an effort to secure Senate approval of the New START Treaty, the Administration issued a report in November 2010 stating that it \"is committed to fully fund the construction of the Uranium Processing Facility (UPF) and the Chemistry and Metallurgy Research Replacement (CMRR)\" and set out a 10-year funding profile for both facilities. The New START resolution of ratification included provisions related to the nuclear weapons complex in general and to CMRR and UPF in particular. The Administration requested the amount indicated in its November 2010 report in the FY2012 budget. However, in the FY2013 request, the Administration eliminated funding for CMRR-NF and \"deferred\" it \"for at least five years\" on grounds that the CMRR facility, UPF, and a life extension project for the B61 bomb were unaffordable concurrently and that there were alternative ways of accomplishing the tasks that CMRR-NF was to perform. However, Section 3114 of the FY2013 National Defense Authorization Act ( P.L. 112-239 ) directed the Secretary of Energy to \"construct at Los Alamos National Laboratory, New Mexico, a building to replace the functions of the existing Chemistry and Metallurgy Research Building at Los Alamos National Laboratory associated with Department of Energy Hazard Category 2 special nuclear material operations.\" This provision also barred any funds to be spent on a plutonium strategy for NNSA \"that does not include achieving full operational capability of the replacement project by December 31, 2026.\" However, Congress appropriated no funds for CMRR-NF for FY2013.\nFor FY2014, the Administration requested no funds for CMRR-NF, and Congress authorized and appropriated no funds for it. However, Section 3117 of the FY2014 National Defense Authorization Act ( H.R. 3304 , P.L. 113-66 ) included an exception to the plutonium strategy provision just noted. It authorized NNSA to spend funds on a modular building strategy, that is, \"constructing a series of modular structures, each of which is fully useable, to complement the function of the plutonium facility (PF–4) at Los Alamos National Laboratory, New Mexico, in accordance with all applicable safety and security standards of the Department of Energy.\" Option 12 describes the modular strategy.",
"As a further illustration of difficulties in building facilities to handle plutonium, this section presents two facilities that were built, found to be unusable, and demolished.\nNuclear Materials Storage Facility (NMSF): This building was built at LANL. According to the DOE FY1984 budget request, \"This project provides for the construction of a repository for long and intermediate storage of large quantities of source and special nuclear materials. It will be designed to meet security, safety, and safeguards requirements for the storage and handling of nuclear materials. The new 29,100-square-foot building will contain a vault area of approximately 13,000 square feet.\" A 1997 report by the DOE Inspector General was scathing:\nWe found that the NMSF, which was originally completed in 1987, was so poorly designed and constructed that it was never usable and that DOE officials were proposing to renovate the entire facility. Departmental and contractor officials discovered numerous design, construction and operational deficiencies after the facility was occupied in February 1987. These deficiencies included: (1) the inability to control and balance the heating, ventilation and air conditioning (HVAC) system to maintain acceptable negative pressures within the facility; (2) the inability to dissipate the heat generated by radioactive decay of the materials to be stored; (3) the inability to limit personnel radiation exposures to \"as low as reasonably achievable;\" (4) a peeling of the \"Placite\" decontamination epoxy coating throughout the facility; and (5) the inability to open and secure the Safe Secure Trailer (SST) doors due to the inadequate width of the garage once the SSTs were parked in the garage.\nBecause of these and other deficiencies, \"This structure was never used for storage of nuclear materials, and a decision was made in 2006 to demolish the structure.\" Demolition was completed by the end of FY2008.\nBuilding 371: A press report tells the story of a plutonium project at Rocky Flats:\nOne striking example of a construction project that turned out to be a failure was a $225 million plutonium processing building at the Rocky Flats Plant near Golden, Colo. The processing plant, Building 371, was started in 1973, completed in 1981 and operated for a month in 1982 before being shut because the new processing technology did not work. The Energy Department has estimated that it will cost nearly $400 million and take eight years to make the equipment in the building work.\n\"The fact of the matter is that Building 371 is a fiasco,\" said Joseph F. Salgado, the Deputy Secretary of Energy. \"It's a horror story. It's unacceptable.\"\nBuilding 371 was intended to replace another, much older processing plant, Building 771. … The Energy Department shut Building 771 on Oct. 8 after three employees were exposed to plutonium dust, which can be extremely dangerous if it is inhaled. The closing of Building 771 was, [sic] the nation's sole source of reprocessed plutonium, which is used in triggers for thermonuclear bombs. The closing has brought most of the plant's operations at the Rocky Flats Plant to a halt.\nThe building was never put into operation. Instead, the buildings at Rocky Flats Plant, including Building 371, were torn down and the site was decontaminated.",
"",
"For many years, Congress has been concerned with cost growth and schedule delays in nuclear weapons complex programs for facilities and weapons. One way to help resolve this problem may be to have a thorough airing of alternatives before decisions are made. Most recently, in its work on the FY2014 budget, Congress pressed NNSA to analyze alternatives:\nThe Senate Armed Services Committee noted that \"NNSA spent about 10 years and more than $350 million on the design of the CMRR Nuclear Facility\" before it was deferred and a larger amount on another project that was canceled. The committee stated that \"these decisions raise serious questions about how well NNSA scrutinizes the analyses of alternatives prior to submitting them for review and approval.\" Accordingly, it directed GAO to study, among other things, NNSA's process for analyzing alternatives.\nThe House Armed Services Committee, in its report on H.R. 1960 , the FY2014 defense authorization bill, stated that Section 3113 would \"require the Secretary of Energy, acting through the [NNSA] Administrator, to request an independent review of each guidance issued for the analysis of alternatives for each nuclear weapon system undergoing life extension and each new nuclear facility of the nuclear security enterprise as well as the results of such analysis of alternatives. The Secretary of Energy, acting through the Administrator, would be required to submit the results of any such analysis to the Nuclear Weapons Council and the congressional defense committees.\" Section 3113 also \"would express the sense of Congress that Congress encourages the Administrator and the Nuclear Weapons Council to follow the results of the analysis of alternatives of a life extension program or a defense nuclear facility construction project when selecting a final option.\" This provision was included in H.R. 1960 as passed by the House. Section 3112 of the FY2014 National Defense Authorization Act ( H.R. 3304 , P.L. 113-66 ) contained related language.\nSection 311 of H.R. 2609 , the FY2014 energy and water development appropriations bill as passed by the House, directs the Secretary of Energy to submit \"a report which provides an analysis of alternatives for each major warhead refurbishment program that reaches [a certain stage].\"\nThe Senate Appropriations Committee expressed its concern \"about NNSA's ability to assess alternatives, which may significantly reduce cost, at the preliminary planning stages of a project.\" It referred to the deferral of CMRR-NF and the cancellation of another project, each incurring planning costs of hundreds of millions of dollars, and noted, \"The Committee believes this wasteful spending could have been avoided had NNSA better assessed alternatives.\" Accordingly, it directed NNSA to submit a plan on how NNSA \"will strengthen its ability to assess alternatives.\"\nSection 312 of the FY2014 Consolidated Appropriations Act ( H.R. 3547 , P.L. 113-76 ) requires the Secretary of Energy to submit to Congress an analysis of alternatives for the B61-12 LEP and certain other major warhead refurbishment programs.",
"Over the past several decades, many projects, including some in the nuclear weapons complex, have been delayed or stopped by lawsuits brought by nongovernmental organizations under the National Environmental Policy Act (NEPA) of 1969, P.L. 91-140, as amended. These lawsuits typically involve procedural issues of compliance with NEPA in preparing an environmental impact statement (EIS). For example, plaintiffs might charge that an agency filed an inadequate EIS or did not consider all reasonable alternatives adequately.\nSecretary of Energy Steven Chu stressed the importance for DOE of complying with NEPA:\nCompliance with the National Environmental Policy Act (NEPA) is a pre-requisite to successful implementation of DOE programs and projects. Moreover, the NEPA process is a valuable planning tool and provides an opportunity to improve the quality of DOE's decisions and build public trust. Hence, timely attention to NEPA compliance is critical to accomplishing our missions. …\nI cannot overstate the importance of integrating the NEPA compliance process with program and project management and of applying best management practices to NEPA compliance in DOE,\" and pointed to the DOE NEPA Order as a \"[tool] available to help improve the efficiency of its NEPA compliance efforts.\nSeveral options discussed below involve increasing the amount of plutonium in RLUOB beyond that permitted for a Radiological Facility so it could perform the AC needed to support production of 80 ppy. Section 102 of NEPA would seem to require an EIS for those options because the increase could raise the risk to the \"human environment\" in a major accident. Section 102 directs all federal agencies to\n(C) include in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on—\n(i) the environmental impact of the proposed action,\n(ii) any adverse environmental effects which cannot be avoided should the proposal be implemented,\n(iii) alternatives to the proposed action,\n(iv) the relationship between local short-term uses of man's environment and the maintenance and enhancement of long-term productivity, and\n(v) any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented.\nIn 2008, NNSA prepared a broad (\"site-wide\") EIS for LANL that included the plutonium program there. Given the state of flux of the plutonium program, NNSA has not prepared an EIS on it since then, though in 2011 it prepared a Supplemental EIS narrowly focused on the CMRR-NF component of the CMRR project.\nHowever, Greg Mello, Executive Director of Los Alamos Study Group, a nongovernmental organization, argues that \"an EIS must precede NNSA's choice between post-CMRR-NF plutonium sustainment alternatives.\" He prepared the following analysis in August 2013 for this report. Since the study group has filed four NEPA lawsuits against Los Alamos construction projects over the past two decades, this analysis merits particular attention.\nThe main elements of the NEPA landscape are (1) a statute that elevates environmental values to a major purpose of governance, establishes a procedural approach to integrating those values in decisions, and creates a Council on Environmental Quality (CEQ) to oversee this process; (2) CEQ regulations that are binding on agencies; (3) agency regulations, harmonious with CEQ's but tailored to each agency; (4) CEQ guidance that lacks the force of law but is frequently cited by courts; and (5) a body of case law, based on thousands of cases, that creates a sort of NEPA \"common law\"—some universally binding, some binding in some federal districts, and some influential for such reasons as lucidity. Early NEPA case law established some basic parameters of implementation, such as that citizens could sue agencies to enforce NEPA compliance. Over time, a body of NEPA law has developed that is relatively settled for most basic legal issues but contested in other areas, especially where decisions depend on particular facts.\nDOE requires an EIS and a Record of Decision (ROD) as early steps for all major projects that may have significant impacts. In the case of CMRR-NF, a careful EIS that really compared alternatives realistically would have noticed the earthquake-amplifying stratum of volcanic ash beneath the site and incorporated the latest seismic information, problems that later bedeviled the project. The underlying weaknesses in purpose and need could have been vetted as well, and hundreds of millions of dollars in design costs and many years of delay in acquiring safer plutonium capabilities could have been avoided. Sound EISs and formal RODs would strengthen DOE's project management.\nI believe that an EIS must precede NNSA's choice between post-CMRR-NF plutonium sustainment alternatives. An EIS requires objective environmental analysis of all reasonable alternatives prior to actions that irreversibly commit federal resources or bias the agency toward an alternative, with an initial business-case analysis used to establish which alternatives are reasonable. Because NNSA has proposed alternatives to CMRR-NF that are major federal actions that could have significant effects on the human environment, and since NNSA has no EIS that analyzes the impact of these alternatives, NNSA must initiate an EIS to do so. Some proposed CMRR-NF alternatives encompass multiple states and sites and may cost billions of dollars. All alternatives will have significant environmental impacts over much of this century.\nThe relative environmental benignity of upgrading RLUOB to an HC-3 facility might tilt the scales toward that choice but is not a reason not to do an EIS. Upgrading RLUOB may not be the whole of the post-CMRR-NF redirection in plutonium programs. Other nuclear weapons complex sites are under consideration for involvement, including [Lawrence Livermore National Laboratory, Nevada National Security Site, Waste Isolation Pilot Plant], and perhaps [Savannah River Site]. LANL is also considering building \"modular\" plutonium facilities and is actively briefing this option to Congress. An EIS is definitely required for choices of this magnitude. None of these alternatives, let alone \"all reasonable alternatives\" as the law requires, have been weighed and their impacts compared in any EIS. Furthermore, NEPA's regulations and case law are clear that an agency cannot analyze one project's alternatives and build something quite different, or take one action today and significantly add to that action later, or do so contemporaneously with separate but connected projects. Congress has been anxious to see a formal plan for plutonium sustainment; the formality of NEPA process would help provide that plan while also serving as a barrier to \"scope creep\" and associated cost escalation.\nIt cannot be overemphasized that NEPA's analysis of alternatives serves public purposes beyond environmental ones. As John Immele, former director of LANL's nuclear weapons program, wrote in late 1999 regarding the NEPA process, \"A ... lesson from the weapons program of the early and mid 1990s as well as the fissile materials disposition program is the necessity for and (surprising) success of publicly vetting our strategies through environmental impact statements.\"\nA thorough EIS analysis of plutonium program alternatives would be a way of complying with NEPA, would be responsive to congressional desires to have NNSA analyze alternatives, would reduce the likelihood that lawsuits filed to challenge the alternative chosen would succeed, and would thus reduce the likelihood that such lawsuits would be filed.",
"Many options are possible. Ideally, all would meet multiple, and sometimes conflicting, goals, such as:\nSupport production of 80 ppy. Support all other necessary plutonium work, however \"necessary\" is defined. Examples might include ARIES, producing plutonium-238 sources, conducting plutonium R&D, and processing liquid waste containing plutonium in order to reduce its volume for shipment to WIPP. Reduce safety and security risks (building collapse in an earthquake or other disaster, dose to workers and the public resulting from an accident, terrorist attack leading to detonation of a nuclear device, etc.) to an acceptably low level. Maximize cost-effectiveness and ensure affordability. Complete the project on a schedule that supports needed work. Halt program operations in CMR in approximately 2019. Provide a planning margin for the facility to meet, in the future, new or expanded missions or more stringent regulatory requirements. Maximize useful life of the facility or facilities. Comply with all existing regulations.\nClearly, the more requirements that are levied on a project, the harder it is to comply with them all. In this case, none of the options presented here could meet all these goals simultaneously, and in some cases there is little or no data to evaluate how well an option would meet its goals. Thus Congress is faced with a choice among imperfect options.\nThe following list includes a broad spectrum of options. The list is presented as a progression, with a logical connection from one option to the next. Each connection is shown in italics.\nAs a start, consider options using existing buildings at Los Alamos, home to the only U.S. pit manufacturing capability . Since RLUOB is permitted to hold only a few grams of plutonium and CMR is at considerable seismic risk and due to be closed out, why not …",
"PF-4 has enough lab space, about 60,000 sf, to produce about 10 ppy with RLUOB supporting some low-MAR AC. LANL estimates that PF-4 could be used to manufacture 30 ppy without having to move out any ongoing programs. Attaining this higher capacity would require several actions including reconfiguring existing space and \"invest[ing] in new equipment (acquire/install) to increase capacity to 30 pits per year.\" As a hedge against inadequate plutonium processing capacity, NNSA's Plutonium Metal Processing subprogram would process plutonium alloy from pits returned from Pantex so as to create an inventory of metal for pits before it is needed; doing so \"helps ease constraints on Analytical Chemistry (AC) capacity and reduce out-year risk to achieve capacity targets.\" Both of these activities serve to increase pit-manufacturing capacity without requiring additional laboratory space.\nFurthermore, NNSA's plutonium strategy is considering ways to make better use of space in PF-4 and RLUOB to support the transition of AC and MC capabilities from CMR. Some space would be made available for this transition by reclaiming or \"repurposing\" rooms in PF-4 that are no longer in use (e.g., because the projects they housed have been completed), and some would come from reconfiguration, that is, rearranging equipment to increase efficiency. The former would add net space for AC/MC; the latter would not. AC equipment also would be added in RLUOB. In total, these actions would affect 8,000 sf in PF-4. A Los Alamos study considered using a facility at Livermore (see Option 7) and RLUOB for AC but did not consider having PF-4 perform all the AC work itself. In part this is because AC is space-intensive and PF-4 would not have sufficient space for production of 30 ppy plus the AC needed to support that capacity.\nAC would pose this problem because PF-4 is not configured for a large amount of AC. While some AC operations that use gram quantities of plutonium can be performed in gloveboxes, most AC operations use tiny samples, such as milligram or microgram quantities of plutonium dissolved in acid and placed in very small containers. Manipulating them is much easier in open-front hoods using thin gloves; it would be much harder to manipulate these samples with the multiple layers of gloves required for PF-4 glovebox work. However, hoods require a powerful ventilation system to create negative pressure in the hoods (so no fumes or plutonium escape), and multiple large HEPA filters. Gloveboxes require much less ventilation capacity since any air that flows into them does so through small leaks. PF-4, which is mostly outfitted with gloveboxes, does not have sufficient air handling capacity to support the hoods needed for 30 ppy. It would be difficult to replace gloveboxes with open-front hoods in PF-4 because the PF-4 ventilation system was not configured for the large airflow that hoods require. Upgrading PF-4 ventilation to support the large number of hoods needed to provide high AC capacity would at best be extremely costly. Indeed, the ventilation system to support open-front hoods is so bulky, as shown in Figure 6 , that it might not be possible to retrofit it into PF-4 at any cost. By extension, even if all of PF-4 were devoted to pit manufacture and supporting tasks, it appears highly improbable that PF-4, by itself, could do all the work needed to produce 80 ppy. There would also be the issue of where to house the tasks that would be moved out.\nGiven those problems, why not …",
"Another option is to resume work on CMRR-NF. That building, after all, was not canceled—it was merely \"deferred\" for \"at least five years.\" Los Alamos estimates that if construction were to begin in FY2018, the building would be completed in 2029, with the five-year delay adding another two years to construction time due to the need to assemble crews, let contracts, etc. Even so, this completion date would be in time for CMRR-NF to contribute to reaching the goal of producing 80 pits per year by 2030. CMRR-NF would provide HC-2 space for AC and MC in support of weapons production. While it is not at all certain that the facility will be built, it could be built if Congress chose to provide funding for it.\nThis option faces many difficulties. The conditions that led the Administration to defer CMRR-NF in FY2013 remain in place, and in some cases have arguably become more salient since then.\nIn deferring CMRR-NF, the Administration argued that building UPF and CMRR-NF and beginning the B61-12 LEP simultaneously would be unaffordable, and that available options would enable the nuclear weapons complex to perform the tasks of CMRR-NF.\nThe cost of UPF has increased and its schedule has slipped, possibly necessitating a scaled-back version of UPF. This adds weight to the Administration's judgment about the affordability of CMRR-NF, UPF, and the B61-12 LEP if done simultaneously.\nSection 3114 of the National Defense Authorization Act for FY2013, P.L. 112-239 , required the Secretary of Energy to construct, at Los Alamos, \"a building to replace the functions of the existing Chemistry and Metallurgy Research Building at Los Alamos National Laboratory associated with Department of Energy Hazard Category 2 special nuclear material operations.\" However, NNSA requested no funds for CMRR-NF in FY2013 or FY2014, and Congress appropriated no funds for it in those years.\nAs detailed in P.L. 113-66 , FY2014 National Defense Authorization Act, Section 3117, \"Authorization of Modular Building Strategy as an Alternative to the Replacement Project for the Chemistry and Metallurgy Research Building, Los Alamos National Laboratory, New Mexico,\" Congress is willing to consider modules (see Option 12) as an alternative to CMRR-NF. (Note that modules would perform high-MAR work while CMRR-NF would have performed mainly AC, which involves much less MAR.)\nA modified RLUOB that could \"perform the functions of the existing Chemistry and Metallurgy Research Building,\" as discussed under Options 8-10, would meet most of the functionality requirement of Section 3114 of P.L. 112-239 , though not the requirement for a new building. (It would not provide vault space, as CMRR-NF would have, but it appears that the PF-4 vault will suffice, as discussed in \" Options 6-12 Overview: Matching Plutonium Tasks to Buildings .\")\nBy the time construction could resume on CMRR-NF, other options, such as those the Administration was considering, would presumably be well developed, reducing the added value of CMRR-NF.\nCongress expressed concern over the escalating cost and delays of CMRR-NF, going so far as to impose cost and schedule caps on the project in Section 3114; would Congress be confident that NNSA could bring CMRR-NF online on schedule and on budget?\nBut even building CMRR-NF would not address the fact that PF-4 would be over 50 years old when CMRR-NF came online, leaving aging and seismic issues unresolved. It may be possible to resolve them with another option …",
"A new building could combine the functions of PF-4 and CMRR-NF. The argument for this option is that PF-4 will be 50 years old in 2028, about when CMRR-NF could be completed. Combining the two buildings into one would presumably cost less than building two separate buildings and would avoid the need to transfer material between buildings, increasing efficiency. A new building would incorporate the most advanced techniques to minimize seismic risk.\nThis option encounters many difficulties. The building would be larger and more complex than either of the two smaller buildings, and complexity in a major nuclear construction project could be expected to drive up costs and stretch out the schedule. Whereas CMRR-NF design work is nearly completed, the new building would have to be designed from scratch, adding time and cost. Also at issue is the need for this facility. NNSA's TA-55 Reinvestment Project (TRP) plans to extend PF-4's life to approximately 2039, so combining the two buildings would forgo a decade of PF-4 useful life. TRP cannot be halted on the chance that the new building would be built: given the immense difficulties that earlier large facilities have encountered, there is no assurance that the new building would be built. Some key nuclear facilities, notably Building 9212 and CMR, have service lives of over 60 years. RLUOB, too, should have at least a 50-year life, that is, to 2059, since it was built to much higher standards than CMR or Building 9212. Upgrades could presumably extend its life. If RLUOB and PF-4 together can do the necessary plutonium work for at least another quarter-century, it would seem premature to even start planning a replacement facility now.\nDespite advances in design and construction that reduce seismic risk, this building would still be at some risk from an earthquake if sited at Los Alamos . A simple way to avoid this risk is to …",
"Constructing this building at a nuclear weapons complex site other than LANL with low seismic risk, such as Pantex, would solve seismic issues regarding LANL, although the Virginia earthquake of 2011 raises doubts about the seismicity of any site. The difficulty lies in the tradeoff. LANL has a large human and facility infrastructure for plutonium work; much of that would have to be built from scratch at Pantex Plant (TX), the nuclear weapons complex site that performs final assembly and initial disassembly of nuclear weapons, taking considerable time and involving considerable expense. Savannah River Site has a plutonium waste infrastructure, but not the equipment or personnel for weapons manufacture. Its seismicity is in the same range as that of Los Alamos. Further, while the regulatory issues of dealing with plutonium buildings are well known for LANL, they would have to be examined in detail at another site. Siting, permitting, and preparing an EIS would be time-consuming. In addition, this option would not resolve problems with design, construction, and cost of the building itself.\nIf building a new building at another site has problems, what about using another existing building at LANL …",
"CMR currently performs some AC for pit production in PF-4, as well as nuclear forensics. Given that these are the only two facilities at Los Alamos contributing to pit production, and that it will be many years before a new one could be built, CMR is being maintained at a minimal level in order to keep it operational until approximately 2019, at which point NNSA plans to halt plutonium work there. One option would go beyond currently planned maintenance and upgrades so as to keep it in operation longer. Just as PF-4 is being upgraded on an ongoing basis to reduce the risks of building collapse and fire, keeping it in operation until 2039, more substantial upgrades to CMR might in theory keep it in service well beyond 2019. So doing would provide AC and other capability until a new building could be built.\nThis option has many problems and uncertainties. As noted, a congressional commission called CMR \"genuinely decrepit\" and a DNFSB study found it to be \"structurally unsound.\" Multiple wings of the building have been stripped to bare walls and floors to reduce nuclear material and prepare for decommissioning. A manager at Los Alamos indicated that CMR was built to the standards of the 1950s and there is a \"vast mismatch\" between the safety requirements of then and now. This individual pointed to problems with heating, electrical, and ventilation systems, and stated that refurbishing the ductwork would be \"cost-prohibitive.\" A tour of the building in September 2013 by the author revealed drains that had been concreted shut, gloveboxes with plastic bags instead of drain connections, gloveboxes with little to no anchoring to the floor, patches to pipes to keep them in operation, and water leaks in the ceiling. Laboratory staff stated that utility panels behind walls were contaminated with radioactive material and that corrosion in some piping had greatly reduced the inside diameter. Since NNSA plans to halt CMR operations in approximately 2019, there have been no studies of how to extend its service life well beyond that time, or what it would cost to do so. However, the fatal flaw in this option is that CMR lacks seismic robustness. Given these problems, it appears that retrofitting CMR to provide adequate utility and seismic robustness may not be possible at any reasonable cost.\nDespite these problems, if no other facility is ready to do the work of CMR by 2019, there would appear to be no other option than keeping CMR operational beyond that date, which would entail additional costs, inefficiencies, and the risk of keeping workers in a seismically fragile structure.\nGiven problems with some obvious options, are other options available? A logical construct matching tasks to buildings may help …",
"As Table 2 shows, plutonium work may be divided into tasks requiring low or high security, and tasks involving lower- or higher-hazard quantities of MAR. This overview discusses each cell.\nHigh SC/High HC: Most work on pits, whether fabricating them using foundries, performing such supporting tasks as sample prep and some MC, or destroying them using ARIES, involves large amounts of WGPu in a form that could be immediately usable by terrorists. As such, this work requires high security and high MAR. PF-4 is HC-2/SC-I, and has the necessary equipment and supporting infrastructure for pit work. PF-4 is the only building in the nuclear weapons complex with this combination of attributes. Therefore, the most efficient use of PF-4 is for tasks requiring high MAR and high security. As a corollary, pit production capacity and efficiency can be increased by moving tasks that do not require high MAR and high security out of PF-4.\nLow SC/High HC: Producing 80 ppy would require casting more hemishells, increasing MAR substantially. While LANL has not done a detailed analysis, this added MAR could raise PF-4 above the limit allowed by the Documented Safety Analysis unless countervailing steps are taken. One approach, discussed in Option 12, would be to build a new module at LANL to hold the pit foundry. A second approach, discussed in Options 6 and 12, is to move Pu-238 work out of PF-4 to a module at LANL or to another site. Pu-238 is an ideal \"candidate\" to be moved out of PF-4. It is 275 times as radioactive as Pu-239, and even though it is a small fraction of plutonium by weight in PF-4, it accounts for 40% of its MAR allowance. It is in a low security category because it would be unattractive to terrorists. Moving Pu-238 out of PF-4 would also free up 8,000 sf of floor space, which could be made available for pit work.\nLow SC/Low HC: Casting hemishells for 80 ppy would also require increasing floor space dedicated to that task. AC is floor-space intensive. At the same time, it involves low MAR; indeed, the MAR is so low, and the form of the material (typically tiny samples of plutonium dissolved in acid) of so little value for use in a nuclear weapon if captured by terrorists, that much less security is required than PF-4 provides. The same holds for MC using samples of several grams of metallic plutonium. Accordingly, AC and some MC can be performed in SC-III/IV buildings. Thus, floor space could be made available in PF-4 by performing AC and some MC elsewhere. Manufacturing 10 ppy in PF-4 would have required 2,400 sf of floor space for AC in PF-4, plus about 7,000 sf for AC in RLUOB. The amount in PF-4, 2,400 sf, is a small fraction of that building's space, but since AC for 80 ppy would require considerably more floor space and ventilation capacity, the key value of conducting AC elsewhere would be in keeping additional AC from moving into PF-4. Options for moving AC out of PF-4 are discussed in Options 7-11. Moving the PF-4 gas gun (see Figure 12 ) out of that building and into a building for AC would release 1,200 sf of floor space, and a small amount of MAR, from PF-4.\nIn sum, moving (and keeping) AC and some MC out of PF-4 would free up space but little MAR, while moving Pu-238 out of PF-4 would free up substantial space and MAR. In combination, these measures would free up much space and MAR in PF-4, making it more likely that it could produce 80 ppy and conduct other plutonium work.\nHigh SC/Low HC: This is a null set; no plutonium tasks require high security for low MAR.\nA note on vault storage space: A vault for storing plutonium is an integral part of pit production. It acts as a buffer to hold plutonium because one production task may not dovetail precisely with another. For example, pit production requires a place to hold plutonium metal that has been qualified for use in pits until it is needed, to hold hemishells until they can be joined into completed pits, and to hold completed pits until they are shipped to Pantex for incorporation into weapons. A vault is also needed to store pits from weapons that have been returned from deployment sites for surveillance. PF-4 is the only building at Los Alamos with a vault qualified to hold the large quantity of plutonium that such tasks require.\nWhen CMRR-NF was being designed in the early 2000s, SNM vault space at PF-4 and other sites was mostly filled and the final disposition of material from other sites was unknown. Accordingly, NNSA decided to add vault space to CMRR-NF. RLUOB could not have a vault because it was designed as a Radiological Facility. At issue is whether there is enough vault space in PF-4 to support production of 80 ppy.\nOver many years, the PF-4 vault has accumulated much material that is no longer needed for programmatic operations. Some, in excess to current or foreseeable needs, can be de-acquisitioned and shipped to the Waste Isolation Pilot Plant for permanent disposal, to Savannah River Site for other disposition, or to Y-12 for uranium items. Plutonium that might be needed for future operations could be stored elsewhere, such as Pantex Plant, which stores thousands of pits, or the Device Assembly Facility at the Nevada National Security Site, an HC-2/SC-I facility that has space available for storage of plutonium, or the K Reactor at Savannah River Site, which is currently used to store plutonium. Thus there are many ways to reduce the amount of material stored in the PF-4 vault, and NNSA accelerated vault cleanout as a mitigation effort associated with the deferral of CMRR-NF. Cleaning out the vault at PF-4 will make more room available for plutonium needed for production. LANL has not studied whether cleanout would provide enough space to support production of 80 ppy, but it appears likely that an effort focused on this goal and coordinated with other sites could do so. Since additional PF-4 vault space could readily be made available and it is not known how much would be needed to support production of 80 ppy, this report does not discuss increasing available vault space as a separate option.\nAs a first step in moving through the options presented in Table 2 , perhaps NNSA could …",
"Pu-238 accounts for 40% of the MAR allowance at PF-4. Increasing pit production to 80 pits per year (ppy) would increase MAR, and the increased pit foundry work, combined with Pu-238 work and other work, could exceed the MAR limit permitted for PF-4. One option would be to move Pu-238 work out of PF-4, whether to a module connected to PF-4 or to another site. While LANL is DOE's center of excellence for plutonium, Pu-238 work is readily separable from Pu-239 work because the two isotopes have very different properties and applications. Pu-239 is used in weapons and might be used as mixed oxide fuel (a mixture of oxides of Pu-239 and uranium isotopes) for nuclear power reactors, while kilogram quantities of Pu-238 are used to generate heat for conversion to electric power for defense and space missions.\nIn a report of May 2013, DOE examined several options for processing Pu-238 for fabrication of radioisotope power systems. One was to upgrade the existing line in PF-4; however, this would not address the possibility of reducing Pu-238 MAR in order to release MAR for weapons work. The report also considered performing Pu-238 work at Idaho National Laboratory (INL) or Savannah River Site (SRS). It did not address the LANL proposal to build modules connected to PF-4, one of which might perform Pu-238 work.\nINL currently conducts operations with clad heat sources of Pu-238. It operates the Space and Security Power Systems Facility, which further encapsulates the Pu-238 heat sources produced by LANL, mates them to the power systems that convert their heat to electric power, tests the resulting system, and delivers them to users.\nINL states that all current LANL Pu-238 operations could be transferred to INL, such as recovery, purification, and source fabrication, and that INL would have a capacity of processing 5 kg per year. The option to bring Pu-238 source fabrication to INL would use an existing building, CPP-1634, that was built in 1993 as an HC-2 building and was since downgraded. It would have to be upgraded back to HC-2 in order to handle 5 kg of Pu-238 per year. INL would also build an addition to CPP-1634 that would more than double its size. The upgrade would require modifying the safety analysis report and upgrading the building's safety systems (such as ventilation) and equipment (such as gloveboxes) to be consistent with the hazards and operations proposed. Pu-238 in quantities of up to 16 kg is SC-III because it is unattractive for use in making a nuclear weapon. CPP-1634 would have more security than is needed to meet SC-III requirements because it would be within the INL security perimeter.\nThe DOE report noted several advantages of establishing this capability at INL, including a new design that minimizes down time and maintenance cost, and process improvements that minimize operational costs and worker exposure and improve product quality. Also, locating the program in a facility owned by DOE's Nuclear Energy program, which is responsible for plutonium-238, would allow \"more control and lower operational costs as compared to operating within TA-55 that seems to have large overhead costs resulting in high operational costs.\" Drawbacks include \"inexperience with Pu-238 processing operations,\" \"loss of co-location and leveraging with related NNSA program,\" risk due to uncertainty in safety requirements because \"no new Pu-238 processing facility has been constructed in many years,\" and \"risk of moving Pu-238 operations away from DOE's plutonium operations center of excellence,\" that is, LANL.\nThere is also an SRS option. From the mid-1960s to early 1980s, SRS produced Pu-238 in its reactors by bombarding neptunium-237 target tubes with neutrons. It then dissolved the target tubes, separated and purified Pu-238 in H Canyon, turned the Pu-238 into plutonium oxide in HB-Line, pressed that material into heat sources, and clad them in iridium in the 235-F facility. In 1983, the last neptunium-237 targets were irradiated and in 1985-1986, Pu-238 operations were moved to LANL. Subsequently, the last SRS reactor was shut down in 1993. Work is underway to develop the capability to produce Pu-238 at Oak Ridge National Laboratory (TN).\nSRS has two buildings that could be used for Pu-238. Its H Canyon is a large, highly shielded concrete structure, approximately 1,000 feet long by 120 feet wide by 75 feet high, that began operations in 1955. It was built to process irradiated targets and fuel rods from SRS reactors for various nuclear materials. These targets and fuel rods had very high levels of radioactivity, so they required processing in a facility that was heavily shielded and remotely operated. As such, it is off limits to personnel, and all material is processed by moving it through pipes or handling it with a remotely operated crane. It is the only remaining U.S. facility that is heavily shielded and remotely operated and that can chemically process large quantities of radioactive material, such as spent fuel rods. It is currently operational, processing irradiated fuel stored in an underwater pool at SRS. SRS also has the HB-Line, which is built atop H Canyon to provide a work space with heavily shielded gloveboxes for work on Pu-238. It became operational in the late 1980s. It is currently operating, but its Pu-238 lines would have to be restarted, which could take three or four years. A third building at SRS that was used in the Pu-238 program, Building 235-F, contained a process line that fabricated heat sources from Pu-238 oxide. However, the facility has not been operated since 1984 and is not part of the current proposal due to high levels of contamination.\nIn the SRS plan, Pu-238 could arrive at the plant as irradiated target tubes of neptunium-237 from a DOE reactor, as unpurified Pu-238 oxide from Russia, or as scrap Pu-238 oxide. These oxides would be dissolved in nitric acid in the HB-Line. This solution would be transferred through pipes to H Canyon, where it would be purified by removing other chemical elements. The purified Pu-238 solution would be transferred back to HB-Line, where plutonium would be precipitated out of solution and then turned into plutonium oxide, a solid. In an option in the SRS plan, a new Plutonium Testing and Processing Facility (PTPF), consisting of prefabricated hot cells (capable of handling highly radioactive material) and gloveboxes, would be installed in H Canyon. This facility would press plutonium oxide into pellets, which would be fabricated into heat sources, clad in iridium, and sent to INL, where they would be mated with power generating equipment and then delivered to end users.\nThe DOE report noted several advantages and disadvantages of this option. H Canyon and HB-Line can process a wide quantity range of Pu-238, from 1 to over 30 kg per year. These facilities are built to high safety standards. Infrastructure requirements are well understood, such as environment, safety, and health, material control and accountability, and waste management; there is also an AC capability. On the other hand, the length of time that missions will support H Canyon is not clear because \"its mission length is defined by a campaign by campaign basis.\" Operations there are planned until 2018-2020, with operations beyond that time uncertain.\nFurther, required production \"[does] not necessitate a large throughput capacity. Thus, revitalization of the facilities may not be justified.\" And without a long-term mission, there is no clear advantage to building PTPF. At issue: There is value to the weapons program in removing Pu-238 from PF-4. Would processing Pu-238 be a long-term mission that would justify, and that might contribute funding to, PTPF?\nThe DOE report compared cost and schedule estimates for these two options, as follows.\nFor the INL option, $12 million for technology development taking three years, and $110 million to $260 million for general-purpose heat source fabrication capability, taking five years. For the SRS option, $28 million to $45 million for plutonium purification revitalization, taking 3½ to 4½ years, and $125 million to $170 million for PTPF, taking four to five years. Combining these figures, the INL option would cost $122 million to $272 million and take eight years, and the SRS option would cost $153 million to $215 million and take 7½ to 9½ years.\nIt must be emphasized that these estimates are preliminary and are not based on extensive analysis.\nDNFSB commented that \"H-Canyon is exhibiting degradation of systems and structures that if not addressed, could challenge safe operations and pose a risk to facility workers. … DOE completed repairs to address some of the identified deficiencies … There are some safety-related repairs that have not yet been completed.\"\nHaving addressed Pu-238, this report now turns to options to address analytic al chemistry …",
"Lawrence Livermore National Laboratory (LLNL) has a large building, Building 332, that is part of its \"Superblock\" complex. Building 332 was built for plutonium work. One wing (\"Increment 1\") was built in 1961; another wing (\"Increment 3\") was built in 1975. Increments 1 and 3 are laboratory buildings; Increment 2 is the control room, without laboratory space. Building 332 was a Hazard Category 2/Security Category I facility, like PF-4, so it was used to handle hundreds of kilograms of plutonium. Its ventilation systems (including fans and HEPA filters) and electrical systems have been updated in the past decade. Even though Livermore is in a seismically active area, Building 332 was designed to take into account seismicity, and an analysis showed that it does not require an upgrade to make it more seismically robust. Its gloveboxes (new and retrofitted) are reinforced so as not to fall over in an earthquake.\nBuilding 332 remains an HC-2 building, but its plutonium quantity is limited by its Security Category. It was SC-I. To reduce vulnerability and security costs, NNSA consolidated SNM to fewer facilities at fewer sites. As part of that plan, LLNL removed all SC-I/II quantities of SNM from the lab, a task completed in September 2012. Building 332 is now SC-III, which limits it, as a first approximation, to 400 g of plutonium metal and 16,000 g of plutonium in solution. Plutonium in solution poses much less risk—is less attractive to terrorists—than metallic plutonium, which is why much more plutonium is allowed in solution than in metal form.\nBuilding 332 has ample space for AC work. It has 24,000 total sf of laboratory space, as compared to 19,500 sf for RLUOB and 22,500 sf in the CMRR-NF design. Some space is being used to fabricate plutonium samples for experiments that subject plutonium to impact (such as from a gas gun projectile) and for material processing studies. LLNL is currently using 5,000 sf for AC and MC, and could make another 6,000 sf available. Building 332 has a substantial excess of air handling capacity, which would support the use of open-front hoods. LLNL believes that Building 332 has sufficient air handling capacity to support AC for 80 ppy.\nOnce analyzed, samples would be processed as waste. For final disposition, waste is shipped to WIPP. Since WIPP does not accept liquids, liquid waste is solidified by mixing it with cement. LANL and LLNL differ in how they would handle waste. LANL has the capability to recover plutonium from liquid samples and to process the waste stream, solidifying it for shipment to WIPP. LANL uses AC to support these operations. LANL also uses AC to send liquid waste to LANL's Radioactive Liquid Waste Treatment Facility because that facility places requirements (such as the amount of mercury) in the waste it accepts for treatment. LLNL does not have these capabilities, and would not perform AC on material (liquids and solids) to be disposed of as waste. However, the liquid waste generated by the AC for 80 ppy would be very much less than the waste that LANL generates for various other missions, so LLNL holds that simply cementing the liquid waste would be a satisfactory way to prepare its liquid waste for shipping.\nThere are several potential drawbacks. All DOE sites that handle plutonium have their own AC operations rather than shipping samples to another site because AC is a basic capability required for many purposes in addition to pit manufacturing, such as measuring quantity of material for material control and accountability, recovering plutonium from waste streams, and for various types of pit work including development of processes for fabrication, qualification of processes, and certification. At issue is whether LLNL would have the needed capacity to support AC for 80 ppy while performing AC for other missions. Having LLNL perform the AC could add schedule risk to any LLNL program that needed AC.\nWhile commercial carriers have shipped plutonium for some years, there might be public concern about shipping many hundreds of samples per year. As a related point, while LLNL could stay within MAR limits if plutonium shipments arrived weekly, a LANL engineer observed, \"I have been associated with pit manufacturing for several decades and it hasn't ever reached steady state yet. The notion of standardized delivery dates is inconceivable to me. The manufacturing process is too fragile and is constantly interrupted leading to feast or famine sample delivery.\" Further, it takes five days to dissolve a certain type of plutonium samples (plutonium oxide fired at very high temperature). Might these problems result in exceeding MAR limits?\nPerforming all AC work in support of pit production would bring more plutonium work to LLNL. This would have the advantage of distributing plutonium expertise more widely in the nuclear weapons complex. LLNL currently has only four chemists doing AC on plutonium. This option would require adding staff and equipment, strengthening LLNL's capability, which could prove useful for peer review of plutonium issues as well as for AC. On the other hand, LANL is the center of excellence for plutonium in the nuclear weapons complex, and this option would dilute LANL's plutonium capability. According to a LANL staff member,\nIf all DOE sites were making steel, there would be ample opportunities to consolidate AC using commercial vendors. With plutonium, AC is too inherent to processing for one site to be completely reliant on off-site AC measurement. Manufacturing war reserve pits demands the highest quality level and the broadest suite of analytical techniques. Since LANL has the country's main plutonium facility, it would need substantial in-house AC capability, and there is inherent capacity in the capability. The logistics of a split-capability mission (manufacturing at LANL, AC elsewhere) does not seem amenable to a smoothly operating enterprise. That said, LANL's 2012 \"60-day study\" acknowledged that LLNL could perform some AC when LANL needed additional capacity.\nSavannah River Site (SRS) offers another option. It has been involved with plutonium for many decades. It had five large reactors for producing plutonium, the first of which began operations in 1953. In total, these reactors produced 36 metric tons of plutonium, most of which was WGPu, with the largest annual amount, 2.1 metric tons, produced in 1964. All the plutonium produced had to be characterized, which required AC. Because SRS supplied plutonium to Rocky Flats Plant, SRS needed an industrial-scale AC capability to characterize the plutonium for the weapons program and to perform AC for other tasks, such as for Pu-238. Part of this capacity is currently unused, but SRS retains the infrastructure and equipment.\nWhile SRS no longer produces plutonium—an SRS reactor last produced plutonium in 1988—SRS continues to conduct a great deal of plutonium AC. It has repurposed its K Reactor, which used to produce plutonium, to store tons of plutonium from across the nuclear weapons complex and elsewhere. For example, plutonium from Rocky Flats and the Hanford Reservation (which used to produce plutonium) was moved to the K Reactor, as was plutonium de-inventoried from LLNL in order to move Superblock to Security Category III, plutonium oxide produced from retired pits by ARIES at PF-4, and plutonium from foreign sources. More is being added on an ongoing basis. All this plutonium requires AC in order to characterize the isotopic composition and impurities of plutonium stored in drums at K Reactor. For example, AC would detect chlorides and fluorides in the plutonium mixture that would corrode storage drums. AC is also used for characterizing plutonium produced at HB-Line for use in mixed oxide (MOX, a blend of plutonium oxide and uranium oxide) fuel for nuclear reactors.\nAs with many industrial operations, SRS nuclear materials processing facilities operate 24/7, so SRS conducts AC 24/7 because some processing operations require a short turnaround time for AC, and personnel must be available at all times in case of problems.\nSRS currently uses F/H Laboratory (the laboratory that supported H area, where H Canyon and HB-Line are located, and F area, which also has a canyon and a B-line) for AC. F/H Laboratory (see Figure 10 ) is large, 80,000 sf as compared to 60,000 sf for PF-4 and 19,500 sf for RLUOB. Also at SRS is Building 773-A, which is larger than F/H Laboratory. Since both labs were sized for a time when the United States produced many thousands of nuclear weapons, they have between them a great deal of excess capacity in terms of hoods and gloveboxes for AC. SRS believes that F/H Laboratory, with Building 773-A for redundancy or a spike in workload, could handle the AC for 80 ppy, though they would need some new instruments and SRS would have to hire perhaps 20 technicians and several analytical chemists. Both labs have a very large ventilation capacity. For example, F/H Laboratory is equipped with six large fans, but SRS calculated that two of them could be shut down and the others would still provide sufficient ventilation capacity. SRS could perform the AC and Pu-238 missions concurrently, as they would use different facilities—H Canyon and HB-Line for Pu-238, and F/H Laboratory, Building 773-A, or both for AC.\nSRS has worked closely with LANL on AC. SRS is part of LANL's quality assurance program. LANL sends SRS metal samples once a year for SRS to perform AC on as part of the Plutonium Metal Standards Exchange. In that program, multiple sites, including the United Kingdom's Atomic Weapons Establishment, exchange plutonium samples and perform AC on them as a check on each other's AC capabilities. LANL, through its accreditation program, has also qualified SRS to perform the AC for plutonium to supply the MOX plant.\nThe drawbacks of conducting all AC for 80 ppy at SRS are similar to those discussed for LLNL, though LANL would not be opposed to conducting some AC at another site if it needed extra capacity to handle a spike in workload, or on a routine basis if production increased to 80 ppy.\nMany plans proposed over the past two decades for plutonium work have sought to consolidate that work at a single site . If it is deemed desirable to do as much plutonium work as possible at LANL, what about a deeper look at other LANL options, starting with an existing building …",
"Under this option, PF-4 would produce pits and would do sample preparation, waste disposal, and MC, while RLUOB would conduct AC on 26 g of WGPu, the most allowed by the Hazard Category material limit for a Radiological Facility. While RLUOB is ideally suited for AC, this option suffers from one significant flaw: 26 g of WGPu is nowhere near enough to do the AC to support 80 ppy, and PF-4 does not have the space to do most of the AC, all of the MC, all of the pit fabrication, other pit work, and work on other plutonium projects.\nWhile RLUOB as is could not conduct the AC/MC needed under current regulat ions, would it be possible to …",
"Recently developed Los Alamos plans for PF-4 include upgrading wings of the building for Pu-238 operations, pit disassembly, pit fabrication, and other programs. Of particular importance are the upgrades to the pit fabrication wing of the building. These upgrades will remove currently unused gloveboxes from the manufacturing space, consolidate laboratory space, and improve the equipment layout to enhance process flow. These steps would increase PF-4's pit production capacity. CMR, RLUOB, or both would conduct some AC necessary to support pit manufacture.\nSpace consolidation offers an opportunity to repurpose space to add equipment to achieve capacities of up to 80 ppy for several, but not all, flowsheet operations. (A \"flowsheet\" is a sequence of operations that must be followed precisely to make a pit.) The capacity of other operations could be boosted in other ways, such as by adding shifts. The challenge is determining what actions are needed to ensure that every operation in the flowsheet could handle up to 80 pits per year because there is not enough space in PF-4 to scale all operations, including support operations like AC, up to a capacity of 80 ppy.\nLANL has not analyzed space-fit issues for producing 80 ppy. But based on comparison to past analyses, it seems likely that achieving a capacity of 80 ppy in PF-4 is possible if LANL could fully use the laboratory space in RLUOB. The usefulness of that space, 19,500 square feet, is currently limited by a requirement that RLUOB can hold only 26 g of WGPu, the volume of two nickels. (See Figure 11 .) Increasing that limit to 1,000 g would provide enough MAR in RLUOB for the AC to support production of 80 ppy, as well as some MC. It is not clear that RLUOB has sufficient floor space to do that much work. However, as discussed in Appendix F , it seems likely that RLUOB with a MAR of 1,000 g WGPu, plus space made available in PF-4 through reconfiguration (8,000 sf) or by moving out Pu-238 (a separate 8,000 sf), plus improving pit fabrication operations (such as by using multiple shifts or improving efficiency of equipment or processes), would provide enough space and free up enough MAR to produce 80 ppy and to perform the AC needed to support that level of production.\nTo hold 1,000 g WGPu while complying with regulations, RLUOB would have to be converted to an HC-3 building. There are several advantages. So doing would support LANL's ability to perform the pit work that DOD requires. It would permit LANL to move AC equipment from CMR, enabling that building to halt plutonium operations. It would permit LANL to free up floor space in PF-4 by moving out equipment for AC and for some MC (see Figure 12 ), and to make operations more efficient, such as by moving out a large MC instrument now placed in the middle of an AC room.\nA drawback is that it would take a substantial effort to convert RLUOB to HC-3. As a Radiological Facility, RLUOB is not subjected to federal, state, local, and laboratory requirements for an HC-3 building. To comply with these requirements, many tasks would have to be conducted; Appendix D lists about 100 of them. Many, such as preparing an environmental assessment and perhaps an EIS, developing safety design reports, developing engineering functions and requirements documents, developing an updated fire hazards analysis, and developing a final material control and accountability plan, would require much time and effort; others would require less effort. But the work would not stop with preparing these documents because many would lead to physical modifications to RLUOB. For example, an engineering\ntask listed in Appendix D —\"Develop design and analysis for seismic upgrades as required. RLUOB safety Structure, System and Components (SSCs) are not currently required to be operational following a seismic event per [NNSA's Los Alamos Field Office] direction\"—could easily lead to seismic upgrades to RLUOB unless a decision were made to accept the risk in light of cost-benefit considerations.\nLANL has not estimated the cost or schedule to complete these tasks, and the upgrade could prove to be expensive. However, given the historical record of cost growth, schedule delays, cancellations, and deferrals in constructing new plutonium facilities, upgrading RLUOB to HC-3 would probably be a quicker and less costly way to obtain the needed capacity than building a new building.\nRegulations limit the quantity of WGPu that RLUOB can hold to the volume of two nickels . What would happen if that limit were not applied to RLUOB ?",
"Many regulations impose burdens on the nuclear weapons complex, including plutonium facilities, that to some analysts may seem disconnected from end goals, such as reducing dose in the event of an accident to a level below a specified threshold. Two quotes are instructive; many more could be added. SEAB stated in 2005,\nThe DOE has burdened the Complex with rules and regulations that focus on process rather than mission safety. Cost/benefit analysis and risk informed decisions are absent, resulting in a risk-averse posture at all management levels.\nAnd an NNSA report of 2006 stated that the complex of that time had\nA culture that sometimes seeks to eliminate all risks at an unsustainable cost no matter how small the probability of occurrence and to substitute oversight recommendations for responsible line decisions.\nHazard Category regulations limiting the amount of plutonium in a building are intended to limit the dose to emergency responders, collocated workers and the general public. However, a calculation in Appendix B shows that if RLUOB held 1,010 g of WGPu and a Design Basis Accident occurred in which the building collapsed, the dose for a collocated worker (CW) and a maximally-exposed offsite individual (MOI) would be far less than the guideline set forth in DOE regulations. Specifically, the dose to a CW would be 10.41 rem, vs. a guideline of 100 rem, and the dose to an MOI would be 0.49 rem, vs. a guideline of 5 to 25 rem. And as discussed under \" Increasing Safety ,\" the probability and consequences of a DBA can be reduced in many ways. Accordingly, Option 10 focuses on how RLUOB might be used for AC/MC in support of pit production if Congress were to waive the limit of 38.6 g Pu-239E (26 g WGPu) for RLUOB.\nWhile the option has not been studied, it appears, as noted under Option 9, that a MAR limit of 1,000 g WGPu would be enough for RLUOB to perform the AC needed to support 80 ppy, as well as some MC tasks, though more floor space might be needed. Appendix F shows the space breakout for AC under several plans. CMRR-NF would have had about 22,500 sf of lab space. Of that, 9,750 sf would have been used for AC. Another 6,750 sf in RLUOB would have been used for AC. The current plan, with the 26 g WGPu limit, is to use 10,500 sf in RLUOB and 5,600 sf in PF-4 for AC. However, most AC work is less efficient if done in PF-4 than in RLUOB because PF-4 uses gloveboxes and because PF-4, which is SC-I, requires particularly rigorous security measures. If RLUOB could hold 1,000 g WGPu, 15,000 sf could be used for AC, 3,500 sf for MC, with the remaining 1,000 sf available for support activities. PF-4 could use 2,400 sf for sample preparation, which uses a large amount of plutonium and is done in a small lab room already set up for this purpose in PF-4.\nOption 10 may merit further study because, if it proves feasible, it would offer advantages that address concerns Congress has raised for many years. Option 7 (AC at LLNL or SRS) would offer some of these advantages as well.\n1. Option 10 would reduce cancellation risk. The history of pit production efforts includes cases where decisions by Congress or the Administration have halted a major plutonium building after planning had started but before construction had begun. Conducting pit production support tasks in a building that already exists would reduce this risk. 2. Option 10 would greatly reduce the risk of a plutonium building being built, found unsuitable, and torn down. As described in \" Two Other Failed Attempts ,\" this situation occurred with Building 371 at Rocky Flats Plant and the Nuclear Material Storage Facility at LANL. 3. Using RLUOB would reduce the risk of large cost growth. Congress is concerned about NNSA's record of cost growth in its nuclear facility construction projects, which may be why Congress, in the FY2013 National Defense Authorization Act, P.L. 112-239 , Section 3114, capped spending for UPF and CMRR-NF, and why Section 3112 of P.L. 113-66 , FY2014 National Defense Authorization Act, established a Director for Cost Estimating and Program Evaluation in NNSA. RLUOB has much lab space, and procuring added equipment would not add to the marginal cost if such equipment would be procured for another nuclear facility. Converting more space in RLUOB, strengthening it, or making other changes to reduce risk and increase efficiency would probably not cost as much as a new facility. 4. Equipping RLUOB for AC and some MC would be the fastest way to augment capacity. RLUOB has an infrastructure to support work on small samples, some lab space is already equipped, and empty lab space could be equipped. The capacity should be available before it is needed, providing time to work out process kinks. In contrast, adding equipment to PF-4 would be difficult, costly, and time-consuming because changes to PF-4, an HC-2 building, must comply with many requirements and workers must undergo security checks, and space may not be available. Minimizing the risk of delay is also of value because delay typically increases cost and could disrupt the schedule for weapons work. 5. Section 3114 of the FY2013 National Defense Authorization Act, P.L. 112-239 , requires the Secretary of Energy to construct a building to replace the functions of CMR at a cost not to exceed $3.7 billion. If RLUOB could replace the functions of CMR while avoiding the need to build CMRR-NF, it would save the cost of the latter facility, which NNSA estimated at between $3.7 billion and $5.9 billion in its FY2012 budget request. The savings could be higher. A five-year deferral, NNSA estimates, would add two years to the time to complete CMRR-NF, and delay typically adds cost. CMRR-NF might be canceled in favor of a modular strategy, which Section 3117 of the FY2014 National Defense Authorization Act authorizes. The two modules referenced in Section 3117 would presumably be less costly than CMRR-NF, especially as they would be between 3,000 sf and 5,000 sf, vs. 22,500 sf for CMRR-NF. However, modules would be HC-2 and at least SC-II. As such, the cost of two modules could reach the billions of dollars. 6. Using RLUOB would avoid or minimize design and construction risks, such as design errors. These risks are different than cost and schedule risks, though they may lead to such risks. A case in point from 2013 occurred with UPF. According to the Senate Appropriations Committee, \"Most recently, a space fit issue that required raising the roof of the building by 13 feet to fit critical equipment resulted in more than $500,000,000 in additional costs to U.S. taxpayers.\" 7. As Appendix E shows, RLUOB is much more seismically resilient than CMR. Option 10 could permit NNSA to halt work in CMR by 2019. It might even permit halting this work before then, reducing the time in which CMR poses a safety hazard to its workers and the public. If no other facility is in place by 2019 for AC and some MC, it might be necessary to extend CMR's service life beyond then. However, there is no assurance that that could be done, which would make it harder to meet the 2021 pit production goal. As a cautionary example, the redesign of UPF might push completion of that facility past the date when Building 9212 can no longer be kept in service. 8. Option 10 could make 1,200 sf of lab space available in PF-4 by enabling the gas gun (see Figure 12 ) to be moved out. The target is typically 20-25 g of WGPu. With a MAR limit of 26 g WGPu for RLUOB, the target would take up so much MAR that much other plutonium work in RLUOB would have to be stop and the material containerized when a gas gun experiment was in progress. A MAR limit of 1,000 g of WGPu would avoid that problem. 9. Option 10 would increase efficiency in other ways. For example, PF-4 houses a highly sensitive spectrometer that had to be placed near an outside wall to minimize vibrations. The only suitable space available was in the middle of a room filled with gloveboxes. Moving it to RLUOB would remove clutter from the room. At the same time, it would be easier to use the instrument in a laboratory room outfitted to accommodate it. 10. NNSA anticipates that upgrades will enable PF-4 to remain in service until 2039. Based on experience with other plutonium buildings, RLUOB, which was completed in 2009, should have at least a 50-year service life. If PF-4 and RLUOB can remain in service for another quarter-century, Congress may be able to defer decisions on other plutonium facilities for at least a decade, and defer substantial expenditures on such facilities longer than that. 11. Even if NNSA ultimately moves high-MAR activities from PF-4 to modules, as discussed in Option 12, it would still be desirable if not necessary to use RLUOB for AC to support production of 80 ppy because RLUOB, unlike PF-4 or the modules, is well suited for low-MAR work that uses a substantial amount of floor space. Thus upgrading RLUOB would likely be a component of the module plan, in which case any difficulties attendant upon upgrading RLUOB would be present under the module plan. 12. Placing the pit program on a fiscally and politically sustainable path soon would avoid years of uncertainty for the entire plutonium program, providing a long-term foundation for the rest of the program. That would help NNSA plan that program, other facilities, disposition of excess nuclear material, and budgets. 13. Upgrading existing buildings, rather than building new buildings or transporting material to other sites as part of pit production, should minimize environmental impact. As a result, compliance with NEPA should be simpler and an EIS prepared to comply with the spirit as well as the letter of that law should be less vulnerable to a successful legal challenge.\nAt the same time, there are several concerns about this option.\n1. RLUOB might collapse in an earthquake. The building was designed to have a 50% chance of surviving the 1995 design basis earthquake (DBE), but the 2009 DBE is more powerful. The lowest two floors of RLUOB (basement, utilities; and first floor, laboratory) are built of thick reinforced concrete, and the second floor (lowest office floor) has thick concrete columns; all are seismically robust. The upper two office floors are designed to the structural requirements of an emergency response building, like a hospital or fire station. While the upper two floors are less robust than the lower floors, they are much sturdier than a standard office building, and its seismic robustness could be increased through several methods discussed in \" Increasing Safety .\" (The \"utility\" component of RLUOB is the Central Utility Building, separated from RLUOB by about a foot.) It appears that detailed analysis would be needed to determine the seismic performance of RLUOB as is, whether a collapse of the office would breach the laboratory ceiling, what reinforcements would be suitable, how effective they would be, and what they would cost. 2. Non-governmental organizations and members of the public might be concerned about any efforts to relax standards pertaining to nuclear facilities. Safety and other standards exist for a reason; would relaxing them add risk, and if so, by how much? Some might oppose introducing more than 26 g of WGPu into RLUOB on grounds that so doing could pose a direct threat to the surrounding area in the event of an earthquake that collapsed the building. 3. Relaxing standards for one building could set a precedent for so doing for other nuclear weapons buildings or other projects more generally. 4. Some might fear that this project could open the way for other plutonium projects at Los Alamos. As discussed in Option 12, the laboratory is considering a modular option, with a tunnel built to connect PF-4 and RLUOB and reinforced-concrete underground rooms or \"modules\" built off the tunnel for high-MAR plutonium operations. In this view, using trucks to transport samples between PF-4 and RLUOB would forestall or delay the modular option. Others might favor the tunnel in part because it would facilitate the modular option. 5. Some may fear that NNSA might not do an adequate EIS. One of the tests for a Categorical Exclusion in DOE regulations (10 CFR 1021.410) is\n(3) The proposal has not been segmented to meet the definition of a categorical exclusion. Segmentation can occur when a proposal is broken down into small parts in order to avoid the appearance of significance of the total action. The scope of a proposal must include the consideration of connected and cumulative actions, that is, the proposal is not connected to other actions with potentially significant impacts (40 CFR 1508.25(a)(1)), is not related to other actions with individually insignificant but cumulatively significant impacts (40 CFR 1508.27(b)(7)), and is not precluded by 40 CFR 1506.1 or § 1021.211 of this part concerning limitations on actions during EIS preparation.\nSimilarly, CEQ regulations (40 CFR 1508.7) define \"cumulative impact\" as follows:\n\"Cumulative impact\" is the impact on the environment which results from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency (federal or non-federal) or person undertakes such other actions. Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time.\nAn EIS does not meet regulatory requirements if it avoids considering all reasonable alternatives, or if only a segment of a proposed action is analyzed, or if the cumulative impacts of multiple actions are not taken into account. \"Up-equipping\" RLUOB (adding equipment so it can handle more AC/MC to support pit production), building a tunnel to connect RLUOB and PF-4, building one module, building a second module, and building additional modules could easily be segmented. While the modules would be HC-2, and thus significant by themselves, up-equipping RLUOB and building a tunnel to connect it to PF-4 might be seen as \"small\" actions that would not appear significant. But the cumulative impact of those small actions plus modules would be much larger than just an up-equipped RLUOB plus a tunnel. Further, since there is a possibility of building modules given that the FY2014 National Defense Authorization Act authorized NNSA to spend funds on a modular building strategy, once certain conditions have been met, the EIS would need to analyze the impact of that alternative, including the entire suite of projects involved (such as the tunnel), before committing to any of them. 6. RLUOB, as currently planned, would dedicate a substantial amount of laboratory space to unclassified research on plutonium. This research could explore such areas as basic properties, nuclear forensics, nuclear power plants, and Pu-238. The space would be open to individuals without clearances. Providing space for postdoctoral fellows to conduct plutonium research would benefit LANL by attracting potential recruits to the lab, and discoveries made by these individuals or foreign nationals could benefit the weapons program. If RLUOB is permitted to have 1,000 g of WGPu in order to support the weapons program, most if not all of the unclassified laboratory space would be converted to classified space.\nSince the laboratory space at RLUOB could perform AC and some MC work, but questions remain about seismic robustness in light of the possible collapse of the office floors, would it be possible to …",
"A concern with RLUOB, even with regulatory relief, is that the office component could collapse in an earthquake and breach the ceiling of the laboratory, releasing plutonium. A simple way to avoid that problem would be to build an \"RLB,\" or Radiological Laboratory Building. Construction of RLUOB was completed in FY2010. The FY2012 NNSA budget request shows the total project cost of the facility as $164.0 million, including the office floors and the Central Utility Building (CUB), and another $199.4 million for installing equipment. An RLB built as a copy of the laboratory space in RLUOB should cost considerably less (when adjusted for inflation) than RLUOB because the office structure would be eliminated, the plans for the lab space already exist, and lessons learned from RLUOB could be applied to facilitate construction. The CUB was intended to provide utilities to CMRR-NF, a larger building than RLUOB, as well as to RLUOB; CUB should thus have the capacity to support most of RLB's needs. If RLB were built as a copy of the basement and laboratory floor of RLUOB, it would need regulatory relief in order to hold enough plutonium to do the AC/MC work needed to support 80 ppy.\nRegulatory relief would be unnecessary if RLB were to be built as an HC-3 building. However, meeting HC-3 standards would result in a substantial cost increase for paperwork, studies, and testing to certify the same equipment (fans, filters, fire suppression equipment, etc.) because the standards would be much higher. Another issue for RLB is that that structure would probably be sited in the location previously planned for CMRR-NF. In that case, building it there could preclude modules. Some would see that as a plus, others as a minus.\nIf regulatory relief for RLB were not forthcoming, or if an HC-3 RLB proved too costly for a building holding 1 kg of WGPu, or if RLB plus PF-4 did not provide enough space or MAR for all the pit work that would be needed to produce 80 ppy, another approach would be to …",
"Los Alamos's preferred approach to the plutonium strategy is a three-part plan: maximize use of RLUOB, repurpose space in PF-4, and build modules linked to PF-4. This section discusses the modules and their pros and cons.\nIn concept, the modules would be like \"RLB\" in that they would be seismically reinforced laboratory-only space. There would be key differences: the modules would be completely buried instead of mostly aboveground, would be designed and built as HC-2, would do high-MAR work instead of AC/MC, and each would be for a single purpose.\nPF-4 is built as modules under one roof. They all utilize the infrastructure and supporting systems of PF-4, such as shipping, receiving, waste management, nondestructive assay, entry control, and security, but are designed so plutonium accidentally released in one room would be contained within that room. The LANL approach envisions building a tunnel from PF-4 to RLUOB with modules connected to the tunnel. The first modules would be for tasks involving large amounts of MAR: Pu-238 processing, a pit foundry, or processing plutonium dissolved in acid. Moving these tasks out of PF-4 would remove about 70% of the MAR in PF-4. So doing would make more MAR available for other tasks involving MAR while staying within the limit prescribed for PF-4.\nA key lesson learned from seismic simulation studies of PF-4 and RLUOB is that the larger the dimensions of the structure, the greater the seismic loads imparted to equipment anchored to the floor. As currently envisioned, modules, at 3,000 to 5,000 square feet, would be smaller than RLUOB (19,500 sf) and PF-4 (60,000 sf). They would be lower in height and narrower than those buildings and made of thick concrete heavily reinforced with rebar. They would be constructed in the 3-acre excavated area between RLUOB and PF-4 that was dug out for CMRR-NF (see Figure 4 ) and then buried with a special concrete that matches the density of the rock (called tuff) on which the modules would sit. By matching the density of the tuff, a seismic wave would pass through the concrete more smoothly, reducing its impact on the modules. Surrounding the structure with concrete would reinforce the walls. A buried structure has the added advantages of minimizing concerns regarding securely transporting plutonium between the modules, PF-4, and RLUOB, and avoiding such natural phenomena as fires and high winds.\nLos Alamos recognizes that the \"big box\" approach—building a single large building like PF-4 or CMRR-NF—no longer appears politically and fiscally sustainable over the decades required to plan and build such a facility. As Senator Lamar Alexander said, \"if the NNSA does not find a more effective [way] to deal with design of these large multi-billion dollar facilities that NNSA builds it's going to lose congressional support for those facilities.\" Part of the problem is that a big box design is typically too ambitious and too cautious at the same time. It is too ambitious because when there is an opportunity to build a plutonium facility only once in 25 or 50 years, there is a tendency for the design to include everything that might possibly be needed over the building's life. It is too cautious because it must comply with a vast and growing body of regulations, often of increasing specificity. Meeting goals and requirements simultaneously is difficult, a difficulty compounded because uncertainties concerning goals and requirements increase the further out projections are made.\nAccordingly, in this view, a new approach is needed. Los Alamos argues that modular construction offers numerous advantages. Since modules would be much smaller than large buildings, they could be built faster and at lower cost. Since each module would house a single operation, safety planning could be specific to each module instead of, as at present, accommodating the highest-risk type and quantity of material. Modules could be built as needed, rather than having to incorporate in a single building all the functions that it might need to perform at some point during its service life. The modular approach, it is argued, would permit a steady level of funding rather than the large spikes of funding involved with construction of a large building like CMRR-NF, making the funding profile more predictable for Congress and the Administration. Design and construction of each module would benefit from lessons learned from previous modules, reducing cost. Reducing MAR in PF-4 would extend that building's service life if future regulations were to reduce its permitted MAR, as was the case with CMR.\nWhile the modular building strategy is, at this point, only a concept, it is gathering steam. Preliminary design work, cost estimates, and schedule estimates are underway and, as noted, the FY2014 National Defense Authorization Act authorizes this strategy. Nonetheless, several questions bear on its desirability:\nIs it needed? Could PF-4 plus RLUOB with regulatory relief produce 80 ppy and perform other plutonium tasks without the modules at acceptable risk levels? Would moving Pu-238 work to INL or SRS obviate the need for modules? Pu-238 accounts for 40% of MAR permitted for PF-4, and 8,000 sf of lab space. Would moving it out free enough MAR and space for PF-4, especially in conjunction with RLUOB, to do the added pit work needed to reach 80 ppy? Is there a need to move 70% of the MAR out of PF-4? Is it needed now? Future requirements for plutonium work might require added space. But NNSA projects that the TA-55 Reinvestment Project will extend the service life of PF-4 to 2039, for a total of 61 years, a projection not contingent on building modules. If RLUOB has a 50-year service life, it could remain operational until 2059. Can a decision on modules be delayed? While modules might save money by drawing on PF-4 infrastructure, they would be HC-2 buildings. As such, they would need their own ventilation, continuous power, fire suppression equipment, emergency access, and the like, all of which would be safety class and thus very expensive. What would the modules cost? NNSA has experienced delays and cost growth in many of its larger nuclear construction projects. The modular approach offers features that could help avoid these problems, such as a smaller scale, application of lessons learned from building previous modules, and construction of each module to accommodate only the purpose for which it is built. But the modules would be separate new facilities. Given NNSA's track record, can Congress have confidence that the modules would not encounter cost and schedule problems? Two arguments for modules are that they would make the funding profile more predictable and that modules could be built as needed. But if the schedule for module construction cannot be predicted, neither can the funding profile. Compared to modules, would it be faster and less costly to upgrade PF-4, use RLUOB for AC, and move Pu-238 out of PF-4? MAR limits in PF-4 are conservatively set. Mitigation measures, discussed next, would further increase the difference between the frequency of the DBE and the frequency of an accident resulting from that earthquake. Could MAR limits be raised without serious adverse potential consequences? Would that reduce the need to build modules as a way of reducing MAR in PF-4?",
"Safety and efficiency are not static. Both can be improved. \"Improved safety,\" as used here, means reducing the risk of a design basis accident (DBA). (Other types of safety, such as reducing the number of falls, are dealt with on a routine basis and are not considered here.) \"Improved efficiency,\" as used here, means increasing capacity (number of ppy). This analysis focuses on Option 10, as this analysis is most applicable to that option; the analysis would also apply to Options 8, 9, and 11. Regarding Option 1, work is already underway on improved safety through TRP. Improving safety and efficiency are not relevant to Options 2, 3, 4, and 12 because, as new buildings, they would be designed and built to comply with the most modern safety standards. Improving safety and efficiency to a significant degree is not practical for Option 5 because CMR is so vulnerable to an earthquake. This analysis is also not relevant to Options 6 and 7, which involve modifying existing buildings at sites other than LANL.",
"How could the risk of a DBA be minimized? A DBA must be prepared for buildings that are HC-3 and higher, not Radiological Facilities. However, if RLUOB held 1 kg of WGPu, whether as an HC-3 building or a Radiological Facility with modifications and regulatory relief, it would be beneficial to construct a DBA in order to analyze the sequence of events leading to the DBA. The key point is that the DBA sequence is not inevitable; a DBA would show many points at which the accident sequence could be interrupted. Taking actions to interrupt that sequence would greatly reduce the probability that the entire DBA sequence would occur, thereby reducing the likelihood that anyone would receive any dose and reducing the dose should the DBA occur.\nPF-4, as an HC-2 building, has a DBA. NNSA is conducting work at PF-4 through TRP to reduce the probability and consequences of a DBA. A DBA for RLUOB might specify an amount of Pu-239E in the building and include the following sequence: an earthquake that collapsed the building, followed by a fire that converted plutonium at risk to plutonium oxide particles that the fire lofted into the air, resulting in a dose to personnel beyond DOE guidelines. This section discusses possible ways to mitigate the risk of each event in the DBA sequence.",
"LANL did not study the probability that RLUOB could survive an earthquake of given magnitude because that analysis is not required for a Radiological Facility. However, as discussed in Appendix E , RLUOB was designed to survive the 1995 design basis earthquake, which was appropriate for an HC-3 building. Since then, the DBE has been increased in severity. If RLUOB is to be used for 1,000 g of WGPu, whether upgraded to an HC-3 building or not, it may prove desirable to strengthen it. This could be done in several ways; note that these measures could reduce the consequences as well as probability of building collapse.\nThe Stanford Linear Accelerator Center (SLAC) in California has facilities built near the San Andreas Fault, so seismic resistance is a design consideration. Matthew Wrona, Director of the Facilities Division at SLAC, noted that most buildings typically are designed to resist vertical loads, as they must bear the gravity loads. An earthquake, however, imposes lateral (horizontal) loads as well as vertical loads, and seismic resistance requires resistance to both. Wrona pointed to several methods to strengthen an existing building to resist seismic loads:\nStrengthen connections between columns and (horizontal) beams, such as by using welded moment resisting connections, to increase lateral load resistance of the building. Install diagonal bracing in load bearing exterior and interior walls. Add steel plates to the inside or outside of a building to stiffen it against lateral loads. Use buttresses anchored to the ground and to the outside of the building. Buttresses would resist lateral loads. Strengthen floor diaphragms to distribute lateral loads to supporting walls.\nSLAC has used several of these techniques to brace office buildings, as Figure 13 shows.\nAs Figure 14 shows, buttresses have been used for many centuries to support buildings. Another strengthening method is base isolation technology, as shown in Figure 15 .\nA LANL structural engineer provided the following comment:\nAny number of techniques could be used to strengthen RLUOB to resist higher seismic forces. External bracing could be used, and the use of this technique at SLAC is a good example. Other possibilities may be to strengthen the internal steel-to-steel connections or the installation of internal shear walls and/or bracing. Base isolation has been applied to some structures to reduce the seismic loads that they would see during an earthquake. It might be applicable to RLUOB, either at the building foundation or at the junction between the concrete structure and the steel office structure above it. Another option may be to install internal dampers that absorb the energy of seismic motion that reduce structure displacements and accelerations which lead to reduced seismic loads. The point is that there are effective upgrades that could be implemented to improve seismic resistance. To choose the most effective set of upgrades, seismic/structural engineers need to complete a thorough analysis of the existing facility with an understanding of the performance required and using the appropriate ground motion in conjunction with applicable federal, state, and local seismic codes.\nNNSA has undertaken several projects to reduce the risk of building collapse for PF-4. Its TRP is intended to add about 25 years of expected useful life. TRP has multiple projects, including seismic upgrades to glovebox stands, as shown in Figure 16 . This upgrade is intended to prevent the gloveboxes from falling over during an earthquake and releasing plutonium. NNSA undertook many other projects in conjunction with its June 2011 Seismic Justification for Continued Operation. It noted that repairing one building feature (drag strut) reduced the dose from 2,100 rem for a once in 5,000 year event to 143 to 278 rem for a once in 2,000 year event. NNSA took many other actions to address seismic hazards, including \"strengthen[ing] the roof, thereby addressing the most significant known weakness—a building collapse failure mode,\" and \"brac[ing] ventilation room columns, addressing the next most significant known weakness.\" Additional repairs, NNSA estimated, could reduce the dose to an MOI to less than 25 rem.",
"A second part of the DBA is that building collapse is followed by a fire that engulfs several rooms of the laboratory space. Various methods could be used. The simplest is to reduce the amount of combustible material in the building. While this seems self-evident, Los Alamos removed about 20 tons of combustible material from PF-4 between 2010 and 2012. Other steps taken in PF-4 included implementing a program to control ignition sources, repairing the main fire wall, addressing other structural issues, and increasing the capability of fire suppression systems. NNSA calculated that these and other measures to reduce the consequences of a post-earthquake fire at PF-4 would reduce the dose from this accident from 2,860 rem as of December 2008 to 23 rem as of June 2012 and well under 1 rem by September 2020. (This dose is for an MOI.) Similar measures should reduce the risk of a fire in RLUOB.",
"A fire would not loft a plutonium ingot into the air because plutonium melts at a high temperature, 1,183 degrees F, and a fire would likely form a layer of plutonium oxide on the surface of the ingot that would keep oxygen from reaching the interior. To be lofted into the air in a form in which it can disperse and be inhaled, it must be converted to tiny (respirable) particles of plutonium oxide. Such particles can be formed if a fire reaches molten plutonium, plutonium shavings, or plutonium dissolved in acid; the latter would readily combine with oxygen if the acid boiled away.\nNNSA has taken many steps to reduce the amount of plutonium consumed in a fire in PF-4. These include installation and use of fire-resistant safes and containers for storing nuclear material, procurement of containers for special nuclear materials that \"are designed to provide increased assurance of confinement in a seismically initiated fire when stored in environments not susceptible to direct flame impingement,\" \"replac[ing] vault sprinkler heads with lower-actuation-temperature heads that will respond sooner and limit the development of a vault fire,\" and \"impos[ing] restrictive material-at-risk limits to reduce the amount of plutonium that could be released in an accident.\" Another step is making sturdier gloveboxes and anchoring them more strongly to the floor so as to reduce the risk that they would topple over in an earthquake, releasing plutonium. Figure 16 shows the progressive strengthening of gloveboxes. Future plans include installation of fire suppression equipment in gloveboxes and improving fire barriers.\nThere are many potential ways to reduce MAR—actually, MAR per pit—that would reduce the amount of plutonium that a fire in RLUOB would consume. Since many AC techniques date back to the Cold War, it may be possible to update them to take advantage of current technologies and requirements in order to reduce MAR. Possibilities include:\nTake fewer samples per pit. AC at present is performed much as it has been since the Cold War, as discussed in \" The Pit Production Process .\" Improved analytic instruments and improved understanding of plutonium and its impurities might permit reducing the number of samples. It may also be the case that these numbers reflect an excess of caution and an abundance of resources characteristic of the nuclear weapons program during the Cold War. Taking fewer samples per pit would reduce the sample prep workload in PF-4, the AC workload in RLUOB, and the workforce and floor space required in both buildings. Perform fewer analyses per sample. Sometimes multiple analyses are performed to reduce the risk of missing needed information in process control. Reducing redundant analyses should have similar benefits as reducing the number of samples per pit. Accept less precision of measurement. While an AC procedure that originated decades ago might require precision to within plus or minus 1%, precision to within plus or minus 5% or 10% might suffice. That could permit faster sample processing, reducing MAR per pit. In addition, relaxing the requirement would, in some cases, permit one analysis technique to perform several types of measurements, while more precise techniques might require a piece of equipment for each measurement type. Using fewer pieces of equipment would also free up floor space in PF-4 or RLUOB. Devise ways to reduce the time that various AC techniques require. Faster processing would reduce the number of hours that material is at risk for each pit, and would permit more work to be done in a given amount of floor space, perhaps with fewer workers, reducing aggregate worker exposure to radiation. By reducing MAR per pit, RLUOB could support AC for a higher production rate, or could conduct AC for a given number of pits under a lower MAR ceiling.",
"Even if an earthquake collapsed the building and a fire converted some plutonium to plutonium oxide particles, that material would not pose a threat unless it escaped from the building and was lofted into the air by the fire. Not all the plutonium at risk in RLUOB would leak into the atmosphere. The first floor of the building is laboratory space, but there is a basement below it and three floors above it. In an earthquake that collapsed the entire building, the first floor would collapse into the basement and the upper floors would collapse onto the laboratory space, sealing in some plutonium. Other steps might further reduce leakage. As a possible example, the foam used to extinguish aircraft fires, if used in a fire in RLUOB, might trap plutonium. A careful analysis of such techniques would be required to determine their efficacy and whether they would create criticality problems. Development of such techniques would be of value for RLUOB, PF-4, and other buildings containing nuclear materials.",
"Even in a worst-case accident, the dose from plutonium released from RLUOB would be very low. NNSA, in discussing PF-4 stated, \"Unmitigated/mitigated radiation doses were 7,250 rem/2,900 rem, based on an accident scenario involving 5MT [metric tons, i.e., 5,000 kg] of one plutonium material form [molten WGPu], an unconstrained full-floor fire, and an assumed 40 percent leak path factor [i.e., 40 percent of plutonium is released into the air].\" (That calculation is beyond worst case, as the MAR allowance for the PF-4 main floor is 2,600 kg Pu-239E. Nonetheless, it is useful for providing a baseline for calculating the dose that might result from the release of 1 kg of WGPu.) If RLUOB held 1 kg of WGPu, and if the leak path factor for this accident at RLUOB, without mitigation, were 40%, then the resulting dose would be 1/5,000 th of 7,250 rem, or 1.45 rem. Even if the leak path factor were 100%, the dose would be 3.6 rem, near the bottom end of the dose range having no detectable clinical effects. (It is unclear if this dose is for MOI, CW, or others.) Appendix B presents another, more detailed calculation that produces even lower results for an MOI. Further, that Appendix shows that the value of \"airborne release fraction\" is very conservative, so that the dose could be tens or even 100 times less than shown in Table B-1 and Table B-2 .",
"Efficiency, in this context, refers to the efficient use of space so as to enable more pit work to be performed in PF-4 and RLUOB.",
"Producing 80 ppy would require more space for production equipment and AC. (Los Alamos has not calculated the precise amount of space required, and the requirement could change between now and 2030, when the capacity is needed.) Since pit fabrication could only be done in PF-4, more space in that building would have to be dedicated to that task. Some ways of achieving this space are straightforward:\nRLUOB could be utilized for AC and some MC. MC would not require much more space to support 80 rather than 30 ppy, as it is used to qualify production equipment and processes and to help solve production problems. However, some MC, such as the gas gun, might be moved into RLUOB. Some space could be repurposed; other space could be made available by moving Pu-238 out of PF-4.",
"Space in PF-4 could be utilized more efficiently, which would have the same effect as increasing floor space.\nPF-4 and RLUOB could operate on two shifts per day. This would be much less costly, much more feasible, and much quicker than building new plutonium buildings, and would have much less environmental impact. LANL estimates that using two shifts per day rather than one increases productivity by a factor of 1.6. Multiple shifts are not new to the nuclear weapons complex; Rocky Flats Plant sometimes operated with three shifts a day, and SRS currently conducts some operations that way. As noted earlier, the vault in PF-4 for holding plutonium is being cleaned out, with excess material sent to WIPP for final disposition. Excess material that may need to be retrieved could be sent to other sites. It may be possible to design equipment to minimize space requirements. Space efficiency was not a major consideration when PF-4 equipment was originally designed; focusing on this goal and bringing modern technology to bear might permit more work to be done in a given space. Having more plutonium in a room would increase the dose to workers unless shielding is increased; this would be a much greater concern in PF-4, where work with kilogram quantities of plutonium is conducted, than in RLUOB, which would use very small samples.",
"In order to examine the costs, risks, and benefits of the options discussed in this report, Congress would need further information. To gather it, Congress could direct NNSA to conduct several studies, including the following:\nStudy of potential PF-4/RLUOB production capacity: Since it is unlikely that new plutonium buildings (especially large ones) will be built for many years, PF-4 and RLUOB have value beyond their cost. Many measures could increase capacity, such as moving Pu-238 out of PF-4, repurposing space in PF-4, and permitting RLUOB to perform all AC. Congress could direct NNSA to study whether some combination of such measures would enable production of 80 ppy while maintaining other essential plutonium missions in PF-4, and the number of ppy RLUOB and PF-4 could produce if more or less than 80.\nStudy of repurposing PF-4 space: Los Alamos plans to repurpose some space in PF-4. Could enough space be made available for pit production and support without disrupting other critical missions in the building? If such disruption was required for pit production, could other missions be done in existing facilities elsewhere in the nuclear weapons complex, or would new facilities have to be built? If new facilities were required, what would they cost and how long would they take to build, and what would happen to the mission before they were completed?\nStudy of the feasibility and cost of converting RLUOB to HC-3: RLUOB was built but not certified to HC-3 standards; it is sometimes called an \"HC-3-like\" building. In order to hold 1,000 g of WGPu while complying with regulations, it would have to be certified to HC-3. This would involve many actions. Many would be studies, but some of them could lead to physical changes to the building, such as seismic bracing or installation of equipment. It is not clear what physical work would be required. A \"study of studies\" would help determine if conversion would be feasible, and if so at what cost.\nStudy of adverse consequences of allowing RL U OB to operate as is but with 1,000 g WGPu: Converting a Radiological Facility to HC-3 would entail costs, yet the dose resulting from an earthquake that collapsed RLUOB would be far below the guidelines set by DOE, as Appendix B shows. Congress could direct an independent organization to study the adverse consequences of using RLUOB for 1,000 g of WGPu as is, that is, with AC equipment installed but no steps to convert the building to HC-3. If it is determined that RLUOB as is would not provide adequate safety with 1,000 g WGPu, a related study could examine if there are additional steps short of full conversion to HC-3 that would provide adequate safety, and what they would cost.\nStudy of having LLNL, SRS , or both perform some AC to support pit production : LLNL and SRS have infrastructure to perform AC to support pit production, though beyond some level of capacity they would need to upgrade equipment and hire additional staff. There would be benefit from dispersing AC expertise, capacity, and work to other sites in the nuclear weapons complex, but also benefit from concentrating them at LANL, the plutonium center of the nuclear weapons complex. It seems unlikely that a site other than LANL would perform all AC to support pit production. At issue: Should one or more sites other than LANL perform some AC to support pit production? If so, how much capacity should be dispersed to other sites? Which site or sites should be chosen? What would it cost to upgrade the site or sites for that capacity?\nStudy of Pu-238 options: Pu-238 activities are costly given the high level of radioactivity of that material. Pu-238 work could be moved to INL, SRS, a module at LANL, or perhaps other sites. DOE's Office of Nuclear Energy prepared a study on this topic. However, that study did not consider the costs and benefits to the weapons program of moving Pu-238 out of PF-4; those costs and benefits might change the calculus of that move. Specifically, if moving Pu-238 to another site made a major contribution toward permitting production of 80 ppy without building new buildings, the value to the weapons program would be significant, and reducing MAR in PF-4 could help extend its service life. On the other hand, while DOE has estimated the cost of the INL or SRS options for Pu-238 to be several hundred million dollars, other costs would be involved, as well as temporary disruption of the Pu-238 program. Congress could direct NNSA to contract with an independent organization to study these costs and benefits.\nStudy of cost implications of the regulatory system: A Radiological Facility is able to hold 38.6 g Pu-239E (26 g WGPu). As shown by RLUOB, such facilities can be affordable and can be built. In contrast, the history of the past quarter-century, as discussed in \" A Sisyphean History: Failed Efforts to Construct a Building to Restore Pit Production ,\" has been that a facility intended to hold more than 26 g WGPu has seen cost and schedule escalate to the point where it cannot be acquired. These efforts have resulted in the expenditure of billions of dollars with the net result of canceled programs, unusable buildings that had to be demolished, and continued operations in \"decrepit\" facilities. Congress could task NNSA to report on cost implications of the current regulatory system governing nuclear facilities, focusing on tradeoffs between cost and risk.",
"Long-term planning is difficult for all parties concerned . Delays and cost growth by NNSA on its major facilities reduce confidence in NNSA's cost and schedule projections, making it difficult for Congress and the Administration to budget for these facilities. NNSA sources say that congressional budgeting outside the regular budget process, such as sequesters and short-term continuing resolutions, and withdrawal of congressional support, such as the termination of MPF, make it difficult for NNSA to plan. Changes in Administration planning, such as the deferral of CMRR-NF, make it difficult for Congress and NNSA to plan.\nLong-term planning for pit production has proven particularly difficult . NNSA provides plans going out 10 to 20 years. However, these plans have often been stretched out, canceled, or modified substantially. Pit production at Rocky Flats Plant halted in 1989, yet LANL did not produce its first war reserve pits until 2007, NNSA has not needed to expand its small capacity, and there is still no plan for larger-scale pit production. Planning for MPF began in 2002, and Congress canceled it in 2005, followed by planning for CMRR, with the Nuclear Facility deferred \"for at least five years\" by the Administration in its FY2013 budget request. Similar delays have occurred with other nuclear weapons complex construction projects and with LEPs. While organizations need long-term plans as general guides to future plans, this history raises questions about the value of such planning.\nRequirements for pit production capacity have been fluid, reducing their credibility . The options studied for MPF in a 2003 EIS were between 125 and 450 ppy. Even if pits had a service life of 45 years, as was thought at the time, a 450-ppy capacity would support a stockpile of some 20,000 weapons, far more than the stockpile had. Then, the interim capacity at LANL was 10 ppy, with a goal of 30 ppy by 2021 and a requirement of 50-80 ppy by around 2030. Yet this latter requirement was not based on an analysis of weapons, targets, and scenarios, but on what NNSA estimated that Los Alamos could produce with PF-4 and CMRR-NF. Despite the deferral of CMRR-NF, and congressional authorization for NNSA to pursue a modular strategy as an alternative to that facility, the requirement for 50-80 ppy remains, and it is unclear if the number needed is 50 or 80. At the same time, steady increases in estimates of pit life, steady reductions in numbers of weapons, and the possibility of reusing pits from retired weapons may reduce the required capacity. As a consequence, it is hard to know what capacity is needed, and thus what new facilities or modifications to existing ones are needed.\nDiffering time horizons between Congress and NNSA, and between political and technical imperatives, cause problems . Congress and the Administration, on the one hand, and DOE, NNSA, the labs, and the plants, on the other, work on very different timescales. It takes well over a decade, at best, for NNSA to bring a major nuclear facility project from initial approval to design, construction, and operation. In contrast, Congress and the Administration have changed course often on a plutonium strategy, sometimes from one year to the next. The more time from start to finish of a project, the more chance there is for intervening events to alter plans. Thus it would be to NNSA's advantage to drastically shorten the time from start to finish of a project. A construction cycle of a decade or more (or 24 years and counting in the case of a new plutonium facility) faces great difficulty when its funding hinges on a political cycle of one or a few years.\nFor a successful plutonium strategy, Congress would find unacceptable management that allows costs to grow immensely, 10-fold in some cases, or that allows multi-year delays. At the same time, Congress and the Administration cannot expect a project to be completed in a couple of years. Analysis of alternatives, site surveys, compliance with NEPA requirements, planning, contracting, and construction typically take years.\nThus, time is of the essence and delay is the enemy. This is a problem for Congress, the Administration, DOD, NNSA, the nuclear weapons complex, and the nation. Is there is a meeting-ground between the political and technical worlds? Can NNSA define the need for a major nuclear facility construction project, then quickly design it, comply with various federal, state, and local regulations, and build it? How could NNSA expedite the process? Can it avoid cost growth, delay, and mission creep? Conversely, once a project is defined, can Congress and the Administration commit to it on a longer-term basis?\nNNSA would need to gain the confidence of Congress in its ability to manage major construction projects. The capacity range studied for MPF implied the nominal ability to support a stockpile far larger than the then-current and likely future stockpile. CMRR-NF experienced a several-fold increase in estimated cost and years of schedule slippage. Failing to provide a realistic estimate of required capacity or to stay remotely close to cost and schedule estimates had consequences. Congress canceled MPF, and the Administration proposed to \"defer\" CMRR-NF for \"at least five years.\" And as noted in \" Two Other Failed Attempts ,\" two plutonium buildings were built, found to be unusable for their intended purpose, and were torn down. Congressional support for a modular strategy—yet another change in plans—increases the likelihood that the deferral of CMRR-NF will be a cancellation. Many believe that NNSA weakens its case for future projects when it releases estimates that are far in excess of a capacity that seems reasonable, or that are far below the ultimate cost and schedule, or when it changes its plans repeatedly.\nThere are costs and risks to doing nothing . Time spent in planning and construction for new buildings to support pit production can reduce risk, for example by studying the impact of the facility on the environment, by studying the seismicity of the construction site, by designing the facility to meet requirements (such as for Hazard Category 2 or 3), and by incorporating measures in the design to reduce dose that individuals could receive from a major accident. However, if history is a guide, it could take many years before a new facility could become operational. Until then, whether the new facility is at Los Alamos or elsewhere, CMR must be used to provide AC support for pit production in PF-4. This entails multiple risks and costs:\nCMR is at high risk of collapse in the event of even a moderate earthquake. Collapse would kill many workers in the building. Pit production requires much more AC than PF-4 can accommodate. Collapse of CMR, without another building to conduct AC, would—not could—disrupt pit production until another facility for AC came on line, which could take years. Bringing another facility online on an emergency basis would probably cost more than doing so in an orderly manner, and shortcuts taken to expedite design, siting, and construction could increase the risk of problems down the road. CMR has a MAR of 9 kg of Pu-239E, and all the plutonium in that facility is considered at risk because no vault or container could be counted on to survive that building's collapse. Dispersal of some of that plutonium could place collocated workers and members of the public at risk. Depending on specifics of the collapse (wind direction, fire, form of plutonium, amount of plutonium escaping, etc.), dispersal of the plutonium could contaminate and force the closure of parts of the laboratory, possibly for months or years. That would disrupt laboratory operations, with operations affected at random based on which areas were contaminated. Cleanup of a large area contaminated by plutonium would be extremely costly and time-consuming. It would be a more effective use of those funds to avoid that problem by moving operations out of CMR as soon as possible.\nA facility can be safe without being compliant . As Appendix B shows, if RLUOB had 1 kg of WGPu, all of which was released in a DBA, the accident would result in doses well below DOE guidelines. Yet RLUOB would be in compliance with DOE regulations as a Radiological Facility only if it had less than 26 g of WGPu. As a corollary, there is a tradeoff between cost and regulatory compliance: Where is the point of diminishing returns?\nShould plutonium quantity in a building be limited by MAR or dose? The regulatory system defines a building's Hazard Category by MAR. An HC-3 building can hold between 38.6 grams and 2,610 grams of Pu-239E; a Radiological Facility can hold up to 38.6 grams. The objective is safety; however, MAR is a surrogate for safety. It is simple for regulators to measure MAR. In contrast, determining dose to a collocated worker or a maximally-exposed offsite individual requires a complex analysis for each building, taking into account such factors as details of construction, measures taken to increase seismic robustness and fire suppression, and assumptions on the amount of plutonium that would be lofted into the air in an earthquake, wind speed, and wind direction. Yet it is dose, not MAR, that determines whether an individual is safe, and as shown in Appendix B , even with MAR of 2,610 g Pu-239E (1,750 g of WGPu) for RLUOB, the maximum permitted in an HC-3 building, dose to those individuals would be far below DOE guidelines.\nWeapons and infrastructure constrain policy and strategy . Logically, these four elements should be linked, and policy and strategy should drive weapons and infrastructure. But given cancellations, multi-year schedule slippages, and major cost growth for LEPs and infrastructure facilities, even if strategy calls for having certain numbers of a certain weapon by a certain year, if an LEP is delayed by cost growth or infrastructure delays, it is the strategy that adapts.\nThe political system is more flexible than the regulatory system . Regulators are bound by statutes, regulations, orders, and standards, and can only determine if a plan complies with these rules without regard to cost. Standards define acceptable risk: a Radiological Facility must have less than 38.6 grams of Pu-239E; a Security Category IV facility can have up to 200 grams of pure plutonium; the DOE guideline is for an MOI to receive a dose of no more than 25 rem over 2 hours. But this system is inflexible. It does not have a way of trading risk (and the benefit of reducing it) against cost (and the benefit of reducing it). As a result, it may force the expenditure of years, and many millions of dollars, to further minimize an already-minimal risk. In order to inject cost-benefit calculations into recommendations by DNFSB, Section 3202 of H.R. 1960 , the FY2014 defense authorization bill as passed by the House, required DNFSB to provide an analysis of the costs and benefits of its recommendations if requested to do so by the Secretary of Energy; in such instances, the Secretary would also be required to conduct a similar analysis. This provision, however, was not included in the final legislation, P.L. 113-66 .\nEven so, while the regulator can present costs and benefits, only the political system has the authority, ability, and culture to decide which tradeoffs are worth making, and to offer regulatory relief. For example, political decisions could make the difference between whether or not a RLUOB/PF-4 option is feasible. If the DOE hazard categorization standard is applied, so that RLUOB could hold only 26 grams of WGPu, then RLUOB could provide very limited AC support for pit production. If it were upgraded, the regulatory system could determine only if the upgrades would meet HC-3 requirements. In contrast, the political system could judge whether certain upgrades would reduce the risk to an MOI enough, with \"enough\" a matter of political judgment, and if the reduction in risk from these upgrades was worth the cost. The political system could also decide if the risk was acceptable without upgrades.\nThere are several potential paths forward: Several options discussed in this report have the potential to produce 80 ppy, resolve the Pu-238 issue, and permit other plutonium activities, all at relatively modest cost, in a relatively short time, with no new buildings, and with minimal environmental impact. Determining the cost, schedule, feasibility, and other characteristics of these options would require detailed study.\nAppendix A. The Regulatory Structure\nLaws\nA dense web of \"laws\" (statutes, regulations, orders, standards, guides, etc.) bears on nuclear facilities and how they are to be built and operated consistent with worker safety, public health, and environmental protection. A critical point is that legislation trumps regulation: since regulations, orders, and standards derive their authority from statutes, statutes can mandate changes in them. Some of the more important laws are:\nAtomic Energy Act of 1954, as amended, 42 U.S.C. 2201 et seq., is the fundamental statute setting policy for civilian and military uses of atomic energy and materials. It established the Atomic Energy Commission, which was superseded by the Energy Research and Development Administration and then by the Department of Energy.\nDepartment of Energy Organization Act of 1977, 42 U.S.C. 7101 et seq., established the Department.\nNational Environmental Policy Act (NEPA) of 1970, 42 U.S.C. 4321-4347, established a national policy on the environment, mandated the preparation of environmental impact statements for certain projects and proposals that could have a significant impact on the environment, and created the Council on Environmental Quality to, among other things, review federal activities to determine their consistency with national environmental policy.\nEstablishment of Defense Nuclear Facilities Safety Board (DNFSB): 42 U.S.C. 2286 et seq. ( P.L. 100-456 , FY1989 National Defense Authorization Act) established DNFSB as an independent executive branch agency, as described in \"Regulators,\" below. Note that the Nuclear Regulatory Commission does not regulate defense nuclear facilities.\nNational Nuclear Security Administration Act, 50 U.S.C. 2401 et seq. (Title XXXII of the FY2000 National Defense Authorization Act, P.L. 106-65 ), established NNSA as a separately organized agency within DOE responsible for, among other things, the nuclear weapons program.\nNuclear Safety Management: 10 CFR 830 sets forth requirements that \"must be implemented in a manner that provides reasonable assurance of adequate protection of workers, the public, and the environment from adverse consequences, taking into account the work to be performed and the associated hazards.\" 10 CFR 830 lists its authority as 42 U.S.C. 2201, 42 U.S.C. 7101 et seq., and 50 U.S.C. 2401 et seq.\nNuclear Safety Analysis Report, DOE Order 5480.23, April 30, 1992. Its purpose is \"to establish requirements for contractors responsible for the design, construction, operation, decontamination, or decommissioning of nuclear facilities to develop safety analyses that establish and evaluate the adequacy of the safety bases of the facilities. The Nuclear Safety Analysis Report (SAR) required by this Order documents the results of the safety analysis.\"\nSafety Analysis Requirements for Defining Adequate Protection for the Public and Workers, Recommendation 2010-1 issued by DNFSB to the Secretary of Energy, October 29, 2010.\nRegulators\nThe main regulators of nuclear weapons complex facilities are as follows:\nThe Defense Nuclear Facilities Safety Board (DNFSB ) is an independent executive branch agency. Its mission, as set by legislation, is \"to provide independent analysis, advice, and recommendations to the Secretary of Energy to inform the Secretary, in the role of the Secretary as operator and regulator of the defense nuclear facilities of the Department of Energy, in providing adequate protection of public health and safety at such defense nuclear facilities.\" It is to \"review and evaluate the content and implementation of the standards relating to the design, construction, operation, and decommissioning of defense nuclear facilities of the Department of Energy … at each Department of Energy defense nuclear facility. The Board shall recommend to the Secretary of Energy those specific measures that should be adopted to ensure that public health and safety are adequately protected.\" Recommendations are central to DNFSB's role, especially since that agency does not issue regulations. Recommendations are not requirements, but \"To date, the Secretary of Energy has accepted every Board recommendation, though three were accepted with conditions or exceptions described in the Department's acceptance letters.\"\nThe DOE Office of Health, Safety and Security (HSS) integrates DOE \"Headquarters-level functions for health, safety, environment, and security into one unified office.... HSS is focused on providing the Department with effective and consistent policy development, technical assistance, education and training, complex-wide independent oversight, and enforcement.\"\nThe DOE Office of NEPA Policy and Compliance has as its mission \"to assure that the Department's proposed actions comply with the requirements of the National Environmental Policy Act (NEPA) and related environmental review requirements … that are necessary prior to project implementation. The Office is the Departmental focal point for NEPA expertise and related activities in all program areas, covering virtually every facet of the Department's diverse and complex operations.\"\nThe DOE Office of General Counsel reviews environmental impact statements and similar documents and decides whether to approve their release to the public.\nNNSA Headquarters sets policy on the nuclear weapons complex, such as major construction; its programs, such as LEPs; and its operations and maintenance.\nNNSA Field Offices are part of the regulatory system. Nuclear weapons complex sites are government-owned, contractor-operated. Field offices hold the contracts with the contractors and interact directly with them. For example, the Los Alamos Field Office handles day-to-day administration of the contract with the contractor, Los Alamos National Security, LLC. NNSA headquarters, in conjunction with Congress and the Administration, sets policy in such matters as how many pits to produce and what facilities to build, and the field office provides direction to the contractor for implementing policy while abiding by rules, such as for safety and security.\nAppendix B. Calculation of Dose as a Function of Material At Risk\nIf Congress were to grant RLUOB regulatory relief so that it could hold 500 g to 1,000 g of WGPu, what risk would that pose to laboratory staff and members of the public? The following equations calculate dose resulting from a major accident that involved these quantities of plutonium, using assumptions as explained below. These calculations are only for dose, and are specific to RLUOB. They do not assess risk to individuals inside the building, nor do they assess risk from fire, earthquake, gas main explosions, and the like.\nThis table calculates the dose to two types of individuals in the event of a major accident. A Maximally Exposed Offsite Individual is a hypothetical person at the location nearest to the site boundary where individuals could normally be expected to be, such as on a main road or in a house. The distance from RLUOB to MOI is assumed to be 1200 meters. A Collocated Worker is an onsite worker 100 meters from the building. Dose is calculated by multiplying the factors in this table. The calculation is specific to RLUOB; values for some factors would differ for other buildings. The calculation assumes a worst-case accident, that is, an earthquake that collapses the building, causing plutonium-containing material to spill out of containers, followed by a fire that aerosolizes the plutonium.\nThe factors are as follows:\nMaterial At Risk (MAR): The amount of material, in this case plutonium, acted upon by an event. It is measured in units of grams of plutonium-239 equivalent (g Pu-239E), a standard used to compare the radioactivity of diverse materials. Table B-1 assumes a MAR of 500 g Pu-239E; Table B-2 uses several values of MAR.\nDamage Ratio (DR): The amount of damage to the structure, with 0 being no damage and 1 being complete collapse. The calculation uses a value of 1, that is, complete collapse of RLUOB, the worst case.\nAirborne Release Fraction (ARF): The fraction of Material At Risk released into the air as a result of the event. ARF is specific to the type of material (e.g., plutonium oxide, plutonium metal, plutonium in solution). The material in this accident is assumed to be 90% liquid (plutonium in solution) and 10% waste (such as rags with plutonium oxide particles).\nThe value for ARF used in the calculation is 0.002, so this one value reduces dose by a factor of 500. Thus the dose resulting from an earthquake that collapsed RLUOB with 1,000g WGPu could be much higher than shown in Table B-1 if that value is in error. A DOE handbook shows that the factor 2E-3 (i.e., 0.002) is for airborne droplets containing plutonium oxide rather than for solid plutonium oxide particles that result from the aqueous solution containing plutonium having boiled away. In response to a question on the validity of using that figure in Table B-1 , Los Alamos stated: \"the ARFs and RFs are almost always VERY conservative. In most of the experiments the average value was about 1 to 2 orders of magnitude lower than the value recommended for use in Safety Analysis. So, no there is not a problem. It really more goes the other way. At each stage we used very conservative values that multiply on each other, such that the final answer in no way represents reality.\" Consequently, the actual dose that would result from collapse of RLUOB with 1,000 g WGPu could be tens or even 100 times smaller than shown in Table B-2 .\nRespirable Fraction (RF): The fraction of the material released into the air that is of a particle size (3 microns in diameter or less for plutonium oxide) that, when inhaled, remains in the lungs. In this calculation, RF is assumed to be 1, the worst case.\nLeak Path Factor (LPF): The fraction of material that escapes the building. While ARF is related to material type, LPF is related to engineered containment mechanisms, such as robust containers. In this calculation, LPF is set at 1, that is, no containment is assumed.\nSource Term (ST): The amount of material released that provides dose to individuals. It is calculated by multiplying the previous five factors together. ST is then multiplied by the following four factors to arrive at dose.\nChi over Q (χ/Q): The rate at which plutonium particles are deposited (fall to the ground). It includes such factors as wind speed, wind direction, and distance from the facility to the MOI or CW receiving the dose.\nBreathing Rate (BR): The volume of air, in cubic meters per second, that an individual breathes in. This is important in calculating dose because the more air an individual breathes in, other things being constant, the higher the dose.\nSpecific Activity (SA): A measure of the radioactivity of a material, expressed in curies (a measure of the number of radioactive disintegrations per second) per gram of material. This table shows SA for Pu-239PE.\nDose Conversion Factor (DCF): Multiplying SA by this factor converts SA to dose.\nDose is expressed in rem, a measure of ionizing radiation absorbed by human tissue.\nDOE sets radiation exposure guidelines for MOI and CW in accidents that release radioactive material. The guideline dose for CW, 100 rem, is higher than that for MOI, 5 to 25 rem. The reason is that, just as workers in any hazardous occupation, such as mining or window washing, assume greater risk than the general public, so do workers in close proximity to SNM. The higher guideline reflects that risk. As noted in \" Key Regulatory Terms ,\" one expert lists a dose of between 0 and 25 rem as having \"no detectable clinical effects; small increase in risk of delayed cancer and genetic effects,\" a dose of 25 to 100 rem as \"serious effects on average individual highly improbable,\" and for 100-200 rem \"minimal symptoms; nausea and fatigue with possible vomiting.\" Thus the doses in Table B-1 and Table B-2 are very low and, as noted in \"Airborne Release Fraction,\" above, could be much lower.\nAbbreviations: MOI, Maximally Exposed Offsite Individual; CW, Collocated Worker; DOE guideline, maximum dose (in rem) per DOE regulations.\nConversion of g Pu-239E to g WGPu: The fissile material in pits is Pu-239. However, the actual material in pits, WGPu, is not pure Pu-239. Instead, it is composed mainly of that isotope as well as small amounts of other plutonium isotopes, some of which are more radioactive than Pu-239. The ratio of Pu-239 to other plutonium isotopes varies slightly from one batch to another, and the ratio changes over time as plutonium undergoes radioactive decay, with each isotope having a different rate of decay. It is useful to convert all radioactive material in a building to a single unit, in this case g Pu-239E, to facilitate compliance with MAR limits. Given the isotopic variance inherent in WGPu, no single factor can precisely convert g WGPu to g Pu-239E for all batches of WGPu. For most purposes, and for purposes of this table, multiplying g Pu-239E by 0.67 yields g WGPu.\nRLUOB, as a Radiological Facility, is only permitted to hold 38.6 g Pu-239E. In order for RLUOB to do the AC and some MC to support production in PF-4 of 80 pits per year, RLUOB would probably need to hold 1,000 g of weapons-grade plutonium, though a lesser amount, perhaps 500 g, might suffice. (As noted, it is not clear that RLUOB would have the floor space to do all the AC for that rate of production.) The table shows dose resulting from an accident that released those quantities of plutonium. The table includes 2,610 g Pu-239E (1,760 g WGPu) because that is the maximum amount of plutonium that a Hazard Category 3 building can hold.\nThe conclusion is that even in a worst-case accident, with RLUOB collapsed by an earthquake and all plutonium in the building spilled out, converted to plutonium oxide particles by a fire, and lofted into the air, the dose that an MOI or a CW would receive if RLUOB contained 1,010 g of WGPu would be at least an order of magnitude below DOE guidelines. That would still be the case even if RLUOB held 1,760 g of WGPu.\nAppendix C. Security and Hazard Categories for Plutonium\nAppendix D. Preliminary Outline of Potential Tasks Required for RLUOB to Exceed Hazard Category 3 Nuclear Facility Threshold Quantity\nLos Alamos National Laboratory prepared the following document to indicate the types of tasks that would be necessary to enable RLUOB to contain more than 38.6 g Pu-239E under current statutes, regulations, DOE orders, DOE standards, administrative procedures, and other requirements. These tasks would convert RLUOB to an HC-3 facility. As will be seen, the list of tasks is extensive, and tasks derive from many sources. Note that while this is a list of tasks, many of these tasks would require extensive effort to complete, and some might lead to physical changes in RLUOB, such as seismic strengthening or added safety equipment.\nAppendix E. Comparison of Seismic Resiliency of CMR and RLUOB\nStructural engineers strive to make buildings safe against possible earthquake ground motion. The model building codes are constantly evolving and incorporate lessons learned from the response of buildings in real earthquakes. Prior to the 1933 Long Beach earthquake, the model building codes had very few seismic requirements. This earthquake led to new requirements being added to codes. Another big change in design codes came after the 1971 San Fernando earthquake, which showed that reinforced concrete buildings with certain characteristics were prone to collapse in large earthquakes. Since that time, the codes have implemented much stricter rules for the design of both steel and reinforced-concrete buildings.\nRLUOB was designed and constructed to withstand earthquake motion much better than CMR. CMR was constructed in the late 1940s and is not very seismically robust. In fact, it is a \"non-ductile reinforced concrete moment frame\"—the very type of structure that the 1971 San Fernando earthquake proved to be vulnerable to collapse in earthquakes. LANL estimates that it is vulnerable to collapse in an earthquake expected to strike with a frequency of once in 167 years to once in 500 years.\nWhile RLUOB, as a Radiological Facility, could have been built of light-duty design and materials because it was to have only about 6 grams of WGPu, NNSA decided to build it to a much higher standard in order to understand issues that could be encountered in building CMRR-NF. Specifically, RLUOB was designed and built to the 2003 Edition of the International Building Code supplemented to meet the requirements for seismic Performance Category 2 as provided in DOE Standard 1020-2002, that is, able to withstand ground motions associated with an earthquake expected to strike with a frequency of once in 2,500 years. It has a special reinforced concrete structure for the basement, first (laboratory), and second (office) floors. The third and fourth floors, which are also for offices, are constructed of steel framing designed to the standards of an emergency response building (e.g., a hospital or fire station), so they are more seismically robust than a typical office building. As a result, RLUOB is much sturdier than it needed to be.\nBased on LANL's models of seismic performance, collapsing RLUOB would take an earthquake with 4 to 12 times more force than an earthquake that would collapse CMR. Its better performance is largely the result of being able to dissipate energy through bending deformations in its steel frame. This energy absorption is key in seismic design. Brittle structures, such as CMR, cannot dissipate energy and are hence more susceptible to collapse when the ground motions exceed the building's design basis. In addition, the earthquake risk in the Los Alamos area is much better known today than it was when CMR was constructed. For example, it is now known that there is a seismic fault directly under CMR but not under RLUOB. Designing RLUOB with a more accurate understanding of the seismic characteristics of the underlying geology increases the ability of that building to withstand potential ground motion.\nAppendix F. Space Requirements for Analytical Chemistry to Support Production of 80 Pits Per Year\nLANL has never analyzed the space requirements for AC to support 80 ppy. However, in 2007 it analyzed the AC capacity of CMRR-NF plus RLUOB, and found that they could, together, support AC for 40-50 ppy. In the original plan for building both RLUOB and CMRR NF, there was to be a total of 16,500 square feet (sf) of laboratory space devoted to AC (see table below). If RLUOB were allowed to hold 1,000 g WGPu and CMRR-NF were to remain deferred, the amount of space for AC in RLUOB would exceed that value without incurring the operational penalty of having to use gloveboxes in PF-4 to the extent that would otherwise be required.\nRegarding the latter point, a few types of AC can be done in gloveboxes. For example, sample management, which involves cutting pieces of plutonium from a larger sample, and analysis that uses solid samples on the order of 1 to 5 g of plutonium, can be done in gloveboxes because they do not require fine manipulation. In contrast, most AC uses samples of a few drops of liquid with milligram (or smaller) quantities of plutonium; such samples require fine manipulation, which is much easier to do in hoods. Performing AC tasks of the latter type in gloveboxes exacts a penalty in the time required to do the analysis, which slows throughput and thereby reduces capacity.\nBy performing AC tasks best suited for hoods in RLUOB and AC tasks that can be performed in gloveboxes in PF-4, by studying how to maximize efficient use of space for AC, and perhaps by using two shifts per day instead of one, it seems likely that a configuration of PF-4 plus RLUOB with 1,000 g WGPu would have the space both to fabricate 80 ppy and to provide the AC necessary to support that level of production. A detailed analysis would be needed to reach this conclusion with confidence.\nAppendix G. Abbreviations"
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"question": [
"What is a pit?",
"Where were pits produced during the Cold War?",
"How has pit production changed since 1989?",
"What is current U.S. nuclear policy?",
"How does the Department of Defense plan to maintain existing nuclear weapons?",
"Why do some people disagree with the Department of Defense's requirement?",
"How did DOE respond to the closing of Rocky Flats?",
"What other measures did the DOE propose in response to the closing of Rocky Flats?",
"Why did Congress reject the Modern Pit Facility?",
"Why did the Administration defer construction of the CMRR-NF?",
"How did Congress mandate the building of CMRR-NF?",
"Why do casting pits require high security?",
"How would making 80 ppy affect MAR?",
"Why does RLUOB require regulatory relief?",
"What options exist for holding plutonium?",
"How would increasing the size of RLUOB be potentially detrimental?",
"What is the possible outcome of regulatory relief?",
"What other options exist for augmenting AC space?",
"How would moving plutonium -238 work to other sites be beneficial?",
"Why might it be better to keep plutonium work at LANL?",
"How might building concrete modules connected to PF-4 be helpful?",
"What factors affect the need for concrete modules?",
"What is the effect of differing timelines between various groups?",
"Why does doing nothing entail costs and risks?",
"How should Congress limit a building's permitted plutonium quantity?",
"Why is the political system potentially more useful than the regulatory system?"
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"A \"pit\" is the plutonium core of a nuclear weapon.",
"Until 1989, the Rocky Flats Plant (CO) mass-produced pits.",
"Since then, the United States has made at most 11 pits per year (ppy).",
"U.S. policy is to maintain existing nuclear weapons.",
"To do this, the Department of Defense states that it needs the Department of Energy (DOE), which maintains U.S. nuclear weapons, to produce 50-80 ppy by 2030.",
"While some argue that few if any new pits are needed, at least for decades, this report focuses on options to reach 80 ppy.",
"With Rocky Flats closed, DOE established a small-scale pit manufacturing capability at PF-4, a building at Los Alamos National Laboratory (LANL).",
"DOE also proposed higher-capacity facilities; none came to fruition.",
"In 2005, Congress rejected the Modern Pit Facility, viewing as excessive the capacity range DOE studied, 125-450 ppy.",
"In 2012, the Administration \"deferred\" construction of the Chemistry and Metallurgy Research Replacement Nuclear Facility (CMRR-NF) on grounds of availability of interim alternatives and affordability.",
"Congress mandated it in the FY2013 cycle, but provided no funds for it then, and permitted consideration of an alternative in the FY2014 cycle.",
"Casting pits uses much plutonium that an accident might release (\"Material At Risk,\" MAR) and requires high security.",
"Making 80 ppy would require freeing more MAR and floor space in PF-4 for casting.",
"Provide regulatory relief so RLUOB could hold 1,000 grams of plutonium with few changes to the building. AC for 80 ppy needs much floor space but not high MAR or high security.",
"Several options involve LANL's Radiological Laboratory/Utility/Office Building (RLUOB). Regulations permit it to hold 26 grams of weapons-grade plutonium, the volume of two nickels; AC for 80 ppy would require 500 to 1,000 grams and perhaps space elsewhere.",
"Augmenting RLUOB to hold the latter amounts within regulations would be costly even though the radiation dose if the building collapsed would be very low.",
"Regulatory relief would save time and money, but would raise concerns about compliance with regulations.",
"A complementary option is to perform some AC at Lawrence Livermore National Laboratory or Savannah River Site.",
"Move plutonium-238 work to Idaho National Laboratory or Savannah River Site. Fabricating plutonium-238 into power sources for space probes entails high MAR, but not high security because it is not used in pits. Moving it would free MAR and floor space in PF-4.",
"At issue is whether to conduct all plutonium work at LANL, the plutonium \"center of excellence.\"",
"This would enable high-MAR work to move out of PF-4, so PF-4 and modules could do the needed pit work.",
"At issue: are modules needed, at what cost, and when.",
"Differing time horizons between Congress and DOE, and between political and technical imperatives, cause problems.",
"Doing nothing entails costs and risks. Keeping a 1950s-era building open while options are explored exposes workers to a relatively high risk of death in an earthquake.",
"Congress may wish to consider limiting a building's permitted plutonium quantity by estimated dose instead of MAR.",
"A facility can be safe even if it is not compliant with regulations. The political system is more flexible than the regulatory system. Regulations derive their authority from statutes. Regulators, bound by these statutes, cannot make cost-benefit tradeoffs regarding compliance. In contrast, the political system has the authority, ability, and culture to decide which tradeoffs are worth making."
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}
|
CRS_R43930
|
{
"title": [
"",
"Introduction",
"Overview of Home Visiting",
"What is Home Visiting?",
"Research on Home Visiting",
"Overview of the MIECHV Program",
"Eligible Families",
"Funding",
"Formula Funding",
"Competitive Funding",
"Funding Levels",
"Coordination in the Community and at the Federal Level",
"Coordination within Jurisdictions",
"Federal Coordination",
"Administration",
"Requirements for Grantees",
"Overview",
"Needs Assessment",
"Coordination with Other Assessments",
"Initial Needs Assessment",
"Update to Needs Assessment",
"How Jurisdictions Demonstrate Improvement",
"Demonstrating Improvements After Three Years",
"Demonstrating Continuous Improvements",
"Additional Requirements",
"Home Visiting Models",
"Home Visiting Evidence of Effectiveness (HomVEE)",
"Eighteen Models Found to be Evidence-Based as of June 2017",
"Selected Characteristics of the Models",
"Use of Models",
"Option to Fund Home Visiting Services on a Pay-for-Outcome Basis",
"Technical Assistance",
"Research and Evaluation",
"National Evaluation of MIECHV: MIHOPE",
"MIHOPE-Strong Start Evaluation",
"Grantee-Led Evaluations",
"Other Research and Evaluation Activities",
"Recent Congressional and Executive Branch Action"
],
"paragraphs": [
"",
"Early childhood home visiting is a strategy for delivering services to improve health, well-being, and education outcomes for vulnerable families with young children. Nurses, social workers, and other professionals visit the homes of families who participate on a voluntary basis. The federal government has long supported early childhood programs in which home visiting is a major component or is otherwise permitted. The Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program is the primary federal program that focuses exclusively on home visiting. The program was implemented in March 2010, following the Obama Administration's budget request for a national home visiting program and a home visitation pilot program carried out in 15 states that had been initiated by the George W. Bush Administration. Congress considered proposals to establish home visiting programs as part of health care reform in 2010 and in prior years.\nHHS provides MIECHV funding to states, territories, and tribal entities for home visiting services in at-risk communities, as identified by these jurisdictions. MIECHV prioritizes certain populations, including low-income families, young mothers, or individuals who have a history of substance abuse, among other risk factors. Families participate on a voluntary basis. In FY2017, the MIECHV program served 156,297 individual parents and children who participated in 942,676 home visits. Jurisdictions that carry out home visiting programs under the program must adhere to specific requirements. For example, they must use most of their program funding to implement one or more home visiting models that have been identified by HHS to be effective. Separately, HHS provides training and technical assistance to jurisdictions and is carrying out research activities to evaluate the impacts of the program on participants' outcomes.\nThis report begins with an overview of the MIECHV program and home visiting generally, and discusses federal efforts to increase and support home visiting services. It goes on to describe the program, including information about its administration, coordination, and funding. Following this is an outline of MIECHV requirements for states and other jurisdictions, including information on the types of home visiting models that have been implemented across jurisdictions. The report concludes with information about efforts to research, evaluate, and provide technical assistance within the MIECHV program.\nAppendix A includes federal legislative history on home visiting; Appendix B includes funding levels by state for the MIECHV program in selected years; Appendix C includes a timeline of relevant dates for the program; and Appendix D provides information about home visiting models adopted by jurisdictions, and features of selected home visiting models that meet HHS criteria for being effective.",
"",
"Home visiting is a holistic strategy that involves social, health, and/or educational services for parents and their children from birth to entry into kindergarten. In practice, it generally entails visits to the homes of families on a regular basis (e.g., weekly or monthly) over an extended period (e.g., six months or longer). For some home visiting models, the number of visits becomes more infrequent over time. Depending on the program model, visits may be conducted by nurses, mental health clinicians, social workers, or paraprofessionals who have received specialized training. These visitors provide services such as parenting education and they refer families to other services in the community.\nTo a large extent, parents shape their children's earliest experiences. Home visiting programs seek to help parents better understand the development of their children. For example, home visitors can help parents facilitate learning opportunities through playing games, talking to their children frequently, and reading to them. Home visitors can also provide information to parents about child health, such as the value of well-child visits, car seat safety, and brushing teeth. Home visiting can directly help parents identify outside supports, such as referrals for health insurance and substance abuse resources. The programs can help achieve positive benefits for children, parents, and possibly their communities.\nFor many years, greater attention has been focused on early childhood home visitation as a way to improve child and family outcomes. In recent decades, this trend appears to be driven in some part by newer research on how the human brain develops and, specifically, the significance of prenatal and early childhood environments to later life.",
"At least since the 1960s, a variety of early childhood home visiting models have undergone many assessments and evaluations intended to test how effectively they achieve their goals. Looking at findings across multiple home visiting studies, researchers conclude that home visiting can provide benefits to children and their parents, including preventing potential child abuse and neglect, enhancing cognitive development, improving parenting attitudes and parenting behaviors (e.g., discipline strategies), and increasing maternal education. They caution, however, that while visiting programs can lead to improvements, the difference is small between observed outcomes for families that received home visits versus those who did not. Further, while one or more individual studies may have shown positive effects with regard to the desired outcomes, those effects have not necessarily been studied and/or achieved across more than one study or program site. Nonetheless, some models or aspects of models have been shown to be particularly effective. Overall, while researchers have cautioned that home visiting is not a panacea, they have generally encouraged its implementation as part of a range of strategies intended to enhance and improve early childhood development.",
"The Patient Protection and Affordable Care Act (ACA, as amended; P.L. 11-148) established the MIECHV program under Section 511 of the Social Security Act. (See Appendix A for a history of federal home visiting efforts.) The program—jointly administered by the U.S. Department of Health and Human Services' (HHS's) Health Resources and Services Administration (HRSA) and Administration for Children and Families (ACF)—seeks to strengthen and improve home visiting services and support to families residing in at-risk communities, while also referring families to services outside of the program. States, territories, and Indian tribes determine which communities are at risk by conducting needs assessments.\nThe MIECHV law requires that jurisdictions administer programs that are evidence-based. Specifically, jurisdictions must use no less than 75% of their program funds to implement home visiting models that HHS has determined as effective, ensure that services are carried out with fidelity to these program models, and demonstrate improvements in outcomes for participating families.\nMIECHV funding is mandatory, meaning that the authorizing law funds the program directly (as opposed to the funding provided through appropriations law). Annual funding levels have been between $100 million and $400 million. The most recent reauthorization of the program, the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ) extended funding through FY2022. With limited exceptions, jurisdictions have two full fiscal years to expend these funds.\nThe law includes several requirements related to eligible families, funding program administration, and research and evaluation. Figure 1 summarizes the major components of the program.",
"Under the MIECHV program, jurisdictions provide home visiting services to eligible families who volunteer to participate. An eligible family includes (1) a woman who is pregnant, and the father-to-be, if available; (2) a parent or primary caregiver of a child, including grandparents or other relatives of the child, and foster parents, who is serving as the child's primary caregiver from birth to entry into kindergarten; and (3) a noncustodial parent who has an ongoing relationship with, and at times provides physical care for, the child from birth to entry into kindergarten. Jurisdictions must give priority to serving eligible families who meet any of the following criteria:\nreside in communities that are in need of home visiting services, as identified in the needs assessment conducted by the jurisdiction and accounting for other factors (staffing, community resources, and other requirements) that are necessary to operate at least one approved home visiting model in those communities; are low-income; include a pregnant woman under the age of 21; have a history of child abuse or neglect or have had interactions with child welfare services; have a history of substance abuse or need substance abuse treatment; have users of tobacco products in the home; have children with low student achievement; have children with developmental delays or disabilities; or individuals who are serving, or formerly served, in the Armed Forces, including such families that have members of the Armed Forces who have had multiple deployments outside of the United States.",
"Funding for the MIECHV program has increased over time from $100 million to $400 million annually. The authorizing law requires that 3% of the annual funding is to be reserved for Indian tribal entities, and another 3% is to be reserved for selected technical assistance, research, and evaluation. MIECHV funding may be expended by the jurisdiction through the end of the second succeeding fiscal year after the award.\nThe law does not specify how the funds are to be awarded, though the most recent reauthorization of the program under BBA 2018 included language that directs HHS to use the most accurate data available for eligible jurisdictions if funding is awarded on the basis of relative population or poverty considerations. In practice, HHS has distributed MIECHV funds by both formula and competitive grants to states and other jurisdictions.",
"Formula funding is available annually for home visiting in the 50 states, the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, the Northern Mariana Islands, and American Samoa. The factors for allocating funds under the formula component have changed, effective with funding awarded with the FY2016 appropriation. HHS has noted that the funds are intended to both address the need for services and to reward jurisdictions for improved outcomes. Table 1 uses funding for FY2018 as an example of how formula funds are to be awarded. Funds are allocated, in part, based on a \"need funding\" factor that accounts for the relative share of children in poverty, with certain adjustments. Most of the funds will be allocated based on a \"base funding\" factor that accounts for the amount of competitive funding each jurisdiction receives. Awards are adjusted using \"guard rails\" to ensure no award varies by greater than ±7.5% from the prior-year formula ceiling amount.",
"In some years, HHS has awarded competitive funding to jurisdictions based on the strength of their program or their effort to develop a strong program. Most recently, HHS awarded competitive funding in FY2017 (using carryover funding from prior years). These \"innovation grants\" focused on bolstering selective aspects of home visiting (e.g., recruitment, engagement, and retention of eligible families). In the past, competitive funds were provided for \"development grants\" focused on building the capacity of the workforce, data infrastructure, and care coordination and referral systems; and/or to build upon their efforts already underway and expand services to more families and communities under grants known as \"expansion grants.\"",
"Funding levels for the program have been enacted by the authorizing law, and amendments to that law, as follows:\nThe ACA directly appropriated five years of funding for the MIECHV program: $100 million for FY2010, $250 million for FY2011, $350 million for FY2012, and $400 million for each of FY2013 and FY2014. The Protecting Access to Medicare Act of 2014 ( P.L. 113-93 ) provided $400 million for the program for the first half of FY2015 (October 1, 2014, through March 31, 2015). The Medicare Access and CHIP Reauthorization Act of 2015 ( P.L. 114-10 ) extended the $400 million made available under P.L. 113-93 through all of FY2015 (October 1, 2014, through September 30, 2015). In other words, the law allowed HHS to obligate FY2015 funds through the end of FY2015 but otherwise did not change the level of funding for FY2015. P.L. 114-10 also provided $400 million for each of FY2016 and FY2017 under the program. BBA 2018 extended funding of $400 million for the program for each of FY2017 through FY2022.\nTable 2 summarizes the obligated funding for the program from FY2010 through FY2017. The total funding for each year does not equal the mandatory level established in the law due to sequestration (in FY2013, FY2014, and FY2017). In addition, some funds were not obligated for each of FY2011 through FY2017.",
"",
"The MIECHV law includes several provisions that seek to ensure holistic services to families and promote coordination between agencies. For example, the law states that grants for home visiting programs are intended to improve specific family outcomes across a number of domains concerning health, emotional and physical well-being, and education. Related to this, jurisdictions carrying out MIECHV programs were required to conduct an initial needs assessment that was coordinated with needs assessments under other federal programs, including those pertaining to child abuse, early childhood education, and domestic violence. Jurisdictions are required to update the needs assessment by October 1, 2020. Jurisdictions must also establish and demonstrate improvements in coordinating with other community resources and supports.",
"The law requires coordination at the federal level between HRSA (specifically, the Maternal and Child Health Bureau) and ACF in (1) reviewing and analyzing the statewide needs assessments; (2) awarding MIECHV funds and overseeing the grants; (3) carrying out an evaluation of the program and an accompanying report; and (4) establishing advisory panels (as required in the law to review and make recommendations on the evaluation for the program and for providing assistance to jurisdictions that have not met expectations for performance). In practice, HRSA administers funding for the states and territories, and ACF administers funds for the tribes. ACF, in collaboration with HRSA, is overseeing the random assignment evaluation of the program known as \"MIHOPE.\"\nThe law also specifies that HRSA and ACF must coordinate and collaborate on research with other federal agencies that have responsibility for administering or evaluating programs for eligible MIECHV families. Such agencies include the HHS Office for Planning and Evaluation (OPRE), the Centers for Disease Control and Prevention (CDC), the Eunice Kennedy Shriver National Institute of Child Health and Human Development of the National Institutes of Health (NIH), the Department of Justice's Office of Juvenile Justice and Delinquency Prevention (OJJDP), and the Department of Education's Institute of Education Sciences.\nAs of February 2020, HRSA and ACF must designate data exchange standards to ensure that a state agency operating a home visiting program can exchange data with another state agency under federal law. Additionally, HRSA and ACF must designate data exchange standards to govern federal reporting and data exchanges that are required under federal law. These standards are to be developed in consultation with a working group established by the Office of Management and Budget (OMB) and must consider the perspectives of states.",
"HHS formula and competitive grant funding for states and territories is allocated to a lead agency in each state that successfully applies for the MIECHV program. Jurisdictions are required to effectively implement home visiting models (or a single home visiting model) in the state's at-risk community or communities, as identified by the jurisdiction via its needs assessment.\nStates and territories can determine which lead agency or agencies will administer the MIECHV program. The public health department is the lead agency that administers home visiting funds in most states, the District of Columbia, and the five territories. In 13 of these jurisdictions (Alaska, Delaware, Guam, Idaho, Kentucky, Maine, Michigan, Montana, Nebraska, Nevada, New Hampshire, North Carolina, and West Virginia) the department of health also includes the state social service agency. In addition, 13 states administer the program through other departments with a social service focus (Alabama, Colorado, Connecticut, Illinois, Kentucky, Mississippi, New Mexico, Oregon, Pennsylvania, Texas, Vermont, Washington, and Wisconsin). South Carolina operates its program through a nonprofit organization, the Children's Trust Fund of South Carolina, which is authorized under state law and overseen by the state Office of Executive Policy and Programs.\nThree states (Florida, North Dakota, and Wyoming) have declined funding for the program, and, as permitted under law, nonprofits have applied and have operated the program in these states in selected years: Florida Association of Healthy Start Coalitions (Florida); Prevent Child Abuse (North Dakota); and Parents as Teachers National Center (Wyoming). The nonprofit organizations receive funding that otherwise would have been awarded to the states in which they operate. To be eligible to operate home visiting programs under MIECHV, nonprofits must have an established record of providing early childhood home visiting programs or initiatives in one or more states.",
"",
"The law specifies a variety of requirements for jurisdictions receiving MIECHV funds. These jurisdictions were required to conduct an initial needs assessment to identify communities with concentrations of poor infant health and mortality, poverty, and other negative outcomes. They had to submit the results of the assessments to HHS and explain how the jurisdiction intended to address the needs of the assessment. Under BBA 2018, jurisdictions must update their needs assessment. Further, the law requires jurisdictions to establish, subject to HHS approval, quantifiable and measurable benchmarks for demonstrating improvements in six indicators for eligible families in the program. Jurisdictions must also meet requirements related to serving families, among other requirements.",
"The MIECHV law requires states to conduct a statewide needs assessment for the MIECHV program. The law separately requires that tribes and nonprofit organizations carry out needs assessments similarly to the assessment required for all states. The statewide needs assessments have three purposes:\n1. Identify communities with concentrations of: premature birth, low-birth weight infants, and infant mortality, including infant death due to neglect or other indicators of at-risk prenatal, maternal, newborn, or child health; poverty; crime; domestic violence; high school dropouts; substance abuse; unemployment; or child maltreatment. 2. Determine the quality and capacity of existing programs or initiatives for early childhood home visitation in the jurisdiction, including the number and types of individuals and families who are receiving services under such programs or initiatives; gaps in early childhood home visitation in the jurisdiction; and the extent to which such programs and initiatives are meeting the needs of eligible families. 3. Determine the state's capacity for providing substance abuse treatment and counseling services to individuals and families in need of such treatment or services.",
"In carrying out the needs assessment, jurisdictions must coordinate with, and take into account, other appropriate needs assessments conducted by the state, as determined by the HHS Secretary, including similar assessments already required under law: (1) the needs assessment for the Maternal and Child Health Services Block Grant (both the most recent completed assessment and any assessments in progress); (2) the community strategic planning and needs assessment under the Head Start program; and (3) the inventory of current unmet needs and current community-based and prevention-focused programs and activities to prevent child abuse and neglect and other family resource services under the Child Abuse Prevention and Treatment Act (CAPTA). HHS guidance issued in August 2010 also specified that the assessment should be coordinated with the state advisory council established under the Head Start Act (for children from birth to school entry); the state's child care agency; the state's education agency; the state's agencies administering federal funds to prevent and respond to domestic violence (under the Family Violence Prevention and Services Act [FVPSA] and STOP grants authorized under the Violence Against Women Act [VAWA]); and the state child welfare agency (if this agency is not also administering programs under CAPTA). In addition, the guidance encouraged coordination with the state Individuals with Disabilities Act (IDEA) agency.",
"As a condition of receiving funds under the Maternal and Child Health Services Block Grant for FY2011, each jurisdiction was required to submit the needs assessment by September 20, 2010 regardless of whether it intended to apply for a grant to provide home visiting services. The 50 states, the District of Columbia, and the territories submitted the assessment and subsequently received a portion of their FY2010 MIECHV funds if they applied for them. (The three states that did not ultimately apply for MIECHV funds, and whose MIECHV programs are now operated by nonprofit organizations, also submitted an assessment.) Jurisdictions that applied for a MIECHV grant (which included the remainder of the FY2010 funds) had to subsequently submit an updated state plan in 2011 that included a final designation of the at-risk communities, a more detailed needs assessment for the targeted communities, and a specific plan for home visiting services tailored to address those needs.\nAs part of the needs assessment, HHS directed states and territories to describe their understanding of the term \"community\" based on the unique structure and makeup of the state or territory. For example, \"community\" could be composed of zip codes, neighborhoods, or census tracts (in urban areas) or counties (for rural areas). HHS defined \"at-risk community\" as a community for which indicators, in comparison to statewide indicators, demonstrate that the community is at greater risk than the state (or jurisdiction) as a whole. States and territories had the option of targeting all at-risk communities or sub-communities or neighborhoods deemed to be at greatest risk, if data on these smaller units were available. Jurisdictions were required to provide a justification for each such community identified, using the most recent and/or relevant data available on each of the risk factors (defined further in the guidance), for both the entire jurisdiction and each community defined as at risk.\nTribal grantees are required to conduct a needs assessment of the tribal community and to develop a plan to address those needs. The assessment is to be conducted within the first year of receiving funding under the program.",
"With enactment of BBA 2018, jurisdictions (including tribal grantees and nonprofit organizations that operate home visiting programs in three states) must review and update their prior assessments. As with the initial assessment, the updated assessments must be coordinated with the statewide needs assessment required under the Maternal and Child Health Services Block Grant, but they may be conducted separately. The assessment must be reviewed and updated by the jurisdiction no later than October 1, 2020. In guidance, HHS has directed jurisdictions to begin activities related to the needs assessment update no earlier than January 2019 and to complete the assessment between early 2019 and October 1, 2020. The guidance notes that further information about the needs assessment is forthcoming.",
"The MIECHV law requires states and other jurisdictions that receive grant funds for home visiting programs to demonstrate improvements among eligible families in what the law refers to as six \"benchmark areas\" (HHS sometimes calls benchmark areas \"outcomes\"). These six benchmark areas are desired outcomes for participants; for each of those outcomes, a state or jurisdiction operating a MIECHV program must establish a baseline to begin measuring performance (see Table 3 ). Jurisdictions were required to demonstrate improvements against these baselines within three years of the law's enactment. In addition, BBA 2018 directs jurisdictions to demonstrate improvements by the end of FY2020 (September 30, 2020) and every three years thereafter. HHS uses 19 items (described as \"constructs\") to measure the performance of each jurisdiction. Each benchmark area has between one and six constructs. This is a change from the performance accountability system that was in place through FY2016, when HHS used 37 constructs to measure performance. Under this prior system, jurisdictions were given flexibility in developing how they would measure performance for each construct. For example, all grantees had to measure prenatal care under the benchmark area for improved maternal and newborn health; however, grantees could focus on different aspects of performance, such as the onset of prenatal care or the adequacy of prenatal care. The revised performance measurement system requires grantees to measure performance under each construct in the same way. According to HHS, the revised data collection efforts are intended to make it easier for data to be aggregated nationally.\nThis data collection effort is focused on grantee performance over time rather than on the impacts of the program. As discussed in a subsequent section, HHS is assessing the effects of MIECHV programs through a separate evaluation effort.",
"The law required jurisdictions to show that they were making improvements in at least four of six benchmark areas three years after the law was implemented. The law also separately required jurisdictions to submit a report to HHS no later than December 31, 2015, about whether improvements were made in each of the benchmark areas.\nBy October 30, 2014, all states and territories operating a MIECHV program submitted reports to demonstrate their performance against the benchmarks for the first three years of the program. The tribal entities that were awarded funding under the first cohort of the tribal grants were required to submit their reports by December 31, 2014, and they did so. The three nonprofit organizations that operate programs in Florida, North Dakota, and Wyoming and were awarded funding after September 2011 were required to submit reports on the three-year benchmarks by October 30, 2016, and they did so.\nIf a jurisdiction fails to demonstrate improvements in at least half of the constructs in four of the benchmark (outcome) areas, it has to develop and implement a plan to make improvements in each of the applicable areas, subject to approval by HHS. HHS provides technical assistance to the grantee in developing and implementing the plan. As directed by statute, HHS convened an advisory panel made up of staff from HHS and the Department of Education to make recommendations about this technical assistance. The law requires HHS to terminate a jurisdiction's MIECHV funding if, after a period of time specified by HHS, the jurisdiction has failed to demonstrate any improvements in outcomes, or if HHS determines that the jurisdiction has failed to submit the required report on performance in benchmark areas. To date, one grantee (from the first cohort of tribal grantees) was not awarded funds due to performance and compliance concerns. No jurisdictions are currently on improvement plans.",
"Jurisdictions must continue to track improvements in the benchmark areas. They must report to HHS about the benchmarks at least 30 days after the end of FY2020 and every three years thereafter. They must demonstrate that their program results in improvements for eligible families in at least four of the benchmark areas that are applicable to the home visiting models used by the jurisdiction . (Some models may not focus their activities on each of the benchmark areas.) This is distinct from the reporting on the benchmark areas for the initial three years, which did not specifically reference the benchmark areas that are applicable to the models. Further, jurisdictions must demonstrate improvements in the benchmark areas based on comparing enrolled families to families that did not receive services under a home visiting program. This varies from the initial reporting on benchmark data, which was based on improvements over time among enrolled families only.\nAs with the benchmark reporting requirement for the initial three years of the program, jurisdictions that do not show improvement within each subsequent three-year period must develop and implement a plan to improve outcomes that are subject to approval by the HHS Secretary. The improvement plan must include the same provisions that had been required as part of the initial reporting on benchmark data. HHS must continue providing technical assistance to the eligible entity in developing and implementing the improvement plan (but the law does not address the ongoing role of the advisory panel). HHS may opt to terminate the jurisdiction's grant if improvements are not made after a period specified by HHS, and provide remaining funds to nonprofit organizations to operate the home visiting program in that jurisdiction.",
"The law also specifies other requirements for jurisdictions carrying out MIECHV programs. Jurisdictions are to conduct individualized assessments of the families and to make improvements in particular outcomes that are relevant to each participating family. Such desired individual family outcomes are nearly identical to the benchmark areas, except that the outcomes also include improvements in parenting skills and in cognitive, language, social-emotional, and physical developmental indicators.\nJurisdictions must also ensure that the program\nadheres to a clear, consistent home visiting model that meets the requirements for being research-based (discussed further in the next section) and is linked to the benchmark areas and outcomes for individual families; employs well-trained and competent staff, as demonstrated by education or training (such as nurses, social workers, educators, and child development specialists) and provides ongoing and specific training on the home visiting model; maintains high-quality supervision to establish \"home visitor competencies\"; demonstrates strong organizational capacity to implement the activities involved; establishes appropriate linkages and referral networks to other community resources and supports for eligible families; and monitors how the home visiting model is implemented to ensure that services are implemented with fidelity to the model.\nJurisdictions may use MIECHV funding to supplement, and not supplant, funds from other sources for early childhood home visitation programs or initiatives. Finally, as discussed in the next section, jurisdictions must spend most of their MIECHV funds on specified home visiting models that meet certain standards of effectiveness.",
"Jurisdictions must use at least 75% of their total funding (regardless of whether they are formula or competitive funds) within a given fiscal year to carry out home visiting models that are \"evidence-based.\" As outlined in the statute, models are evidence-based if they\nhave been in existence for at least three years; are associated with a national organization or institution of higher education that has comprehensive standards to ensure that services are high-quality and that the program continuously makes improvements; are research-based and grounded in relevant empirically-based knowledge; and have demonstrated significant positive outcomes in the benchmark areas and the desired individual family outcomes when evaluated using well-designed and rigorous quasi-experimental research designs or randomized controlled research design in which the evaluation results have been published in peer-reviewed journals.\nIn implementing the MIECHV program, HHS established criteria for determining which home visiting models have evidence of effectiveness after seeking public comment on the criteria (as required under the law). The criteria expand on the requirements in the law about models that are linked to specified outcomes and demonstrate significant positive outcomes. The criteria are as follows:\nat least one high- or moderate-quality impact study of the model finds favorable, statistically significant impacts in two or more of eight outcome domains; or at least two high- or moderate-quality impact studies of the model using nonoverlapping study samples find one or more favorable, statistically significant impacts in the same outcome domain.\nIn this context, impact studies evaluate whether the home visiting model results in favorable outcomes for participants generally. As specified by HHS (and in accordance with the MIECHV law), the outcome domains are generally consistent with the benchmark areas and individual family outcomes for the program: (1) maternal health; (2) child health; (3) child development and school readiness; (4) positive parenting practices; (5) family economic self-sufficiency; (6) reductions in child maltreatment; (7) reductions in juvenile delinquency, family violence, and crime; and (8) linkages and referrals.\nJurisdictions may use up to 25% of their formula and/or competitively awarded funds for administering home visiting models that conform to a promising and new approach for achieving improved outcomes under the benchmark areas and improved family outcomes. The law specifies that such a \"promising\" model must have been developed or identified by a national organization or institution of higher education and will be evaluated through a well-designed and rigorous process led by the jurisdiction. HHS has further explained that a promising approach is one that meets the standards outlined in the statute but for which there is little to no evidence of effectiveness; one with evidence that does not meet the criteria for an evidence-based model; or a modified version of an evidence-based model that includes significant alterations to core components.",
"In 2009, prior to implementation of ACA, HHS/ACF created the Home Visiting Evidence of Effectiveness (HomVEE) initiative to determine which home visiting models have shown evidence of effectiveness. The project has been incorporated into the MIECHV program. It annually (on a fiscal year basis) reviews the research literature on studies of models in which home visiting is the primary service strategy for pregnant women or families with children from birth to age five.\nHomVEE prioritizes the home visiting models for further study based on a point system. Points are assigned to models based on the number and design of their impact studies (with three points for each randomized control trial (RCT) and two points for each quasi-experimental designed study) and their sample size of their impact studies (with one point for each study with a sample size of 250 or more). In addition, HomVEE reviewers determine whether the program is currently in operation and if additional information on the model can be gleaned from websites and others sources.\nOf those models that receive sufficient points for further review, HomVEE examines applicable impact studies with RCTs and quasi-experimental designs, and assigns each study a rating of high, moderate, or low quality. After reviewing studies for a model, HomVEE evaluates the evidence across all studies that receive a high or moderate rating and measure outcomes in at least one of the eight domains. The reviewers additionally examine and report on other aspects of the evidence for each model, based on all high- and moderate-quality studies available.",
"As of June 2017, the HomVEE review had identified 45 home visiting models as suitable for review and identified 18 of these models as having met the criteria for an evidence-based program. The HomVEE project also reviewed home visiting models to examine specific impacts for American Indian and Alaska Native populations. One model, Family Spirit, had such impacts and is one of the 18 models that meet the HHS criteria.",
"HHS determined that each of the 18 models is effective in at least two of the eight areas that were included in the HHS criteria for evidence of effectiveness of home visiting models. Some key characteristics of the models are as follows:\nJust over half of the models (11) target at-risk pregnant women, and all of them target parents and their young children. All but two models serve families with children under age one, and nearly all (14) serve children across multiple age ranges (birth to 23 months, 24 to 48 months, etc.). The models are implemented by a variety of entities that includes nonprofit and community-based organizations; hospitals, health clinics, or physicians; a state governmental agency (e.g., child welfare or health care agency); Head Start agencies; and other types of entities (e.g., preschool and criminal justice programs). All but four of the models require home visitors to meet certain minimum educational requirements. Home visitors are typically registered nurses, mental health professionals, social workers, or paraprofessionals.\nFurther, each model requires preplacement training on the model, and the majority of the models (14 models) require ongoing training, as opposed to having voluntary ongoing training (4 models). The caseload for home visitors varies, with a range of about 10 to 30 cases per worker (for 12 of the models); however, some models assign greater or fewer caseloads based on the needs of families. Many of the models call for weekly visits with the family for an initial period of time, and the visits often become less frequent over time. A few models specify a particular number of visits overall (ranging from 1 to 52 visits), and others provide a certain number of visits based on family needs. Four models provide additional types of interventions that include classes on preparing for motherhood and meetings with other program participants. See Table D-1 and Table D-2 for further detail on the characteristics of the 18 models designated as effective.",
"Table 4 summarizes information on the number of jurisdictions implementing each evidence-based model in FY2017. In addition, three jurisdictions (Arkansas, Kansas, and Tennessee) used a portion of their funds to implement a home visiting model in FY2017 that was promising, but not yet determined to be effective. Specifically, these states used 25% or less of their FY2017 formula grant allocation for this purpose.",
"The most recent law to reauthorize the MIECHV program, BBA 2018, added new language to enable a jurisdiction to use up to 25% of its MIECHV grants for a \"pay-for-outcome\" (sometimes referred to in policy literature as \"pay-for-success\") initiative that satisfies the requirements for providing evidence-based home visiting services. Funding for pay-for-outcomes initiatives may be expended by the eligible entity for up to 10 years after the funds are made available.\n\"Pay-for-outcome\" initiative is defined as a performance-based grant, contract, or cooperative agreement awarded by a jurisdiction in which a commitment is made to pay for improved outcomes that result in social benefit and direct cost savings or cost avoidance to the public sector. Such an initiative is to include\na feasibility study that describes how the proposed intervention is based on evidence of effectiveness; a rigorous third-party evaluation that uses experimental or quasi-experimental design, or other research methodologies, that allow for the strongest possible causal inferences to determine whether the initiative has met its proposed outcomes; an annual, publicly available report on the progress of the initiative; and a requirement that payments are made to the recipient of a grant, contract, or cooperative agreement only when agreed-upon outcomes are achieved, except that this requirement does not apply to payments for the third-party evaluation.\nHHS has provided some preliminary guidance to states advising that FY2018 formula funds are not to be used for pay-for-outcome initiatives; however, jurisdictions that plan to use future funding for this purpose must submit a letter of intent with a description of any past or current activities that would support pay-for-outcome initiatives, such as a feasibility study, third party evaluation, and outcome payments. This preliminary guidance noted that further guidance is forthcoming.",
"The law directs the HHS Secretary to provide technical assistance (TA) to grantees, specifically with regard to administering programs or activities that are funded by the MIECHV program. In addition, HHS is to provide technical assistance to any jurisdiction that is required to implement an improvement plan because it failed to improve in the benchmark (or outcome) areas. Jurisdictions receive TA from federal staff, developers of home visiting models, and TA providers contracted with HHS. Multiple HHS-contracted providers assist grantees.\nHRSA provides assistance to grantees through the MIECHV Home Visiting-Improvement Action Center (HV-ImpACT), which is operated under a contract with the Education Development Center, a national nonprofit organization that provides support to states and territories in implementing and improving their programs. HV-ImpACT provides training and technical assistance that focuses on administering high-quality programs, strengthening coordination of early childhood systems, and improving program outcomes. ACF provides similar types of technical assistance to Tribal MIECHV grantees via Programmatic Assistance for Tribal Home Visiting (PATH), operated by Zero to Three, a national nonprofit organization.\nACF also provides assistance to grantees through the Design Options for Maternal, Infant, and Early Childhood Home Visiting Evaluation (DOHVE) Technical Assistance Team. James Bell Associates operates the DOHVE Technical Assistance Team. DOHVE provides technical assistance to jurisdictions on their research and evaluation efforts. For example, they assist jurisdictions with developing meaningful plans to evaluate home visiting programs and disseminate findings, building capacity to analyze returns on investments in home visiting, integrating home visiting data into other early childhood data systems, and coordinating state and tribal home visiting efforts. Tribal entities receive technical assistance on these same topics via the Tribal Evaluation Institute (TEI) . James Bell Associates operates TEI.",
"The law directs the HHS Secretary to carry out a continuous program of research and evaluation activities to increase knowledge about home visiting programs, using random assignment designs when feasible. In practice, these activities include developing studies of home visiting models and sharing research and best practices. In addition, HHS requires jurisdictions to conduct evaluations of home visiting programs if they are implementing promising models (as opposed to a model that HHS has determined is evidence-based) or receive competitive awards.",
"The HHS Secretary was required to appoint an independent advisory committee of experts in program evaluation and research, education, and early childhood development. The purpose of this panel is to review, and make recommendations, on the design and plan for a national evaluation of the MIECHV program. HHS appointed the panel in 2013. As specified in the law, the evaluation must include an\nanalysis of the results of the statewide needs assessments and state actions in response to the assessments; assessment of the effect of early childhood home visitation programs on child and parent outcomes, including with respect to the benchmark areas and the individual family outcomes (described previously); assessment of the effectiveness of home visiting programs on different populations, including the extent to which the ability of programs to improve participant outcomes varies across programs and populations; and assessment of the potential for the activities carried out under home visiting programs, if scaled broadly, to improve health care practices, health care system quality, and efficiencies; eliminate health disparities; and reduce costs.\nThe evaluation, known as the Mother and Infant Home Visiting Program Evaluation (MIHOPE), is examining programs that use the four most common evidence-based home visiting models: Early Head Start-Home Visiting (EHS), Healthy Families America (HFA), Nurse-Family Partnership (NFP), and Parents as Teachers (PAT). The MIHOPE study includes 4,229 families in 88 local home visiting programs across 12 states who were randomly assigned to receive home visiting services or to a control group that was referred to non-home visiting services available in the community. The evaluation is generally designed to address the requirements outlined in the law and will include (1) an analysis of state needs assessments, (2) an implementation study of local program services, (3) an impact analysis of the effects of MIECHV on child and family outcomes, and (4) an economic analysis of program costs and cost effectiveness. MDRC, the social policy research organization, is conducting the evaluation, along with partner organizations.\nMIHOPE researchers collected information from families when the mother was pregnant or the child was no more than six months, and again when the child was 15 months old and between the ages of 2 ½ and 3 ½ years. HHS published a report on the implementation study, and additional reports are forthcoming.\nThe implementation study reported that families participated in the home visiting program for an average of eight months in the year following their first visit, and about half of all families were participating at the time of the child's first birthday. Families with more challenges and barriers participated in home visiting programs for shorter periods compared with average families in the study. Families in programs implementing EHS or NFP stayed in the program longer. About half of all families received at least one referral for public assistance or health insurance, including public health insurance programs. On average, families and home visitors discussed five topics in each visit; the most common topics discussed were mental health, positive parenting behavior, child preventative care, child development, and economic self-sufficiency. Home visitors described their role as providing consistent and stable support to empower mothers in their role as their child's first teacher. Some home visitors reported that they had challenges identifying and addressing a mother's poor mental health, substance abuse, and intimate partner violence.\nIn 2016, HHS awarded a separate contract to MDRC to design a follow-up study of MIHOPE participants. This evaluation is known as MIHOPE-LT (long term), and is designed to track outcomes of families in the study when their children are in kindergarten, third grade, early adolescence, and late adolescence. The evaluation is to include a cost-benefit analysis to examine whether benefits to families outweigh the costs of the four home visiting models.",
"In addition to the MIHOPE evaluation, the MIHOPE expansion evaluation (MIHOPE-Strong Start) is examining birth and health outcomes for mothers and infants through the Strong Start for Mothers and Newborns (Strong Start) initiative. Strong Start is carried out by the Centers for Medicare and Medicaid (CMS). The initiative is examining whether nonmedical prenatal interventions, when provided in addition to routine medical care, can improve health outcomes for pregnant women and newborns and decrease the cost of medical care during pregnancy, delivery, and over the course of the child's first year of life. One of those interventions is home visiting.\nThe MIHOPE-Strong Start evaluation seeks to determine whether home visiting services can impact health outcomes for disadvantaged pregnant women. The evaluation enrolled approximately 3,000 families from Healthy Families America and Nurse-Family Partnership sites in 66 local home visiting programs in 17 states. Families were randomly assigned to a home visiting group or to a non-home visiting control group. Participants include pregnant women who have Medicaid or CHIP (Children's Health Insurance Program) and are interested in and eligible for home visiting services, along with their children. The evaluation includes an implementation study and an impact analysis of the outcomes in three areas: (1) birth outcomes, (2) maternal prenatal health and health care use, and (3) infant health and health care use. The evaluation is also intended to provide information relevant to CMS on how participation in such programs might affect Medicaid costs. The evaluation was designed by CMS and ACF, is funded by CMS (without MIECHV funds), and is implemented in partnership with HRSA.\nHHS has published a report that provides an overview of how the 17 states involved in the MIHOPE evaluation are working to promote prenatal and positive birth outcomes. The report discusses the major stakeholders and partners involved in supporting these outcomes, through such efforts as providing funding, administering and expanding programs, supporting system-building efforts, linking services to families, and conducting training and professional development. The report also identified that the states use multiple sources to fund home visiting and other resources to support positive prenatal and birth outcomes. Additional reports for MIHOPE-Strong Start are forthcoming.",
"As noted, jurisdictions conduct evaluations of home visiting programs if they are implementing promising models. They also have the option to conduct evaluations of models that HHS has determined to be evidence-based, particularly for enhancements to these models. Plans for these evaluations must first be approved by HHS. Between 2011 and 2015, 48 jurisdictions developed grantee-led evaluations for promising approaches and evidence-based models. Based on an analysis by HHS, these grantee-led evaluations have helped to identify how programs are carried out, including (1) how to recruit, retain, and engage participants; (2) how to develop the home visiting workforce; (3) how to collaborate with community partners and coordinate services; (4) how programs are enhancing home visiting; and (5) the effectiveness of promising approaches in home visiting.",
"HHS supports efforts to learn more about selected aspects of home visiting, such as mapping the career trajectories of home visitors and investigating how home visiting programs can support families in substance abuse prevention, treatment, and recovery. In addition, HRSA and ACF support collaborative efforts that focus on certain research topic s:\nHRSA contracts with Johns Hopkins University to operate the Home Visiting Applied Research Collaborative (HARC). The center provides funding to researchers to strengthen home visiting practices. It also partners with other academic institutions, research firms, and home visiting experts to design and build HARC's research agenda. HRSA provides funding to the Education Development Center to operate the Home Visiting Collaborative Improvement and Innovation Network (HV-CoIIN 2.0) . This network convenes teams from states and local home visiting agencies to focus on improving home visiting interventions that were found to be effective in the earlier collaborative network known as HV-CoIIN 1.0. These issues include screenings for maternal depression, access to treatment, reducing symptoms, early detection, and linkages to services for children at developmental risk. HV-CoIIN 2.0 will also build capacity to improve in other areas, such as screening and referrals for intimate partner violence. ACF provides MIECHV funding to the Tribal Early Childhood Research Center (TRC). The center also receives funding from the HHS-funded Head Start and Child Care programs. The TRC seeks to partner with American Indian and Alaska Native communities, programs, practitioners, and researchers to advance research into early childhood development and early childhood programs for American Indian and Alaska Native children and families. The TRC is located at the University of Colorado Denver's School of Public Health.",
"Since 2014, Congress has held oversight hearings on the MIECHV program and considered legislation to extend funding for and reauthorize it. The program was reauthorized through FY2022 under the Bipartisan Budget Act of 2018 in February 2018.\nOn January 9, 2014, the House Energy and Commerce Committee held a hearing on the extension of health care policies that included discussion of the MIECHV program. Two witnesses from HHS testified about how the MIECHV program has been carried out and on the screening and use of evidence-based models selected by jurisdictions in the program. On April 1, 2014, President Obama signed into law the Protecting Access to Medicare Act of 2014 ( P.L. 113-93 ), which extended funding for the MIECHV program through March 31, 2015 (the law also extended funding for other health care programs and policies). On April 2, 2014, the House Ways and Means Subcommittee on Human Resources held a hearing on the MIECHV program. Witnesses included a home visiting nurse and her client, an administrator of a home visiting program, and two researchers. They discussed how the program works in practice, both from the perspectives of program staff and the client. In addition, researchers discussed the current research on home visiting, including the efficacy of selected home visiting models. On March 15, 2017, the Subcommittee on Human Resources held another hearing that focused on reauthorization of the program, including testimony from staff and a client with a national home visiting model, a home visiting manager, and a state committee in Illinois that promotes home visiting services. Witnesses generally discussed the benefits of home visiting.\nAs mentioned, the Protecting Access to Medicare Act of 2014 ( P.L. 113-93 ) was signed into law on April 1, 2014, and provided funding of $400 million for the first half of FY2015 (October 1, 2014, through March 31, 2015). The Medicare Access and CHIP Reauthorization Act of 2015 ( P.L. 114-10 ), signed into law on April 16, 2015, extended the $400 million made available under P.L. 113-93 through all of FY2015 (October 1, 2014, through September 30, 2015). P.L. 114-10 also provided $400 million for each of FY2016 and FY2017 under the program.\nOn June 8, 2017, the Increasing Opportunity through Evidence-Based Home Visiting Act ( H.R. 2824 ) was introduced and referred to the House Ways and Means Committee and the House Energy and Commerce Committee. The bill sought to reauthorize, and make substantive changes to, the MIECHV program. At a September 13, 2017, markup, the Ways and Means Committee considered amendments to H.R. 2824 . The committee reported the bill, as amended. On September 26, 2017, the House passed H.R. 2824 with additional amendments. On September 19, 2017, the Strong Families Act of 2017 ( S. 1829 ) was introduced, and included several of the same provisions in H.R. 2824 . The Bipartisan Budget Act of 2018 ( H.R. 1892 ), enacted on February 9, 2018 as P.L. 115-123 , incorporated all of S. 1829 and a provision in H.R. 2824 that directs HHS to use the most accurate relative federal population and poverty data if HHS awards funds based on these factors.\nAppendix A. Legislative History of Home Visiting\nFederal Efforts to Establish a Home Visiting Program\nCongressional and executive branch interest in early childhood home visiting programs predated the Affordable Care Act and implementation of the Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program. Since 2004, Congress has considered home visiting legislation and held related hearings across multiple committees. Some of these efforts have supported selected home visiting models and/or particular aspects of home visiting, such as its role in promoting parent and child education, responding to domestic violence, and reducing child maltreatment. Some home visiting proposals reflected government-wide efforts beginning in the George W. Bush Administration and extending into the Obama Administration to expand social programs that work and eliminate those that do not.\nEducation Begins At Home Act\nThe Education Begins at Home Act ( S. 2412 ; 108 th Congress), introduced in 2004, sought to authorize a stand-alone home visiting program, and would have directed the Departments of Education and Health and Human Services to collaboratively award grants to support home visiting. It would have also amended the Early Head Start program to establish standards for home visiting staff. The bill was not taken up; however, several similar bills were introduced in subsequent years. One of these similar bills (the Education Begins At Home Act, H.R. 3628 ; 109 th Congress) was the focus of a hearing by the House Education and the Workforce Committee. At the hearing, Representative Osborne said that home visiting can \"deliver parent education and family support services directly to parents with young children and aim to offer guidance to parents on how to support their children's development from birth through their enrollment in kindergarten.\" Other witnesses, including representatives from two home visiting programs (Parents as Teachers and Nurse-Family Partnership), testified about the role of home visiting in improving multiple child and family outcomes in education, health, and other domains.\nHome Visiting and Domestic Violence Program\nIn 2006, the Violence Against Women and Department of Justice Reauthorization Act of 2005 ( P.L. 109-162 ) was signed into law. It authorized $7.0 million each fiscal year for FY2007-FY2011 for the Department of Justice to develop and implement policies and procedures to help home visitors address the effect of domestic violence on pregnant women as well as young children and their parents. Congress did not appropriate funds for the program, and the Violence Against Women Reauthorization Act of 2013 ( P.L. 113-4 ) repealed the authorizing language.\nSupporting Evidence-Based Home Visiting to Prevent Child Maltreatment\nCongress subsequently funded a home visiting pilot program that had been proposed by the Bush Administration in the FY2008 budget request and had a child maltreatment focus. As part of the request, the Administration sought $10 million (as a set-aside within the discretionary activities account of the Child Abuse Prevention and Treatment Act, CAPTA) for competitive grants to expand, upgrade, or develop home visiting programs that have \"proven effective models,\" and to support a national cross-site evaluation to examine factors associated with successful replication or expansion of such models. To support this initiative, Congress provided $10 million in FY2008 and $13.5 million in FY2009 as a set-aside from the CAPTA discretionary activities account. Funding in years 3 through 5 of the initiative was provided under MIECHV.\nThis initiative—Supporting Evidence-Based Home Visiting to Prevent Child Maltreatment (EBHV)—was carried out by ACF, which awarded cooperative agreements to 17 grantees (mostly private, nonprofit organizations; state or local agencies; or hospitals or medical centers) in 15 states. The goals of the initiative were to (1) support implementation with fidelity to home visiting program models; (2) help scale up home visiting models, by replicating the program in a new area, adapting the model for a new population, or increasing enrollment capacity in an existing service area; and (3) help sustain the home visiting model beyond the end of the grant period. EBHV funding was not used to cover the full cost of direct home visiting services; instead, grantees used other funding sources for such services. Grantees were expected to adopt home visiting models that, as defined by ACF, were evidence-based programs.\nEach grantee worked with one or more implementing agencies to deliver home visiting services to families or served as the agency and provided services directly. The implementing agencies used one or more of the following five models in carrying out home visiting services: Healthy Families America, Nurse-Family Partnership (NFP), Parents as Teachers (PAT), SafeCare, and Triple P. In addition to the cooperative agreements, ACF awarded funds to Mathematica Policy Research, Inc., and the Chapin Hall Center for Children to conduct a cross-site evaluation of the funded programs.\nThe evaluation found that the grantees generally adhered to standards that measured fidelity to a home visiting model; however, they often struggled to maintain caseloads and deliver services as intended. In addition, the grantees participated in activities to build infrastructure and partnerships. Such activities included strengthening fiscal capacity through partnering and fundraising, building community awareness or political support for programs, and evaluating and monitoring programs. The evaluation found that grantees with greater investment in these activities tended to achieve the initiative's goals.\nWhile the EBHV initiative was underway, the Obama Administration proposed a new capped entitlement program as part of its FY2010 budget request for grants to states, territories, and tribes to establish and expand evidence-based home visitation programs for low-income mothers and pregnant women. The program was intended to \"create long-term positive impacts for children and their families, as well as generate long-term positive impacts for society as a whole.\" Under the proposal, the Administration sought to give priority to funding for home visiting models \"that have been rigorously evaluated and shown to have positive effects on critical outcomes for families and children.\" The proposal also included provisions to ensure that states and other jurisdictions would adhere to a proven program model and sought to direct some of this funding for technical assistance and program assessment and monitoring. The Administration requested $124 million for an initial year of the program and envisioned a \"gradual growth\" in the program so that it would reach an estimated 450,000 new families at a cost of $1.8 billion over a 10-year period.\nHome Visiting as Part of Health Care Reform\nAt the same time that Congress was considering whether to fund the Obama Administration's initiative, other home visiting proposals were moving forward in the House and the Senate. In June 2009, the House Ways and Means Subcommittee on Income Security and Family Support held a hearing on early childhood home visitation programs, related research, and a bill introduced by members of the subcommittee ( H.R. 2667 ) to establish a home visiting program. Witnesses included researchers, an administrator of state-funded home visitation programs, a former participant and current home visitor, and a nurse consultant. The witnesses generally supported broader implementation of early childhood home visiting models with a proven record of positive outcomes for families based on rigorous research.\nIn November 2009, the House passed the Affordable Health Care for America Act ( H.R. 3962 ). The bill included two home visiting provisions. Section 1713 specified that the Medicaid program support home visits by trained nurses. This section appeared to draw from the Healthy Children and Families Act of 2007 ( H.R. 3024 / S. 1052 ). Section 1904 sought to provide a program for home visiting, to be funded at $750 million over five years (FY2010-FY2014). This section appears to have been drawn primarily from H.R. 2667 , which had been introduced earlier in 2009. Separate health care reform efforts in the Senate culminated in the passage of the Patient Protection and Affordable Care Act ( H.R. 3590 ) on December 24, 2009; the bill included the MIECHV program. H.R. 3590 was taken up by the House on March 21, 2010, and was signed into law on March 23, 2010, as P.L. 111-148 .\nHHS first allocated funding for the MIECHV program in FY2010. As the MIECHV program was implemented, the EBHV grantees entered into subcontracts with the MIECHV lead agency in their states, and these states received additional funds from FY2010 through FY2012 to pass through to EBHV grantees. Some of the EBHV grantees received MIECHV funds to allow them to sustain services beyond the EBHV funding period or to expand services. However, some grantees were using models that did not meet HHS criteria under the MIECHV program for being effective and therefore were ineligible for funding.\nAppendix B. MIECHV Formula Funding by State and Territory\nAppendix C. Timeline for the MIECHV Program\nAppendix D. Home Visiting Models Used Under the MIECHV Program"
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{
"question": [
"What does the federal Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program provide?",
"Who conducts the home visits?",
"What services do these professionals provide during their home visits?",
"How do families become participants?",
"How many families were involved in the program?",
"What has research revealed about the efficacy of home visiting?",
"What did the Patient Protection and Affordable Care Act (ACA, as amended; P.L. 111-148) establish?",
"Who administers this program?",
"What have the amendments to the act done to funding within the program?",
"How did the Bipartisan Budget Act of 2018 (BBA 2018, P.L. 115-123) affect the program?",
"What does the law mandate, in regards to the HHS?",
"How does BBA 2018 direct HHS?",
"How does MIECHV funding get distributed?",
"What requirements are there for funding?",
"How will these assessments be updated?",
"What does the law require regarding jurisdiction funding?",
"How does HHS evaluate home visiting models?",
"What impacts have these successful models demonstrated?"
],
"summary": [
"The federal Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program supports home visiting services for families with young children who reside in communities that have concentrations of poor child health and other indicators of risk.",
"Home visits are conducted by nurses, mental health clinicians, social workers, or paraprofessionals with specialized training.",
"Generally, they visit the homes of eligible families on a regular basis (e.g., weekly or monthly) over an extended period (e.g., six months or longer) to provide support to caregivers and children, such as guidance on creating a positive home environment and referrals to community resources.",
"Families participate on a voluntary basis.",
"In FY2017, the MIECHV program supported 156,297 individual parents and children involved in 942,676 home visits.",
"Research on the efficacy of home visiting has shown that some models can help improve selected child and family outcomes, such as reducing child abuse.",
"The Patient Protection and Affordable Care Act (ACA, as amended; P.L. 111-148) established the MIECHV program under Section 511 of the Social Security Act in March 2010.",
"The program is jointly administered by the U.S. Department of Health and Human Services' (HHS's) Health Resources and Services Administration (HRSA) and the Administration for Children and Families (ACF).",
"The ACA, and amendments to the act, have directly appropriated mandatory funding for the program.",
"Most recently, the Bipartisan Budget Act of 2018 (BBA 2018, P.L. 115-123) provided $400 million annually through FY2022.",
"The law is silent about how funds are to be distributed under the program, except to require that HHS reserve 3% of the annual appropriation for Indian tribal entities and another 3% for training, technical assistance, and evaluations.",
"BBA 2018 directs HHS to use the most accurate data available for eligible jurisdictions if funding is awarded on the basis of relative population or poverty considerations.",
"In practice, HHS has distributed MIECHV funding based on a formula that accounts for poverty and based on a competitive award process.",
"States, territories, and tribes must carry out their home visiting programs as specified in the law. Among other requirements, these jurisdictions had to carry out a needs assessment by September 20, 2010, to identify communities with concentrations of poor infant health and other negative outcomes for children and families; the availability and use of home visiting services; and the capacity for providing substance abuse treatment and counseling in the jurisdiction.",
"BBA 2018 directs jurisdictions to update this assessment by October 1, 2020. Under the program, these jurisdictions are required to achieve gains in four of six \"benchmark\" (outcome) areas pertaining to family well-being and coordination of community resources.",
"The law requires that the majority of annual funding (a minimum of 75%) for jurisdictions that administer home visiting programs must be used to support a program model that has shown sufficient evidence of effectiveness. The remaining 25% of funds may be used to implement models that have promise of effectiveness.",
"HHS has established criteria for determining whether home visiting models are effective and reviews home visiting models on an ongoing basis via the Home Visiting Evidence of Effectiveness (HomVEE) project. The project has determined that 18 models are evidence-based.",
"Generally, these models have shown impacts in one or more outcomes in maternal and child health; early childhood social, emotional, and cognitive development; family/parent functioning; and links to other resources."
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CRS_R40566
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{
"title": [
"",
"U.S. Policy Toward Cuban Migrants",
"Evolution of the Policy",
"Cuban Adjustment Act of 1966",
"Cuban Migration Agreement, September 1994",
"Cuban Migration Agreement, May 1995",
"Special Cuban Migration Lottery",
"Federal Assistance to Cuban Migrants",
"Cuban-Haitian Entrants",
"Major Federal Benefit Programs",
"Supplemental Security Income (SSI)",
"Temporary Assistance for Needy Families (TANF)",
"Refugee Resettlement Assistance28",
"Refugee Cash Assistance (RCA)",
"Refugee Medical Assistance (RMA)",
"Analysis of Migration Trends40",
"U.S. Coast Guard Interdictions",
"Unauthorized Cubans Arriving in the United States",
"In-country Refugee Processing",
"Trends in Cuban Legal Permanent Residents",
"Current Challenges and Issues",
"Interdiction and Repatriation",
"Cuban Adjustment Act",
"Cash Benefits",
"Migration Talks"
],
"paragraphs": [
"",
"A watershed in U.S. immigration policy toward Cuban migrants may be on the horizon as the Obama Administration and a bipartisan group of congressional leaders weigh prospects for more open economic and diplomatic relations with Cuba. A normalization of the immigration policy cast 50 years ago in response to the communist revolution in Cuba, however, is not imminent, nor is it likely to be easily achieved. This report opens with a historical analysis of the unique immigration policy that evolved with Cuba and an explanation of its nexus with other federal policies. It follows with time series analysis of Cuban migration trends. The report concludes by discussing current challenges and issues.",
"Cuba, as a communist state, has restricted many freedoms, including at various times the freedom to travel. As a result, normal immigration for Cubans has been elusive for approximately 50 years, and most Cubans have been admitted to the United States through special humanitarian provisions of the law. The first emigres who came in 1958 were, according to the history of the time, followers of General Fulgencio Batista, the dictator who had taken power in a 1952 military coup. When Fidel Castro defeated Batista and formally assumed power in Cuba in 1959, the exodus escalated, peaking at approximately 78,000 in 1962. In October of that year, Castro stopped regularly scheduled travel between the two countries, and the risky practice of asylum seekers setting sail from Cuba to Florida began.\nBetween 1962 and 1979, hundreds of thousands of Cubans entered the United States under the Attorney General's parole authority. In 1980, a mass migration of asylum seekers—known as the Mariel boatlift—brought approximately 125,000 Cubans (and 25,000 Haitians) to South Florida over a six-month period. Prompted by the costs that the Mariel boatlift incurred, Congress established the \"Immigration Emergency Fund\" in the1986 Immigration Reform and Control Act (IRCA) to provide federal aid to regions and communities facing more general health and safety problems due to overcrowded and unsuitable living conditions that arise when mass migration occurs. Congress also authorized that funds could be used for border enforcement costs associated with mass migration.\nAfter declining for several years, Cuban \"boat people\" steadily rose from a few hundred in 1989 to a few thousand in 1993. After Castro made threatening speeches in 1994, riots ensued in Havana, and the Cuban exodus by boat escalated. The number of Cubans intercepted by the U.S. Coast Guard or the U.S. Border Patrol reached a post-Mariel high of almost 40,000 in 1994.\nUntil 1995, the United States generally had not repatriated Cubans (except certain criminal aliens on a negotiated list) under a policy established when the government became Communist within two years of the 1959 revolution. Not only has the United States been reluctant to repatriate people to a Communist country, but the Cuban government typically has also refused to accept Cuban migrants who are excludable under the Immigration and Nationality Act (INA). The key elements of current policy on Cuban immigration are the Cuban Adjustment Act of 1966, the Migration Agreements of 1994 and 1995, and the Special Cuban Migration Lottery.",
"Most of the undocumented Cubans who arrive in the United States are allowed to stay and adjust to permanent resident status under the Cuban Adjustment Act (CAA) of 1966 (P.L. 89-732). The CAA, as amended, provides that certain Cubans who have been physically present in the United States for at least one year may adjust to permanent resident status at the discretion of the Attorney General—an opportunity that no other group or nationality has. The alien must be eligible to receive an immigrant visa and be admissible to the United States as a legal permanent resident (LPR). Spouses and children accompanying the aliens who are applying for this adjustment are also covered by the CAA. Cubans apply to the U.S. Citizenship and Immigration Services (USCIS) in the Department of Homeland Security (DHS) to adjust as LPRs.\nThe CAA predates the Refugee Act of 1980, the law that incorporates refugee and asylum principles into the INA. The legislative debate leading up to its enactment makes clear that persons fleeing Cuba are presumed to be refugees under international law, but the CAA does not use the language or definitions commonly used for refugee and asylee. Legislative efforts to \"sunset\" the CAA or repeal it outright have not been successful; however, in 1996 Congress enacted language stipulating that the CAA would be repealed when Cuba became a democracy.",
"\"Normalizing\" migration between the two nations was the stated purpose of the migration agreement signed on September 9, 1994, when the status quo of U.S. policy toward Cuban migrants was altered significantly. The plan's objectives of safe, legal, and orderly immigration relied on six points.\nThe United States agreed to no longer permit Cubans intercepted at sea to come to the United States; rather, Cubans would be placed in a safe haven camp in a third location. Justifying this policy as a \"safety of life at sea\" issue, Cuba also agreed to use \"persuasive methods\" to discourage people from setting sail. United States and Cuba reaffirmed their support for the United Nations General Assembly resolution on alien smuggling. They pledged to cooperate in the prevention of the illegal transport of migrants and the use of violence or \"forcible divergence\" to reach the United States. The United States agreed to admit no less than 20,000 immigrants from Cuba annually, not including the immediate relatives of U.S. citizens. The United States and Cuba agreed to cooperate on the voluntary return of Cubans who arrived in the United States or were intercepted at sea. The United States and Cuba did not reach an agreement on how to handle Cubans who are excludable under the INA, but they did agree to continue discussing the matter. The United States and Cuba agreed to review the implementation of this agreement and engage in further discussions.\nIt became apparent that the 20,000 minimum level per year could not be met through the INA preference system or the refugee provisions because of the eligibility criteria. In other words, few Cubans qualified for visas as family-sponsored immigrants, including immediate relatives of U.S. citizens, or as employment-based immigrants (e.g., persons of extraordinary ability, members of the professions, or skilled shortage workers). In addition to those Cubans who may qualify to immigrate through the INA preference system and who may qualify as refugees, the United States decided to use other authority in the law (i.e., parole) to allow Cubans to come to the United States and become LPRs through the CAA. As specifically discussed below, a \"visa lottery\" program was established to randomly select who, among the many Cubans seeking to migrate, receives a visa.",
"On May 2, 1995, the Clinton administration announced a further agreement with Cuba that resolved the dilemma of the approximately 33,000 Cubans then encamped at Guantanamo. This new agreement, which came at the time of year when boat people traditionally begin their journeys, had two new points. Foremost, the United States allowed most of the Cubans detained at Guantanamo to come to the United States through the humanitarian parole provisions of the INA. Cuba agreed to credit these admissions toward the minimum 20,000 LPRs per year from Cuba, with 5,000 charged annually over three years. Secondly, rather than placing Cubans intercepted at sea in safe haven camps, the United States began repatriating them to Cuba. Both parties promised to act in a manner consistent with international obligations and to ensure that no action is taken against those repatriated. U.S. officials would inform repatriated Cubans about procedures to legally immigrate at the U.S. Interests Section in Havana. Those charged with alien smuggling, however, would face prison terms in Cuba.\nInterdicted Cubans are given an opportunity to express a fear of persecution if returned to Cuba. Those who meet the definition of a refugee or asylee are resettled in a third country. From May 1995 through July 2003, about 170 Cuban refugees were resettled in 11 different countries, including Spain, Venezuela, Australia, and Nicaragua. The Department of State (DOS) is required to monitor whether those migrants who are returned to Cuba are subject to reprisals. In May 2004, DOS noted that it had been unable to monitor returnees outside Havana since March 2003.\nAs a result of this agreement, migration talks between the United States and Cuba are supposed to occur twice yearly. No migration talks have been held since January 2004, however, because DOS cancelled them due to Cuba's refusal to discuss the following key issues: Cuba's issuance of exit permits for all qualified migrants; Cuba's cooperation in holding a new registration for an immigrant lottery; the need for a deeper Cuban port utilized by the U.S. Coast Guard for the repatriation of Cubans interdicted at sea; Cuba's responsibility to permit U.S. diplomats to travel to monitor returned migrants; and Cuba's obligation to accept the return of Cuban nationals determined to be excludable from the United States.\nAs a consequence of the migration agreements and interdiction policy, a \"wet foot/dry foot\" practice toward Cuban migrants has evolved. Put simply, Cubans who do not reach the shore (i.e., dry land), are returned to Cuba unless they cite fears of persecution. Those Cubans who successfully reach the shore are inspected by DHS and generally permitted to stay in the United States and adjust under CAA the following year.",
"Since the 1994 migration agreement, the United States has conducted three visa lottery open seasons to implement the Special Cuban Migration Program. The three open seasons were at two-year intervals: FY1994, FY1996, and FY1998. The number of qualifying registrants increased each year, from 189,000 in 1994 to 433,00 in 1996 and to 541,00 in 1998. Cubans qualifying through the 1998 lottery continue to be paroled into the United States.\nEligible registrants must be Cuban citizens between 18 and 55 years of age. They also must be able to answer \"yes\" to two of the following three questions. Have you completed secondary school or a higher level of education? Do you have at least three years of work experience? Do you have any relatives residing in the United States? Once selected through the lottery, the successful applicants are given parole status with a visa that is good for six months. The medical examination, required of all potential immigrants, is good for one year. Spouses and minor children may accompany the successful registrants. Over the years, there have been reports of barriers the potential Cuban parolees face, such as exorbitantly priced medical exams, exit visa fees, and repercussions for family members who remain in Cuba.",
"Cubans are among the subset of foreign nationals who are eligible for federal benefits and cash assistance. Over a decade ago, Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 ( P.L. 104-193 ) established comprehensive restrictions on the eligibility of noncitizens for means-tested public assistance and limited the eligibility of refugees and asylees to five years. Aliens who enter the United States without authorization are barred from any federal public benefit except the emergency services and programs expressly listed in PRWORA. Amendments in P.L. 105-33 and P.L. 105-185 extended the period of food stamp/Supplemental Security Income (SSI)/Medicaid (but not Temporary Assistance for Needy Families) eligibility for refugees and asylees from five to seven years and added Cuban and Haitian Entrants to those eligible for these benefits for seven years.",
"The term \"Cuban-Haitian Entrant\" is not defined in the INA, but its usage dates back to 1980. Many of the Cubans and the vast majority of the Haitians who arrived in South Florida during the 1980 Mariel Boatlift did not qualify for asylum according to the individualized definition of persecution in §§ 207-208 of the INA. The Carter Administration labeled Cubans and Haitians as \"Cuban-Haitian Entrants\" and used the discretionary parole authority of the Attorney General to admit them to the United States. Subsequently, an adjustment of status provision was included in the Immigration Reform and Control Act (IRCA) of 1986 ( P.L. 99-603 ) that enabled the Cuban-Haitian Entrants who had arrived during the Mariel Boatlift to become LPRs.\nWhile not a term of law in the INA, Congress did define Cuban-Haitian Entrant in the context of eligibility for federal assistance. Title V of the Refugee Education Assistance Act of 1980 ( P.L. 96-422 ), commonly known as Fascell-Stone, defined Cuban and Haitian Entrants as\n(1) any individual granted parole status as a Cuban/Haitian Entrant (Status Pending) or granted any other special status subsequently established under the immigration laws for nationals of Cuba or Haiti, regardless of the status of the individual at the time assistance or services are provided; and\n(A) who—(i) was paroled into the United States and has not acquired any other status under the Immigration and Nationality Act [this chapter]; (ii) is the subject of removal proceedings under the Immigration and Nationality Act [this chapter]; or (iii) has an application for asylum pending with the Immigration and Naturalization Service; and\n(B) with respect to whom a final, nonappealable, and legally enforceable order of removal has not been entered.\nThe intent and resulting effect of the Fascell-Stone provision was to treat Cubans and Haitians in the same manner as refugees and asylees for the purposes of the federal refugee resettlement program and most other federal benefits and assistance. The Office of Refugee Resettlement (ORR) uses the term \"Cuban-Haitian Entrants\" for Cubans who meet the Fascell-Stone definition.",
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"Under current law, asylees, refugees, and Cuban-Haitian entrants (as well as certain aliens whose deportation/removal is being withheld for humanitarian reasons and Vietnam-born Amerasians fathered by U.S. citizens) are among categories of aliens who may be eligible for SSI for seven years after entry/grant of such status. In order to receive SSI benefits, these qualified aliens must meet all the requirements for eligibility as native-born citizens. SSI eligibility requirements include meeting the definitions for age, disability, or blindness and falling below established income and resource thresholds. In 2008, individual SSI beneficiaries could have received up to the maximum federal benefit rate of $637 a month, and married couples received up to $956. Cuban entrants, like other qualified aliens, are ineligible after seven years unless naturalized or if in receipt of SSI benefits as of August 22, 1996. This SSI eligibility for Cuban entrants as well as refugees, asylees, and aliens in other specified humanitarian categories was extended to nine years (during FY2009 through FY2011) by P.L. 110-328 . If qualified aliens are eligible for SSI, they are likely to be eligible for enrollment in their state's Medicaid Program.",
"Cuban Entrants are treated as refugees, and thus those families with children under 18 may be eligible for time-limited cash assistance through a state's Temporary Assistance for Needy Families (TANF) program. The Personal Responsibility Act of 1996 restricts receipt of federal TANF benefits to a 60-month lifetime limit. States may exempt up to 20% of the caseload from the time limit because of state-defined hardship, and states have the option to continue TANF benefits under special circumstances. Like other federal welfare programs, the TANF program is means-tested; however, unlike SSI, the TANF program is state-administered, and payment levels can vary widely by state. In 2008, the average monthly maximum benefit level for a family of three in the median state was $389, with a range from $923 in Alaska to $170 in Mississippi. Refugees and entrants participating in job training programs sponsored by the Office of Refugee Resettlement (ORR) are considered to be working toward self-sufficiency and may be exempt from certain state TANF program requirements. TANF beneficiaries may be eligible for their state's Medicaid program; however, SSI beneficiaries are generally ineligible to receive TANF in addition to SSI.",
"As noted above, Cuban entrants are eligible for the federal resettlement assistance program for refugees and entrants, which is partially funded through the ORR. In addition to providing a range of social services, primarily administered by states, the ORR provides funding to states for transitional cash and medical assistance through the Transition and Medical Services program. ORR resettlement assistance and services are designed to help refugees and entrants obtain self-sufficiency and social adjustment as quickly as possible. Refugees and entrants are expected to become self-sufficient within six months of arrival, and Refugee Cash Assistance (RCA) and Refugee Medical Assistance (RMA) are limited to eight months.\nRefugees and entrants who meet the income and resource eligibility requirements for SSI, TANF, or Medicaid, but are not otherwise eligible (e.g., single males or childless females and couples), may receive benefits under the ORR-funded RCA and RMA programs. Under Title V of the Refugee Education Assistance Act, participating states are fully reimbursed for cash and medical assistance to Cuban and Haitian entrants under the same conditions and to the same extent as such assistance and services for refugees under the refugee program.",
"States have the option of choosing either a publically administered or public/private RCA program. Most states publically administer their RCA program. By doing so, the state agency must operate its RCA program consistent with the provisions of their TANF program.\nIn publically administered RCA programs, payment levels to refugees or entrants are equivalent to a state's TANF payment levels, and thus vary across the country. The maximum RCA benefit for an individual entrant or refugee in the state of Florida, which is home to many Cuban émigrés, in 2008-2009 is $180 per month—the same payment standard as Florida TANF. In Tennessee, for example, an individual could receive up to $95 a month, and a family of three could receive up to $185 a month. In case of California, the monthly maximum benefit for a family of three is approximately $706 or $8,448 annually.\nPublic/private RCA programs have been approved by ORR in Maryland, Texas, Oregon, Louisiana, Oklahoma, and Minnesota. In the Texas RCA Provider Manual , the maximum RCA payment levels for the entire eight-month RCA period are $2,680 for one-person family unit, $3,600 for a two-person family unit, and $4,560 for a three-person family unit. Under the Texas public/private model, only a portion of the RCA payment levels are distributed in cash. In months five through eight, payments are distributed in the form of vendor payments for rent and utility.",
"Like RCA benefits, states administer their own RMA program from ORR funds, which pay for 100% of RMA costs for eligible refugees and entrants. Refugees or entrants who are not eligible for their state's Medicaid program may be eligible for RMA benefits for up to eight months. In many states, covered services under RMA are the same as covered services under their state Medicaid plan. Costs of RMA per refugee vary due to variables such as age, health of the beneficiary, and services provided. The state of Florida, for example, estimated the average 2007 RMA monthly benefit per person at $165.29.",
"Despite a history of travel restrictions imposed by the Castro government, Cuba was one of the top immigrant-sending countries during the last half of the 20 th century and is one of the top immigrant-sending countries thus far in the 21 st century. In FY2008, there were 49,500 Cubans who became legal permanent residents (LPRs)—surpassed only by LPRs from Mexico, China, India, and the Philippines. Yet, very few Cubans have arrived in the United States through the legal immigration avenues proscribed by the INA. An analysis of the trends in Cuban migrants—and how their patterns have changed over time—follows.",
"Since the May 1995 agreement, the U.S. Coast Guard interdictions of Cubans have fluctuated, but trended upward over time. Interdictions were low during the first few years after the migration agreement (e.g., 411 in FY1996 and 421 in FY1997). The number of Cuban interdictions more than doubled between FY1997 and FY1998—when 903 Cubans were interdicted—and reached 1,619 in FY1999. Interdictions gradually dipped from 1,000 in FY2000 to 666 in FY2002. Interdictions hit a 12-year high of 2,868 in FY2007. In FY2008, the U.S. Coast Guard interdicted 2,199 Cubans. Figure 1 presents this time series.",
"Although the vast majority of foreign nationals apprehended by the U.S. Border Patrol agents are Mexican nationals, apprehensions of unauthorized migrants from other countries have more than quadrupled in recent years. Consistent with this trend, Cuban apprehensions have steadily escalated since a low point of 819 in FY2004. In FY2007, Cuban nationals comprised 4,295 of the 68,016 apprehensions of aliens from countries other than Mexico. The number of Cubans that the U.S. Border Patrol apprehended dipped slightly to 3,351 in FY2008. It is important to note, as Figure 2 depicts, that the U.S. Border Patrol apprehends most Cubans in coastal areas rather than along the southern land borders.\nAs discussed above, Cubans migrants have traditionally traveled by sea through the Florida Straits toward the coast of South Florida. Other Cubans have been seeking alternate travel routes. In a more western passage, migrants sail from Cuba coming ashore somewhere along Mexico's Yucatan Peninsula and eventually making their way over land to the U.S. border. According to media reports, many Cuban migrants have been landing on the coast of Mexico's Quintana Roo state, approximately 120 miles from the Cuban coast. According to a report published in one of Mexico's leading daily newspapers, La Jornada , Mexico had become the principal route for Cuban migration to the United States in 2007.\nCubans who arrived at ports of entry without documents appear to exhibit a pattern over time that is comparable to Coast Guard interdictions and Border Patrol apprehensions, although a complete 1995-2008 time series is not available. Inadmissible Cubans arriving at ports of entry reached a high of 13,019 in FY2007 and fell slightly to 11,278 in FY2008, as Figure 3 illustrates. The Laredo CBP field office reported the largest number of inadmissible Cubans during this period, FY2004-FY2008, with the Miami CBP field office following at a distant second.\nIn October 2008, Cuban Foreign Minister Felipe Perez Roque announced that Mexico would began to repatriate Cubans who arrive in Mexico with proper documents. The director of the Cancun regional office of the National Institute of Migration in Mexico, Luis Alberto Molina Rios, explained the policy change: \"The option of repatriation will reduce the number of Cubans arriving in Mexico.\" Effective November 20, 2008, the Mexican Navy has reportedly added Cuban interdiction and repatriation to the duties of their vessels patrolling Mexico's eastern coast.\nIf confirmed Cuban nationals present themselves at an official land port of entry at the U.S border with Mexico, they are inspected by CBP regardless of whether the Cuban national has valid immigration documents. Cubans are expressly exempt from the expedited removal provisions in the INA, which allow CBP agents to remove any alien who lacks proper documentation from the United States without any further hearings or review, unless the alien indicates a fear of persecution. CBP officers generally parole Cuban nationals into the United States, and ultimately the Cuban parolees adjust to LPR status under the CAA. As a result, unauthorized Cuban migrants who enter through Mexico are more likely to identify themselves to CBP officers than are other unauthorized aliens.",
"The United States has conducted in-country refugee processing in Cuba since the 1994-1995 migration talks. Cubans are eligible to apply for admission to the United States through the in-country refugee program under what is known as the Priority 2 (P-2) category. The P-2 category of Cubans specifically includes\nformer political prisoners; members of persecuted religious minorities; human rights activists; forced labor conscripts during the period 1965-1968; persons deprived of their professional credentials or subjected to other disproportionately harsh or discriminatory treatment resulting from their perceived or actual political or religious beliefs; and persons who have experienced or fear harm because of their relationship—family or social—to someone who falls under one of the preceding categories.\nAll refugee processing and admissions by the United States dropped precipitously when new security procedures were implemented after the September 11, 2001, terrorists attacks, and refugee processing of Cubans were no exception. As Figure 4 indicates, there were only 305 Cuban refugee arrivals in FY2003, primarily the result of the difficulties in conducting security clearances and background checks. During this period, there are were reported problems obtaining exit visas from the Cuban government for the refugees. The U.S. Citizenship and Immigration Services (USCIS) provided data for FY2004 that detailed this situation. USCIS considered 8,658 Cubans for refugee status and approved 5,670 (65%) in FY2004. Only 2,980 Cuban refugees, however, actually arrived in the United States in FY2004. The refugee processing logjam appears to have eased by the end of FY2005, as Figure 4 depicts 6,260 Cuban refugee arrivals. The in-country refugee program reportedly approved over 4,200 Cubans during FY2008, and 4,100 Cubans were expected to arrive in FY2008.",
"In terms of total immigration from Cuba (i.e., as immediate relatives of U.S. citizens, as legal immigrants through the preference system, as refugees, as parolees or other adjustments through CAA or through the Nicaraguan Adjustment and Central American Relief Act), approximately half of a million Cubans have become LPRs since FY1981. Of that number, well over half have become LPRs since the 1994-1995 migration agreements went into effect. Although actual admission numbers have been jagged over this period, the trend line has moved upward.\nCuba consistently ranks among the top 10 source countries for LPRs. A total of 49,500 Cubans became legal permanent residents in FY2008. Cuba ranked fifth as a top immigrant-sending country—after Mexico, China, India, and the Philippines—in FY2008.",
"U.S. immigration policy toward Cuban migrants juggles immigration control and humanitarian compassion within a larger policy framework that remains quite contentious. The change in leadership of both the United States and Cuba may provide openings for revisions in U.S. policy on Cuban migration. A normalization of immigration policies, however, is not imminent nor is it likely to be easily achieved. Some of the major challenges and issues that bear on U.S. policy on Cuban migrants are discussed below.",
"Some consider the migrant interdiction and repatriation policy to be at odds with the rescue mission of the U.S. Coast Guard, while others view it as integral to maritime security role of the U.S. Coast Guard. A series of events in 1999 illustrate the difficulties balancing these priorities. A well-publicized incident in June 1999 provoked outrage when the U.S. Coast Guard used pepper spray and a water cannon to prevent six Cubans from reaching Surfside Beach in Florida. A few weeks later, a woman drowned when a boat capsized during interdiction. Notably in late November 1999, the U.S. Coast Guard opted to bring six-year old Elian Gonzalez and two other survivors of an ill-fated journey to the United States rather than taking them to Cuba as the migration agreement provides. For the first five months Elian Gonzalez was in the United States, he was in the temporary care of his father's uncle, Lazaro Gonzalez, who lives in Miami. When Elian's father, Juan Miguel Gonzalez, arrived in the United States in April 2000 to assume custody of his son, Lazaro Gonzalez defied a federal government order to turn over the child. Then-Attorney General Janet Reno ordered federal law enforcement officers to remove Elian from the home of Lazaro Gonzalez in the pre-dawn hours of April 22, 2000.\nSeveral incidents in 2003 offer further examples of the interdiction and repatriation dilemma. On April 11, 2003, the Cuban government executed three men who had hijacked a ferry in Havana on April 2 in an attempt to reach the United States. The men were executed by firing squads after summary trials that were held behind closed doors. International human rights groups, such as Amnesty International and Human Rights Watch, and a number of countries, including Mexico, the European Union, and the 15-nation Caribbean Community, condemned the crackdown and the executions. In July 2003, a dozen people reportedly stole a Cuban-flagged boat from the marina where it was docked in Cuba and kidnapped the three watchmen guarding the marina in the process. When the boat was in international waters allegedly on route to Florida, the U.S. Coast Guard officials tried to intercept it and reportedly faced violent resistance when they interdicted the vessel. All 15 persons on board were taken to the U.S. Coast Guard cutter and interviewed by a USCIS asylum officer. The three watchmen indicated a desire to return to Cuba. When the Cuban government offered to sentence the 12 persons implicated in crimes (purportedly boat theft, kidnapping, and assaulting federal officers) to 10 years in prison, the United States agreed to return them.\nThe reach of the interdiction policy became clear on January 5, 2006, when the U.S. Coast Guard found 15 Cubans, including 4 women and 2 children, on an old Key West bridge that was no longer connected to land. The decision to repatriate the Cubans was made by the Coast Guard's legal office in conjunction with DHS Immigration and Customs Enforcement. The Coast Guard stated that the Cubans \"were determined to be feet-wet and processed in accordance with standard procedure.\" By 2006, migrant interdiction and repatriation had become the keystone in the designing of Operation Vigiliant Sentry (OVS), the DHS coordinated plan for response to a Caribbean mass migration. OVS was reportedly exercised throughout 2006 to prepare for a potential migration in the event of instability in Cuba.\nSupporters of these repatriation decisions argue that it is critical to deter illegal and dangerous migration of Cubans who flee on unseaworthy or overcrowded vessels. Some further maintain that the prison sentences of the 12 Cubans who stole a boat in 2003, which the Cuban government apparently negotiated with the United States, were essential to prevent a repeat of summary executions that occurred to the hijackers in April of that year. Critics of these decisions assert that both countries (United States and Cuba) are denying these people their rights to due process and a hearing. Some called for a full investigation of these incidents, and some sought an end to the current interdiction and repatriation policy.",
"Some maintain the 1966 Cuban Adjustment Act is obsolete and locked into the mind set of the Cold War era, as well as unnecessary since Cubans may seek asylum under the refugee laws enacted since 1966. The CAA, as discussed above, permits Cubans who have been physically present in the United States for at least one year to become LPRs. Over the decades since its enactment, it has enabled most Cubans to enter the United States regardless of whether they have proper immigration documents. Some opponents of the CAA assert that it is discriminatory because it gives Cubans an immigration advantage that foreign nationals from no other country have. Immigration control proponents have argued that it serves as a magnet attracting Cubans who would not otherwise qualify for admission. Just as there are efforts in Congress to liberalize economic policies (especially travel and agricultural) with Cuba since Raul Castro assumed power, some argue that it is time to regularize immigration policy with Cuba.\nOpponents of repealing or revising the CAA say that it would send the wrong message to Cubans during this critical period. It is not necessary and may be unwise, some maintain, to alter the law now that Fidel Castro has transferred power to his brother Raul Castro. Supporters of the CAA point out that the success of the migration agreement—particularly its commitment to admit at least 20,000 Cubans annually—depends on the ability to adjust the parolees under the CAA. If the CAA were repealed, supporters point out, only Cubans who met the refugee definition or who qualified for visas as family-sponsored immigrants or as employment-based immigrants would be able to immigrate to the United States, and the backlogs for immigrant visas would grow.",
"Confusion over the extent of federal cash assistance available to Cuban migrants prompted allegations that Cubans were receiving cash payments in excess of amounts normally available to other program beneficiaries. Some allege further that Cuban migrants use these federal cash payments to pay smugglers to shepherd them into the United States. Media reports have indicated that smugglers can charge Cuban migrants up to $15,000 each.\nThe RCA payments available to Cuban entrants, however, are not issued in a lump sum, and the payment levels provide only basic monthly assistance to refugees without income or assets with which to support themselves for a maximum period of eight months. In the state of Florida, for example, a single Cuban entrant—as other eligible refugees and asylees—who meets the federal and state eligibility requirements for RCA in Florida would be eligible to receive between $95 to $180 a month.\nMore broadly, some questions why all Cubans—rather than those who enter as refugees—are afforded the same set of federal benefits as refugees. Most LPRs who enter the United States are barred from federal benefits for at least five years according to comprehensive restrictions on the eligibility of noncitizens for means-tested public assistance. Others maintain that Cubans are refugees, regardless of whether they adjust through the CAA or the refugee provisions in the INA.",
"Whether the United States should resume migration talks with Cuba is central to the policy debate. Semi-annual migration talks between Cuba and the United States had been held regularly on the implementation of the 1994 and 1995 migration accords for a decade. The U.S. State Department, however, had cancelled the 20 th round of talks scheduled for January 2004, and no migration talks were held since. According to the State Department, Cuba had refused to discuss issues integral to the migration agreement. In response to the cancellation of the talks, Cuban officials maintained that the decision of the United States was irresponsible and that Cuba was prepared to discuss all of the issues raised by the United States.\nFidel Castro's departure as head of government in July 2006 has prompted some observers to call for a reexamination of U.S. policy toward Cuba overall, and a potential opportunity to restart the migration talks. After serving temporarily, Raúl Castro, brother of the former dictator, officially assumed the Cuban presidency in February 2008. This transfer of power between the Castro brothers led some to question whether there would be much of an opening for renewed migration talks between the United States and Cuba.\nDuring the 2008 presidential campaign, however, President Barack Obama stated he would seek to change U.S. policy by allowing unlimited family travel and remittances to Cuba, signaling to some the possibility of resuming the migration talks. In his opening speech at the Summit of the Americas on April 17, 2009, President Obama expressed the hope of \"a new beginning with Cuba,\" specifically mentioning migration as an issue.\nSupporters of resuming the migration talks maintain that the talks are a key element. In February, the ranking member of the Committee on Foreign Relations, Senator Richard Lugar, released a staff report that specifically called for a resumption of the migrations talks.\nRegarding migration, staff recommends the revival of US.-Cuban biannual migrations talks, which have been suspended since 2004. These talks provide an important venue for discussing the shared problem of illegal migration. The USG should remain committed to fully implementing its agreements under the 1994 Joint Communique and the 1995 Joint Statement (collectively known as the U.S.-Cuba Migration Accords) as effective tools for promoting safe, legal, and orderly migration.\nIn addition, staff suggests an executive branch review of the \"wet-foot, dry-foot policy.\" Under this policy, Cubans who are intercepted at sea are sent back to Cuba or to a third country while those who make it to U.S. soil are allowed to remain in the United States. The review should assess whether this policy has led to the inefficient use of U.S. Coast Guard resources and assets as well as the potential to redirect these resources to drug interdiction efforts.\nSome of those challenging the resumption of the migration talks argue that Cuba should address the five areas of concern (listed above) before the United States moves forward. The State Department spokesman during the George W. Bush Administration, Richard Boucher, made this point in 2004: \"The point is not just to have a meeting,\" Boucher said, \"the point is to deal with the serious issues involved.\" Whether to even negotiate with the current government of Cuba is an issue raised by others. Roger Noreiga, of the American Enterprise Institute and formerly the Assistant Secretary of State for Western Hemisphere Affairs, offered this argument in 2008:\nSome of those counseling \"stability\" may be concerned about a mass migration of Cubans fleeing chaos. It is time to rethink that argument, which is usually wielded by those policymakers counseling a \"go slow\" approach. The best hope for avoiding a dangerous mass migration of Cubans to our shores in a post-Fidel world is to help them press for real change at home. If we stand by as their dreams of a new future are dashed by Raúl, we are inviting a burst of migration by a new generation of desperate Cubans.… In this post-Fidel period, any clumsy word or deed suggesting that the United States accepts the transfer of power from one dictator to another would snuff out the nascent hopes for freedom and consign 11million Cubans to additional years of hopeless dictatorship.\nOn May 31, 2009, an official at the U.S. Department of State reported that the Cuban government had indicated that it wants to resume talks on the legal immigration of Cubans to the United States. Migration talks with Cuba, however meaningful, would likely be incremental in scope. The objectives of such talks would be striving toward safe, legal, and orderly immigration."
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"question": [
"What characterizes Cuban migration?",
"How has immigration from Cuba changed since Fidel Castro came to power?",
"What immigration practice has become commonplace in the past 50 years?",
"What changes have been made since the mid-1990s?",
"How have these migration policies been received?",
"What has immigration of Cubans to the United States looked like since 1995?",
"What is Cuba's role as an immigrant-sending country?",
"What is the trend of U.S. Coast Guard interdictions of Cubans?",
"What were the rates of interdictions of Cubans in 2007 and 2008?",
"What were the rates of apprehensions of Cubans in those same years?",
"What pattern emerged for Cubans who arrived at ports of entry without documents?"
],
"summary": [
"Many of the issues surrounding Cuban migration are unique but not new.",
"Normal immigration from Cuba has been elusive since Fidel Castro came to power.",
"Over the past 50 years, the practice of Cubans fleeing by boat to the United States has become commonplace, and at some points reached the levels of a mass exodus.",
"Since the last upsurge of \"boat people\" in the mid-1990s, the United States and Cuba worked toward establishing safe, legal immigration, which includes returning migrants interdicted by the U.S. Coast Guard.",
"These migration policies, however, are not without critics.",
"The immigration of Cubans to the United States has increased since 1995, although the actual admission numbers have ebbed and flowed over this period.",
"Cuba consistently ranks among the top 10 source countries for legal permanent residents (LPRs). Cuba ranked fifth as a top immigrant-sending country—after Mexico, China, India, and the Philippines—in FY2008. A total of 49,500 Cubans became LPRs in FY2008.",
"U.S. Coast Guard interdictions of Cubans have fluctuated since the mid-1990s, yet the general trend has moved upward.",
"Cuban interdictions reached a 12-year high of 2,868 in FY2007. In FY2008, the U.S. Coast Guard reported 2,199 Cuban interdictions.",
"Similarly, U.S. Border Patrol apprehensions of Cubans peaked at 4,295 in FY2007 and slipped to 3,351 in FY2008.",
"Cubans who arrived at ports of entry without documents exhibited a comparable pattern, reaching a high of 13,019 in FY2007 and falling slightly to 11,278 in FY2008."
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GAO_GAO-18-562
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{
"title": [
"Background",
"Laws and Presidential Directives Guiding DHS’s Chemical Defense Efforts",
"Our Work on Duplication, Overlap, and Fragmentation of Federal Programs",
"DHS Has Several Chemical Defense Programs and Activities Intended to Prevent and Protect Against Chemical Attacks",
"A Chemical Strategy and Implementation Plan Would Enhance DHS Efforts to Integrate and Coordinate Its Chemical Defense Programs and Activities",
"DHS’s Efforts to Address Chemical Attacks Have Been Fragmented and Not Well Coordinated",
"DHS Has Begun to Consolidate Some Chemical Defense Programs and Activities",
"DHS’s Prior Efforts and Recent Reorganization Offer an Opportunity for More Strategic Coordination",
"Conclusions",
"Recommendation for Executive Action",
"Agency Comments and GAO Evaluation",
"Appendix I: Department of Homeland Security Chemical Defense Programs",
"Office of Health Affairs, Chemical Defense Program",
"Science and Technology Directorate, Chemical Defense Activities",
"National Protection and Programs Directorate, Chemical Facility Anti- Terrorism Standards (CFATS) Program and Other Chemical Facility Security Activities",
"Appendix II: Department of Homeland Security Components’ Chemical Defense Responsibilities as Part of an All-Hazards Approach",
"Appendix III: Comments from the Department of Homeland Security",
"Appendix IV: GAO Contacts and Staff Acknowledgements",
"GAO Contacts",
"Staff Acknowledgements"
],
"paragraphs": [
"Chemical attacks have emerged as a prominent homeland security risk because of recent attacks abroad using chemical agents and the interest of ISIS in conducting and inspiring chemical attacks against the West. DHS’s OHA officials have stated that nationwide preparedness for a chemical attack is critical to prevent, protect against, mitigate, respond to, and recover from such an attack because it could occur abruptly, with many victims falling ill quickly, and with a window of opportunity of a few hours to respond effectively. Also, recent incidents in Malaysia and the United Kingdom demonstrate that chemical agents can be used to target individuals and can contaminate other individuals near the attack area. Chemicals that have been used in attacks include chlorine, sarin, and ricin, all of which can have deadly or debilitating consequences for individuals exposed to them; see figure 1.",
"Various laws guide DHS’s efforts to defend the nation from chemical threats and attacks. For example, under the Homeland Security Act of 2002, as amended, the Secretary of Homeland Security, through the Under Secretary for Science and Technology, has various responsibilities, to include conducting national research and developing, testing, evaluating, and procuring technology and systems for preventing the importation of chemical and other weapons and material; and detecting, preventing, protecting against, and responding to terrorist attacks. Under former Section 550 of the DHS Appropriations Act, 2007, DHS established the CFATS program to, among other things, identify chemical facilities and assess the security risk posed by each, categorize the facilities into risk-based tiers, and inspect the high-risk facilities to ensure compliance with regulatory requirements.\nDHS’s responsibilities with regard to chemical defense are also guided by various presidential directives promulgated following the September 11, 2001, terror attacks against the United States; see table 1.",
"In 2010, Public Law 111-139 included a provision for us to identify and report annually on programs, agencies, offices, and initiatives—either within departments or government-wide—with duplicative goals and activities. In our annual reports to Congress from 2011 through 2018 in fulfillment of this provision, we described areas in which we found evidence of duplication, overlap, and fragmentation among federal programs, including those managed by DHS. To supplement these reports, we developed a guide to identify options to reduce or better manage the negative effects of duplication, overlap, and fragmentation, and evaluate the potential trade-offs and unintended consequences of these options. In this report, we use the following definitions:\nDuplication occurs when two or more agencies or programs are engaged in the same activities or provide the same services to the same beneficiaries.\nOverlap occurs when multiple programs have similar goals, engage in similar activities or strategies to achieve those goals, or target similar beneficiaries. Overlap may result from statutory or other limitations beyond the agency’s control.\nFragmentation occurs when more than one agency (or more than one organization within an agency) is involved in the same broad area of national interest and opportunities exist to improve service delivery.",
"DHS manages several programs and activities designed to prevent and protect against domestic chemical attacks. Prior to December 2017, for example, three DHS components—OHA, S&T, and NPPD—had specific programs and activities focused on chemical defense. In December 2017, DHS created the CWMD Office, which, as discussed later in this report, consolidated the majority of OHA and some other DHS programs and activities intended to counter weapons of mass destruction such as chemical weapons. Other DHS components—such as CBP, the Coast Guard, and TSA—have chemical defense programs and activities as part of their broader missions. These components address potential chemical attacks as part of an all-hazards approach to address a wide range of threats and hazards. Appendix I discusses in greater detail DHS’s programs and activities that focus on chemical defense, and appendix II discusses DHS components that have chemical defense responsibilities as part of an all-hazards approach. Table 2 identifies the chemical defense responsibilities of each DHS component, and whether that component has a specific chemical defense program or an all-hazards approach to chemical defense.\nFigure 2 shows that fiscal year 2017 funding levels for three of the programs that focus on chemical defense totaled $77.3 million. Specifically, about $1.3 million in appropriated funds was available for OHA for its Chemical Defense Program activities and S&T had access to about $6.4 million in appropriated funds for its Chemical Security Analysis Center activities. The CFATS program had access to about $69.6 million in appropriated funds—or 90 percent of the $77.3 million for the three programs—to regulate high-risk facilities that produce, store, or use certain chemicals. OHA officials stated that their efforts regarding weapons of mass destruction over the last few years had focused mostly on biological threats rather than chemical threats. For example, $77.2 million in fiscal year 2017 appropriated funds supported OHA’s BioWatch Program to provide detection and early warning of the intentional release of selected aerosolized biological agents in more than 30 jurisdictions nationwide. By contrast, as stated above, OHA and S&T had access to about $7.7 million in fiscal year 2017 appropriated funds for chemical defense efforts.\nWe could not determine the level of funding for components that treated chemical defense as part of their missions under an all-hazards approach because those components do not have chemical defense funding that can be isolated from funding for their other responsibilities. For example, among other things, CBP identifies and interdicts hazardous chemicals at and between ports of entry as part of its overall mission to protect the United States from threats entering the country.",
"DHS’s chemical defense programs and activities have been fragmented and not well coordinated, but DHS recently created the CWMD Office to, among other things, promote better integration and coordination among these programs and activities. While it is too early to tell the extent to which this new office will enhance this integration and coordination, developing a chemical defense strategy and related implementation plan would further assist DHS’s efforts.",
"DHS’s chemical defense programs and activities have been fragmented and not well coordinated across the department. As listed in table 2 above, we identified nine separate DHS organizational units that have roles and responsibilities that involve conducting some chemical defense programs and activities, either as a direct mission activity or as part of their broader missions under an all-hazards approach. We also found examples of components conducting similar but separate chemical defense activities without DHS-wide direction and coordination.\nOHA and S&T—two components with specific chemical defense programs—both conducted similar but separate projects to assist local jurisdictions with preparedness. Specifically, from fiscal years 2009 to 2017, OHA’s Chemical Defense Program conducted chemical demonstration projects in five jurisdictions—Baltimore, Maryland; Boise, Idaho; Houston, Texas; New Orleans, Louisiana; and Nassau County, New York—to assist the jurisdictions in enhancing their preparedness for a large-scale chemical terrorist attack. According to OHA officials, they worked with local officials in one jurisdiction to install and test chemical detectors without having department-wide direction on these detectors’ requirements. Also, according to S&T officials, the Chemical and Biological Defense Division worked with three jurisdictions in New York and New Jersey to help them purchase and install chemical detectors for their transit systems beginning in 2016 again without having department-wide direction on chemical detector requirements.\nThe Secret Service, CBP, and the Coast Guard—three components with chemical defense activities that are part of their all-hazards approach—also conducted separate acquisitions of chemical detection or identification equipment, according to officials from those components. For example, according to Secret Service officials, the agency has purchased chemical detectors that agents use for personal protection of protectees and assessing the safety of designated fixed sites and temporary venues. Also, according to CBP officials, CBP has purchased chemical detectors for identifying chemical agents at ports of entry nationwide. Finally, according to Coast Guard officials, the agency has purchased chemical detectors for use in maritime locations subject to Coast Guard jurisdiction.\nOfficials from OHA, S&T, and the CWMD Office acknowledged that chemical defense activities had been fragmented and not well- coordinated. They stated that this fragmentation occurred because DHS had no department-wide leadership and direction for chemical defense activities.\nWe recognize that equipment, such as chemical detectors, may be designed to meet the specific needs of components when they carry out their missions under different operating conditions, such as an enclosed space by CBP or on open waterways by the Coast Guard. Nevertheless, when fragmented programs and activities that are within the same department and are responsible for the same or similar functions are executed without a mechanism to coordinate them, the department may miss opportunities to leverage resources and share information that leads to greater effectiveness.",
"As discussed earlier, DHS has taken action to consolidate some chemical defense programs and activities. Specifically, in December 2017, DHS consolidated some of its chemical, biological, radiological, and nuclear defense programs and activities under the CWMD Office. The CWMD Office consolidated the Domestic Nuclear Detection Office; the majority of OHA; selected elements of the Science and Technology Directorate, such as elements involved in chemical, biological, and integrated terrorism risk assessments and material threat assessments; and certain personnel from the DHS Office of Strategy, Policy, and Plans and the Office of Operations Coordination with expertise on chemical, biological, radiological, and nuclear issues. According to officials from the CWMD Office, the fiscal year 2018 funding for the office is $457 million. Of this funding, OHA contributed about $121.6 million and the Domestic Nuclear Detection Office contributed about $335.4 million. Figure 3 shows the initial organizational structure of the CWMD Office as of June 2018.\nAs of July 2018, according to the Assistant Secretary of CWMD, his office supported by DHS leadership is working to develop and implement its initial structure, plans, processes, and procedures. To guide the initial consolidation, officials representing the CWMD Office said they plan to use the key practices for successful transformations and reorganizations identified in our past work. For example, they noted that they intend to establish integrated strategic goals, consistent with one of these key practices—establish a coherent mission and integrated strategic goals to guide the transformation. These officials stated that the goals include those intended to enhance the nation’s ability to prevent attacks using weapons of mass destruction, including toxic chemical agents; support operational components in closing capability gaps; and invest in and develop innovative technologies to meet technical requirements and improve operations. They noted that the latter might include networked chemical detectors that could be used by various components to help them carry out their mission responsibilities in the future. However, the officials stated that all of the new office’s efforts were in the initial planning stages and none had been finalized. They further stated that the initial setup of the CWMD Office covering the efforts to consolidate OHA and the Domestic Nuclear Detection Office may not be completed until the end of fiscal year 2018.\nIt is still too early to determine the extent to which the creation of the CWMD Office will help address the fragmentation and lack of coordination on chemical defense efforts that we have identified. Our prior work on key steps for assisting mergers and transformations shows that transformation can take years to complete. One factor that could complicate this transformation is that the consolidation of chemical defense programs and activities is limited to certain components within DHS, such as OHA, and not others, such as some parts of S&T and NPPD. Officials from the CWMD Office stated that they intend to address this issue by coordinating the office’s chemical security efforts with other DHS components that are not covered by the consolidation, such as those S&T functions that are responsible for developing chemical detector requirements. These officials also stated that they intend to address fragmentation by coordinating with and supporting DHS components that have chemical defense responsibilities as part of their missions under an all-hazards approach, such as the Federal Protective Service, CBP, TSA, the Coast Guard, and the Secret Service. Furthermore, the officials stated that they plan to coordinate DHS’s chemical defense efforts with other government agencies having chemical programs and activities at the federal and local levels.",
"In October 2011, the Secretary of Homeland Security designated FEMA to coordinate the development of a strategy and implementation plan to enhance federal, state, local, tribal and territorial government agencies’ ability to respond to and recover from a catastrophic chemical attack. In November 2012, DHS issued a chemical response and recovery strategy that examined core capabilities and identified areas where improvements were needed. The strategy identified a need for, among other things, (1) a common set of catastrophic chemical attack planning assumptions, (2) a formally established DHS oversight body responsible for chemical incident response and recovery, (3) a more rapid way to identify the wide range of chemical agents and contaminants that comprise chemical threats, and (4) reserve capacity for mass casualty medical care. The strategy also identified the principal actions needed to fill these gaps.\nFor example, with regard to identifying the range of chemical agents and contaminants that comprise chemical threats, the strategy focused on the capacity to screen, search for, and detect chemical hazards (and noted that this area was cross-cutting with prevention and protection). The strategy stated that, among other things, the Centers for Disease Control and Prevention, the Department of Agriculture and Food and Drug Administration, the Department of Defense, the Environmental Protection Agency, and DHS components, including the Coast Guard, provide screening, search, and detection capabilities. However, the strategy noted that “DHS does not have the requirement to test, verify, and validate commercial-off-the-shelf (COTS) chemical detection equipment purchased and fielded by its various constituent agencies and components, nor by the first responder community.”\nAccording to a November 2012 memorandum transmitting the response and recovery strategy to DHS employees, the distribution of the strategy was only to be used for internal discussion purposes and was not to be distributed outside of DHS because it had not been vetted by other federal agencies and state, local, tribal, and territorial partners. The memorandum and the strategy further stated that DHS was developing a companion strategy focused on improving the national capacity to prevent, protect against, and mitigate catastrophic chemical threats and attacks and noted that once this document was complete, DHS would engage with its partners to solicit comments and feedback. The strategy also stated that DHS intended to develop a separate implementation plan that would define potential solutions for any gaps identified, program any needed budget initiatives, and discuss programs to enhance DHS’s core capabilities and close any gaps.\nDHS officials representing OHA and S&T told us that DHS had intended to move forward with the companion strategy and the accompanying implementation plan but the strategy and plan were never completed because of changes in leadership and other competing priorities within DHS. At the time of our discussion and prior to the establishment of the CWMD Office, OHA officials also noted that DHS did not have a singular entity or office responsible for chemical preparedness. An official representing S&T also said that the consolidation of some chemical, biological, radiological, and nuclear efforts may help bring order to chemical defense efforts because DHS did not have an entity in charge of these efforts or a strategy for guiding them.\nNow that DHS has established the CWMD Office as the focal point for chemical, biological, radiological, and nuclear programs and activities, DHS has an opportunity to develop a chemical defense strategy and related implementation plan to better integrate and coordinate the department’s programs and activities to prevent, protect against, mitigate, respond to, and recover from a chemical attack. The Government Performance and Results Act of 1993 (GPRA), as updated by the GPRA Modernization Act of 2010 (GPRAMA), includes principles for agencies to focus on the performance and results of programs by putting elements of a strategy and plan in place such as (1) establishing measurable goals and related measures, (2) developing strategies and plans for achieving results, and (3) identifying the resources that will be required to achieve the goals. Although GPRAMA applies to the department or agency level, in our prior work we have reported that these provisions can serve as leading practices for strategic planning at lower levels within federal agencies, such as planning for individual divisions, programs, or initiatives.\nOur past work has also shown that a strategy is a starting point and basic underpinning to better manage federal programs and activities such as DHS’s chemical defense efforts. A strategy can serve as a basis for guiding operations and can help policy makers, including congressional decision makers and agency officials, make decisions about programs and activities. It can also be useful in providing accountability and guiding resource and policy decisions, particularly in relation to issues that are national in scope and cross agency jurisdictions, such as chemical defense. When multiple agencies are working to address aspects of the same problem, there is a risk that duplication, overlap, and fragmentation among programs can result in wasting scarce funds, confuse and frustrate program customers, and limit overall program effectiveness. A strategy and implementation plan for DHS’ chemical defense programs and activities would help mitigate these risks. Specifically, a strategy and implementation plan would help DHS further define its chemical defense capability, including opportunities to leverage resources and capabilities and provide a roadmap for addressing any identified gaps. By defining DHS’s chemical defense capability, a strategy and implementation plan may also better position the CWMD Office and other components to work collaboratively and strategically with other organizations, including other federal agencies and state, local, tribal, and territorial jurisdictions.\nOfficials from the CWMD Office agreed that the establishment of the new office was intended to provide leadership to and help guide, support, integrate, and coordinate DHS’s chemical defense efforts and that a strategy and implementation plan could help DHS better integrate and coordinate its fragmented chemical defense programs and activities.",
"Recent chemical attacks abroad and the threat of ISIS to use chemical weapons against the West have sparked concerns about the potential for chemical attacks occurring in the United States. DHS components have developed and implemented a number of separate chemical defense programs and activities that, according to DHS officials, have been fragmented and not well coordinated within the department. In December 2017, DHS consolidated some of its programs and activities related to weapons of mass destruction, including those related to chemical defense, by establishing the new CWMD Office. It is too early to tell whether and to what extent this office will help address fragmentation and the lack of coordination across all DHS’s weapons of mass destruction efforts, including chemical efforts. However, as part of its consolidation, the CWMD Office would benefit from developing a strategy and implementation plan to guide, support, integrate, and coordinate DHS’s programs and activities to prevent, protect against, mitigate, respond to, and recover from a chemical attack. A strategy and implementation plan would also help the CWMD Office guide DHS’s efforts to address fragmentation and coordination issues and would be consistent with the office’s aim to establish a coherent mission and integrated strategic goals.",
"The Assistant Secretary for Countering Weapons of Mass Destruction should develop a strategy and implementation plan to help the Department of Homeland Security, among other things, guide, support, integrate and coordinate its chemical defense programs and activities; leverage resources and capabilities; and provide a roadmap for addressing any identified gaps. (Recommendation 1)",
"We provided a draft of this report to DHS for review and comment. DHS provided comments, which are reproduced in full in appendix III and technical comments, which we incorporated as appropriate. DHS concurred with our recommendation and noted that the Assistant Secretary for CWMD will coordinate with the DHS Under Secretary for Strategy, Policy, and Plans and other stakeholders to develop a strategy and implementation plan that will better integrate and direct DHS chemical defense programs and activities. DHS estimated that it will complete this effort by September 2019. These actions, if fully implemented, should address the intent of this recommendation.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees, the Secretary of Homeland Security, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (404) 679-1875 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.",
"At the time our review began, the Department of Homeland Security (DHS) had three headquarters components with programs and activities focused on chemical defense. These were the Office of Health Affairs’ (OHA) Chemical Defense Program; the Science and Technology Directorate’s (S&T) Chemical and Biological Defense Division and Chemical Security Analysis Center (CSAC); and the National Protection and Programs Directorate’s (NPPD) Chemical Facility Anti-Terrorism Standards (CFATS) program and Sector Outreach and Programs Division. Each component had dedicated funding to manage the particular chemical defense program or activity (with the exception of the Sector Outreach and Programs Division because this division funds DHS activities related to all critical infrastructure sectors, including the chemical sector). On December 7, 2017, DHS established the Countering Weapons of Mass Destruction (CWMD) Office, which incorporated most of OHA and selected elements of S&T, together with other DHS programs and activities related to countering chemical, biological, radiological, and nuclear threats. According to DHS, the CWMD Office was created to, among other things, elevate and streamline DHS’s efforts to prevent terrorists and other national security threat actors from using harmful agents, such as chemical agents, to harm Americans and U.S. interests.",
"OHA, which was subsumed by the CWMD Office in December 2017, was responsible for enhancing federal, state, and local risk awareness and planning and response mechanisms in the event of a chemical incident through the Chemical Defense Program. This program provided medical and technical expertise to OHA leadership and chemical defense stakeholders including DHS leadership, DHS components, the intelligence community, federal interagency partners, and professional and academic preparedness organizations. The program’s efforts focused on optimizing local preparedness and response to chemical incidents that exceed the local communities’ capacity and capability to act during the first critical hours by providing guidance and tools for first responders and supporting chemical exercises for preparedness. DHS’s Chief Medical Officer was responsible for managing OHA.\nThe Chemical Defense Program expended about $8.3 million between fiscal years 2009 and 2017 in chemical demonstration projects and follow-on funding to assist five jurisdictions in their chemical preparedness: Baltimore, Maryland; Boise, Idaho; Houston, Texas; New Orleans, Louisiana; and Nassau County, New York. For example, in Baltimore, OHA assisted the Maryland Transit Administration with the selection and installation of chemical detection equipment to integrate new technology into community emergency response and planning. In the other four locales, OHA assisted these partners in conducting multiple scenarios specific to each city based on high-risk factors identified by the Chemical Terrorism Risk Assessment (CTRA), which is a risk assessment produced by CSAC every 2 years. Such scenarios included indoor and outdoor scenarios in which persons were “exposed” to either an inhalant or a substance on their skin. Figure 4 summarizes the scenarios conducted in each city and some of the lessons learned.\nAccording to OHA summary documentation, a key finding from this work was that timely decisions and actions save lives and manage resources in response to a chemical incident. Since the completion of the five-city project, OHA has been working to, among other things, continue to develop a lessons learned document based on the project, as well as a related concept of operations, that state and local jurisdictions could use to respond to chemical incidents.\nAs of December 7, 2017, OHA was consolidated into the CWMD Office and its functions transferred to the new office, according to officials from the CWMD Office. The Chief Medical Officer is no longer responsible for managing OHA but serves as an advisor to the Assistant Secretary for Countering Weapons of Mass Destruction and as the principal advisor to the Secretary and the Administrator of FEMA on medical and public health issues related to natural disasters, acts of terrorism, and other man-made disasters, among other things.",
"S&T’s Homeland Security Advanced Research Projects Agency includes the Chemical and Biological Defense Division, which supports state and local jurisdictions by, for example, providing them help in modeling potential chemical attacks. The Chemical and Biological Defense Division worked with the City of New York to develop chemical detection modeling by simulating a chemical attack. As a result of the simulation, New York City officials wanted to implement mechanisms to prevent the potential consequences of a chemical attack in a large city.\nS&T’s Office of National Laboratories includes the CSAC, which identifies and characterizes the chemical threat against the nation through analysis and scientific assessment. CSAC is responsible for producing, among other things, the CTRA, a comprehensive evaluation of the risks associated with domestic toxic chemical releases produced every 2 years. CSAC officials chair the Interagency Chemical Risk Assessment Working Group that meets to develop the CTRA, identify chemical hazards, and produce a list of priority chemicals. This working group is comprised of DHS components, federal partners, and private industry officials that share industry information to ensure accurate and timely threat and risk information is included in the CTRA. To complement the CTRA, CSAC developed a standalone CTRA desktop tool that DHS components can use to conduct risk-based modeling of a potential chemical attack and provide results to DHS components, such as the U.S. Secret Service, for advance planning of large-scale events.\nIn addition, CSAC conducts tailored risk assessments addressing emerging threats such as fentanyl, a synthetic opioid that has caused numerous deaths across the United States. CSAC sends these assessments, along with other intelligence and threat information, to relevant DHS components, federal agencies, state and local partners, and private entities so this information can be used in planning and decision making. Officials from eight DHS components we spoke with said they use CSAC information in their work and that CSAC products are useful.\nCSAC conducted two exercises, known as Jack Rabbit I and II, to experimentally characterize the effects of a large-scale chemical release and to understand the reason for the differences seen between real-world events and modeling predictions. These exercises were intended to strengthen industry standards in chemical transportation, as well as response and recovery plans. Outputs and data from these exercises have been used to write first responder guidelines for these types of events and are being taught in nationwide fire and hazmat courses. The fiscal year 2018 President’s Budget request did not ask for an appropriation to fund CSAC. However, the Consolidated Appropriations Act, 2018, did provide funding for CSAC. Furthermore, in May 2018, the Secretary delegated responsibility for conducting the non-research and development functions related to the Chemical Terrorism Risk Assessment to the CWMD Office.",
"The CFATS program uses a multitiered risk assessment process to determine a facility’s risk profile by requiring facilities in possession of specific quantities of designated chemicals of interest to complete an online questionnaire. CFATS program officials said they also use CSAC data as part of the process for making decisions about which facilities should be covered by CFATS, and their level of risk. If CFATS officials make a determination that a facility is high-risk, the facility must submit a vulnerability assessment and a site security plan or an alternative security program for DHS approval that includes security measures to meet risk- based performance standards. We previously reported on various aspects of the CFATS program and identified challenges that DHS was experiencing in implementing and managing the program. We made a number of recommendations to strengthen the program to include, among other things, that DHS verify that certain data reported by facilities is accurate, enhance its risk assessment approach to incorporate all elements of risk, conduct a peer review of the program to validate and verify DHS’s risk assessment approach, and document processes and procedures for managing compliance with site security plans. DHS agreed with all of these recommendations and has either fully implemented them or taken action to address them.\nThe Sector Outreach and Programs Division works to enhance the security and resilience of chemical facilities that may or may not be considered high-risk under the CFATS program and plays a nonregulatory role as the sector-specific agency for the chemical sector. The Sector Outreach and Programs Division works with the chemical sector through the Chemical Sector Coordinating Council, the Chemical Government Coordinating Council, and others in a public-private partnership to share information on facility security and resilience. In addition, the division and the coordinating councils help enhance the security and resilience of chemical facilities that may or may not be considered high-risk under the CFATS program. The division and councils are to collaborate with federal agencies, chemical facilities, and state, local, tribal, and territorial entities to, among other things, assess risks and share information on chemical threats and chemical facility security and resilience. Further, the Protective Security Coordination Division in the Office of Infrastructure Protection works with facility owners and operators to conduct voluntary assessments at facilities.",
"Department of Homeland Security (DHS) components conduct various prevention and protection activities related to chemical defense. These activities are managed by individual components as part of their overall mission under an all-hazards approach.\nU.S. Coast Guard - The Coast Guard uses fixed and portable chemical detectors to identify and interdict hazardous chemicals as part of its maritime prevention and protection activities. It also responds to hazardous material and chemical releases in U.S. waterways. The Coast Guard also staffs the 24-hour National Response Center, which is the national point of contact for reporting all oil and hazardous materials releases into the water, including chemicals that are discharged into the environment. The National Response Center also takes maritime reports of suspicious activity and security breaches at facilities regulated by the Maritime Transportation Security Act of 2002. Under this act, the Coast Guard regulates security at certain chemical facilities and other facilities possessing hazardous materials.\nU.S. Customs and Border Protection (CBP) - CBP interdicts hazardous chemicals at U.S. borders and ports of entry as part of its overall mission to protect the United States from threats entering the country. Among other things, CBP has deployed chemical detectors to point of entry nationwide that were intended for narcotics detection, but can also be used by CBP officers to presumptively identify a limited number of chemicals. Also, CBP’s National Targeting Center helps to screen and identify high-risk packages that may contain hazardous materials at ports of entry. In addition, CBP’s Laboratories and Scientific Services Directorate manages seven nationally accredited field laboratories, where staff detect, analyze, and identify hazardous substances, including those that could be weapons of mass destruction. When CBP officers send suspected chemical weapons, narcotics, and other hazardous materials to the labs, the labs use various confirmatory analysis technologies, such as infrared spectroscopy and mass spectrometry, to positively identify them. Also, the Directorate has a 24-hour Teleforensic Center for on-call scientific support for CBP officers who have questions on suspected chemical agents.\nFederal Emergency Management Agency (FEMA) - FEMA provides preparedness grants to state and local governments for any type of all-hazards preparedness activity, including chemical preparedness. According to FEMA data, in fiscal year 2016, states used about $3.5 million, local municipalities used about $48.5 million, and tribal and territorial municipalities used about $80,000 in preparedness grant funding for chemical defense including prevention and protection activities, as well as mitigation, response, and recovery efforts related to a chemical attack.\nOffice of Intelligence and Analysis (I&A) - I&A gathers intelligence information on all homeland security threats including chemical threats. Such threat information is compiled and disseminated to relevant DHS components and federal agencies. For example, I&A works with CSAC to provide intelligence information for the CTRA and writes the threat portion of that assessment. I&A also receives information from CSAC on high-risk gaps in intelligence to help better inform chemical defense intelligence reporting. Also, the Under Secretary of I&A serves as the Vice-Chair of the Counterterrorism Advisory Board. This board is responsible for coordinating, facilitating, and sharing information regarding DHS’s activities related to mitigating current, emerging, perceived, or possible terrorist threats, including chemical threats; and providing timely and accurate advice and recommendations to the Secretary and Deputy Secretary of Homeland Security on counterterrorism issues.\nNPPD’s Federal Protective Service (FPS) - FPS secures federally- owned and leased space in various facilities across the country. Federal facilities are assigned a facility security level determination ranging from a Level 1 (low risk) to a Level 5 (high risk). As part of its responsibility, FPS is to conduct Facility Security Assessments of the buildings and properties it protects that cover all types of hazards including a chemical release, in accordance with Interagency Security Committee standards and guidelines. FPS is to conduct these assessments at least once every 5 years for Level 1 and 2 facilities, and at least once every 3 years for Level 3, 4, and 5 facilities. FPS conducts the assessments using a Modified Infrastructure Survey Tool.\nTransportation Security Administration (TSA) - TSA efforts to address the threat of chemical terrorism have been focused on the commercial transportation of bulk quantities of hazardous materials and testing related to the release of commercially transported chemicals that could be used as weapons of mass destruction. TSA’s activities with respect to hazardous materials transportation aim to reduce the vulnerability of shipments of certain hazardous materials through the voluntary implementation of operational practices by motor carriers and railroads, and ensure a secure transfer of custody of hazardous materials to and from rail cars at chemical facilities. Also, in May 2003, TSA began requiring that all commercial motor vehicle operators licensed to transport hazardous materials, including toxic chemicals, must successfully complete a comprehensive background check conducted by TSA. According to TSA documents, approximately 1.5 million of the nation’s estimated 6 million commercial drivers have successfully completed the vetting process. Additionally, TSA has also recently partnered with five mass transit and passenger rail venues, together with other DHS components such as DHS’s Science and Technology Directorate and the U.S. Secret Service, to test chemical detection technologies for such venues. In addition, TSA is responsible for the Transportation Sector Security Risk Assessment, which examines the potential threat, vulnerabilities, and consequences of a terrorist attack involving the nation’s transportation systems. This assessment’s risk calculations for several hundred specific risk scenarios, including chemical weapons attacks, are based on the elements of threat, vulnerability and consequence using a combination of subject matter expert judgments and modeling results.\nU.S. Secret Service - The Secret Service is responsible for protecting its protectees and designated fixed sites and temporary venues from all threats and hazards, including chemical threats. For example, the Secret Service conducts security assessments of sites, which may involve chemical detection, and coordinates with other agencies for preparedness or response to threats and hazard incidents. In addition, the Secret Service has a Hazardous Agent Mitigation Medical Emergency Response team, dedicated to responding to numerous hazards, including chemical threats and incidents.",
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"In addition to the contact named above, John Mortin (Assistant Director), Juan Tapia-Videla (Analyst-in-Charge), Michelle Fejfar, Ashley Grant, Imoni Hampton, Eric Hauswirth, Tom Lombardi, Sasan J. “Jon” Najmi, Claire Peachey, and Kay Vyas made key contributions to this report."
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"question": [
"How does DHS combat chemical attacks?",
"What are some of the different components of the DHS programs?",
"How has the organization of DHS's chemical defense programs changed?",
"What was discovered about about DHS' chemical defense program?",
"What redundancies existed within DHS?",
"What risk exists without greater coordination?",
"To what extent can the new CWMD Office be evaluated?",
"How would a strategy and implementation help DHS?",
"Why was the 2012 effort abandoned?",
"What was GAO asked to do?",
"What did the resulting report examine?",
"How was this review conducted?"
],
"summary": [
"The Department of Homeland Security (DHS) manages several programs and activities designed to prevent and protect against domestic attacks using chemical agents (see figure).",
"Some DHS components have programs that focus on chemical defense, such as the Science and Technology Directorate's (S&T) chemical hazard characterization. Others have chemical defense responsibilities as part of their broader missions, such as U.S. Customs and Border Protection (CBP), which interdicts chemical agents at the border.",
"DHS recently consolidated some chemical defense programs and activities into a new Countering Weapons of Mass Destruction (CWMD) Office.",
"However, GAO found and DHS officials acknowledged that DHS has not fully integrated and coordinated its chemical defense programs and activities.",
"Several components—including CBP, U.S. Coast Guard, the Office of Health Affairs, and S&T—have conducted similar activities, such as acquiring chemical detectors or assisting local jurisdictions with preparedness, separately, without DHS-wide direction and coordination.",
"As components carry out chemical defense activities to meet mission needs, there is a risk that DHS may miss an opportunity to leverage resources and share information that could lead to greater effectiveness addressing chemical threats.",
"It is too early to tell the extent to which the new CWMD Office will enhance the integration of DHS's chemical defense programs and activities.",
"Given the breadth of DHS's chemical defense responsibilities, a strategy and implementation plan would help the CWMD Office (1) mitigate the risk of fragmentation among DHS programs and activities, and (2) establish goals and identify resources to achieve these goals, consistent with the Government Performance and Results Modernization Act of 2010.This would also be consistent with a 2012 DHS effort, since abandoned, to develop a strategy and implementation plan for all chemical defense activities, from prevention to recovery.",
"DHS officials stated the 2012 effort was not completed because of leadership changes and competing priorities.",
"GAO was asked to examine DHS's chemical defense programs and activities.",
"This report examines (1) DHS programs and activities to prevent and protect against domestic chemical attacks and (2) the extent to which DHS has integrated and coordinated all of its chemical defense programs and activities.",
"GAO reviewed documentation and interviewed officials from relevant DHS offices and components and reviewed DHS strategy and planning documents and federal laws and directives related to chemical defense."
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GAO_GAO-15-27
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{
"title": [
"Background",
"Over Half of Grantees Could Track Some Individuals from Early Education into the Workforce, but Data Are Generally Limited",
"Over Half of Grantees Have the Ability to Match Some Individual Records from Early Education to Workforce",
"Most Grantees Are Not Able to Match Data Comprehensively",
"Most Grantees That Match Data Also Share Them, but Few Share All Types of Data",
"Longitudinal Data Analysis Has Informed State and Local Policy Making and Helped States Shape Their Research Agendas",
"Grantees Reported Using Some Longitudinal Data to Inform Decision and Policy Making",
"Most Grantees Have Developed a Research Agenda in Conjunction with Their Longitudinal Data Systems",
"Concluding Observations",
"Agency Comments and Our Evaluation",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: Data Quality Campaign (DQC) Survey Questions",
"Appendix III: Statewide Longitudinal Data Systems (SLDS) and Workforce Data Quality Initiative (WDQI) Grantees",
"Appendix IV: Specific Programs Matched by Statewide Longitudinal Data Systems (SLDS) and Workforce Data Quality Initiative (WDQI) Grantees between Sectors",
"Grantee Alaska",
"Subsidized Child",
"Less Than",
"Less Than",
"Unemployment",
"Unemployment",
"Appendix V: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments",
"Glossary",
"Aggregate level data",
"College and career readiness reports",
"Data governance",
"Diagnostic report",
"Early education sector",
"Early warning report",
"Feedback report",
"Growth report",
"K-12 sector",
"Postsecondary education sector",
"Predictive report",
"Matching",
"Match rate",
"Sharing",
"Workforce sector"
],
"paragraphs": [
"Since the early 2000s, states have been building longitudinal data systems to better address data collection and reporting requirements in federal laws—such as the No Child Left Behind Act of 2001 and the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act (America COMPETES Act)— and to inform stakeholders about student achievement and school performance. Federal, state, and private entities have provided funding for these systems. For example, in addition to the SLDS and WDQI programs, other recent federal grant programs including Race to the Top and the Race to the Top-Early Learning Challenge may support states’ efforts.\nThe purpose of the SLDS grant program—administered by Education’s Institute for Education Sciences, National Center for Education Statistics—is generally to enable state educational agencies to design, develop, implement, and expand statewide longitudinal data systems to manage, analyze, disaggregate, and use individual student data. From fiscal years 2006 to 2013, Education has awarded approximately $613 million in SLDS grants (see table 1). For each grant competition, Education establishes the award period and range of grant amounts to be awarded; SLDS grants have ranged anywhere from 3 to 5 years, with a maximum award amount of $20 million per grantee. See appendix III for a list of states that received SLDS grants and the amount of their awards.\nThough the SLDS grant requirements have varied over time, states generally could use SLDS funds to build K-12 longitudinal data systems or to expand these systems to include data from other sectors, such as early education, postsecondary education, or workforce (see table 2). The long-term goal of the program is for states to create comprehensive “P20- W”—early learning through workforce—longitudinal data systems that, among other things, will allow for states, districts, schools, educators, and other stakeholders to make informed decisions and conduct research to improve student academic achievement and close achievement gaps.\nUnder the WDQI grant program—administered by DOL’s Employment and Training Administration—states are expected to fully develop their workforce longitudinal data systems and then be able to match these data with available education data to analyze education and workforce outcomes.has chosen to award WDQI grants to states that have received an SLDS grant or have a longitudinal data system in place. Among other requirements, all grantees are required to develop or improve workforce longitudinal data systems and enable workforce data to be matched with education data to ultimately follow individuals through school and into the workforce. DOL has provided funding for approximately $36 million in WDQI grants to 33 states since fiscal year 2010 (see table 3). The award period for each grant is 3 years. See appendix III for a list of states that received WDQI grants and the amount of their awards.",
"",
"After analyzing data from DQC’s 2013 survey, we determined that over half of grantees have the ability to match data—reliably connect the same record in two or more databases—for some individuals from early As shown in figure 1, individuals can education and into the workforce.take different paths to move from early education into the workforce: (1) via K-12 or (2) via K-12 and postsecondary. Regardless, as the match rate—that is, the percent of unique student records reliably connected between databases—increases, the number of grantees able to match data between sectors decreases. For example, 31 of 48 grantees have the ability to track individuals between all sectors from early education to workforce to at least some degree, but only 6 grantees could do so at the highest match rate.\nOur analysis of the DQC survey data also shows that more grantees match data among the education sectors than between the education and workforce sectors, though—as was the case with matching data from early education to workforce—the number of grantees that match data For example, 43 decreases as the match rate increases (see table 4).grantees reported matching data between the K-12 and early education sectors, and 31 grantees reported matching data between the K-12 and workforce sectors at least to some degree; however, the number of grantees that reported matching data between these same sectors drops to 37 and 9, respectively, at a match rate of 95 percent or more.\nNot all grantees are matching data between all sectors, which may partially be the result of receiving grants with different grant requirements. For example, all 20 grantees that received a fiscal year 2009 SLDS ARRA grant were required to have longitudinal data systems that include individual student-level data from preschool through postsecondary education and into the workforce (see table 2). However, fiscal year 2012 grantees could choose from among three different grant priorities, so some grantees may be focused on building a K-12 longitudinal data system while others may be using their grant funds to link existing K-12 data to other sectors. In addition, grantees may have been in different stages of developing their longitudinal data systems prior to receiving a grant, which may help explain why some grantees are able to match data between more sectors than others.",
"Programs Included in the Data Quality Campaign Survey, 2013 Early education: early intervention, Head Start/Early Head Start, special education, state prekindergarten, subsidized child care K-12: elementary and secondary education Postsecondary institutions: less than 2-year public, less than 2-year private not-for-profit, less than 2-year private for-profit, 2-year public, 2-year private not-for-profit, 2-year private for-profit, 4-year and above public, 4- year and above private not-for-profit, 4-year and above private for-profit Workforce: unemployment insurance wage records, unemployment benefits claim data, Workforce Investment Act of 1998 (WIA) adult or dislocated worker program, WIA youth program, adult basic and secondary education, Wagner-Peyser Act employment services, Temporary Assistance for Needy Families (TANF)\nOf those grantees that match data, we found that few generally do so for all of the possible programs between particular sectors (see sidebar), based on our analysis of DQC survey data (see table 5). For example, only 6 of 31 grantees reported that they were able to match data on all seven programs between the K-12 and workforce sectors, which include unemployment insurance wage records, unemployment benefit claims data, Workforce Investment Act of 1998 (WIA) adult or dislocated worker program, WIA youth program, adult basic and secondary education, Wagner-Peyser Act employment services, and Temporary Assistance for Needy Families (TANF).\nWe also analyzed DQC’s data to determine which programs are most commonly matched by grantees between particular sectors (see fig. 2). See appendix IV for a list of the specific programs matched by each grantee.",
"Most grantees that match data also share data between sectors; that is, they exchange at least one type of data (e.g., demographic, enrollment, program participation, etc.) between two databases in at least one direction, based on our analysis of DQC data. However, in general, few grantees share all possible types of data (see sidebar). For example, only 3 of 36 states that match data between the postsecondary and workforce sectors reported sharing all 10 types of data asked about by DQC, which include information on postsecondary degree completion, earnings and wages, and industry of employment, among others (see table 6).\nOfficials in all five grantee states we spoke with said matching K-12 education and workforce data is challenging without using a Social Security number (SSN) that uniquely identifies an individual and, as a result, some states may have greater difficulty tracking particular groups of students over time. SLDS officials in three states—Ohio, Pennsylvania, and Virginia—said collecting a SSN in K-12 education data is prohibited either by state law or agency policy; in the other two states—South Dakota and Washington—officials said collecting a SSN is optional and whether to do so is determined at the district level.unique statewide student identifier is a technical requirement of the SLDS grant program, states can choose the format of the identifier used. Education suggested, in a November 2010 SLDS Technical Brief, that states use a unique identifier distinct from a student’s SSN for privacy reasons; however, Education also stated that states should maintain a While establishing a student’s SSN as a data element in order to link data between systems. According to a 2010 report from the Social Security Administration’s Office of the Inspector General, 28 states collect a SSN in K-12 education data.\nUnlike the SLDS program, in its evaluation criteria for WDQI grants, DOL specifies that states use SSNs as a personal identifier, as they are already in use throughout the workforce system. To match education and workforce data absent a SSN, state officials said they are developing algorithms to match individual records using other identifiers, which could include an individual’s first name, last name, and date of birth. However, a person’s last name can change, which Pennsylvania SLDS officials said can make it difficult to reliably track individuals over time. Further, Ohio WDQI officials explained that the absence of a SSN makes it particularly difficult to track students who drop out of high school or to track high school graduates who do not move on to the workforce. Similarly, Ohio SLDS officials said tracking students that do not go on to postsecondary education is a challenge because there is no readily available identifier to determine any workforce participation by those individuals.\nIn four of five grantee states we spoke with, officials also cited data governance as a challenge. Data governance is the exercise of decision- making and authority for data-related matters using agreed-upon rules that describe who can take what actions with what information and when, under what circumstances, and using what methods. SLDS grantees are generally required to develop a governance structure involving both state and local stakeholders that includes a common understanding of data ownership, data management, as well as data confidentiality and access. All WDQI grantees are expected to establish partnerships with relevant workforce agencies and with state education agencies for the purposes of data sharing. Pennsylvania and Ohio officials said it has not been easy to get the various workforce agencies that maintain data on individual workforce programs to share their data as the agencies often operate independently from one another. As a result, Pennsylvania officials said agencies are territorial about their data, making it difficult to build consensus around developing a longitudinal data system. In Ohio, officials said that each agency has to be approached separately to obtain commitment to share data in a longitudinal system. Similarly, officials in Virginia said collecting data on early education programs has been a challenge as the data are scattered across different agencies. An official from the Early Childhood Data Collaborative explained that it can be easier to facilitate data matching between early education programs under the purview of one agency, such as state prekindergarten and special education, which are generally overseen by state educational agencies in addition to K-12 data.\nBased on our interviews with grantee states, state officials we spoke with said they are in different stages of developing a data governance structure. For example, Pennsylvania WDQI officials said they have not yet established a formal data governance structure. In contrast, Virginia officials have established a data governance structure; officials said they spent 18 months working through the different priorities, cultures, and agendas of the various agencies providing data to the longitudinal data system.\nState officials in all five grantee states we spoke with also said they have had to manage public concerns about the purpose of data collection or about data privacy. For example, in Ohio, SLDS officials told us there is a lack of understanding about the value of building a longitudinal data system; officials have had to counter misperceptions about what data are being collected in the state’s longitudinal data system, what the data will be used for, and why data need to be connected between the education and workforce sectors. South Dakota officials said they have had to respond to concerns from parents and other education stakeholders about the privacy of longitudinal data.\nGrantees have tried to provide information to the public about the purposes of the data system and steps taken to safeguard information. Forty-six grantees reported using outreach tools to communicate the availability of the data to non-educator stakeholders, according to our analysis of the DQC survey data. These grantees reported using traditional outreach measures, which could include public service announcements, press conferences and news releases, and posting information about the data on the state education agency’s website. For example, four of five grantee states we interviewed have web pages dedicated to their longitudinal data systems. These web pages can include overviews of the systems, answers to frequently asked questions, trainings on how to use or access the data, and examples of research studies that use the data. Further, 44 grantees reported on the DQC survey that they take advantage of in-person opportunities, which could include meetings, conferences, and presentations. Lastly, 35 grantees reported using electronic or social media to promote the data, which could include Facebook, Twitter, blogs, and webinars. In the context of discussing the challenge of managing public concerns about data collection or privacy, officials in three of the five grantee states we spoke with specifically said they have provided information about how they protect individual data. Pennsylvania SLDS officials said they took considerable time to convey to parents and taxpayers the steps they are taking to ensure data privacy. Similarly, Virginia officials from both grant programs said explaining all of the precautions the state is taking with respect to data privacy seems to help in reducing concerns. Ohio officials said the state’s Department of Education has convened a new workgroup to see if there are better ways to address misperceptions about data collection and use.\nLastly, state officials cited the importance of federal funding to their efforts to build their longitudinal data systems and expressed concerns about sustaining their systems after their grants end. Officials we interviewed in all five grantee states said they would not be as far along in developing their longitudinal data systems without the federal funding provided through the SLDS and WDQI programs. For example, officials in Washington said they used their initial SLDS and WDQI grants to focus on building their K-12 data system and workforce systems, respectively.\nThey said the second SLDS grant they received was instrumental in building a P-20W system to connect data between all sectors. Ohio officials said the SLDS funds have provided, among other uses, critical funding for further development of the longitudinal data system, technological updates, and access to technical assistance. However, officials in all five grantee states also expressed concerns about sustaining the systems moving forward. For example, officials in Virginia said they have created a legislative committee to focus on sustainability efforts and will need to request additional funding to keep the system sustainable. Officials in Pennsylvania said they are trying to leverage the existing technical infrastructure and use other available resources, but it is difficult to find funding for their workforce data efforts.",
"",
"According to our analysis of the DQC survey data and our interviews with selected states, SLDS and WDQI grantees use longitudinal data to examine education outcomes and to inform policy decisions. All 48 grantees responded that their state educational agency uses the data to analyze aggregate education outcomes (see fig. 3). For example, the three most common types of analyses are related to high school feedback, cohort graduation or completion, and growth (i.e., changes in the achievement of the same students over time). These aggregate data are used to analyze a particular cohort of students and develop information on students’ outcomes over time. They also help guide school-, district-, and state-level improvement efforts. For example, officials from three of the five grantee states we interviewed told us they have used the data to assess kindergarten readiness for children who attended state early education programs. Also, 27 grantees responded to the DQC survey that they use the data to analyze college and career readiness. More specifically, to better understand the courses and achievement levels that high school graduates need to be successful in college, Virginia followed students who graduated from high school from 2006 to 2008 and analyzed enrollment and academic achievement patterns for different groups of students. According to agency officials in Virginia, this analysis resulted in changes to the course requirements for graduation.\nIn addition to examining education outcomes, states also use longitudinal data to assess how cohorts of students fare once they are in the workforce. Washington’s Education Research and Data Center, a state center dedicated to analyzing education and workforce issues across the P-20W spectrum, has published several studies examining workforce outcomes for high school and college graduates. For example, one study compared earnings for workers with bachelor’s degrees from Washington state colleges and universities to earnings of workers with only diplomas from public high schools.\nIn addition to analyzing aggregate student outcomes, grantees also indicated that they analyze individual-level student outcomes. Our analysis of DQC survey data shows that 45 of 48 grantees examine outcomes for individual students (see fig. 4). Student-level data provide teachers and parents with information they can use to improve student achievement. For example, 32 grantees reported that the data are used in diagnostic analysis, which help teachers identify individual students’ strengths and academic needs. Also, 29 grantees responded to the DQC survey that they produce early warning reports, which identify students who are most likely to be at risk of academic failure or dropping out of school. For example, Virginia’s early warning report shows demographic and enrollment information about an individual student; flags for warning indicators such as attendance, GPA, and suspensions; and a record of interventions the school has taken to help the student (see fig. 5). Further, officials in three of the grantee states we interviewed told us that educators have access to student-level analyses. In Pennsylvania, teachers can use an educator dashboard, which includes longitudinal data, to determine the educational needs of their students and adjust their teaching plans.\nForty-one of 48 grantees reported to the DQC that they use longitudinal data to inform policy and continuous improvement efforts. Specifically, grantees reported that they use the data to inform school turnaround efforts (34 grantees), evaluate intervention strategies or programs (14 grantees), or identify and reward schools that demonstrate high growth (27 grantees), among other things. Officials in three of five grantee states we spoke with provided more specific examples of how they use or plan to use longitudinal data to inform their efforts. Ohio officials told us they used longitudinal data to study students in remediation to help develop a remediation policy. They also said they have been working on a workforce success measures dashboard to compare outcomes across state programs. For example, the dashboard will allow policy makers to assess how successful the state’s adult basic education program is compared to the state’s vocational education program. Pennsylvania officials told us they will develop a similar dashboard. Washington state officials told us that longitudinal data helped address a concern in the state legislature about whether math and science teachers were leaving to work in the private sector. Researchers identified common teacher and school district characteristics associated with teachers who left for employment in other fields and found that math and science teachers did not leave the field at a higher rate than other teachers. Officials told us that this analysis prompted the state legislature to focus its attention on improving the recruitment of math and science teachers rather than improving retention.\nWhile many grantees reported on the DQC survey that they use longitudinal data to analyze outcomes for students and workers and to make policy decisions, officials from all five grantee states we interviewed told us that these analyses are limited because they are still developing their longitudinal data systems. In addition, only three of these states— Ohio, Virginia, and Washington—are conducting education to workforce analyses. Officials in Pennsylvania and South Dakota said they plan to do this type of analysis, but only after they finish putting all the education and workforce data into their systems and matching these data.",
"Data from the 2013 DQC survey show that 39 SLDS or WDQI grantees have developed research agendas articulating and prioritizing research or policy questions that can be answered with longitudinal data. These research agendas were developed in partnership with higher education institutions, independent researchers, or others. Of the five grantee states we interviewed, only Virginia and Ohio have fully developed their research agendas. Pennsylvania, South Dakota and Washington officials told us they are in the process of doing so. State officials shared two approaches for creating these agendas. Under the first approach, stakeholders from various state agencies comprise a committee that identifies research questions. Virginia took this approach and drafted a list of “burning questions” to answer using longitudinal data. Officials in Virginia explained that they purposefully kept the agenda broad so that the questions will remain relevant over the long term. Washington’s Education Research and Data Center has similarly developed a list of critical questions it would like to answer using longitudinal data. Under the second approach, state agencies use information requests and stakeholder feedback on sample reports to shape the research agenda. For example, officials from the South Dakota Department of Education told us they have solicited feedback after training districts on the data and reviewed requests from the governor’s office and state legislators. They also told us that they are following the number of hits for individual reports on the state’s Department of Education’s electronic portal.\nForty-three of 48 grantees reported that they have a process by which researchers who are not employees of the state can propose their own studies for approval, according to the 2013 DQC survey data. Four of the grantee states we interviewed have established a formal request process for researchers who would like to access longitudinal data and the fifth state is reviewing its protocols and expects to develop a formal application process. Officials in two grantee states told us that the request process is intended to streamline access to the data and make it easier for researchers to seek approval for data requests. In addition, officials in Ohio told us that when researchers apply for access to Ohio’s data, they must include information in their application about how the study will meet the state’s research priorities.",
"Since fiscal year 2006, the federal government has made a significant investment—over $640 million in SLDS and WDQI grant funds—to help states build P20-W longitudinal data systems that track individuals from early education and into the workforce. The different grant requirements for linking data between sectors may have contributed to states being in different stages of developing their longitudinal data systems. That is, some grantees are just building their K-12 longitudinal data systems while others are matching data between education and workforce sectors. It remains to be seen whether all grantees will ultimately achieve the long- term goal of developing complete P20-W longitudinal data systems or how long that will take, particularly in light of unresolved concerns about limitations to matching data using a Social Security number and sustainability. Further, even among those grantees that can match data between sectors, most can only do so for a limited number of programs or data types. As grantees continue to refine their systems, maximizing the potential of these systems will rest, in part, with the ability to more fully match information on specific programs and characteristics of individuals that could help in further analyzing education and workforce outcomes.",
"We provided a draft of this report to Education and DOL for their review. Each provided technical comments, which we incorporated as appropriate.\nAs agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution until 30 days after the date of this letter. At that time, we will send copies of this report to the appropriate congressional committees and the Secretaries of Education and Labor. In addition, the report is available at no charge on GAO’s website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (617) 788-0580 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix VII.",
"The objectives of this report were to examine: (1) the extent to which Statewide Longitudinal Data Systems (SLDS) and Workforce Data Quality Initiative (WDQI) grantees match individual student and worker records and share data between the education and workforce sectors; and (2) how grantees are using longitudinal data to help improve education and workforce outcomes.\nTo answer our objectives, we analyzed state-level data from a 2013 survey conducted by the Data Quality Campaign (DQC), a nonprofit organization that works with state officials and others to support the effective use of data to improve student achievement. DQC’s survey focused on 10 “State Actions” the DQC has developed to ensure effective data use (see table 7). DQC has conducted this annual survey since 2005. The survey data include self-reported information on how data are matched and shared between the early education, K-12, postsecondary education, and workforce sectors, as well as information on specific programs within these sectors, how states analyze and use the data, and who has access to the data.\nTo conduct the survey, DQC used an online tool to collect information and invited the governor’s office in all 50 states and the District of Columbia to participate. According to DQC, the governor’s office is in the best position to bring stakeholders together to respond to the survey. As part of their survey response, states were asked to provide documents or website links as evidence of having specific policies or reports. After survey responses were received, DQC worked with each state to ensure the information reported was as accurate as possible.\nWe analyzed data from eight survey questions (see table 8 in appendix II) to determine the extent to which SLDS and WDQI grantees match individual records and share data among the education sectors and between the education and workforce sectors. For the purposes of our report, a grantee is one of the 48 states that received a SLDS grant, a WDQI grant, or both and responded to the 2013 DQC survey. We considered the District of Columbia to be a state. We excluded Alabama, New Mexico and California from our review because neither Alabama nor New Mexico received a SLDS or a WDQI grant and because California chose not to participate in DQC’s 2013 survey. We excluded the U.S. Virgin Islands and Puerto Rico because, while these territories received SLDS grants, DQC did not include them in its survey. We analyzed data on SLDS and WDQI grantee states because the SLDS and WDQI grant programs provide federal funds for developing longitudinal data systems and are complementary.\nWe considered a grantee as matching data between sectors if a grantee matched data from at least one program between sectors (for a list of programs included in the DQC survey, see questions 1, 4, 7, and 10 in table 8 in appendix II). We considered a grantee as sharing data if a grantee matched data according to our definition and also reported exchanging at least one data element between sectors, in either direction (for a list of data elements, see questions 2, 5, 8, and 11 in table 8 in appendix II). We also analyzed data from another twelve survey questions to identify how grantees are using longitudinal data to help improve education and workforce outcomes (see table 9 in appendix II).\nWe conducted a data reliability assessment by reviewing the survey instrument and related documentation, interviewing officials responsible for administering the survey, and testing the data for obvious inaccuracies. We determined that these data are sufficiently reliable for the purposes of this report.\nIn addition to our analysis of DQC survey data we conducted interviews with a nongeneralizable sample of five grantees as well as relevant federal agencies and nonprofit organizations. During our interviews with the five grantee states—Ohio, Pennsylvania, South Dakota, Virginia, and Washington—we asked grantees to identify challenges they faced in building and implementing longitudinal data systems and discussed how grantees have used longitudinal data to inform decision-making in education and workforce programs. We selected these grantees based on factors including the differing levels of progress they have made in establishing data linkages and the federal funding they have received from the SLDS and WDQI programs.\nWithin each state, we spoke with relevant K-12, workforce, postsecondary education, and early education officials. We also interviewed officials at Education, DOL, and the Department of Health and Human Services to obtain information about their roles in helping states build longitudinal data systems. In addition, we spoke with officials from nonprofit organizations to obtain their views on states’ implementation of longitudinal data systems. These stakeholder organizations included the Early Childhood Education Collaborative, the State Higher Education Executive Officers Association, and the Workforce Data Quality Campaign. Finally, we reviewed relevant federal laws, regulations, requests for applications, and solicitations for grant applications to understand the requirements of these grants.",
"As explained in appendix I, we analyzed data from DQC’s 2013 survey to answer our research objectives. Table 8 and table 9 show the specific questions we analyzed from DQC’s survey instrument. For some questions, DQC allowed states to select “other” as a response; we excluded these “other” responses from our analysis.",
"",
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"In addition to the contact named above, Janet Mascia, Assistant Director, Jennifer Gregory, and Nisha R. Hazra made key contributions to this report. Also contributing to this report were Deborah Bland, David Chrisinger, Alex Galuten, Amanda Miller, Jeffrey G. Miller, Mimi Nguyen, Yunsian Tai, and Walter Vance.",
"This glossary is provided for reader convenience. It is not intended as a definitive, comprehensive glossary of related terms.",
"Group statistics (numbers, percentages, averages, etc.) based on individual student data.",
"Reports designed to identify students who are on track for readiness or success in college or careers.",
"The exercise of decision-making and authority for data-related matters using agreed-upon rules that describe who can take what actions with what information and when, under what circumstances, and using what methods.",
"Information on individuals designed to identify each student’s strengths and academic needs.",
"Programs that serve children prior to kindergarten. Programs include: early intervention, Head Start/Early Head Start, state prekindergarten, special education, and subsidized child care.",
"A report designed to identify students who are most likely to be at risk of academic failure or dropping out of school.",
"Information on outcomes for students after they graduate from a school or district.",
"A report that shows changes in the achievement of the same students over time.",
"Elementary and secondary education.",
"Institutions of higher education. Types of institutions include: less than 2- year public, 2-year public, 4-year and above public, less than 2-year private not-for-profit, 2-year private not-for-profit, 4-year and above private not-for-profit, less than 2-year private for-profit, 2-year private for- profit, and 4-year and above private for-profit.",
"A report that shows how students’ success later in the education/workforce pipeline is related to the status of the same students earlier in the pipeline.",
"Reliably connecting the same individual record in two or more databases.",
"The percent of unique individual records reliably connected across databases.",
"Exchanging data between two databases, in either direction. Data elements that could be shared between early education and K-12 include: demographic, family characteristics, program participation, child-level development data; between K-12 and postsecondary: demographic, college readiness assessment scores, college placement assessment scores, high school transcript data, postsecondary enrollment, postsecondary remediation status, postsecondary progress, postsecondary credits earned, postsecondary enrollment intensity, postsecondary outcomes; between K-12 and workforce: demographic, enrollment, transcript data, earnings and wages, employment status, occupation, industry of employment; between post-secondary and workforce: demographic, enrollment, transcript data, financial aid, postsecondary degree completion, earnings and wages, employment status, occupation, industry of employment.",
"Programs that serve individuals in the workforce. Programs include: adult basic and secondary education, TANF, unemployment benefits claims data, unemployment insurance wage records, Wagner-Peyser Act employment, WIA adult or dislocated workers program, and WIA youth program."
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"question": [
"What did GAO determine about grantee states?",
"What is the DQC?",
"What did the DQC do in its survey?",
"What problems arise with match rates?",
"What did GAO discover about match rates?",
"What challenges did state officials site regarding matching data?",
"In what way do grantees use longitudinal data?",
"What did all grantees report?",
"How do grantees use data in improvement efforts?",
"How do grantees use data to support individuals?",
"In what ways do data support research agendas?",
"What was GAO asked to review?",
"What does the report examine?",
"What data did GAO analyze?",
"What data was collected via this survey?",
"How did GAO collect interview data?",
"What other sources did GAO utilize?"
],
"summary": [
"Over half of 48 grantee states that received a Statewide Longitudinal Data Systems (SLDS) or Workforce Data Quality Initiative (WDQI) grant have the ability to match data on individuals from early education into the workforce, based on GAO's analysis of 2013 Data Quality Campaign (DQC) survey data.",
"The DQC is a nonprofit organization that supports the effective use of data to improve student achievement.",
"In its survey, DQC collected self-reported information from states on their ability to match, or connect the same individual record, between the (1) K-12 and early education, postsecondary, and workforce sectors and between the (2) postsecondary and workforce sectors.",
"However, as the match rate—that is, the percent of unique individual records reliably connected between databases—increases, the number of grantees able to match data decreases.",
"GAO found that more grantees reported being able to match data among the education sectors than between the education and workforce sectors. Further, most grantees reported that they are not able to match data comprehensively. For example, only 6 of 31 grantees reported that they match K-12 data to all seven possible workforce programs covered by the DQC survey, which include adult basic and secondary education as well as unemployment insurance wage records.",
"State officials cited several challenges to matching data, including state restrictions on the use of a Social Security number. Specifically, officials in three of five grantee states GAO spoke with said state law or agency policy prohibit collecting a Social Security number in K-12 data, which can make it more difficult to directly match individuals' K-12 and workforce records.",
"According to GAO analysis of the DQC survey data, grantees use some longitudinal data to inform policy decisions and to shape research agendas.",
"All 48 grantees reported analyzing aggregate-level data to help guide school-, district-, and state-level improvement efforts.",
"All 48 grantees reported analyzing aggregate-level data to help guide school-, district-, and state-level improvement efforts. For example, 27 grantees said they analyze data on college and career readiness to help schools determine whether students are on track for success in college or in the workforce.",
"Grantees also reported using longitudinal data to analyze outcomes for individual students. For example, 29 grantees reported that they produce early warning reports that identify students who are most likely to be at risk of academic failure or dropping out of school.",
"Data from the DQC survey also show that 39 grantees reported developing a research agenda in conjunction with their longitudinal data systems.",
"GAO was asked to review the status of grantees' longitudinal data systems.",
"This report examines (1) the extent to which SLDS and WDQI grantees match individual student and worker records and share data between the education and workforce sectors and (2) how grantees are using longitudinal data to help improve education and workforce outcomes.",
"To answer these questions, GAO analyzed data from a 2013 survey conducted by the DQC.",
"This survey collected information from states on data linkages among education and workforce programs and on how states use longitudinal data.",
"In addition, GAO interviewed a nongeneralizable sample of five grantees, which were selected based on the progress they have made in matching data and on the funding they have received from the SLDS and WDQI programs.",
"GAO also reviewed relevant federal laws and regulations."
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CRS_R42641
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{
"title": [
"",
"Introduction",
"Origins of the GSCF Concept",
"Basic Provisions",
"Uses and Approval Processes",
"Security and Counterterrorism Training",
"Coalition Support",
"Justice Sector, Rule of Law, and Stabilization Assistance",
"Deletion of Transitional Authorities for Horn of Africa Counterterrorism and Peacekeeping and Yemen Counterterrorism",
"Funding Provisions and Expiration",
"DOD FY2012 Funding",
"State Department FY2012 Funding",
"FY2013 Funding",
"FY2014 Funding",
"FY2015 Request",
"Limitations, Conditions, and Exemptions",
"Congressional Oversight",
"Current Status",
"Issues for Congress in Brief",
"Is the GSCF a Workable Concept?",
"The State Department Role",
"Possible Drawbacks for DOD",
"DOD Authority to Train Foreign Security Forces",
"Strategy Issues",
"Looking Ahead: Implementing FY2012 and FY2014 Funding and Beyond",
"Appendix. FY2012 GSCF Planned21Program Summaries and Funding Transfers"
],
"paragraphs": [
"",
"At the Obama Administration's request, in December 2011 Congress enacted into law a new, joint State Department and Department of Defense (DOD) Global Security Contingency Fund (GSCF) to assist countries with urgent security and stabilization needs. The Administration proposed the GSCF with its FY2012 budget submission as a \"pilot project\" for State and the DOD to jointly fund and plan security-related assistance. Its stated purpose was to enable the United States to better \"address rapidly changing, transnational, asymmetric threats, and emergent opportunities.\" \"Pooled\" DOD and State Department funds would be used to develop interagency responses to build the security capacity of foreign states, to prevent conflict, and to stabilize countries in conflict or emerging from conflict.\nCongress, demonstrating its interest in the experiment, provided GSCF authority as Section 1207 of the FY2012 National Defense Authorization Act ( P.L. 112-81 ) for four fiscal years rather than the three years requested. As enacted, Section 1207 also contains two transitional authorities for counterterrorism operations in Africa and one for Yemen, all expiring at the end of FY2012.\nMany see the GSCF as an innovative first step in addressing problems inherent in the current agency-based budgeting and program development systems. Although some view the GSCF primarily as a means to transfer funds from DOD to the State Department, with its relatively smaller budget, others look to it as a possible means to foster more timely, coherent, and effective U.S. government responses to emerging threats and opportunities and to provide an impetus for improving interagency coordination in security and stabilization missions.\nThis report provides basic information on the GSCF legislation. It starts with a brief discussion of the conceptual origins of the legislation and then summarizes the legislation's provisions. It concludes with a short analysis of salient issues.",
"Although the GSCF was proposed as a means to secure flexible funding for emerging needs, the GSCF concept has its origins in long-standing perceptions that multiple deficiencies in current national security structures and practices have undermined U.S. efforts abroad. A core problem is the U.S. government's current agency-centric national security system that inhibits rational budgeting and planning for national security efforts that require contributions from multiple agencies. Analysts have long proposed changes to address deficiencies along the following lines:\nProvide the State Department with a flexible funding account to respond to emerging needs and crises situations . For many years, the George W. Bush Administration repeatedly sought a State Department emergency response fund that would facilitate immediate responses to crises and emerging threats. Congress denied such requests several times, but in 2005 it authorized DOD to transfer up to $100 million of its own funds to the State Department for such purposes. (Section 1207 of the FY2006 NDAA, P.L. 109-163 , as amended.) This \"Section 1207\" authority expired at the end of FY2010. Congress established a U.S. Agency for International Development account, the Complex Crises Fund in FY2011 for similar purposes, with a $50 million appropriation in FY2011 and $40 million in FY2012, but has not made a similar account available to the State Department. Develop mechanisms to promote greater interagency cooperation in planning security and stabilization programs. Analysts point to many problems inherent in programming by individual agencies. Because agencies usually do not consult or coordinate with others when planning programs, there is unnecessary duplication and overlap. And because agencies conduct programs targeted at the issues that fall under their purview, there are often serious gaps. Of particular concern are the \"governance gaps,\" i.e., the formulation of security assistance programs to train and equip military forces without components to improve the ability of government institutions to manage those forces. The goal of greater interagency cooperation is to develop coherent security and stabilization programs that address all elements of a problem. Clarif y and rationaliz e security roles and missions. The appropriate division of labor between the State Department and DOD, especially for security assistance, is a matter of debate. Since military assistance first became a significant component of U.S. foreign policy after World War II, oversight of those programs has always been vested in a civilian, usually the Secretary of State. In 1961, Congress made the Secretary of State responsible, by law, for \"the continuous supervision and general direction\" of that assistance. Beginning in the 1980s, however, Congress has called on DOD to contribute its manpower and funding to an increasingly broad range of national security efforts under new DOD authorities. After the terrorist attacks on the United States of September 11, 2001 (9/11), DOD requested and Congress approved multiple new DOD authorities. Some fill gaps when civilian funding and personnel are not available. Others, DOD argues, provide a means to address critical needs in an effort to protect U.S. troops and minimize U.S. military operations. The goal is to reach agreement on an appropriate model for post -9/11 civil-military activities and missions, either by strengthening the State Department's ability to lead, by creating a new system of shared responsibility, or by strengthening the State Department's lead while also encouraging greater sharing of responsibility in order to enhance collaboration among all agencies involved in security sector assistance. Creat e a \"unified\" budget system for national security missions along functional rather than agency lines . For over a decade, analysts have urged the U.S. government to consolidate budgets for national security activities. In particular, they have recommended that the White House present Congress annually with either a unified national security budget or a series of unified budgets for a specific multi-agency national security activity, such as counterterrorism or security assistance. The goal is to rationalize government-wide resource allocation and promote due consideration of the tradeoffs involved in allocating those resources. Unified budgets are also recommended as a means to provide greater transparency and accountability in U.S. government spending, and facilitate congressional oversight of national security programs.\nThe Obama Administration presented the GSCF as a means to identify potential difficulties when combining State Department and DOD funds and to test the possibilities for combining agency expertise and efforts to conduct security activities. If successful, the GSCF is seen as a possible precedent for a broader interagency funding and efforts.",
"",
"Assistance may be provided under the three-year GSCF authority for three purposes, as detailed below. Assistance \"may include the provision of equipment, supplies, and training.\" (GSCF funds are available to either the Secretary of State or the Secretary of Defense for such assistance.) The first two of these purposes—security and counterterrorism training, and coalition support—are nearly identical to those of the Global Train and Equip authority provided by Section 1206 of the FY2006 NDAA, P.L. 109-163 , as amended, with one exception. For Section 1206 programs, the Secretary of Defense is in the lead.",
"Section 1207 (b)(1)(A) authorizes the use of the GSCF \"to enhance the capabilities of military forces and other security forces responsible for conducting border and maritime security, internal security, and counterterrorism operations, as well as the government agencies responsible for such forces.\" Recipient countries would be designated by the Secretary of State with the concurrence, i.e., approval, of the Secretary of Defense. Programs to provide this support would be jointly formulated by the Secretary of State and the Secretary of Defense, and approved by the Secretary of State, with the concurrence of the Secretary of Defense before implementation.",
"Section 1207 (b)(1)(B) permits GSCF assistance to national military forces and other specified security forces to enable them to \"participate in or support military, stability, or peace support operations consistent with United States foreign policy and national security interests.\" Just as with security and counterterrorism training assistance, recipient countries would be designated by the Secretary of State with the concurrence of the Secretary of Defense. These programs are also jointly formulated by the Secretary of State and the Secretary of Defense, and approved by the Secretary of State, with the concurrence of the Secretary of Defense, before implementation.",
"Section 1207(b)(2) authorizes using the GSCF to assist the justice sector (including law enforcement and prisons), and to conduct rule of law programs and stabilization efforts \"where the Secretary of State, in consultation with the Secretary of Defense, determines that conflict or instability in a region challenges the existing capability of civilian providers to deliver such assistance.\" The Secretary of State also designates recipients of this type of assistance and implements activities with the concurrence of the Secretary of Defense. However, unlike the preceding types of assistance where the Secretaries of State and Defense would jointly formulate programs, the Secretary of State formulates these programs in consultation with the Secretary of Defense. State and DOD staff will determine an appropriate consultation mechanism.",
"In addition to the GSCF authority requested by the Administration, Section 1207(n) of the original legislation established three new transitional authorities that would permit the Secretary of Defense, with the concurrence of the Secretary of State, to assist counterterrorism and peacekeeping efforts in Africa during FY2012. A similar provision was added to the FY2013 NDAA ( P.L. 112-239 ); subsequently, Section 1207(n) was deleted by the FY2014 NDAA.",
"The FY2012 NDAA established a GSCF account \"on the books of the Treasury of the United States.\" As amended by the FY2014 NDAA, there is no overall spending limitation. There is a limit of $200 million on transfers from DOD to the GSCF, but no limit is set on State Department funding. (However, the appropriations legislation sets a limit on State Department transfers; see below.) A proportional limitation provides that the DOD contribution for any activity shall be no more than 80% of the cost of that activity, and the State Department contribution shall be not less than 20%.\nDespite the State Department's request for a $50 million appropriation, the FY2012 appropriations act provided no new money for the fund, but permitted DOD and the State Department to transfer up to the $250 million from other accounts, with a limit of $200 from DOD and $50 million from State. Under the FY2012 NDAA, monies may be transferred from the GSCF to the \"agency or account determined to be the most appropriate to facilitate\" assistance. (No official was specified as responsible for the determination.) GSCF authority expires on September 30, 2015, but amounts appropriated or transferred before that date for programs already in progress would remain available until the programs are completed.",
"Complementing the P.L. 112-74 appropriations act authority for DOD to transfer funds to the GSCF, the P.L. 112-81 authorizing legislation provided DOD with a new transfer authority of up to $200 million per fiscal year, permitting DOD to transfer funds from its defense-wide operation and maintenance account to the GSCF. The appropriations act required the Secretary of Defense to notify the congressional defense committees in writing 30 days before making the transfer, providing the source of the funds and a detailed justification, execution plan, and timeline for each proposed project.",
"Just as with DOD, the P.L. 112-74 appropriations act provided no new monies for the State Department contribution to the fund. Instead, this act permits the State Department to transfer up to $50 million from funds appropriated in three accounts (i.e., International Narcotics Control and Law Enforcement [INCLE], Foreign Military Financing [FMF], and Pakistan Counterinsurgency Capability Fund [PCCF]) or any other transfer authority available to the Secretary of State.",
"No funding was provided in FY2013.",
"The \"omnibus\" Consolidated Appropriations Act, 2014 ( P.L. 113-76 ), Section 8003 of Division K (Department of State, Foreign Operations, and Related Programs Appropriations Act, 2014), permits the State Department to transfer up to $25 million to the GSCF from INCLE, FMF, and PKO. Section 8068 of Division C (Department of Defense Appropriations, 2014) of that act states that DOD may transfer up to $200 million to the GSCF from the Operations and Maintenance, Defense-Wide account.",
"For FY2015, the Obama Administration does not request a GSCF appropriation under the State Department budget. Relevant DOD budget documents available as of this date seem to indicate there is no DOD FY2015 appropriation request.",
"Congress provided GSCF authority notwithstanding any other provision of law, with two exceptions. These are the Foreign Assistance Act of 1961, as amended (FAA) (P.L. 85-195) Section 620A prohibition on assistance to governments supporting international terrorism and the FAA Section 620J prohibition on assistance to foreign security forces for which the Secretary of State has determined there is credible evidence of gross violations of human rights (the \"Leahy Amendment.\" The legislation makes clear that the three-year GSCF authorization is not intended to replace other legislation. GSCF programs are required to include elements to promote the observance of and respect for human rights and fundamental freedoms, as well as respect for legitimate civilian authority.",
"Reporting requirements are extensive and detailed. There are five separate reporting requirements, one in the appropriations legislation (a notification before funds are transferred) and four in the authorization legislation (one a notification before programs are initiated, one when guidance is issued, one when guidance and processes are fully operational, and one an annual report).\nSection 8003(d) of the FY2014 omnibus appropriations legislation ( P.L. 113-76 ) requires the State Department to notify the appropriations committees 15 days prior to making any transfers from the INCLE, FMF, and PKO accounts to the GSCF in accordance with regular notification procedures, including a detailed justification, implementation plan, and timeline for each proposed project, but is not subject to prior consultation with the appropriations committees. Section 8068 requires DOD to notify the congressional defense committees in writing 30 days prior to making transfers from the Operations and Maintenance, Defense-Wide account to the GSCF with the source of funds and a detailed justification, execution plan, and timeline for each proposed project.\nThe FY2014 NDAA amended NDAA reporting requirements slightly. The authorizing legislation requires the secretaries of State and Defense to notify specified congressional committees at four points. Specified committees are the House and Senate Appropriations Committees and Armed Services Committees, the House Committee on Foreign Affairs, and the Senate Committee on Foreign Relations.\nThe Secretary of State and the Secretary of Defense must notify the specified committees not less than 30 days before initiating an activity. No funds may be transferred into the fund until 15 days after Congress is notified. The notification regarding the initiation of program activities is to include a detailed justification for the program, its budget, execution, plan and timeline, a list of other security-related assistance or justice sector and stabilization assistance being provided to that country that is related to or supported by that activity, and any other appropriate information. The secretaries of State and Defense shall jointly submit a report to the specified committees no later than 15 days after the date on which guidance and processes for implementation of programs have been issued, and shall jointly submit additional reports not later than 15 days after future changes to guidance and processes. A related notification requirement mandates that the Secretary of State, with the concurrence of the Secretary of Defense shall jointly notify Congress 15 days after the date on which all necessary guidance has been issued and the processes for implementing programs \"are established and fully operational.\" The secretaries of State and Defense must jointly submit an annual report on programs, activities, and funding no later than October 30 of each year.",
"For programs to be conducted under FY2012 funding, the Secretary of State designated seven countries as recipients of GSCF assistance: Nigeria, Philippines, Bangladesh, and Libya, as well as three Central European countries, Hungary, Romania, and Slovakia. In August and September, 2012, the State Department and DOD submitted requests to the Appropriations Committees to transfer $44.8 million from designated funds to the GSCF. These funds were transferred before the end of FY2012, according to the State Department. As of the date of this report, detailed programs are still being developed. (See Table A-1 in the Appendix for summaries of the programs and funding transferred.)\nNo further information on the progress of the FY2012 programs or on plans for potential FY2014 programs has been made available to CRS.",
"For some policy makers and analysts, the GSCF proposal is a positive, long-awaited first step toward the development of integrated, interagency funding streams for agencies that carry out related programs. For others, the GSCF proposal and specific provisions of the bill raise a number of issues, some of which are summarized below.",
"Congress has expressed concern over the slow pace of FY2012 program planning and implementation. In May 2012, the House Armed Services Committee HASC), in its report on the National Defense Authorization Act for FY2013 ( H.R. 4310 ), expressed concern with the direction and speed of the process of developing GSCF programs. Attributing the problem to cumbersome bureaucratic processes, HASC stated its expectation that the departments \"begin exercising the authority in a timely manner.\" Also contributing to delays have been the small size of the GSCF three-member team, the problems of setting up a new interagency office, and the difficulties of aligning two sets of planning and implementation processes, requiring decisions down to the level of resolving definitional differences, as well as to the extensive intra-agency consultation and coordination required, according to observers. Some observers have wondered whether identifying feasible projects has contributed to the delay. While to some observers these problems raise serious doubts about the feasibility of establishing an agile interagency mechanism, others believe the potential utility of such a mechanism argues for continued efforts to overcome them.",
"The GSCF puts the State Department, in the person of the Secretary of State, in the lead. Some who have viewed Congress's approval of many new DOD security assistance authorities since 9/11 as a gradual erosion of the traditional State Department lead on security assistance, may see the GSCF as a welcome reversal of that trend.\nNevertheless, some may wonder about the extent to which the Secretary of State may actually exercise control if DOD provided most GSCF funding. This is especially true as the Secretary of Defense will be providing funds through an authority that permits the transfer of funds from one activity to another but stipulates that the funds may only be transferred to a higher priority activity. Activities that may be high priority for State are not necessarily high priority for DOD.\nAdvocates of greater State Department control would prefer that Congress dispense with the GSCF \"pooled\" fund and appropriate substantially more security assistance and related DOD funding (particularly \"Section 1206\" building partnership capacity funding ), directly to the international affairs budget, just as FMF, INCLE, and PCCF are currently appropriated. Some fear that the decision to pool DOD and State Department funds rather than to appropriate funds directly to the State Department budget will perpetuate the State Department's lack of capacity to resource security assistance rather than resolve it. On the other hand, others are concerned that including all GSCF funding in the international affairs budget would leave GSCF activities vulnerable to possible cuts by Congress or the State Department itself in the case of overall State Department budget reductions.\nOthers may be concerned that the State Department lacks the capacity to plan and direct an increased number of security assistance and related governance and rule of laws programs without increasing the size of its staff. Some also view the State Department as lacking the institutional interest and will necessary to plan and oversee a large security assistance portfolio. But others may point to the State Department's creation of new programs under the Security Assistance peacekeeping account (PKO) as evidence of State's interest in this program area.",
"For DOD, the GSCF may be perceived as entailing disadvantages as well. While some perceive the GSCF's ability to tap DOD funds for State Department programs of mutual interest as beneficial, others see this effort as a problematic and unwarranted diversion of DOD funds, particularly in this constrained budget environment. In addition, some perceive possible future disadvantages. Some analysts believe that DOD at times needs to ensure the integrity of its own missions by the use of security and stabilization assistance. Because GSCF purposes overlap those of DOD's \"Section 1206\" train and equip authority, where the Secretary of Defense is in the lead, some analysts view a successful GSCF effort as someday leading to the elimination of Section 1206 and similar authorities. For some analysts, such a move could mean sacrificing some of the control and flexibility over programs provided through a DOD authority.",
"The GSCF proposals also raise the continuing concern about DOD's role in training security forces with law enforcement functions. The GSCF legislation provides DOD with authority to train and otherwise assist a wider range of foreign security forces than previously permitted. Since FY2006, in conjunction with DOD requests for an expansion of Section 1206 authority, Congress has repeatedly rejected providing DOD with authority to train and assist police and other non-military forces, except for foreign maritime security forces. (Congress has, however, specifically provided DOD with authority to train police in Afghanistan and Iraq.)\nThe GSCF provides authority for assistance to \"security forces responsible for conducting border and maritime security, internal security, and counterterrorism operations, as well as the government agencies responsible for such forces,\" without any limitation on the agency that could provide such assistance. Opponents of this extension have argued that training security forces that perform law enforcement functions is a civilian, not a DOD, function because military skills and culture are distinct from those of civilian law enforcement. Proponents see sufficient overlap, particularly for security forces that operate in lawless border areas and those that exercise counterterrorism functions, to validate this expansion. Some, although, point out that such police activities conducted within the GSCF framework would probably be subject to greater State Department oversight than those conducted under a DOD authority.",
"Some analysts express concern that the Administration has requested a new security assistance funding mechanism without first establishing a strategic framework that would set priorities and clarify department and agency roles in security assistance, improving the prospects for effective interagency collaboration. Early on, the Obama Administration undertook a review of security assistance to establish such a framework, but that effort has not concluded. Some now look to the GSCF process as the crucible for competing concepts and new arrangements. Given the Administration's characterization of the GSCF as an experiment intended to identify issues in interagency collaboration, the GSCF may indeed contribute to the goals of the review.",
"Even though the GSCF has been authorized for four years, through FY2015, Congress may monitor its use closely and consider in-course changes. Congressional expressions of concern about the Administration's slow progress in implementing FY2012 programs point to cumbersome bureaucratic processes as a source of the problem. GSCF officers have attributed difficulties to the melding of State and DOD procedures and the extensive intra-agency coordination required in the State Department. Coordination problems may be exacerbated by reliance on transfers from multiple State Department accounts, rather than on appropriations, may be another source of the problem. If the Administration cannot plan and implement FY2014-funded programs more expeditiously than the FY2012 programs, Congress may wish to study, perhaps through a Government Accountability Office (GAO) or other program evaluation, whether and how planning and implementation impediments can be overcome.",
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{
"question": [
"What did the FY2012 National Defense Authorization Act (P.L. 112-81), Section 1207, create?",
"What is the purpose of this fund?",
"What agency oversees the GSCF budget?",
"What agency oversees GSCF decisions?",
"Why was the GSCF inaugurated?",
"What does it consist of?",
"What do people hope that the GSCF will provide?",
"What barriers have prevented this from occuring?",
"How are funds for GSCF provided?",
"What was Congress's response to requests for GSCF appropriations?",
"What transfers has Congress permitted between FY2012 and FY2015?",
"What steps has the Administration taken to program FY2012 funds?",
"What countries were selected as eligible for this assistance?",
"What must the Administration do before the plans can begin?"
],
"summary": [
"The FY2012 National Defense Authorization Act (P.L. 112-81), Section 1207, created a new Global Security Contingency Fund (GSCF) as a four-year pilot project to be jointly administered and funded by the Department of Defense (DOD) and the State Department.",
"The purpose of the fund is to carry out security and counterterrorism training, and rule of law programs. (There also are three one-year transitional authorities for assistance to Africa and Yemen.)",
"The GSCF is placed under the State Department budget.",
"Although decisions are to be jointly made by the Secretaries of State and Defense, the mandated mechanism puts the Secretary of State in the lead.",
"The GSCF was conceived of as an important step in improving U.S. efforts to enable foreign military and security forces to better combat terrorism and other threats.",
"It incorporates features of previous legislation and reflects recommendations to address multiple deficiencies in current national security structures and practices.",
"Many have hope that it will provide a model for interagency cooperation on security assistance that will overcome the disadvantages of the current system of agency-centric budgets and efforts.",
"Extended start-up difficulties, however, have led to questions about the mechanism's utility.",
"To date, Congress has provided funds for the GSCF through transfers from other accounts, not from appropriations.",
"While the Administration requested GSCF appropriations in FY2012, FY2013, and FY2014, Congress has appropriated no funding.",
"In the FY2012 omnibus appropriations act (P.L. 112-74), Congress permitted DOD and the State Department to transfer up to the $250 million from specified accounts, with a limit of $200 million from DOD and $50 million from State. For FY2013, Congress made no provision for funding. In the FY2014 omnibus appropriations act (P.L. 113-76), Congress provided authority for DOD to transfer to the GSCF up to $200 million and for the State Department to transfer up to $25 million from specified account. In the FY2014 omnibus appropriations act (P.L. 113-76), Congress provided authority for DOD to transfer to the GSCF up to $200 million and for the State Department to transfer up to $25 million from specified accounts. For FY2015, the Obama Administration does not request a GSCF appropriation under the State Department budget. Relevant DOD FY2015 budget documents available as of this date seem to indicate there is no DOD FY2015 appropriations request.",
"The Administration has taken steps to program FY2012 funds. In mid-2012, it notified Congress that it would initiate programs for Yemen and East Africa under the \"transitional\" (Section 1207(n), P.L. 112-81) authority with authorized funding up to $75 million each. These are being implemented. Later in the year, the Administration transferred $44.8 million to the GSCF for programs under the core GSCF legislation, which provided for country selection by the Administration in the course of the fiscal year.",
"The Secretary of State designated seven countries as eligible for this assistance: Nigeria, the Philippines, Bangladesh, Libya, Hungary, Romania, and Slovakia.",
"The Administration must notify congressional committees with detailed program plans before the programs can begin."
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CRS_RL33705
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{
"title": [
"",
"Introduction",
"Background",
"Oil Spill Data: Recent Trends",
"Coast Guard Data",
"PHMSA Data",
"Impacts of Oil Spills in Aquatic Environments",
"Acute Impacts",
"Chronic Impacts",
"Ecosystem Recovery",
"Economic Costs of Oil Spills",
"Cleanup Costs",
"Location",
"Oil Type",
"Oil Volume",
"Natural Resources Damages",
"Other Economic Costs",
"Oil Spill Governance",
"Oil Pollution Act of 1990",
"Spill Response Authority",
"National Contingency Plan",
"Tank Vessel and Facility Response Plans",
"Double-Hull Design for Vessels",
"Liability Issues58",
"The Oil Spill Liability Trust Fund",
"Financial Responsibility",
"Other Federal Laws",
"Clean Water Act",
"Outer Continental Shelf Lands Act",
"Pipeline Statutes",
"Vessel Statutes",
"Federal Agencies' Responsibilities",
"Response",
"Prevention and Preparedness",
"International Conventions",
"MARPOL 73/78",
"Intervention Convention",
"State Laws",
"Appendix. Federal Authorities Before and After the Exxon Valdez Spill"
],
"paragraphs": [
"",
"Oil is a dominant source of energy in the United States, accounting for approximately 37% of total energy consum ption in 2016. Its use is widespread, providing fuel for the transportation, industrial, and residential sectors. Vast quantities of oil continuously enter the country via vessel or pipeline. Vast quantities continually move throughout the country to various destinations. With such widespread use and nonstop movement, it is inevitable that some number of spills will occur.\nThis report provides background information regarding oil spills and identifies the legal authorities and processes for oil spill prevention, response, liability, and compensation. The first section highlights background issues, including oil spill statistics and potential environmental impacts. The second section discusses the legal and regulatory framework that governs oil spill prevention and response.",
"Oil spills occur from a wide variety of sources. Some sources release relatively minor amounts per individual release but, in aggregate, contribute a significant annual volume (e.g., recreational vessels). Other sources, such oil tankers or offshore oil wells, release oil on a less frequent basis but have the potential to release a significant volume in one incident. These variances in frequency and volume of oil releases create different environmental impacts as well as different challenges for responders and policymakers.\nMajor oil well blowouts are relatively uncommon but have accounted for the largest unintentional oil spills in world history. In 1979, the IXTOC I oil well blowout released an estimated 140 million gallons in Mexican Gulf Coast waters. By comparison, the largest oil tanker spill in world history—the Atlantic Empress off the coast of Tobago in 1979—was estimated at approximately 84 million gallons.\nOver the past few decades, two major U.S. oil spills have had lasting repercussions that transcended local environmental and economic effects:\n1. 2010 Deepwater Horizon oil spill: On April 20, 2010, an explosion occurred at the Deepwater Horizon drilling platform in the Gulf of Mexico, resulting in 11 fatalities. The platform had been attached to the Macondo oil well approximately 5,000 feet below sea level. Two days later the platform sank into the Gulf, and responders discovered that the well was releasing oil at a significant rate. According to estimates, the well released more than 100 million gallons of oil before it was contained 86 days later. 2. 1989 Exxon Valdez oil spill: On March 24, 1989, the Exxon Valdez oil tanker ran aground on Bligh Reef in Prince William Sound, Alaska, releasing approximately 11 million gallons of crude oil. Cleanup efforts lasted for six months in 1989 until the U.S. Coast Guard suspended operations due to weather and climatic conditions. Cleanup efforts resumed during the warmer months of 1990 and 1991. The Exxon Valdez spill produced extensive consequences beyond Alaska. According to the National Academies, the Exxon Valdez disaster caused \"fundamental changes in the way the U.S. public thought about oil, the oil industry, and the transport of petroleum products by tankers. ... 'Big oil' was suddenly seen as a necessary evil, something to be feared and mistrusted.\"",
"No single agency or organization collects oil spill data from all of the major sources for all locations. Although the National Response Center collects and provides details about a wide spectrum of incidents, the spill volume data are often initial, unverified estimates, and drawing lessons from these data may be difficult.\nA national assessment of oil spill volume and frequency necessitates data collection from several sources, including the U.S. Coast Guard and the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA). Combining the data from these sources may be problematic, because (1) some incidents may be included in both sources of data; and (2) the data collection processes and scopes may vary. Therefore, data from these sources are presented separately below.",
"The Coast Guard has maintained an Oil Spill Compendium with spill data for various sources within its jurisdiction for responding to oil spills. Pursuant to the National Contingency Plan (discussed below), the Coast Guard's oil spill response jurisdiction is the \"coastal zone,\" defined in regulations to include\nall United States waters subject to the tide, United States waters of the Great Lakes, specified ports and harbors on inland rivers, waters of the contiguous zone, other waters of the high seas subject to the NCP, and the land surface or land substrata, ground waters, and ambient air proximal to those waters.\nFigure 1 illustrates the number of oil spill incidents and spill volume between 2002 and 2016 from data provided by the Coast Guard. The spill data include incidents from vessels, facilities, and pipelines. The 2010 Deepwater Horizon oil spill is not included in the figure, because the magnitude of its spill volume—more than 100 million gallons—makes it difficult to compare to annual spill volumes. The figure does include an estimate of oil released on the surface (approximately 400,000 gallons) from the Deepwater Horizon mobile offshore drilling unit.\nThe figure indicates that the number of incidents has decreased over time. Except for several large incidents in 2005 and 2006 (and the Deepwater Horizon incident in 2010), the volume of spilled oil has remained relatively consistent. In 2005, approximately 8 million gallons of oil were released from Louisiana facilities damaged during Hurricane Katrina; in 2006, approximately 2 million gallons spilled from a refinery in Louisiana.\nFigure 2 compares the volume of spills over a longer time period from the same selected sources identified in Figure 1 . As Figure 2 illustrates, the annual oil spill volumes from all sources—particularly tankers and barges—declined dramatically in the 1990s compared to previous decades. This historical decline is likely related, at least in part, to the Oil Pollution Act of 1990 (OPA), which was enacted after the 1989 Exxon Valdez oil spill. The 1990 act (discussed below) made comprehensive changes to U.S. oil pollution law by expanding federal response authority and increasing spill liability. The high costs associated with the Exxon Valdez spill, and the threat of broad liability imposed by OPA (in some scenarios, unlimited liability), were likely significant drivers for the spill volume decline seen in the 1990s.",
"PHMSA collects oil spill data for pipelines and rail transportation—two modes of oil transportation that have received attention in recent years. Figure 3 illustrates the number of oil incidents and spill volume by mode of transportation between 2002 and 2016. The pipeline and rail data illustrated in the figure include incidents that involve spills as small as one gallon.\nAs the figure indicates, pipeline incidents increased between 2011 and 2014 but have decreased since then. Spill volumes have fluctuated over time depending on the number and size of major spills in particular years. For example, in 2016, three pipeline incidents resulted in spills of over 300,000 gallons. In 2015, only two spills resulted in releases of over 100,000 gallons.\nSpills from rail transportation increased dramatically between 2009 and 2014 largely due to the increased transportation of crude oil by rail. In 2015 and 2016, the number of incidents by rail decreased as crude by rail transportation decreased. As with pipeline spill volume, the annual spill volumes from rail transportation are a function of the number and size of major spills. For example, the increased rail volume in 2013 is the result of two major incidents of over 450,000 gallons. The increased rail volume in 2015 is the result of three major incidents of over 100,000 gallons.\nThe increase in rail incidents, including several large spills which occurred between 2010 and 2014, generated considerable interest from policymakers. At the time, some cited the increase in the debate over the Keystone XL pipeline. One of the issues raised was crude oil spill frequency and volume by mode of transportation. The two figures below provide a comparison between pipeline and rail transportation in this context. In contrast to previous figures in this report, the spill data in these figures include only crude oil incidents. The reason for this difference is because the volume data (i.e., million gallons transported) from the Energy Information Administration includes only crude oil.\nFigure 4 illustrates the number of oil spill incidents per barrel of oil transported. The figure indicates that incidents from rail (per gallon transported) exceeded pipeline incidents each year except 2016. Note that many of these incidents involved relatively small volumes of spilled oil.\nFigure 5 compares the volume of oil spilled per volume of oil transported by mode of transportation. The figure indicates that in four of the last seven years the volume of oil spilled by pipeline rail (per gallon transported) exceeded that of rail transport. However, in the three years in which rail transport volume exceeded pipeline volume (per volume transported), the differences between rail and pipeline volumes were more substantial. As discussed above, these differences are due to a small number of relatively large spills from rail that occurred in those years.",
"The impacts of an oil spill depend on the size of the spill, the rate of the spill, the type of oil spilled, and the location of the spill. Depending on timing and location, even a relatively minor spill can cause significant harm to individual organisms and entire populations. Oil spills can cause impacts over a range of time scales, from days to years, or even decades for certain spills. Impacts are typically divided into acute (short-term) and chronic (long-term) effects. Both types are part of a complicated and often controversial equation that is addressed after an oil spill: ecosystem recovery.",
"Depending on the toxicity and concentration of the spill, acute exposure to oil spills can kill various organisms and cause the following debilitating (but not necessarily lethal) effects:\nreduced reproduction, altered development, impaired feeding mechanisms, and decreased defense from disease.\nBirds, marine mammals, bottom-dwelling and intertidal species, and organisms in their developmental stages (e.g., fish eggs and larvae) are particularly vulnerable to oil spills.\nIn addition to the impacts to individual organisms, oil spills can lead to a disruption of the structure and function of the ecosystem. Certain habitats—such as coral reefs, mangrove swamps, and salt marshes—are especially vulnerable, because the physical structure of the habitats depends upon living organisms.\nThese potential acute effects to individual organisms and marine ecosystems have been \"unambiguously established\" by laboratory studies and well-studied spills.",
"Long-term, chronic exposure typically occurs from continuous oil releases—leaking pipelines, offshore production discharges, and non-point sources (e.g., urban runoff). Although spills are normally associated with acute impacts, some oil spills have also demonstrated chronic exposure and effects. There is increasing evidence that chronic, low-level exposures to oil contaminants can significantly affect the survival and reproductive success of marine birds and mammals. However, because of the complexity of factors, including a longer time period and presence of other pollutants, determining the precise effects on species and ecosystems due to chronic oil exposure in a particular locale is difficult for scientists. As a result, studies involving chronic effects are often met with debate and some controversy.",
"Interested parties may have differing opinions as to what constitutes ecosystem recovery. At one end of the spectrum, local groups may demand that an ecosystem be returned to pre-spill conditions. NOAA regulations (15 C.F.R. §990.30) state that recovery \"means the return of injured natural resources and services to baseline\"—in other words, a return to conditions as they would have been had the spill not occurred. Baseline conditions may not equate with pre-spill conditions. Multiple variables affect local species and ecosystem services. For example, one species at a spill site could have been on the decline at the time of an incident, because of changing water temperatures. These types of trends are considered during the restoration evaluative process (discussed below). Restoration leaves room for site-specific interpretation, which, in the case of the Exxon Valdez spill and cleanup, continues to generate considerable argument.",
"The economic costs that can result from an oil spill can be broken into three categories: cleanup expenses, natural resource damages, and the various economic losses incurred by the affected community or individuals.",
"The cleanup costs of an oil spill can vary greatly and are influenced by a mix of factors: location characteristics, oil type, and oil volume.",
"Location is generally considered the most important factor because it involves multiple variables. Areas with less water movement, such as marshlands, will generally cost more to clean up than open water. Some spill locations may have relatively robust populations of indigenous micro-organisms that help degrade the oil naturally.\nTourist destinations or sensitive habitats, such as coral reefs, will likely require more stringent cleanup standards, thus increasing the costs. The political and social culture at the spill site plays a part as well. A spill in a high-profile area may receive special attention. Major oil spills, especially ones that affect shoreline ecosystems, are often met with extensive media coverage, placing pressure on parties to take action. Coupled with this pressure, authorities (federal, state, or local) at these locations may require extensive oil spill response requirements, which can influence cleanup cost. For instance, spill costs in the United States are considerably higher than in other parts of the world.",
"The more persistent and viscous oil types, such as heavy crude oil (e.g., crude oil derived from oil sands) and intermediates known as bunker fuels, are more expensive to clean up. Gasoline and other lighter refined products may require only minimal cleanup action. Generally, these materials will evaporate or disperse relatively quickly, leaving only a small volume of petroleum product in the environment.",
"Compared with other factors, spill volume is less important. A major spill away from shore will likely cost considerably less than a minor spill in a sensitive location. Certainly, the amount of oil spilled affects cleanup costs, because, all things being equal, a larger spill will require a larger and more expensive cleanup effort. However, the relationship between cleanup costs and spill volume is not linear. Cleaning up a smaller spill is likely to cost more than a larger spill on a per-gallon basis.",
"This category of costs relates to the environmental impacts caused by an oil spill. Pursuant to OPA, the party responsible for an oil spill is liable for any loss of natural resources (e.g., fish, animals, plants, and their habitats) and the services provided by the resource (e.g., drinking water, recreation).\nWhen a spill occurs, natural resource trustees conduct a natural resource damage assessment to determine the extent of the harm. Trustees may include officials from federal agencies designated by the President, state agencies designated by the relevant governor, and representatives from tribal and foreign governments. The various trustees assess damages to natural resources under their respective jurisdictions. If multiple trustees are involved, they must select a lead administrative trustee (LAT), who coordinates trustee activities and serves as a liaison between oil spill responders. The LAT need not be from a federal agency; however, only a federal LAT can submit a request to the Oil Spill Liability Trust Fund for the initial assessment funding.\nThe Oil Pollution Act (OPA) of 1990 states that the measure of natural resource damages includes\nthe cost of restoring, rehabilitating, replacing, or acquiring the equivalent of the damaged natural resources; the diminution in value of those natural resources pending restoration; and the reasonable cost of assessing those damages.\nPursuant to OPA, NOAA developed regulations pertaining to natural resource damage assessments in 1996. Natural resource damages may include both losses of direct use and passive uses. Direct use value may derive from recreational (e.g., boating), commercial (e.g., fishing), or cultural or historical uses of the resource. In contrast, a passive-use value may derive from preserving the resource for its own sake or for enjoyment by future generations.\nThe damages are compensatory, not punitive. Collected damages cannot be placed into the general Treasury revenues of the federal or state government, but must be used to restore or replace lost resources. NOAA's regulations focus on the costs of primary restoration—returning the resource to its baseline condition—and compensatory restoration—addressing interim losses of resources and their services.",
"Oil spills can generate costs other than response expenses or damages to natural resources. An oil spill can disrupt business activity near the spill, particularly businesses and individuals that count on the resources and reputation of the local environment. For example, the local fishing and tourist industry may be affected. In some cases, a well-publicized oil spill can weaken local or regional industries near the spill site, regardless of the actual threat to human health created by the spill.\nLocal infrastructure and services can be disrupted by an oil spill. Port and harbor operations may be interrupted, altering the flow of trade goods. Power plants that use cooling water systems may need to temporarily cease operations. For example, the Salem Nuclear Plant—the second-largest nuclear plant in the United States—was forced to halt activity due to a substantial oil spill (more than 250,000 gallons) in the Delaware River in November 2004.",
"When the Exxon Valdez ran aground in March 1989, there were multiple federal statutes, state statutes, and international conventions that dealt with oil discharges. The spill highlighted the inadequacies of the existing coverage and generated public outrage. Following the spill, Members of Congress faced great pressure to address these issues. (See the Appendix for further information concerning these issues.) The end result was the Oil Pollution Act of 1990 (OPA) —the first comprehensive law to specifically address oil pollution to waterways and coastlines of the United States.\nThe governing framework for oil spills in the United States remains a combination of federal, state, and international authorities. Within this framework, several federal agencies have the authority to implement oil spill regulations. The framework and primary federal funding process used to respond to oil spills are described below.",
"With the enactment of OPA on August 18, 1990, Congress consolidated the existing federal oil spill laws under one program ( Appendix ). The 1990 law expanded the existing liability provisions within the Clean Water Act (CWA) and created new free-standing requirements regarding oil spill prevention and response. Key OPA provisions are discussed below.",
"When responding to a spill, many considered the lines of responsibility under the pre-OPA regime to be unclear, with too much reliance on spillers to perform proper cleanup. OPA strengthened and clarified the federal government's role in oil spill response and cleanup. OPA Section 4201 amended Section 311(c) of the CWA to provide the President (delegated to the U.S. Coast Guard or EPA) with authority to perform cleanup immediately using federal resources, monitor the response efforts of the spiller, or direct the spiller's cleanup activities. The revised response authorities addressed concerns \"that precious time would be lost while waiting for the spiller to marshall its cleanup forces.\"\nThe federal government—specifically the On-Scene Coordinator (OSC) for spills in the Coast Guard's jurisdiction—determines the level of cleanup required. Although the federal government must consult with designated trustees of natural resources and the governor of the state affected by the spill, the decision that cleanup is completed and can be ended rests with the federal government. States may require further work, but without the support of federal funding.",
"The first National Oil and Hazardous Substances Pollution Contingency Plan (NCP) was administratively prepared in 1968 after observing the British government's response to a 37-million-gallon oil tanker spill ( Torrey Canyon ) off the coast of England. The NCP contains the federal government's procedures for responding to oil spills and hazardous substance releases.\nOPA expanded the role and breadth of the NCP. The 1990 law established a multi-layered planning and response system to improve preparedness and response to spills in marine environments. Among other things, the act also required the President to establish procedures and standards (as part of the NCP) for responding to worst-case oil spill scenarios.\nFor further details on the NCP, see CRS Report R43251, Oil and Chemical Spills: Federal Emergency Response Framework , by [author name scrubbed] and [author name scrubbed].",
"As a component of the enhanced NCP, OPA amended the CWA to require that U.S. tank vessels, offshore facilities, and certain onshore facilities prepare and submit oil spill response plans to the relevant federal agency. In general, vessels and facilities are prohibited from handling, storing, or transporting oil if they do not have a plan approved by (or submitted to) the appropriate agency (discussed below).\nThe plans should, among other things, identify how the owner or operator of a vessel or facility would respond to a worst-case scenario spill. Congress did not intend for every vessel to have onboard all the personnel and equipment needed to respond to a worst-case spill, but vessels must have a plan and procedures to call upon—typically through a contractual relationship—the necessary equipment and personnel for responding to a worst-case spill.\nIn 2004, Congress enacted an amendment requiring non-tank vessels (i.e., ships carrying oil for their own fuel use) over 400 gross tons to prepare and submit a vessel response plan. Congress reasoned that many non-tank vessels have as much oil onboard as small tank vessels, thus presenting a comparable risk from an oil spill. Moreover, the international standards for oil spill prevention apply to tanker and non-tanker vessels alike. Thus, the 2004 amendment brought the U.S. law more in line with international provisions.",
"The issue of double hulls received considerable debate for many years prior to OPA, and it was one of the stumbling blocks for unified oil spill legislation. Proponents maintained that double-hull construction provides extra protection if a vessel becomes damaged. However, opponents argued that a double-hulled vessel might cause stability problems if an accident occurred, thus negating the benefits. Stakeholders also highlighted the impacts that a double-hull requirement would entail for the shipping industry (e.g., cost and time of retrofitting, ship availability). The OPA requirements for double hulls reflected some of these concerns.\nThe act required new vessels carrying oil and operating in U.S. waters to have double hulls. However, OPA provided certain exceptions, depending on the size of the vessel (e.g., less than 5,000 gross tons) and its particular use (e.g., lightering). For older vessels, OPA established a staggered retrofitting schedule, based on vessel age and size. As of January 2010, single-hull vessels (with several exceptions, some of which expired in 2015) cannot operate in U.S. waters.",
"OPA unified the liability provisions of existing oil spill statutes, creating a freestanding liability regime. Section 1002 states that responsible parties are liable for any discharge of oil (or threat of discharge) from a vessel or facility to navigable waters, adjoining shorelines, or the exclusive economic zone of the United States (i.e., 200 nautical miles beyond the shore).\nRegarding the oil spill statutes prior to OPA, Congress recognized that \"there is no comprehensive legislation in place that promptly and adequately compensates those who suffer other types of economic loss as a result of an oil pollution incident.\" OPA broadened the scope of damages (i.e., costs) for which an oil spiller would be liable. Under OPA, a responsible party is liable for all cleanup costs incurred, not only by a government entity, but also by a private party. In addition to cleanup costs, OPA significantly increased the range of liable damages to include the following:\ninjury to natural resources, loss of personal property (and resultant economic losses), loss of subsistence use of natural resources, lost revenues resulting from destruction of property or natural resource injury, lost profits and earning capacity resulting from property injury or natural resource injury, and costs of providing extra public services during or after spill response.\nOPA provided limited defenses from liability: act of God, act of war, and act or omission of certain third parties. These defenses are similar to those of the Superfund statute, established in 1980 for releases of hazardous substances (which does not include oil).\nExcept for certain behavior, including acts of gross negligence or willful misconduct, OPA set liability limits (or caps) for cleanup costs and other damages. OPA requires the President to issue regulations to adjust the liability limits at least every three years to take into account impacts of inflation over time. The statute directs the President to use the consumer price index (CPI) to account for these impacts. Administrations subsequent to the enactment of OPA in 1990 did not adjust the liability limits until Congress amended OPA in 2006: The Coast Guard and Maritime Transportation Act of 2006 adjusted the liability limits for vessels in statute. Subsequent limits were adjusted through agency rulemakings.\nFor purposes of liability limits, OPA divides potential sources of oil spills into four general categories. The liability limits differ by category, and in some cases, the scope of liability varies. The categories and their scopes of liability are:\nTank vessels: Liability limit includes both removal costs and natural resource and economic damages. The limit is based on vessel size measured in gross tonnage. All other vessels: Liability limit includes both removal costs and natural resource and economic damages. The limit is based on vessel size measured in gross tonnage. The limits are lower than those for tank vessels. Offshore facilities (not including deepwater ports): Liability limit applies only to damages (natural resource and economic damages). L iability for removal costs is not limited . Onshore facilities and deepwater ports: Liability limit includes both removal costs and natural resource and economic damages.\nTable 1 identifies the liability limit for each of the oil spill source categories listed above as enacted in OPA. The table includes adjustments made in the Coast Guard and Maritime Transportation Act of 2006, which modified only the limits for vessels, and subsequent adjustments made through agency regulations.",
"Prior to OPA, federal funding for oil spill response was generally considered inadequate, and damages recovery was difficult for private parties. To help address these issues, Congress supplemented OPA's expanded range of covered damages with the Oil Spill Liability Trust Fund (OSLTF).\nPursuant to Executive Order (EO) 12777, the Coast Guard created the National Pollution Funds Center (NPFC) to manage the trust fund in 1991. The fund may be used for several purposes:\nprompt payment of costs for responding to and removing oil spills; payment of the costs incurred by the federal and state trustees of natural resources for assessing the injuries to natural resources caused by an oil spill, and developing and implementing the plans to restore or replace the injured natural resources; payment of parties' claims for uncompensated removal costs, and for uncompensated damages (e.g., financial losses of fishermen, hotels, and beachfront businesses); payment for the net loss of government revenue, and for increased public services by a state or its political subdivisions; and payment of federal administrative and operational costs, including research and development, and $25 million per year for the Coast Guard's operating expenses.\nAlthough Congress created the OSLTF in 1986, Congress did not authorize its use or provide its funding until after the Exxon Valdez incident. In 1990, OPA provided the statutory authorization necessary to put the fund in motion. Through OPA, Congress transferred balances from other federal liability funds into the OSLTF. In complementary legislation, Congress imposed a 5-cent-per-barrel tax on the oil industry to support the fund. Collection of this fee ceased on December 31, 1994, due to a sunset provision in the law. However, in April 2006, the tax resumed as required by the Energy Policy Act of 2005 ( P.L. 109-58 ). In addition, the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) increased the tax rate to 8 cents through 2016. In 2017, the rate increased to 9 cents. The tax is scheduled to terminate at the end of 2017.\nFigure 6 illustrates the receipts, expenditures, and end-of-year balances for the OSLTF. At the end of FY2017, the projected balance is $5.4 billion.",
"To preserve the trust fund and ensure that responsible parties can be held accountable for oil spill cleanup and damages, OPA requires that vessels and offshore facilities maintain evidence of financial responsibility (e.g., insurance). The Coast Guard's National Pollution Funds Center (NPFC) implements the financial responsibility provisions for vessels; the Bureau of Ocean Energy Management implements this requirement for offshore facilities.\nThe current levels of financial responsibility are related to the current liability limits for various sources (e.g., vessels, offshore facilities) of potential oil spills. The liability limits differ by potential source. In the case of vessels, whose liability limits are a single dollar amount encompassing both removal costs and other damages, the financial responsibility levels are directly tied to the corresponding liability caps. Current law requires responsible parties for vessels to demonstrate the \"maximum amount of liability to which the responsible party could be subjected under [the liability limits in OPA Section 1004; 33 U.S.C. 2704].\"\nBecause the structure of offshore facility liability limit is different than vessels, the corresponding financial responsibility limit provisions differ. Responsible parties for offshore facilities in federal waters must demonstrate $35 million financial responsibility, unless the President determines a greater amount (not to exceed $150 million) is justified (33 U.S.C. 2716(c)). The federal regulations that are authored by this statutory provision (30 C.F.R. Part 254) base the financial responsibility amount—between $35 million and $150 million—on a facility's worst-case discharge volume (as defined in 30 C.F.R. §253.14). For example, a facility with a worst-case discharge volume over 105,000 barrels —the highest level of worst-case discharge listed in the regulations—must maintain $150 million in financial responsibility.",
"Although OPA is the primary domestic legislation for oil spills, other federal laws contain provisions that relate to oil spills. Many of these provisions were in place before OPA. The following list is not all-inclusive, but it highlights the main requirements authorized by laws other than OPA.",
"The Clean Water Act (CWA) was the primary federal statute governing oil spills prior to OPA and many provisions continue to apply. A key provision is found in Section 311(b)(3), which prohibits the discharge of oil or hazardous substances into U.S. navigable waters. In addition, the CWA contains various penalty provisions for noncompliance, including violations of the discharge prohibition of Section 311(b).\nPursuant to statutory requirements in the CWA, the EPA crafted regulations for spill prevention control and countermeasure (SPCC) plans in 1973. SPCC plans address the \"procedures, methods, and equipment and other requirements for equipment to prevent discharges.\" The EPA's SPCC plans apply only to non-transportation, onshore facilities that exceed a certain oil storage capacity and that, in the event of a spill, can be reasonably expected, because of their location, to produce an oil discharge that would reach navigable waters or adjoining shorelines of the United States. Unlike other oil spill preparedness provisions, SPCC plans focus more on prevention than on response activities, requiring, for example, secondary containment (e.g., dikes, berms) for oil-storage equipment.\nThe agency offered several regulatory amendments after the 1973 rulemaking. Following the passage of the Oil Pollution Act of 1990 (OPA), the agency proposed substantial changes and clarifications that were not made final until July 2002. For reasons beyond the scope of this report, EPA extended the 2002 rule's compliance date on multiple occasions and made further amendments to the 2002 rule. For most types of facilities subject to SPCC requirements, the deadline for complying with the changes made in 2002 was November 10, 2011. However, a subsequent EPA rulemaking extended this compliance date for farms to May 10, 2013.\nNotwithstanding these recent deadlines, the 2002 final rule and subsequent revisions did not alter the requirement for owners or operators of facilities, including farms, to maintain and continue implementing their SPCC plans in accordance with the SPCC regulations that have been in effect since 1974.",
"The primary federal law governing oil development and operations in waters in federal jurisdiction is the Outer Continental Shelf Lands Act (OCSLA) of 1953 and its subsequent amendments (43 U.S.C. §§1331-1356). The OCSLA provided the foundation for regulations (30 C.F.R. Parts 250 and 550) that are implemented by the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE). Sections of these regulations address oil spill prevention and response issues by requiring that various equipment and procedures be in place at offshore facilities.",
"The U.S. pipeline network is extensive: The Pipeline and Hazardous Materials Safety Administration estimates that there are more than 160,000 miles of hazardous liquid pipelines in the United States. Moreover, U.S. inland pipelines are concentrated in coastal areas, particularly in the Gulf states, and these pipelines may have an impact on coastal waters if spills reach waterways that empty into coastal waters.\nSeveral laws govern oil pipelines. The Hazardous Liquid Pipeline Act of 1979 ( P.L. 96-129 ) granted authority to the Department of Transportation (DOT) to regulate various issues regarding oil spills from pipelines. On December 29, 2006, the President signed the Pipeline Safety Improvement Act of 2006 ( P.L. 109-468 ) to improve pipeline safety and security practices, and to reauthorize the federal Office of Pipeline Safety. The Office of Pipeline Safety (OPS), which is part of the DOT, implements provisions concerning pipeline design, construction, operation and maintenance, and spill response planning.",
"Several federal laws directly or indirectly deal with oil pollution from vessels. Laws concerning navigation reduce the possibilities of vessel collision or hull breach by objects in the waterways. Other laws call for particular vessel design standards. For example, the Ports and Waterways Safety Act of 1972, amended by the Port and Tanker Safety Act of 1978, called for specific construction and equipment design requirements for oil tankers. (As noted, OPA subsequently amended this statute in 1990 to establish a phased-in schedule for double-hulled tankers.) Congress enacted the 1970s legislation to coincide with international initiatives. In fact, many of the federal laws concerning vessel standards and pollution control procedures were written to implement international conventions. These are discussed below.",
"The United States shares jurisdiction over its coastal waters with the coastal states. The 1953 Submerged Lands Act (SLA) gave coastal states jurisdiction over the submerged lands, waters, and natural resources (e.g., oil deposits) located, in most cases, within 3 nautical miles off the coastline. The waters, seabed, and natural resources beyond the states' waters are exclusively federal, and extend to the edge of the exclusive economic zone (200 nautical miles from shore). However, the federal government maintains the authority to regulate commerce, navigation, national defense, power production, and international affairs within state waters.\nThe oil spill legal framework involves implementation by multiple federal agencies. Agency responsibilities can be divided into two categories: (1) oil spill response and cleanup and (2) oil spill prevention/preparedness.",
"As mentioned above, the National Oil and Hazardous Substances Pollution Contingency Plan (NCP) contains the federal government's framework and operative requirements for responding to an oil spill (and releases of hazardous substances). Although first developed through administrative processes in 1968, subsequent laws have amended the NCP, including the Clean Water Act in 1972; the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) in 1980; and the Oil Pollution Act (OPA) in 1990. Oil spill response actions required under the regulations of the NCP are binding and enforceable, per these enforcement authorities.\nThe NCP establishes the National Response System (NRS), a multi-tiered and coordinated national response strategy for addressing oil spills and releases of hazardous substances. The NCP provisions specific to oil spill response are codified in 40 C.F.R. Part 300, Subpart D. Key components of the NRS include the following:\nNational Response Team (NRT): composed of representatives from the federal departments and agencies assigned roles in responding to oil spills. The U.S. Coast Guard chairs the NRT when a response is being mounted to a spill in a coastal region. Regional Response Teams (RRTs): composed of regional representatives of each NRT member agency, state governments, and local governments. The Coast Guard leads the relevant RRT during responses to oil spills in coastal waters. Area Committees (ACs): composed of qualified personnel from federal, state, and local agencies. The primary function of each AC is to prepare an Area Contingency Plan (ACP) for its designated area. On-Scene Coordinator (OSC): who directs the response efforts and coordinates all other efforts at the scene.\nOil spill response authority is determined by the location of the spill: the Coast Guard has response authority in the coastal zone, and the EPA covers the inland zone. The OSC has the ultimate authority to ensure that an oil spill is effectively removed and actions are taken to prevent further discharge from the source. The OSC is broadly empowered to direct and coordinate all response and recovery activities of federal, state, local, and private entities (including the responsible party), and will draw on resources available through the appropriate ACPs and RRTs.\nAlthough the OSC must consult with designated trustees of natural resources and the governor of the state affected by the spill, the OSC has the authority and responsibility to determine when removal (i.e., cleanup) is complete.\nOther agencies, particularly those on the NRT and relevant RRT, may play a role in response activities. As the chair of the NRT (and vice-chair during oil spills in the coastal zone), EPA may provide response support. For example, during the Deepwater Horizon spill response, EPA conducted air and water sampling and provided environmental monitoring support, particularly regarding the use of dispersants.\nIn addition, NOAA provides scientific analysis and consultation during oil spill response activities. Assistance can include oil spill tracking, cleanup alternatives, and knowledge of at-risk natural resources. Moreover, NOAA experts begin to collect data to assess natural resource damages during response operations.",
"Regarding oil spill prevention and preparedness duties, jurisdiction is determined by the potential sources (e.g., vessels, facilities, pipelines) of oil spills. A series of executive orders (EOs), coupled with memoranda of understanding (MOU), have established the various agency responsibilities. Table 2 identifies the agencies responsible for implementing prevention and preparedness regulations for the potential sources of oil spills.\nPrevention responsibilities include, among other things, assessing whether facilities or vessels have the necessary equipment in place. As discussed above, vessels may be required to have double hulls; facilities may need secondary containment.\nPreparedness duties involve oversight tasks, such as evaluating facility and vessel response plans. Preparedness responsibilities also include developing and maintaining contingency plans at various levels: area, regional, and national. Personnel training is a vital component of sustaining readiness. NOAA oil spill experts help train responders in government service and private business.\nIn addition, OPA requires agencies to conduct internal examinations to test preparedness. As part of this requirement, the Coast Guard conducts Spills of National Significance (SONS) exercises to analyze the Coast Guard's ability to respond to a major oil spill.",
"The relationship between international and domestic law can be complex. For example, a \"self-executing\" agreement taking the form of a treaty, signed by the Executive and ratified with the advice and consent of the Senate, stands on equal footing with federal statute. On the other hand, if an international agreement is not self-executing, implementing legislation may be necessary for the agreement's provisions to be given domestic legal effect, including to provide U.S. agencies with the domestic legal authority necessary to carry out functions contemplated under the agreement. Several federal laws governing oil spills were fashioned to implement obligations contained in international agreements.\nInternational conventions have played an important role in developing consistent standards for oil-carrying vessels from different nations. A primary player in this regard is the International Maritime Organization (IMO), a body of the United Nations, which sets international maritime vessel safety and marine pollution standards. The Coast Guard represents the United States at IMO meetings.\nMultiple international conventions concern vessels and their impact on the marine environment. Described below are two selected conventions that contain provisions that are particularly relevant to oil pollution in coastal waters.",
"The IMO implements the 1973 International Convention for the Prevention of Pollution from Ships, as modified by the Protocol of 1978 (MARPOL 73/78). Vessels whose nations are signatories to MARPOL are subject to its requirements, regardless of where they sail, and member nations are responsible for the vessels registered under their flag.\nMARPOL 73/78 includes six annexes, each covering a different pollution type. Annex I (Prevention of Pollution by Oil) entered into force in 1983 and established requirements for controlling oil discharges to sea. Annex I requires vessels to have equipment that minimizes oil discharge, such as oil-water separators, and shipboard oil pollution emergency plans (SOPEPs). Although the SOPEP applicability is similar to that of the vessel response plan (VRP) required by OPA, the purpose of the SOPEP is somewhat different. A SOPEP is intended to provide guidance to the vessel's officers regarding proper onboard emergency procedures when an oil spill occurs, whereas the VRP is more focused on responding to the spill itself.\nThe United States implements Annex I through the Act to Prevent Pollution from Ships (APPS). APPS applies to all U.S.-flagged ships, irrespective of location, and to all foreign-flagged vessels in U.S. waters or at ports under U.S. jurisdiction. The Coast Guard issues and enforces regulations necessary to carry out the APPS provisions. The Coast Guard inspection program is a key component of its oil spill prevention effort.",
"The 1967 Torrey Canyon spill off the coast of Great Britain was one of the first major spills to receive worldwide attention. The incident raised many questions regarding oil spill response, particularly when dealing with vessels from other nations. For example, the incident prompted debate over responses allowable if a nation's waters and environment are threatened by a spill from another nation's vessel. The 1969 International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties (the Intervention Convention) sought to address these issues.\nTo implement this convention in the United States, Congress passed the Intervention on the High Seas Act of 1974. Under this act, if the Coast Guard determines there to be a \"grave and imminent danger to the coastline or related interests of the United States from pollution or threat of pollution of the sea by convention oil [i.e., as defined in the convention],\" the Coast Guard can take action to \"prevent, mitigate, or eliminate that danger.\"",
"As mentioned above, multiple states had oil spill liability laws before the passage of OPA in 1990. During the 15 years prior to OPA's passage, the issue of whether or not to preempt state liability laws was perhaps the primary obstacle to enacting unified oil spill legislation. Proponents of preemption argued that differing state laws—particularly the various levels of liability—frustrate the shipping industry and were contrary to the goal of comprehensive federal legislation. Preemption opponents maintained that states should be allowed (as with most other federal environmental statutes) to set stiffer standards regarding liability, compensation, and cleanup. In the aftermath of the Exxon Valdez spill, the scales tipped to the side of anti-preemption. According to OPA Section 1018 (referred to as a \"savings clause\"), the act will not preempt any state from imposing \"additional liability or requirements\" with respect to the discharge of oil or related response activity (e.g., cleanup standards). A 2003 study identified 16 states that impose unlimited liability for oil spills.\nThere was some concern that the language of OPA's savings clause would allow states to regulate matters typically reserved for the federal government, such as oil tanker construction. To address this issue, the conference report stated that the savings clause would not disturb a 1978 Supreme Court decision that dealt with the intersection of federal and state authority to regulate the shipping industry. In that case, the Court determined that a Washington State law was preempted. The state law had attempted to govern oil tanker design, size, and movement in Puget Sound.\nRegardless of the clarification in the conference report, the line between federal and state jurisdiction (i.e., the extent of federal preemption) continues to be tested. In 2000, the Supreme Court struck down (as preempted) a Washington State rule calling for various personnel requirements, such as training, on oil tankers. Similarly, in March 2010, a federal district court in Massachusetts ruled against a state law—finding it preempted—that would affect tanker design, personnel qualifications, and navigation.",
"The following list highlights the primary federal authorities that were in effect when the Exxon Valdez spill occurred in 1989:\nClean Water Act (1972): The Clean Water Act (CWA) represented the broadest authority for addressing oil spills at the time of the Exxon Valdez spill. Section 311 of the CWA established requirements for oil spill reporting, response, and liability. The act also created a fund (311 Fund), maintained by federal appropriations, that could be used for cleanup and natural resource restoration. Deepwater Port Act (1974): This statute addressed oil spills and liability issues at deepwater oil ports. The act also set up the Deepwater Port Fund to provide for prompt cleanup and to compensate damages above liability limits. The fund was financed by a per-gallon tax on oil transferred at a deepwater port. Trans-Alaska Pipeline Authorization Act (1973): This act covered oil spills and liability relating to the Trans-Alaska Pipeline System (TAPS). Although the pipeline is constructed over land, spills from it could reach coastal waters via inland rivers. The act created a trust fund, financed through a lessee fee, that could be used to respond to spills and damages from the pipeline. Outer Continental Shelf Lands Act Amendments (1978): This act established an oil spill liability structure and rules for oil extraction facilities in federal offshore waters. With this legislation, Congress created the Offshore Pollution Fund, financed by a per-gallon fee on produced oil, that could be used for oil spill cleanup and damages. National Oil and Hazardous Substances Pollution Contingency Plan (NCP): The first NCP was administratively prepared in 1968 after observing the British government's response to a 37-million-gallon oil tanker spill ( Torrey Canyon ) off the coast of England. The NCP contains the federal government's procedures for responding to oil spills and hazardous substance releases.\nAfter the Exxon Valdez spill, many observers described the above legal collection as an ineffective patchwork. Arguably, each law had perceived shortcomings (discussed below in the context of post- Exxon Valdez legislation), and none provided comprehensive oil spill coverage.\nFor more than 15 years prior to the Exxon Valdez incident, Congress made attempts to enact a unified oil pollution law. Several contentious issues produced deadlocks, hindering the passage of legislation. One of the central points of debate, state preemption, dealt with whether a federal oil spill law should limit a state's ability to impose stricter requirements, particularly unlimited liability. Other liability questions also generated debate. For example, if an oil spill occurred, should the owner of the cargo (i.e., oil) be held liable, as was the ship owner/operator? Another point of contention was whether oil-carrying vessels should be required to have double hulls. Although proponents argued that a second hull would help prevent oil spills, the shipping industry raised concern that implementing such a mandate would disrupt oil transportation and potentially affect the national economy. A final issue involved the interaction between domestic legislation (federal and state) and international measures. Some were concerned that if the United States became a party to certain international agreements under consideration in the 1980s, the international standards would preempt federal and state laws, especially those establishing liability limits. Proponents argued that these concerns were overstated and stressed that joining the international agreements was especially important for the United States because of the international nature of oil transportation and associated pollution."
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{
"question": [
"What oil spills have raised national concern?",
"What other spills have attracted attention?",
"What factors determine the impact of an oil spill?",
"What impacts emerge as a result of these factors?",
"What rates of oil spills have been observed over the past two decades?",
"What was the fallout of the Gulf spill?",
"What agencies respond to oil spills?",
"How does the Clean Water Act determine authority?",
"Who determiness the level of cleanup required?",
"What financial support do federal responders have?",
"How is this fund financed?",
"What is the fund's current balance?",
"Who determines jurisdiction over oil spill prevention and preparedness duties?",
"What established the various agency responsibilities?",
"What is one example of agency responsibilities?"
],
"summary": [
"Several major U.S. oil spills have had lasting repercussions that transcended local environmental and economic effects: the1969 well blowout off the coast of Santa Barbara, California; the 1989 Exxon Valdez oil spill in Prince William Sound, Alaska; and the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.",
"More recent spills in various locations from other sources, including pipelines and rail transportation, have garnered attention from policymakers.",
"The impacts of an oil spill depend on the size of the spill, the rate of the spill, the type of oil spilled, and the location of the spill.",
"Depending on timing and location, even a relatively minor spill can cause significant harm to individual organisms and entire populations. Oil spills can cause impacts over a range of time scales, from days to years, or even decades for certain spills.",
"Over the past two decades, the annual number and volume of oil spills have shown declines—in some cases, dramatic declines. However, this trend was altered dramatically by the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.",
"The incident led to a significant release of oil: According to estimates, the well released more than 100 million gallons of oil before it was contained on July 15, 2010 (86 days later). Scientists continue to study the fate and impact of the spill.",
"Oil spill response authority is determined by the location of the spill: the U.S. Coast Guard has response authority in the U.S. coastal zone, and the Environmental Protection Agency (EPA) covers the inland zone.",
"The Clean Water Act, as amended by the Oil Pollution Act (OPA) in 1990, provides the federal authority to perform cleanup immediately using federal resources, monitor the response efforts of the spiller, or direct the spiller's cleanup activities.",
"The lead federal responder (either from Coast Guard or EPA) determines the level of cleanup required.",
"Federal responders have immediate access to funds in the Oil Spill Liability Trust Fund to support cleanup activities.",
"The trust fund is primarily financed by a per-barrel tax on domestic crude oil and imported petroleum products.",
"The fund's balance is estimated to reach $5.4 billion at the end of FY2017.",
"Jurisdiction over oil spill prevention and preparedness duties is determined by the potential sources (e.g., vessels, facilities, pipelines) of oil spills.",
"A series of executive orders, coupled with memoranda of understanding, have established the various agency responsibilities.",
"For example, EPA oversees onshore facilities, the Coast Guard oversees vessels, the Department of Transportation oversees pipelines and rail transportation, and the Department of the Interior's Bureau of Ocean Energy Management oversees offshore facilities (e.g., oil platforms)."
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CRS_RL34646
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{
"title": [
"",
"Overview",
"Political Situation",
"The Lawsuit to Ban the AKP and its Aftermath",
"Ergenekon",
"Role of the Military",
"U.S. Policy"
],
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"",
"Secularism has been one of the \"fundamental and unchanging principles\" guiding the Turkish Republic since its founding in 1923. It also has been the principle that has led to considerable domestic political tension. Over the years, political parties have emerged that appeared to challenge that principle and to seek to restore the centrality of religion to the state. Each time, the party has eventually been banned from the political stage. The Justice and Development Party (AKP) formed in 2001, has Islamist roots, but claims a conservative democratic place in the political spectrum. The AKP won the 2002national election by a wide margin and the 2007 election by a wider one, but its victories have not ended the secular-religious tensions in the country.\nToday, the Turkish domestic political scene is in turmoil, with two coincidental, perhaps related, dramas unfolding simultaneously. The public prosecutor initiated a lawsuit to have the ruling Justice and Development Party (AKP) banned for being a \"focal point of anti-secular activities.\" Prior to this action and after it, in stages, the authorities arrested prominent secularists/ultranationalists ( ulusalcilar ) on suspicion of plotting and instigating actions to create chaos in the country and provoke the military to overthrow the government. Both dramas highlight a severely polarized political climate and a continuing crisis over power and identity in Turkey. The AKP and the secularists each have champions and opponents who disseminate conflicting narratives and interpretations of events. In some instances, the schism is blurred, as some secularists argue for AKP's survival in the name of democracy, and some AKP members and followers question their leaders' actions. Nonetheless, the national rift is real and as yet unhealed.\nThe United States is concerned for stability in Turkey because it is a strategic partner, NATO ally, and candidate for membership in the European Union (EU). The Bush Administration may be concerned about the survival of Turkey's democracy because Turkey is one of the few predominantly Muslim democratic countries in the world and Administration officials refer to it as an inspiration for other Muslims even as they appear to have lessened emphasis on democratization elsewhere. During the recent governmental crisis in Ankara, the Administration adopted what appeared to some to be a stance of studied neutrality, with U.S. officials calling on Turks to find a solution based on democracy and rule of law.",
"",
"The political crisis first appeared in spring 2007, when the Justice and Development Party (AKP)-controlled parliament sought to elect then Foreign Minister Abdullah Gul as President of the Turkish Republic. Gul has roots in Turkey's Islamist movement and his wife wears a head scarf, which secularists consider a symbol of both Islamism and backwardness. Hence, to secularists, the country's identity was tied to the selection of a president. Moreover, they argued that, because the AKP already controlled the prime ministry and parliament (the Turkish Grand National Assembly), the balance of political power in the government would tilt in favor of Islamists if the party also assumed the presidency. A Turkish president is mainly a symbolic head of state, but he has significant powers of appointment as well as a bully pulpit. The crisis was temporarily resolved via early national elections on July 22, 2007, which the AKP won with a decisive 46.6% (usually rounded up as 47%) of the vote. On August 28, the new legislature elected Gul president.\nSecularist opponents continued to scrutinize the AKP government's performance for Islamist tendencies and a reprise of the crisis may have been expected. In December 2007, President Gul named an AKP-allied professor to head the Higher Education Board (YOK), disturbing some secularists. They were even more provoked when, on January 14, 2008, Prime Minister Recep Tayyip Erdogan declared that the ban on wearing the head scarf in all public institutions was \"a serious problem in terms of freedom.\" The ban has been in effect for several decades. On February 9, following Erdogan's lead, a 411-vote majority in the 550-seat parliament passed two constitutional amendments to lift the ban on wearing head scarves on university campuses; President Gul ratified them on February 22.\nThe Prime Minister may have miscalculated in focusing on liberalization with the head scarf to the apparent exclusion of other human rights that are restricted. He thereby derailed an AKP-initiated, albeit somewhat stalled, process to draft a new constitution to replace the current one, which had been largely drafted under military guidance in the aftermath of a 1980 military coup. The AKP's stated goal had been to make the document more democratic and civilian. Erdogan may have been able to reform the constitution if he had tried harder to build a national consensus for the change, instead of shifting his attention so single-mindedly to the head scarf issue. A more sweeping revision of the constitution might have included the head scarf issue amid changes that are required for Turkey to meet the criteria for European Union (EU) membership, and perhaps might not have generated as much blowback. Ultimately, lifting the head scarf ban alone simply provided ammunition for the AKP's enemies.\nOn February 27, the opposition Republican People's Party (CHP) and Democratic Left Party (DSP) filed suit in the Constitutional Court to overturn the new amendments. Then, on March 14, the Chief Public Prosecutor of the Court of Appeals requested the Constitutional Court to ban the AKP and 71 of its leading members, including Erdogan, Gul, more than 40 Members of Parliament, and 11 mayors, from politics for becoming a \"focal point of anti-secular activities.\" Among other charges, the request cited parliament's lifting of the head scarf ban in universities. The AKP holds a 340-seat majority in the 550-seat parliament and, therefore, the prosecutor deemed it responsible for the action. He did not seek to indict the opposition Nationalist Action Party (MHP) or smaller parties which had joined the AKP to provide the super-majority required to amend the constitution in order to lift the ban. The AKP defense claimed that lifting the ban was aimed at expanding freedoms in the country and rejected all of the prosecutor's allegations.\nAnalysts considered the outlook for the AKP's survival bleak as 8 out of the 11 judges on the Constitutional Court had been appointed by former President Ahmet Necdet Sezer, a staunch secularist. Seven had accepted the prosecutor's case, permitting it to go forward, and the Court ruled in a 9-2 vote on June 5 that parliament's action lifting the ban on head scarves in universities was unconstitutional. A 7-member Court majority was required to close the party, and the June 5 decision was widely viewed as a harbinger of the decision on the fate of the AKP. Moreover, a ban on a party would not have been unprecedented. Some 24 parties have been banned since the founding of the republic, and 4 parties accused of \"anti-secular activities\" or \"Islamism\" have been banned since 1980.\nIf the Court banned the AKP and its leaders, then observers feared Turkey might have entered a period of political instability or, at least, uncertainty. Yet, each time an allegedly Islamist party had been banned in the past, it reconstituted itself and returned stronger. However, some analysts suggested that the AKP may have peaked with 47% of the vote in 2007 and would not return with a larger share. Others suggested that Prime Minister Erdogan may have alienated some centrists he had attracted in the 2007 election by not fulfilling his 2007 victory speech promise to govern for all Turks, bringing an \"Islamist\" agenda to the fore with the head scarf issue, apparently dropping plans to revise the constitution, neglecting the EU membership process, and failing to meet international standards in the Ergenekon police investigation (see below). Nonetheless, the successor \"AKP\" might have succeeded in portraying itself as victim of a \"judicial coup,\" garnering a considerable sympathy vote, and winning a majority in parliament.\nFurthermore, the AKP continues to benefit from the ineffectiveness and lack of vision of the two main opposition parties, CHP and MHP. Neither has a party organization nor a level of grass roots support that can compete with the AKP. Under Deniz Baykal's leadership, the CHP, the party of Mustafa Kemal Ataturk, founder of the Turkish Republic, has opposed government proposals without offering alternatives and may have lost its social democratic moorings. According to some experts, the party appears bereft of ideas of service and recent elections have shown that its constituents are a diminishing group of academics and elite nationalists who reside mainly in cities along the Aegean coast. For his part, MHP leader Devlet Bahceli supported lifting the head scarf ban and opposed banning the AKP, but maintained that AKP's leaders, such as Prime Minister Erdogan, should be held responsible for illicit actions and subject to being banned from holding political office. Thus, Baykal transparently saw a route to greater personal political success via banning the most popular and charismatic politician in the country.\nOn July 30, six judges on the Constitutional Court voted to ban the party, one short of the required super-majority, providing the AKP with a narrow escape. Four others agreed that the party had become a focal point for anti-secular activities, but not serious ones. Thus, ten judges found the party guilty. Yet, because the required seven judges did not agree to the ban, the Court ruled that a penalty requiring the party to forfeit one-half of its financial assistance from the state would suffice. This penalty is not a hardship for the AKP, whose private donors can readily compensate for the loss. No AKP officials were banned. Constitutional Court President Hasim Kilic voted to exonerate the AKP and called for constitutional amendments to eliminate party closure cases. He nonetheless described the ruling as a \"serious warning\" to the AKP and expressed hope that it would act accordingly. Some analysts concluded that the Court had placed the AKP on probation. The Court has not yet issued the reasoning for its decision, which reportedly is based on the constitution.\nSome observers suggest that the Court may have been influenced by the lack of a possible alternative government, given the absence of a serious political opposition. Therefore, a ban on the AKP would have produced an indefinite period of political instability that might have devastated the country's economy. It also could have seriously harmed Turkey's European Union prospects and perhaps its relations with other allies and friends. Instead, the Court opted to give the AKP a severe warning.\nIn the months after the prosecutor proposed the indictment, AKP leaders assiduously acted as if business were usual, even though Ankara seemed frozen in time while awaiting the Court's verdict. They refused to call supporters out into the streets for protests, believing that a counter-reaction by security forces or opponents would exacerbate tensions in the country and prove counterproductive. Shortly before the Court ruling, Prime Minister Erdogan reportedly admitted that \"we made mistakes.\" However, he did not repeat that admission after the ruling, when he still denied that his party was ever a focal point of anti-secular activities. After the judgement, AKP officials reaffirmed their commitment to an agenda of reforms and EU membership. President Gul called for \"self-criticism and empathy,\" saying, \"In looking at our own errors, we at the same time have to place ourselves in the position of those opposed to us and try to understand the thinking and feelings of those against us.\"\nFirst indications, however, suggest that the AKP will not abandon its desire to respond to and change society according to its underlying religious principles. On August 6, President Gul rejected 9 out of 21 nominees for university rector posts, reportedly because they had opposed the government on the head scarf issue. Instead, Gul chose others close to the AKP. He acted in accordance with presidential authority, yet according to some observers, his decision proved, that he was unable to put himself – as he had himself proposed– in the position of the opposition and understand how it would react.\nMany observers, including some AKP supporters, now want the government to embark on an ambitious program to draft a new democratic constitution, make changes necessary to prevent future actions to ban parties, revise election laws to lower the 10 per cent of the vote threshold to enable broader representation in parliament, and change the political parties' law to democratize and revive those institutions. It may be premature to expect the AKP to undertake an aggressive agenda before renewing its mandate in the March 2009 municipal elections or in early national elections; the next national elections are otherwise scheduled to occur in July 2012. Nonetheless, the government has said that it has developed a new four-year program of legislation, including constitutional amendments, to further the country's bid for EU membership.",
"On June 12, 2007, police raided an apartment in Istanbul and seized a cache of hand grenades, explosives, and fuses. The investigatory trail led to the arrests in January 2008 of prominent ultranationalists ( ulusalcilar ) and secularists, including a retired major general and other retired military officers, the head of a fringe political party, a university rector, the head of a non-governmental organization, businessmen, and journalists. On July 1, two retired four-star generals, additional retired military officers, the head of the Ankara Chamber of Commerce, and other journalists were taken into custody. The arrests of generals of such high rank are unprecedented. One of them, Gen. Sener Eruygur, is the former commander of the gendarmerie and now heads the non-governmental Ataturkist Thought Association, which organized peaceful mass demonstrations against President Gul's election in 2007. The other, Gen. Hursit Tolon, is the former commander of the First Army.\nThe indictment proposed on July 14, 2008, requests that 86 individuals be charged with being members of an armed terrorist organization, attempting to overthrow the government by force, inciting people to armed insurgency, instigating the killing of a judge during a 2006 attack on the Council of State (the highest administrative court), and bombing of the Cumhurriyet newspaper in 2007, among other crimes. The perpetrator of the 2006 attack on the court previously had been thought to be religiously motivated. The final indictment is about 2,500 pages and includes almost all sensational political crimes committed in Turkey over the past few years. An additional indictment is expected to be requested against Gens. Eruygur and Tolon, perhaps for attempting coups during the AKP's first term. The High Criminal Court has accepted the indictment, and the case will be heard beginning October 20, 2008. Arrests of individuals related to Ergenekon continue.\nThe alleged members of the criminal organization are said to have referred to themselves as Ergenekon . Ergenekon means \"steep mountain pass\" and refers to the Turkish national myth: it was the route via which Turkish ancestors, following a gray wolf, escaped from Central Asia to freedom in Turkey to exact revenge on their enemies. All of the accused are known to have openly opposed the AKP, their \"enemy.\" According to the prosecutor, Ergenekon is not connected to the armed forces or the National Intelligence Organization (MIT).\nTurkey has a highly centralized government in which the Interior Minister, a member of the AKP government, controls and funds the police. Some analysts believe that the AKP is using the Ergenekon prosecutions in its fight for life, seeking to intimidate its opponents. They state that media outlets supportive of the AKP have disseminated reams of leaked \"evidence\" related to Ergenekon, some of it derived from extensive police wiretapping and some of it wildly inaccurate. The observers suggest that these same media outlets are engaged in a disinformation campaign to boost the AKP's fortunes and to help it ensnare its more well-known opponents, and not coup-plotters. CHP Chairman Deniz Baykal argues that the Ergenekon charges are \"fictitious\" and asserts that \"There is a suspicion in society that it is turning out to be a political revenge process rather than a legal process.\" For his part, Gen. Tolon claims that he and Gen. Eruygur are not in \"the slightest way involved\" in Ergenekon and are scapegoats. If true, charges that Ergenekon is a product created for revenge and intimidation would undermine AKP's claim to be the standard-bearer of democracy.\nOn the other hand, Prime Minister Erdogan has suggested that the closure case against the AKP was a response to the government's earlier pursuit of Ergenekon, not vice versa. Even some at odds with the AKP see the case as a test of Turkey's democracy and rule of law, primarily its ability and willingness to confront the extra-governmental power of what has long been referred to as the \"deep state.\" The \"deep state\" refers to like-minded members of the military, bureaucracy, and related elite who believe it their duty to safeguard the legacy of Ataturk and his vision for Turkey and who, according to this theory, have controlled the country and manipulated the political system for 50 years. Today, the \"deep state\" is seen as a nationalist, secularist, and statist network that opposes modernizing reforms and compromises required for Turkey to join the European Union, among other concerns. Members of the network are said to feel most threatened by the AKP's rise. However, the prolonged detention without charge and harsh treatment of those indicted in the Ergenekon affair, which contradict international standards, may undermine hope that the case would reinforce Turkey's democracy, rule of law, and pathway to the EU.",
"The Turkish military, which views itself as the guarantor of the Turkish Republic and protector of its secular identity, has intervened in the political process five times since 1960, including two coups. Yet, aside from calling for caution and respect for the law during the crisis over the possible closure of the AKP and the Ergenekon affair, the military commanders were quiet. They may not have recovered from a bungled attempt to prevent President Gul's election by means of a warning notice posted on the General Staff's website on April 27, 2007, described by some as an \"e-coup.\" Instead, that action appeared to have the opposite effect; it helped to bring about the early national elections, contributed to the AKP victory, and produced Gul's election.\nThus, it is possible that the military may have been content to let its secularist allies in the judicial bureaucracy take the principal lead in the effort to eliminate the AKP. After the party survived its judicial test, the military commanders verbally reasserted their oversight role and dedication to secularism at the change of command ceremony on August 30 in the presence of President Gul and Prime Minister Erdogan. Incoming Land Forces Commander General Isik Kosaner, who is slated to become Chief of Staff in 2010, forthrightly stated, \"Protection of fundamental characteristics of the republic cannot be considered intervention in domestic politics.\" His approach was in keeping with that traditionally taken by deputy chiefs of staff and force commanders. New Chief of the General Staff General Ilker Basbug also perhaps communicated the same message, but with more subtlety. He confirmed, \"The Turkish Armed Forces is always involved as a party when it comes to safeguarding and protecting the underlying philosophy of the Republic of Turkey...\" and noted, \"The principle of secularism is one of the pillars of the underlying philosophy the Republic....\" Basbug quoted from Article 24 of the Constitution, which stipulates that religion should not be exploited for political benefit. He also asserted or recommended that it was essential for social peace that those concerned about the growing influence of religious ideas on the country's cultural identity be taken seriously.\nThe General Staff apparently is cooperating with the police in the Ergenekon investigation, allowing searches of military residences and the seizure of documents.",
"The overall U.S. policy toward Turkey is largely determined by the United States' need and appreciation for Turkey as a strategic partner and NATO ally. In addition, the Bush Administration values Turkey as a predominantly Muslim secular democracy that might provide political inspiration for other Muslim countries. Therefore, it has a vested interest in the continuation of Turkey's democracy and political stability and does not want military coup there. The Administration adopted a stance of studied neutrality toward the Turkish domestic political crisis resulting from the closure case against the AKP. On April 15, Secretary of State Condoleezza Rice said, \"We believe and hope that this will be decided within Turkey's democratic context and by its secular democratic principles.\" Her spokesman stated, \"We are strong supporters of democracy in Turkey and we have faith in Turkish democracy. But ultimately, these questions about politics and religion and different social values are going to have to be ones that are resolved within the context of Turkish law, politics, and their Constitution.\" However, the constitution that Administration officials referred to, although much amended, was drafted under the supervision of a military junta and accepted in a 1982 referendum without opposition permitted. Nonetheless, the Administration continues to emphasize democracy in Turkey while it no longer sounds that theme for other Muslim majority countries due to the increasing popularity of fundamentalist parties.\nRice also made remarks about enjoying an excellent relationship with the AKP government. But, few in Turkey considered this a change in approach. The Administration did not satisfy any group in Turkey. The AKP's advocates sought a stronger statement opposed to the possible banning of a party that had won a decisive election so recently. They believed that the EU's threat to suspend membership talks if the AKP were banned was more in line with democratic principles. Others contend that the EU had to take a stronger stand because Turkey is a candidate for membership. The secularists believe that the Bush Administration supports the AKP as a model for Muslim democracies and want it to continue in office. They are suspicious of any positive comment U.S. officials might make about the party."
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{
"question": [
"What is the Turkish Republic's relationship to secularism?",
"What has been the response of various political parties to this principle?",
"What happens to these political parties?",
"What is the AKP?",
"How have the AKP's victories affected Turkey?",
"What was the outcome of the AKP's lawsuit?",
"What is a short-term goal for the AKP?",
"What is the possible future for AKP?",
"What have police discovered regarding the Ergenekon conspiracy?",
"Who was part of this conspiracy?",
"How will the arrests be handled by the court?",
"What theories do people raise regarding the arrests?",
"What has been the response of the military?"
],
"summary": [
"Secularism has been one of the \"fundamental and unchanging principles\" guiding the Turkish Republic since its founding in 1923.",
"Over the years, political parties have emerged that appeared to challenge that principle and to strive to restore religion to a central place in the state.",
"Each time, the party has eventually been banned from the political stage.",
"The Justice and Development Party (AKP), formed in 2001, has Islamist roots and claims to be conservative and democratic.",
"The AKP won the 2002 and 2007 national elections by wide margins, yet its victories have not ended the secular-religious tensions in the country.",
"The AKP narrowly survived a lawsuit seeking its closure on July 30, 2008, when the Constitutional Court held that the party was a \"focal point of anti-secular activities,\" but opted for a financial penalty instead of a ban. Some analysts contend that the party is on \"probation,\" but it is not yet clear how the court case will affect AKP's conduct.",
"In the near term, it is proposing to pursue additional reforms required to achieve European Union (EU) membership.",
"If AKP renews and strengthens its mandate in the March 2009 municipal elections or in early national elections, it might then opt for a more aggressive agenda.",
"At the same time, police have unearthed what they claim is a conspiracy, called Ergenekon, of ultranationalists and secularists to create chaos in the country and provoke the military to overthrow the government.",
"Those arrested include two retired four-star generals.",
"The case will be presented in Court beginning in October 2008.",
"Some suggest that the arrests are evidence of Turkey's progress as a democracy because the \"deep state\" or elite who have manipulated and controlled the political system for 50 years are finally being confronted. Others charge that the AKP is using the affair to intimidate its opponents and that the authorities' handling of those charged fails to meet international standards.",
"The powerful Turkish military has been unusually quiet throughout the closure case and the Ergenekon revelations and appears to be cooperating with the Ergenekon investigation."
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CRS_R44670
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{
"title": [
"",
"Introduction",
"Full Retirement Age",
"Early Eligibility Age",
"Actuarial Modification to Benefits: Claiming Before or After the FRA",
"Actuarial Reduction for Claiming Benefits Before the FRA",
"Delayed Retirement Credit for Claiming Benefits After the FRA",
"Retirement Earnings Test",
"Age Distribution of New Retired-Worker Beneficiaries",
"Proposals to Increase the Retirement Age"
],
"paragraphs": [
"",
"The Social Security full retirement age (FRA) is the age at which workers can first claim full Social Security retired-worker benefits. Among other factors, the age at which an individual begins receiving Social Security benefits has an impact on the size of the monthly benefits. Claiming benefits before the FRA can substantially reduce monthly benefits, whereas claiming benefits after the FRA can lead to a substantial increase in monthly benefits. Benefit adjustments are made based on the number of months before or after the FRA the worker claims benefits. The adjustments are intended to result in roughly the same total lifetime benefits, regardless of when the worker claims benefits, based on average life expectancy.\nThe FRA was 65 at the inception of Social Security in the 1930s. As part of legislation enacted in 1983, the FRA is increasing gradually from 65 to 67 over a 22-year period that started for those who turned age 62 in 2000. The increase in the FRA will be fully phased in (the FRA will reach 67) for workers born in 1960 or later (i.e., for workers who become eligible for retirement benefits at age 62 in 2022). For workers who become eligible for retirement benefits in 2019 (i.e., workers born in 1957), the FRA is 66 and 6 months.\nWorkers can claim Social Security retired-worker benefits as early as age 62, the early eligibility age (EEA). However, workers who claim benefits before the FRA are subject to a permanent reduction in their benefits. Spouses can also claim reduced retirement benefits as early as age 62. Other types of dependents can claim benefits before the age of 62.\nWorkers who claim benefits after the FRA receive a delayed retirement credit that results in a permanent increase in their monthly benefits. The credit applies up to the age of 70. Claiming benefits after attainment of age 70 does not result in any further increase in monthly benefits.",
"The FRA was 65 at the inception of Social Security. According to Robert Myers, who worked on the creation of the Social Security program in 1934 and later served in various senior and appointed capacities at the Social Security Administration (SSA), \"[a]ge 65 was picked because 60 was too young and 70 was too old. So we split the difference.\" On the other hand, SSA suggests that the Committee on Economic Security (CES) made the proposal of 65 as the retirement age due to the prevalence of private and state pension systems using 65 as the retirement age and the favorable actuarial outcomes for 65 as the retirement age.\nIn 1983, Congress increased the FRA as part of the Social Security Amendments of 1983, which made major changes to Social Security's financing and benefit structure to address the system's financial imbalance at the time. Among other changes, the FRA was increased gradually from 65 to 67 for workers born in 1938 or later. Under the scheduled increases enacted in 1983, the FRA increases to 65 and 2 months for workers born in 1938. The FRA continues to increase by two months every birth year until the FRA reaches 66 for workers born in 1943 to 1954. Starting with workers born in 1955, the FRA increases again in two-month increments until the FRA reaches 67 for workers born in 1960 or later. The increase in the FRA, one of many provisions in the 1983 amendments designed to improve the system's financial outlook, was based on the rationale that it would reflect increases in longevity and improvements in the health status of workers. The 1983 amendments did not change the early eligibility age of 62 (discussed below); however, the increase in the FRA results in larger benefit reductions for workers who claim benefits between the age of 62 and the FRA. Table 1 shows the FRA by worker's year of birth under current law.",
"Currently, the EEA is 62 for workers and spouses; this is the earliest age at which they can claim retirement benefits. Benefits claimed between age 62 and the FRA, however, are subject to a permanent reduction for \"early retirement.\" When the original Social Security Act was enacted in 1935, the earliest age to receive retirement benefits was the FRA (age 65). In 1956, the eligibility age was lowered from 65 to 62 for female workers, wives, widows, and female dependent parents. This was to allow wives, who traditionally were younger than their husbands, to qualify for benefits at the same time as their husbands. Benefits for female workers and wives were subject to reduction if claimed between the ages of 62 and 65; the reduction did not apply to benefits for widows and female dependent parents.\nIn 1961, the eligibility age was lowered from 65 to 62 for men as well. Benefits for male workers and husbands were subject to reduction if claimed between the ages of 62 and 65; the reduction did not apply to widowers and male dependent parents. Although the eligibility age was made consistent for male and female workers, an inconsistency remained in the calculation of benefits. A man the same age as a woman needed more Social Security credits to qualify for benefits, and, if his earnings were identical to hers, usually received a lower benefit because his earnings were averaged over a longer period. This inconsistency was addressed in legislation enacted in 1972 which provided that retirement benefits would be computed the same way for men and women (the provision was fully effective for men reaching age 62 in 1975 or later).\nIn subsequent years, further adjustments were made to the eligibility age for surviving spouses. The eligibility age was lowered to age 60 for widows (1965), age 50 for disabled widow(er)s (1967), and age 60 for widowers (1972).",
"Benefits are adjusted based on the age at which a person claims benefits to provide roughly the same total lifetime benefits regardless of when a person begins receiving benefits, based on average life expectancy. The earlier a worker begins receiving benefits (before the FRA), the lower the monthly benefit will be, to offset the longer expected period of benefit receipt. Conversely, the longer a worker delays claiming benefits (past the FRA), the higher the monthly benefit will be, to take into account the shorter expected period of benefit receipt. The benefit adjustment is based on the number of months between the month the worker attains the FRA and the month he or she claims benefits. The day of birth is ignored for adjustment purposes, except for those born on the first of the month. Workers born on the first of the month base their FRA as if their birthday was in the previous month (e.g., someone born on February 1, 1980, who has an FRA of 67, can apply for full retirement benefits in January 2047). A calculator on SSA's website allows the user to enter his or her date of birth and the expected month of initial benefit receipt to see the effect of early or delayed retirement; the effect is shown as a percentage of the full benefit payable at the FRA.",
"When a worker claims benefits before the FRA, there is an actuarial reduction in monthly benefits. The reduction for claiming benefits before the FRA can be sizable and it is permanent; all future monthly benefits are payable at the actuarially reduced amount. For each of the 36 months immediately preceding the FRA, the monthly rate of reduction from the full retirement benefit is five-ninths of 1%. This equals a 6⅔% reduction each year. For each month earlier than three years (36 months) before the FRA, the monthly rate of reduction is five-twelfths of 1%. This equals a 5% reduction each year. The earliest a worker can claim retirement benefits is age 62. For a worker with an FRA of 67, claiming benefits at 62 results in a 30% reduction in their monthly benefit. Table 2 shows the actuarial reduction applied to retired-worker benefits based on the FRA and the age at which benefits are claimed.",
"Workers who claim benefits after the FRA receive a delayed retirement credit (DRC). As with the actuarial reduction for early retirement, the delayed retirement credit is permanent. The DRC has been modified over the years. Initially, the Social Security Amendments of 1972 provided a delayed retirement credit that increased benefits by one-twelfth of 1% for each month between ages 65 and 72 that a worker did not claim benefits (i.e., 1% per year). The credit, which was effective after 1970, applied only to the worker's benefit; it did not apply to a widow(er)'s benefit payable on the worker's record. The Social Security Amendments of 1977 increased the credit to 3% per year and included the credit in the computation of a widow(er)'s benefit.\nThe credit was further increased under the Social Security Amendments of 1983. As shown in Table 3 , under current law, the amount of the credit varies based on the worker's year of birth (i.e., when the worker becomes eligible for benefits at age 62). The credit increases gradually until it reaches 8% per year (two-thirds of 1% per month) for workers born in 1943 or later (i.e., workers who became eligible for retirement benefits in 2005 or later). In addition, the maximum age at which the DRC applies was lowered from 72 to 70. Any further delay in claiming benefits past age 70 does not result in a higher benefit. The increase in the DRC was intended to ensure that workers who claim benefits after the FRA receive roughly the same total lifetime benefits as if they had claimed benefits earlier (based on average life expectancy). A worker with an FRA of 66, for example, receives a 32% benefit increase if he or she claims benefits at age 70; a worker with an FRA of 67 receives a 24% benefit increase.\nFigure 1 illustrates the effect of claiming age on benefit levels based on an FRA of 66. If the worker claims retirement benefits at age 62, for example, his or her benefit would be equal to 75% of the full benefit amount—a 25% permanent reduction based on claiming retirement benefits four years before attaining the FRA. If the worker delays claiming retirement benefits until age 70, however, his or her benefit would be equal to 132% of the full benefit amount—a 32% permanent increase for claiming benefits four years after the FRA.",
"The decision to claim Social Security benefits before the FRA results in a permanent reduction in monthly benefits for early retirement. In addition, if a Social Security beneficiary is below the FRA and has current earnings, he or she is subject to the retirement earnings test (RET). Stated generally, Social Security benefits are withheld partially or fully, for one or more months, if current earnings exceed specified thresholds.\nThere are two separate earnings thresholds (or exempt amounts ) under the RET. The first (lower) threshold applies to beneficiaries who are below the FRA and w ill not attain the FRA during the year. In 2019, the lower earnings threshold is $17,640. If a beneficiary has earnings that exceed the lower threshold, SSA withholds $1 of benefits for every $2 of earnings above the threshold.\nThe second (higher) threshold applies to beneficiaries who are below the FRA and will attain the FRA during the year. In 2019, the higher earnings threshold is $46,920. If a beneficiary has earnings that exceed the higher threshold, SSA withholds $1 of benefits for every $3 of earnings above the threshold. The RET no longer applies beginning with the month the beneficiary attains the FRA. In other words, once the beneficiary attains the FRA, his or her benefits are no longer subject to withholding based on earnings.\nDuring the first year of benefit receipt, a special monthly earnings test applies. Regardless of the amount of annual earnings in the first year of benefit receipt, benefits are not withheld for any month in which earnings do not exceed a monthly exempt amount (the monthly exempt amount is equal to 1/12 of the annual exempt amount). In 2019, the monthly exempt amounts are $1,470 ($17,640/12) and $3,910 ($46,920/12).\nFor example, consider a worker who claims benefits at age 62 in January 2019 and has no earnings during the year except for a consulting project that pays $20,000 in July. Although the beneficiary's annual earnings ($20,000) exceed the annual exempt amount ($17,640), benefits are withheld only for the month of July. The beneficiary has $0 earnings in all other months; July is the only month in which earnings exceed the monthly exempt amount ($1,470).\nBenefits withheld under the RET are not \"lost\" on a permanent basis. When a beneficiary attains the FRA and is no longer subject to the RET, SSA automatically recalculates the benefit, taking into account any months for which benefits were partially or fully withheld under the RET. Stated generally, there is no actuarial reduction for early retirement for any month in which benefits were partially or fully withheld under the RET. The recalculation results in a higher monthly benefit going forward. Starting at the FRA, the beneficiary begins to recoup the value of benefits withheld under the RET; the beneficiary recoups the full value of those benefits if he or she lives to average life expectancy.",
"Statistics published by SSA show that a majority of retired-worker beneficiaries claim benefits before the FRA. Figure 2 shows the age distribution of new retired-worker beneficiaries in 2017. Among nearly 2.5 million new retired-worker beneficiaries that year, 37% claimed benefits at age 62 (the first year of eligibility) and 64% were under the age of 66. About one-fourth (23%) of new retired-worker beneficiaries claimed benefits at age 66, while 12% were age 67 or older. The percentage of retired-worker beneficiaries who claim benefits at earlier ages has declined in recent years. In 2010, for example, more than one-half (52%) of new retired-worker beneficiaries were age 62 and 81% were under the age of 66.",
"The Social Security full retirement age was 65 when the program was established in the 1930s. It remained 65 until 1983, when Congress included an increase in the FRA among many provisions in the Social Security Amendments of 1983, which were designed to address serious near-term and long-range financing problems. The 1983 Amendments became law on April 20, 1983 . Without legislative action, it was anticipated that Social Security benefits could not be paid on time beginning in July 1983 . The 1983 provision that increased the FRA from 65 to 67 continues to be phased in; it will be fully phased in by 2022.\nThe Social Security system once again faces projected long-range funding shortfalls. The Social Security Board of Trustees (the Trustees) projects that full Social Security benefits can be paid on time until 2034 with a combination of annual Social Security tax revenues and asset reserves held by the Social Security trust funds. After the projected depletion of trust fund reserves in 2034, however, annual tax revenues are projected to cover about three-fourths of benefits scheduled under current law.\nOver the years, many proposals have been designed to improve Social Security's financial outlook as well as achieve other policy goals. A common proposal is to increase the early eligibility age or further increase the full retirement age. As in the past, lawmakers who support increasing the retirement age point to gains in average life expectancy as an indicator that people can work until older ages. Those who oppose this type of policy change, however, point out that gains in life expectancy have not been shared equally across different segments of the population. They cite research showing that life expectancy is lower for individuals with lower socioeconomic status (SES) compared to those with higher SES, and that the gap in life expectancy by SES has been growing over time.\nDifferential gains in life expectancy are important in the context of Social Security. The actuarial adjustments to benefits for early or delayed retirement (i.e., for claiming benefits before or after the FRA) are based on average life expectancy. That is, the actuarial adjustments are designed to provide a person with roughly the same total lifetime benefits, regardless of the age at which he or she claims benefits, assuming the person lives to average life expectancy. Research has shown that differential gains in life expectancy have resulted in a widening gap in the value of lifetime Social Security retirement benefits between low earners and high earners.\nOver the years, deficit reduction commissions and other policymakers have recommended an increase in the Social Security retirement age. The recent proposals, for example, included the S.O.S. Act of 2016 ( H.R. 5747 , the 114 th Congress), which proposed increasing the FRA among other changes. Under the proposal, after the FRA reaches 67 for those attaining 62 in 2022, the FRA would increase by two months per year until the FRA reaches 69 for those attaining 62 in 2034. Thereafter, the FRA would increase one month every year. SSA's Office of the Chief Actuary (OCACT) projects that this option would improve the Social Security trust fund outlook by eliminating 39% of the system's projected long-range funding shortfall (based on the 2018 Annual Report of the Social Security Board of Trustees, intermediate assumptions).\nAnother recent proposal from the Bipartisan Policy Center in 2016 recommended, among other changes, to increase the FRA by one month every two years after the FRA reaches 67 for those attaining age 62 in 2022 until the FRA reaches 69, and also increase the age up to which the DRC may be earned at the same rate (from 70 to 72). This option contains no change in the EEA. OCACT estimates that this option would improve the Social Security trust fund outlook by eliminating 19% of the system's projected long-range funding shortfall (based on the 2018 Annual Report of the Social Security Board of Trustees, intermediate assumptions).\nIn 2010, the National Commission on Fiscal Responsibility and Reform (also called the Simpson-Bowles Commission after co-chairs Alan Simpson and Erskine Bowles) recommended increasing both the EEA and the FRA, among other Social Security changes. Under the commission's recommendations, after the FRA reaches 67 in 2027, both the EEA and the FRA would be indexed to increases in life expectancy. The commission estimated that the FRA would reach 68 by about 2050, and 69 by about 2075. The EEA would increase to 63 and 64 in step with increases in the FRA. OCACT estimates that this option would improve the Social Security trust fund outlook by eliminating 15% of the system's projected long-range funding shortfall.\nIn conjunction with proposed increases in the EEA and FRA, the commission recommended policies that would provide people with more flexibility in claiming benefits. Specifically, the commission recommended allowing people to claim up to half of their benefits at age 62 (with an actuarial reduction) and the other half at a later age (with a smaller actuarial reduction). This option was intended to provide a smoother transition for those interested in phased retirement or for households where one member has retired and another continues to work. In general, it could provide a stream of income for those with financial difficulties by allowing them to claim a portion of their benefits early and avoid taking a permanent reduction on the full benefit amount.\nRecognizing that some workers may be physically unable to work beyond the current EEA (62) and may not qualify for Social Security disability benefits, the commission also recommended a hardship exemption for up to 20% of retirees. Under the proposal, as the EEA and FRA increase, certain beneficiaries could continue to claim benefits at age 62 and their benefits would not be subject to additional actuarial reductions. The commission specified that SSA would design the policy taking into consideration factors such as the physical demands of labor and lifetime earnings in developing eligibility criteria. Concerns regarding the effects of increasing the retirement age, especially on certain segments of the population, are not new. The Social Security Amendments of 1983, which increased the retirement age gradually from 65 to 67, mandated a study to examine the effects of increasing the retirement age on workers in physically demanding jobs or ill health."
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"question": [
"What are the benefits of attaining the Social Security full retirement age?",
"What determines a worker's monthly benefit amount?",
"What is the intention of the adjustments?",
"What occurs if one claims benefits before the FRA?",
"What was the FRA at the inception of Social Security?",
"How has the FRA changed since then?",
"What is the current FRA?",
"What is the early eligibility age?",
"What are the rules for spouses and other dependents?",
"What are some examples of reduced benefits?",
"To what extent is it common to claim reduced benefits?",
"What is the advantage of waiting until after the FRA to claim benefits?",
"What are examples of this advantage?",
"How common is it to wait until the FRA?",
"Why have lawmarkers argued in favor of increasing the FRA?",
"What concerns do other lawmakers have?",
"How is this concern justified?"
],
"summary": [
"The Social Security full retirement age (FRA) is the age at which workers can first claim full Social Security retired-worker benefits.",
"Among other factors, a worker's monthly benefit amount is affected by the age at which he or she claims benefits relative to the FRA. Benefit adjustments are made based on the number of months before or after the FRA the worker claims benefits.",
"The adjustments are intended to provide the worker with roughly the same total lifetime benefits, regardless of when he or she claims benefits, based on average life expectancy.",
"Claiming benefits before the FRA results in a permanent reduction in monthly benefits (to take into account the longer expected period of benefit receipt); claiming benefits after the FRA results in a permanent increase in monthly benefits (to take into account the shorter expected period of benefit receipt).",
"The FRA was 65 at the inception of Social Security in the 1930s.",
"Under legislation enacted in 1983, the FRA is increasing gradually from 65 to 67 over a 22-year period (for those reaching age 62 between 2000 and 2022). The FRA will reach 67 for workers born in 1960 or later (i.e., for workers who become eligible for retirement benefits at age 62 in 2022).",
"Currently, the FRA is 66 and 6 months for workers who become eligible for retirement benefits in 2019 (i.e., workers born in 1957).",
"Workers can claim reduced retirement benefits as early as age 62 (the early eligibility age).",
"Spouses can also claim reduced retirement benefits starting at age 62. Other dependents, such as widow(er)s, can claim benefits at earlier ages.",
"For workers with an FRA of 66, for example, claiming benefits at age 62 results in a 25% reduction in monthly benefits. For workers with an FRA of 67, claiming benefits at age 62 results in a 30% benefit reduction.",
"A majority of retired-worker beneficiaries claim benefits before the FRA. In 2017, 37% of new retired-worker beneficiaries were age 62; almost two-thirds (64%) were under the age of 66.",
"Workers who delay claiming benefits until after the FRA receive a delayed retirement credit, which applies up to the age of 70.",
"For workers with an FRA of 66, for example, claiming benefits at age 70 results in a 32% increase in monthly benefits. For workers with an FRA of 67, claiming benefits at age 70 results in a 24% benefit increase.",
"In 2017, almost one-fourth (23%) of new retired-worker beneficiaries were age 66; 12% were over the age of 66.",
"Some lawmakers have called for increasing the Social Security retirement age in response to the system's projected financial imbalance, citing gains in life expectancy for the population overall.",
"Other lawmakers, however, express concern that increasing the retirement age would disproportionately affect certain groups within the population, citing differences in life expectancy by socioeconomic groups. Proposals to increase the retirement age are also met with concerns about the resulting hardship for certain workers, such as those in physically demanding occupations, who may be unable to work until older ages and may not qualify for Social Security disability benefits.",
"Differential gains in life expectancy are important in the context of Social Security because the actuarial adjustments for claiming benefits before or after the full retirement age are based on average life expectancy."
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CRS_RL34522
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{
"title": [
"",
"Recent Developments1",
"Bilateral Relations with the United States",
"General Background",
"History",
"Geography",
"Government, Politics, and Elections",
"Structure of Government",
"Political Dynamics",
"Lead Up to 2008 Elections",
"The Caretaker Government",
"Anti-Corruption Drive",
"The Role of the Military",
"Islamist Extremism",
"Extremist Groups",
"The Economy",
"Religious Freedom and Human Rights",
"Religious Freedom",
"Human Rights"
],
"paragraphs": [
"",
"Since January 2007, Bangladesh has been ruled under a state of emergency by a military-backed caretaker government led by \"Chief Adviser\" Fakhruddin Ahmed. This interim administration assumed control of the government and postponed elections that had been scheduled for January 2007 at a time when many feared that election related violence would escalate. Since, it has embarked on an anti-corruption drive and has pledged to return Bangladesh to democracy by holding elections by the end of the 2008. The current government's anti-corruption drive appears to be aimed at ridding Bangladesh of what many see as endemic corruption associated with Sheikh Hasina of the Awami League (AL) and Khaleda Zia of the Bangladesh National Party (BNP), both of whom are former Prime Ministers of Bangladesh. Despite this effort, it appears that the BNP and the AL, or factions thereof, will be the leading political contenders in the next election. Discontent over increasing food prices may exacerbate political tensions and lead to street protests. This could hinder the caretaker government's ability to govern and could lead to a prolonged state of emergency that could lead to further destabilization and further erode democracy in Bangladesh.\nThe government reportedly arrested some 10,000 people in early June to \"maintain law and order\" in the lead-up to elections. \"Local leaders and activists of major political parties, labour leaders, student activists and local government representatives\" were reportedly among those arrested. In May 2008, the interim government invited the main political parties to enter into a dialogue with it to discuss the restoration of democracy in Bangladesh. Sheikh Hasina and Khaleda Zia boycotted the talks on the basis that elections could not proceed without the country's two main political leaders.",
"Former Deputy Assistant Secretary of State for South and Central Asia John Gastright stated on August 1, 2007, in testimony before the House Subcommittee on the Middle East and South Asia, that Bangladesh was \"... fast becoming a democracy in name only, where money, cronyism and intimidation increasingly dictated the outcome of elections.\" In discussing the shift to the new military-backed caretaker government, he stated that U.S. was initially \"troubled that this dramatic shift in government might signal a hidden agenda to indefinitely delay a return to democracy and conceal a secret military coup.\" He added that the caretaker government was responsive to calls for outlining a roadmap to elections and the restoration of democracy.\nThe United States has long-standing supportive relations with Bangladesh and has viewed Bangladesh as a moderate voice in the Islamic world. Major U.S. interests in Bangladesh include political stability and democratization; continuation of economic reform and market-opening policies; social and economic development; environmental issues; countering anti-Western Islamist groups; and improvement of the human rights situation. Many in the United States would particularly like to bolster Bangladesh's democracy, which is destabilized by political violence. In early 2003, Dhaka was the site of modestly-sized street demonstrations in opposition to the U.S.-led invasion of Iraq.\nBangladesh is a recipient of significant international aid. It has received more than $30 billion from foreign donors since its independence in 1971. The State Department has requested a total of $88.8 million in assistance for Bangladesh in the FY2008 budget request. U.S. assistance to Bangladesh supports health and economic development programs, the improvement of working conditions, including the elimination of child labor. P.L. 480 funds provide food assistance for the poorest families and for disaster relief. International Military Education and Training programs strengthen the international peacekeeping force of Bangladesh, which is a leading contributor of U.N. peacekeeping personnel.\nThe United States has generally had a negative balance of trade with Bangladesh since 1986. The United States is Bangladesh's largest export destination. Ready made garments and jute carpet backing are two of Bangladesh's key exports to the U.S. Bangladesh's main import partners are India, China, Kuwait, Singapore, Japan, and Hong Kong. The United States exports wheat, fertilizer, cotton, communications equipment, and medical supplies, among other goods to Bangladesh.\nIn April 2008, U.S. Ambassador James Moriarty reportedly articulated three key dimensions to American foreign policy toward Bangladesh. These are democracy, development, and preventing terrorists from gaining influence in the country. He also stated that credible and transparent elections will be extremely difficult to conduct under a state of emergency, and he believes the caretaker government is taking steps to hold elections by the end of the year and that progress has been made in the area of human rights. Moriarty is cited as saying that \"we are working closely with the government to strengthen the capacity of law enforcement agencies to fight terrorism and improve control of Bangladesh's borders and ports of entry.\"\nThe State Department budget has identified American aid priorities as focused on promoting \"peace and security by strengthening democratic governance and tackling the underlying social, demographic, and economic factors that make Bangladesh vulnerable to violent extremism\" through programs aimed at \"democracy and governance, health, education, disaster management, food security, and economic growth.\" The U.S. has provided about $5 billion in aid to Bangladesh since independence in 1971.",
"Bangladesh is among the poorest and most corrupt countries in the world. The largely agricultural economy suffers frequent and serious setbacks from cyclones and floods. Bangladesh is believed to have large reserves of natural gas.",
"Formerly known as East Pakistan, and before that as the East Bengal region of British India, Bangladesh gained its independence from Pakistan in 1971 following a civil war that included military intervention by India. Whereas the partition of British India into India and Pakistan was the result of religious division between Hindus and Muslims, the partition of Pakistan that created Bangladesh was more the result of ethnic division and the desire for self expression by Bengalis from East Pakistan. This double partition was a challenge to the rationale for Pakistan and points to the national component of Bengali identity rather than to the religious component that has played an increasingly important role in Bangladesh politics and identity in recent years.\nBangladeshi politics have been characterized by a bitter struggle between the Bangladesh National Party (BNP) and the Awami League (AL), and particularly between the two leaders of the respective parties, former Prime Minister Khaleda Zia (1991-1996, 2001-2006) and former Prime Minister Sheikh Hasina Wajed (1996-2001). Zia is the widow of former president and military strongman Ziaur Rahman, who was assassinated in 1981. Sheikh Hasina is the daughter of Bangladeshi independence leader and first prime minister Sheikh Mujibur Rahman, who was assassinated in 1975. When out of power, both the AL and the BNP have devoted their energies to parliamentary boycotts, demonstrations, and strikes in an effort to unseat the ruling party. The strikes often succeeded in immobilizing the government and disrupting economic activity. The President's powers are largely ceremonial but are expanded during the tenure of a caretaker government.\nThere has been much political violence in Bangladesh in recent years. The State Department issued a statement that \"strongly condemned\" the bomb attack that killed four, including former Awami League Finance Minister A.M.S. Kibria, and injured 70 at a political rally of the Awami League on January 27, 2005. The incident was described by the State Department as \"the latest in a series of often deadly attacks on prominent leaders of the political opposition and civil society.\" On August 21, 2004, grenades were hurled in an apparent political assassination attempt on opposition leader Sheikh Hasina at a political rally in Dhaka and killed 22. These two attacks, and widespread bombings on August 17, 2005, marked a rising tide of political violence in Bangladesh. The formerly ruling Awami League alleged that the Islamist Jamaat-e-Islami and Islamiya Okiyya Jote parties protected the radicals responsible for the violence from prosecution by the government.",
"Bangladesh is a low-lying riparian nation of much agricultural fertility with a subtropical monsoonal climate that is particularly prone to flooding. The country's alluvial plain is drained by five major river systems that flow into the Bay of Bengal. Some 40% of Bangladesh's total land area is flooded on average each year washing away 1% of arable land. It has a large delta at the confluence of the Ganges, Brahmaputra, and Meghana rivers and their tributaries. The southwest coastal jungle region is known as the Sundarbans and is home to some of the few remaining Bengal Tigers in the world. There are some hills in the Chittagong Hill Tract region in the southeast and near Sylhet in the northeast of the country. Bangladesh is subject to major cyclones that cause extensive flooding at the rate of some 16 floods per decade. The low lying aspect of Bangladesh's terrain makes it particularly vulnerable to sea level rise due to climate change.",
"",
"An understanding of the close political balance between the two main parties in the last election is necessary to understand the political maneuvering that has taken place in the lead-up to the elections that were scheduled for January 22, 2007. The January 2007 elections were postponed by the military-backed interim government ostensibly to forestall mounting political violence and remove corrupt officials from office. Bangladesh has a 300-seat unicameral national parliament known as the Jatiya Sangsad. During the last election, held on October 1, 2001, the Zia-led Bangladesh National Party and its alliance partners won 41% of votes. The BNP's alliance partners in that election included the Jamaat-e-Islami (JI), the Islamiya Okiya Jote (IOJ), and the Jatiya Party (JP) - Manzur Faction. They were opposed by the Hasina-led Awami League which won 40% of the vote. The number of seats won by party were as follows: BNP: 193, AL: 58, JI: 17, JP (Ershad Faction): 14, IOJ: 2, JP (Manzur Faction): 4, and others: 12.\nElections in Bangladesh are to be held every five years. Bangladesh has instituted a provision for the President to appoint an interim government in the immediate lead-up to polls in order to prevent the incumbent government from using the powers of office to unfair political advantage.",
"The intense and at times violent political rivalry between the BNP and the AL, and the presence of radical Islamist parties and groups, have defined Bangladesh's poor political environment in recent years. Other challenges facing Bangladesh include rampant corruption, dysfunctional parliamentary government, a weak judiciary, poor human rights, communal conflict, periodic environmental disasters, and poverty.\nPolitical turmoil and violence, the politicisation of the public administration and concerns that corruption obstructs private sector investment and public service delivery are key elements of what is widely deemed a 'crisis of governance'. These mount amid newer concerns about security and the perceived rise of Islamic militancy.\nThere is also increasing concern that the military may continue to play a political role in the future despite its pledge to return Bangladesh to democratic government.\nFormer U.S. Ambassador Patricia Butenis stated that Bangladeshis\nhave suffered because the political parties ... could not agree on the basic rules of the game ... the hard part is actually creating political parties that are genuinely democratic in practice and outlook, parties that focus on issues and the national interest instead of personalities....\nIn the lead-up to the scheduled January 2007 election, observers generally feared that political infighting, corruption, rising Islamist extremism, and political violence would further erode the Bangladesh government's ability to effectively or democratically govern. Bombings and other violence \"targeted opponents of Islamization: secular and leftist politicians, intellectuals and journalists, and religious minority groups.\"",
"There is concern that elections scheduled to take place by the end of 2008 may be delayed and that this could precipitate a further erosion of democracy and lead to further political instability in Bangladesh. The acting leader of the Awami League, Zillur Rahman, has stated that his party will not participate in the next general elections if they are held under a state of emergency. He added that elections would not be possible if AL leader Sheikh Hasina was not released from jail. Hasina has been held on charges of graft, abuse of power, and extortion in a building inside the parliament complex since July 2007. She is among 170 political figures being held on corruption charges by the interim government. Of the 170, 40 have thus far been convicted. Hasina, who is 60, was hospitalized in April due to high blood pressure. The AL has threatened street protests to achieve her release. Hasina has reportedly stated that she doubts that polls will be held by the end of the year.\nThe Bangladesh National Party has split into two factions. One remains loyal to Khaleda Zia while another has broken away. Zia unsuccessfully challenged the breakaway faction's right to hold discussions with the interim government's Election Commission. The 62-year-old Zia is also under detention on corruption charges in the parliamentary complex. As a result of a court ruling, the breakaway group led by Hafizuddin Ahmed has strengthened its claim to the leadership of the BNP. Hafizuddin is acting Secretary General of the pro-Saifur faction while Khandaker Delwar Hossain was appointed BNP Secretary General by Khaleda Zia. Saifur Rahman is viewed as a reformist leader in the AL. Delwar has stated that, \"No election would be held under the state of emergency and release of the two top leaders is a must for holding an acceptable election.\"\nThe recent dramatic rise in food costs in Bangladesh is contributing to the destabilized political situation there. Food prices reportedly have doubled in Bangladesh over the past year in part due to flooding associated with Cyclone Sidr and other storms in 2007. Concurrently, there is also a dramatic rise in regional and global food prices. The price of rice in some Asian markets has reportedly risen from $460 per metric ton to approximately $1,000 in less than two months. Bangladesh is now experiencing acute shortages of food, driving prices up. There has been some rioting in Dhaka as a result. The growing world food crisis is particularly acute in places like Bangladesh where more than half the people are landless laborers who are in no position to grow their own food. An estimated 60 million of Bangladesh's poor spend 40% of their income on food. The crisis is raising discontent with the interim government's state of emergency and is reportedly emboldening the parties to act. In the words of one laborer, \"our politicians were corrupt, but we had enough money to buy food.\"",
"Many initially welcomed the intervention by the military as it was thought to have prevented anticipated violence. While initially welcomed as a stabilizing influence, the military-backed interim government is increasingly viewed in Bangladesh, and abroad, as a potential threat to democratic government in Dhaka.",
"Corruption is widespread in Bangladesh. Berlin-based Transparency International ranked Bangladesh as among the world's most corrupt countries with a rank of 162 out of 179 countries. According to one source, Bangladesh took disciplinary action against a significant percentage of its police force in recent years for offenses ranging from corruption to dereliction of duty. Bangladesh's largest port, Chittagong, which handles 90% of all trade to Bangladesh, is reportedly hampered by widespread corruption and a rapid increase in piracy. U.S. Assistant Secretary of State for South and Central Asia Richard Boucher has stated \"the main obstacles [for Bangladesh] are corruption and poor governance.\"\nA key goal for the caretaker government has been to remove Hasina and Zia, and their associated political machines, from the political scene in Bangladesh. This \"minus two\" strategy has met with mixed success. The government was unsuccessful in its attempts to exile the two but has kept them under detention. In May 2008, the caretaker government announced the formation of a \"truth commission.\" Those appearing before the truth commission and giving details of fraud would not be tried for their crimes but would be banned from contesting elections for five years.",
"The power behind the caretaker government is thought by some to reside with the Directorate General of Forces Intelligence (DGFI). The military has sought to exert its influence from behind the scenes through the interim caretaker government. Army Chief General Moeen Ahmed has reiterated his pledge that the military has no political ambition and that it remains committed to the political roadmap to hold elections by the end of 2008. He added that the army wishes to see honest and competent leadership come to power. Many observers believe that the military wants to rid Bangladesh of past corrupt leaders and to then withdraw from politics in a way that would preserve the military's position in society and avoid retaliation by disaffected politicians. The extent to which there is uniform support for this objective within the armed forces is unclear. General Ahmed's term as Chief of Staff of the Armed Forces of Bangladesh has been extended to June 2009. There has been discussion of a proposed National Security Council (NSC). This has caused concern that the military's role in the affairs of state could be institutionalized through the creation of a NSC.\nThe difficulty that the military has had in dealing with economic difficulties, natural disasters, and the \"minus two\" strategy, has reportedly undermined the morale of some in the armed forces and led to internal tensions within the military. There is reportedly a split within the officer corps between senior and junior officers with the latter group believing that senior officers have been corrupted through their involvement in the political process. The perception that the military's reform agenda is faltering may lead to further division.\nIt is thought by some observers that General Ahmed is interested in becoming president. There is also speculation that he and others in the military favor reform that would strengthen the presidency and allow the president to sack an elected prime minister and dissolve parliament. Such a president, it is thought, would be able to use the proposed National Security Council to facilitate his or her role in government.\nIt has been argued that the military will be, at least in part, restrained by a desire not to jeopardize its lucrative involvement in international peacekeeping. Bangladesh first became involved in United Nations (U.N.) peacekeeping in 1988 and has since contributed some 60,000 soldiers to such efforts. Bangladesh had some 9,600 soldiers serving abroad in U.N. peace operations in 11 different countries in March 2008, making Bangladesh one of the largest sources of U.N. troops. It has been reported that the U.N. resident representative in Bangladesh has in the past pointed out that the military's actions in Bangladesh have implications for its involvement in U.N. peacekeeping contracts. Bangladeshi troops have a reputation for being disciplined and have fewer complaints lodged against them than U.N. troops from many other countries.",
"Bangladesh was originally founded on secular-socialist principles and firmly grounded in an ethnic Bengali nationalism as opposed to a Muslim religious identity. Some have attributed the rise of Islamist influence in Bangladesh to the failure of Bangladeshi political elites to effectively govern. This has been described as a crisis of hegemony of the rulers who have failed to provide moral leadership or effectively represent the interests of the masses. Many believe this has created political space for the Islamists to gain influence.\nThe May 2008 attacks in Jaipur, India suggests that Islamist extremists from Bangladesh remain a threat in the region. The May 13 bombings in Jaipur are thought to have killed 80 and wounded 200. It has been reported that Indian investigators believe that the Bangladeshi group Harkat ul-Jihad-al-Islami is responsible for the attacks. Such attacks also threaten to undermine inter-communal harmony in India as Indian Muslims increasingly fear reprisals for such attacks.\nThe caretaker government indicated its resolve to fight Islamist extremism by executing six leaders of the Islamist extremist group Jamaatul Mujahideen Bangladesh (JMB) in March 2007. The previous BNP government also demonstrated new-found resolve to fight terrorism before it stepped down, despite having Islamist political parties in its coalition. There is a fear among some observers that the current crisis confronting Bangladesh may create a political or security vacuum that radical Islamists may seek to fill.\nThe political context for the potential influence of Islamist extremism is demonstrated by the role that Islamist parties played as coalition partners in the previous BNP government. The BNP government of Khaleda Zia ruled with coalition support from the Jamaat Islami (JI) and Islami Okiya Jote (IOJ) political parties. These two political parties have an Islamist political agenda and are thought to have ties to radical extremists.\nBecause of the near even electoral balance between the BNP and the AL in the pre-2007 political environment, the Islamist political parties, JI and IOJ in particular, enjoyed political influence disproportionate to their support among the Bangladeshi electorate. The current split within the BNP appears to be creating a more multi-party system in which Islamist political parties may not enjoy the same degree of influence. Some analysts believe the parties' abilities to be political queen - makers may be less obvious with more potential political factions and parties. Islamists rioted in Dhaka in April 2008 to protest a draft law that would give equal inheritance rights to women. This triggered further protests in Chittagong on April 11 in which Islamist activists, many of them reportedly madrasa students, attacked a police station.",
"Several terrorist and militant extremist groups operate in Bangladesh, including Harkat ul Jihad al Islami (HuJi), Jagrata Muslim Janata Bangladesh (JMJB), and Jama'atul Mujahideen Bangladesh (JMB). The Bangladeshi opposition, analysts, and media observers have alleged that the presence in the former ruling Bangladesh National Party (BNP) Coalition government of two Islamist parties, the Islamiya Okiyya Jote (IOJ) and the Jamaat-e-Islami, had expanded Islamist influence in Bangladesh and created space within which terrorist and extremist groups could operate. Islami Okiyya Jote is reported to have ties to the radical Harkat-ul-Jihad-al-Islami (HuJI). Jamaat may also have had ties to Harkat ul-Jihad-i-Islami, which itself has ties to Al Qaeda. Harkat leader Fazlul Rahman signed an Osama bin Laden holy war declaration in 1998. JMB seeks the imposition of Sharia law for Bangladesh and is thought responsible for the widespread and coordinated August 2005 bombings. HuJI has been implicated in the January 2002 attack on the American Center in Calcutta, India. HuJI, or the Movement of Islamic Holy War, is on the U.S. State Department's list of \"other terrorist organizations\" and is thought to have links to Pakistani militant groups. It is also thought to have a cadre strength of several thousand. Awami League sources claimed that former fundamentalist leader Bangla Bhai had ties to Jamaat-e-Islami. AL leader Sheikh Hasina has accused the previous government of \"letting loose communal extremist forces.\" Some news sources have reported that international extremists have used Bangladeshi passports and that some have obtained them with the assistance of sympathetic officials at various Bangladesh Embassies under the previous government.\nTwo senior members of IOJ have reportedly been connected with the reemergence of Harkat ul Jihad (HuJi) under the name \"Conscious Islamic People.\" It has also been reported that the political wing of HuJi may seek to enter politics under the name Islami Gono Andolon. The former BNP government had denied the presence of significant terrorist elements in the country and reportedly had even expelled BNP lawmaker Abu Hena from the BNP for speaking out against extremist activities at a time when the official view was that such extremists did not exist.\nThe former BNP government eventually moved to suppress the Jamaat-ul-Mujahideen (JMB) and the Jagrata Muslim Janata Bangladesh (JMJB) terrorist groups operating in Bangladesh. The government sentenced to death JMB leaders Shaikh Abdur Rahman and Siddiq ul Islam, also known as \"Bangla Bhai,\" as well as five other JMB members, in May 2006. They were subsequently executed for their role in the bombings. The two Islamist militant leaders received their sentences for the murder of two judges in November of 2005. They are also believed to have been behind widespread bombings in Bangladesh and to have sought to replace the secular legal system with Sharia law through such attacks. The government also reportedly has arrested some 900 lower-level militants, seven known senior leaders, 4 out of 11 commanders, and some 20 district leaders on terrorism charges. Despite this, the then leader of the opposition, Sheikh Hassina, stated \"militants are partners of the government ... the government catches a few militants whenever foreign guests visit Bangladesh.\" She has also alleged that Jamaat has 15,000 guerillas and its own training camps. Hassina has also stated that the arrest of JMB operatives is \"only the tip of the iceberg.\"\nIt appears that the former BNP government shifted its position on the necessity of acknowledging and addressing Islamist militants in August of 2005. In response, JMB leader Rahman reportedly has stated, \"masks will fall and you [the authorities] will be exposed.\" Such an allegation is consistent with allegations by the AL opposition, which has accused the government, or more likely elements within the government, of allowing Islamist militancy to rise in Bangladesh.\nSelig Harrison, a prominent South Asia Analyst, noted in early August 2006 that \"a growing Islamic fundamentalist movement linked to al-Qaeda and Pakistani intelligence agencies is steadily converting the strategically located nation of Bangladesh into a new regional hub for terrorist operations that reach into India and Southeast Asia.\" Harrison pointed out that former Prime Minister Khaleda Zia's Bangladesh National Party's coalition alliance with the Jamaat-e-Islami Party of Bangladesh led to a \"Faustian bargain\" that brought Jamaat officials into the government. These officials, he argued, in turn allowed Taliban-styled squads to operate with impunity. Jamaat's entry into the former BNP government also reportedly led to fundamentalist control over large parts of the Bangladesh economy, Islamist madrassa schools acting as fronts for terrorist activity, fundamentalist inroads being made in the armed forces, and rigging (by manipulating voter lists) of the elections that were originally scheduled for January 2007.\nThe State Department continues to view the government of Bangladesh as working to thwart terrorist activities. In responding to a question from an Indian journalist who asserted that Bangladesh \"is not only aiding and abetting the separatist Indian guerilla forces, but is also ... supporting and helping the Islamic forces to fight against India,\" Assistant Secretary of State Boucher stated the following:\nWe see that Bangladesh is a very populated country with a developing security service, a developing ability to fight terrorism, with some successes already that they can show in terms of arresting the leaders of the major terrorist group that has been operating in Bangladesh, but with a lot of work left to do, in terms of getting the whole network and getting, stopping other people who might be operating there.\nOn July 11, 2006, a series of coordinated bomb blasts killed approximately 200 persons while wounding some 500 others on commuter trains in Bombay (Mumbai), India. Indian authorities subsequently arrested several individuals reportedly with ties to terrorist groups in Bangladesh and Nepal who were \"directly or indirectly\" linked to Pakistan. Indian intelligence officials have portrayed the bombers as being backed by Pakistan-supported terrorist groups. Pakistan has denied these allegations. Allegations had been made that the explosives had come from Bangladesh. In response, Bangladesh authorities stated that the Jamaat ul-Mujahideen (JMB) attacks in Bangladesh on August 17, 2005, which killed 30 in a series of nationwide blasts, were of Indian origin. Six of the eight arrested in India in connection with the bombings are thought to have received training from Lashkar-e-Toiba at terrorist camps in Pakistan. Lashkar is a Pakistan-based, Al Queda-allied terrorist group.\nAlthough most of the terrorism focus in India has been on Pakistan, Bharatiya Janata Party (BJP) President Rajnath Singh has called on the Indian government to pressure Bangladesh to dismantle terrorist training centers in Bangladesh. The Hindu nationalist BJP is the leading opposition party in India. Singh also stated that Bangladesh had become \"a centre of Islamic fundamentalist forces.\" The anti-terrorism squad investigating the Bombay blasts also interrogated a number of individuals in a village in Tripura, India, that borders Bangladesh. A bombing in Varanasi, India, in March 2006 also reportedly had links to HuJi in Bangladesh.\nArmy forces captured Habibur Rahman Bulbuli in June 2007. Bulbuli was leader of the Khelafat Majlish that is a component of the Islamiya Okiya Jote, which was a junior partner in the former BNP government of Khaleda Zia. Bulbuli has claimed to be a veteran of fighting in Afghanistan and a follower of Osama bin Laden. In June 2007, Bangladesh police charged Mufti Hannan and three accomplices, who are all now in prison, with trying to assassinate the British High Commissioner Anwar Choudhury in 2004. Choudhury, who is of Bangladeshi origin, was wounded in a grenade attack as were some 50 others. Three were also killed in the attack which occurred at a shrine near Choudhury's ancestral home. The Rapid Action Battalion (RAB) reportedly captured four suspected members of Jamaat-ul-Mujahideen, as well as grenades and explosives, near Kishoregani northwest of Dhaka on July 18, 2007.",
"Bangladesh is one of the poorest countries in Asia, with almost half the population living on a dollar a day or less. Population growth, natural disasters, and political instability have all placed constraints on the economic development of the country. Bangladesh is believed to have significant onshore and offshore natural gas deposits that could bring future prosperity to the country.\nThe most immediate economic challenge for the interim government is to gain control over consumer price inflation, as many Bangladeshis are finding food too expensive. One survey found that the cost of food staples grew 50% in 2007 and food prices have continued to rise in 2008. Speculators are thought to be hoarding rice and the government has moved to try to restrict banks from loaning money to hoarders of rice. Cyclone Sidr, which killed an estimated 3,400 and destroyed an estimated $291 million worth of the winter rice crop, followed heavy flooding in July and August 2007 which also had a negative impact on the harvest. As a result, Bangladesh had a 3.1 million ton shortfall to meet domestic demand for the year ending in June 2008. Such discontent could make an already volatile political situation even more difficult. Another key challenge is underemployment which is estimated to be 24.5% of the population.\nBangladesh's economic growth is expected to slow. Although actual GNP growth was 6.6% in 2006, Bangladesh's GNP growth is estimated to be 6.5% in 2007 and is projected to slow to 5.7% in 2008. Weakened external demand for textiles and labor problems are contributing causes for this slowdown, though there are signs that textiles are already recovering. The garment sector in Bangladesh accounts for 80% of exports and 40% of industrial jobs. Key export markets include the United States (25.2%), Germany (12.7%), the United Kingdom (9.9%), France (5.5%), and Italy (3.9)%. Private consumption in Bangladesh now accounts for some 65% of GDP.\nBangladesh is thought to have significant reserves of natural gas, although estimates of its reserves have varied over the years. It was reported in Oil and Gas Journal in 2006 that Bangladesh had 5 trillion cubic feet (Tcf) of proven gas reserves. In 2004 , Bangladesh's Ministry of Finance estimated that Bangladesh had some 20.5 Tcf of recoverable reserves. In 2001, the U.S. Geological Survey estimated that Bangladesh had over 32 Tcf of undiscovered reserves. Natural gas accounts for 80% of Bangladesh's commercial energy consumption. Though there have been negotiations to build a pipeline to export gas to India these have not come to fruition. Instead, the Bangladesh government appears to have focused on meeting Bangladesh's current and future energy needs. As a result, India has explored building a pipeline around the north of Bangladesh to access gas in neighboring Burma. It is estimated that Burma made $2.7 billion from gas exports in 2007.",
"",
"Approximately 88% of Bangladesh's population is Muslim. Approximately 10% of the population is Hindu, while the remainder is Christian and Buddhist. Ethnic and religious minority groups overlap in areas such as the Chittagong Hill Tracts area where most Buddhists and non-Bengali people are found. While there is relative peace between religious groups at present, Bangladesh's struggle for independence in 1971 led to much inter-communal strife and death with some estimates listing the number killed at over a million. A further eight to ten million refugees fled into West Bengal, India.\nThough the state religion of Bangladesh is Islam, the nation's Constitution provides for the right to practice the religion of one's choosing. According to the State Department's International Religious Freedom Report 2007 , while the government publically has supported freedom of religion \"... attacks on religious and ethnic minorities continued to be a problem ... Religion exerted a significant influence on politics, and the government was sensitive to the Islamic consciousness of its political allies and the majority of its citizens.\" The report went on to add that public officials and the police were \"sometimes slow to assist religious minority victims of harassment and violence ... Hindu, Christian, and Buddhist minorities experienced discrimination and sometimes violence by the Muslim majority.\" There were also continuing calls for the Ahmadi sect to be declared non-Muslim.",
"The ongoing state of emergency and postponement of elections are widely viewed as undermining political rights in Bangladesh. Many rights, such as the freedom of expression, freedom of the press, freedom of association, and the right to bail, were suspended. The State Department concluded that, \"the anti-corruption drive initiated by the government, while greeted with popular support, gave rise to concerns about due process.\" It also observed that \"there was a significant drop in the number of extrajudicial killings by security forces,\" though members of the security forces continued to act \"with impunity and committed acts of physical and psychological torture.\""
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"question": [
"How did Bangladesh gain its independence?",
"What has characterized Bangladeshi politics since independence?",
"What is the nature of the two dominant political parties?",
"How do parties attempt to regain control when not in power?",
"What threatens Bangladesh's democratic nature?",
"What is the current political situation in Bangladesh?",
"What political reforms have Ahmed's administration pursued?",
"What are the implications of this caretaker government?",
"What is the role of political violence in Bangladesh?",
"What was the effect of the bomb attack in 2005?",
"What was the outcome of the assassination attempt on Sheikh Hasina in 2004?",
"What do the 2005 and 2004 attacks have in common?",
"What U.S. policy toward Bangladesh emphasize?",
"How does the U.S. view Bangladesh?",
"Why are some analysts concerned about Bangladesh?"
],
"summary": [
"Bangladesh (the former East Pakistan) gained its independence in 1971, following India's intervention in a rebellion against West Pakistan (currently called Pakistan).",
"In the years since independence, Bangladesh has established a reputation as a largely moderate and democratic majority Muslim country.",
"The Bangladesh National Party (BNP), which led the ruling coalition of the previous government, and the leading opposition party, the Awami League (AL), traditionally have dominated Bangladeshi politics. The BNP has been led by former Prime Minister Khaleda Zia; the AL has been led by Sheikh Hasina.",
"When in opposition, both parties have sought to regain control of the government through demonstrations, labor strikes, and transport blockades.",
"This status has been under threat from a combination of political violence, weak governance, poverty, corruption, and Islamist militancy.",
"Bangladesh is now ruled by a military-backed caretaker government led by Fakhruddin Ahmed that appears unlikely to relinquish power until at least the end of 2008.",
"It is pursuing an anti-corruption drive that has challenged the usual political elites. It is also seeking to put in place voter reforms, including issuing identity cards, and has moved against militant Islamists.",
"Although there is some concern that the new military-backed caretaker government may be reluctant to relinquish power, it has presented a roadmap for new elections and a return to democracy in Bangladesh.",
"Political violence has become part of the political landscape in Bangladesh under previous governments.",
"A.M.S. Kibria, a finance minister in a previous Awami League government, and four others were killed in a bomb attack that also injured 70 at a political rally of the Awami League in early 2005.",
"In mid 2004, an apparent political assassination attempt on opposition leader Sheikh Hasina at a political rally in Dhaka killed 22.",
"These two attacks, and widespread bombings in mid 2005 that claimed 26 lives and injured dozens others, are the most notable incidents among many in recent years.",
"U.S. policy toward Bangladesh emphasizes support for political stability and democracy, development, and human rights.",
"The United States has long-standing supportive relations with Bangladesh and views Bangladesh as a moderate voice in the Islamic world.",
"Some analysts are concerned that Islamist parties and groups have gained influence through the political process and that this has created space for militant activities inside the country. Some allege that the presence in the former ruling Bangladesh National Party coalition government of two Islamist parties, the Islamiya Okiyya Jote (IOJ) and the Jamaat-e-Islami, contributed to the expansion of Islamist influence in Bangladesh."
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GAO_GAO-14-111
|
{
"title": [
"Background",
"Investigating and Acting on Potential Fraud",
"ZPIC Contracts by Area of Work and Award Amount",
"CMS Paid About $108 Million to ZPICs during Calendar Year 2012, Primarily for Fee-for-Service Work, which ZPICs Mostly Spent on Fraud Case Development",
"ZPICs Reported More than $250 Million in Savings and Other Actions, Primarily from Reactive Sources, but CMS Lacks Information on Whether More Could Be Saved",
"ZPICs Reported More than $250 Million in Savings through Administrative Actions, but CMS Lacks Information to Track the Timeliness of These Actions",
"ZPICs Identified Potential Fraud Primarily through Reactive Sources",
"CMS Generally Gave ZPICs Good Reviews, but Does Not Link ZPIC Performance to Agency Program Integrity Measures",
"Conclusions",
"Recommendations",
"Agency Comments",
"Appendix I: Scope and Methodology",
"Appendix II: ZPIC Activities and Results, 2012",
"Appendix III: GAO Contact and Staff Acknowledgements",
"GAO Contact",
"Staff Acknowledgements"
],
"paragraphs": [
"To address Medicare’s vulnerability to fraud, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) established the Medicare Integrity Program (MIP). In particular, HIPAA required the Secretary of HHS to enter into contracts to promote the integrity of the Medicare program. In exercising its authority to identify and combat improper payments, CMS created 18 Program Safeguard Contractors (PSC) to identify and investigate potential fraud in specific parts of Medicare, such as Part A, in particular states or regions.\nIn 2008, as part of the implementation of broader agency contracting reform, CMS began replacing PSCs with ZPICs, reducing the total number of contractors and giving additional responsibilities to ZPICs to investigate potential fraud across the Medicare fee-for-service program. In September 2008, CMS awarded the first two ZPIC contracts for Zones 4 and 7. As of September 2013, all but one of the ZPICs— Zone 6—was in operation. PSCs continue to operate in Zone 6 because of protest-related delays with respect to the Zone 6 ZPIC contract. The term of each ZPIC contract is generally for a 1-year base period followed by 4 option years, enabling CMS to extend each contract through 5 years of performance. (See table 1 for contract performance timelines and fig. 1 for a map of the seven ZPIC zones.)\nIn 2010, CMS established the Center for Program Integrity (CPI), which oversees the agency’s program integrity efforts, including ZPICs. CPI’s stated mission is to ensure that correct payments are made to legitimate providers for covered, appropriate, and reasonable services for eligible beneficiaries. CPI has undertaken an effort to try to move beyond the “pay and chase” approach—which focused on the recovery of funds lost due to payments of fraudulent claims—to focusing on fraud prevention. To enhance these efforts, the Small Business Jobs Act of 2010 appropriated funds for and required CMS to implement predictive analytics technologies, which are automated systems and tools that can help identify patterns of potentially fraudulent claims before they are paid. In turn, CMS developed the Fraud Prevention System (FPS), an electronic system in which Medicare claims data are compared against models of potentially fraudulent behavior to identify and prioritize for investigation providers with aberrant billing patterns. As part of implementing FPS, CPI modified ZPICs’ work. They are to continue to investigate and quickly initiate actions to protect Medicare, but are also charged with investigating certain referrals from FPS.",
"To detect and investigate potential fraud within each zone, ZPICs develop leads, investigate them, and initiate appropriate actions against suspect providers, suppliers, and others. ZPICs do this with teams of investigators, data analysts, and medical reviewers. Investigators perform a range of actions to examine potential fraud, including conducting provider audits, making site visits to suspect providers’ offices, and interviewing Medicare beneficiaries. Data analysts, including statisticians, examine Medicare claims and other data to support investigations and search for potential fraud and new schemes. Medical reviewers, primarily nurses, provide clinical knowledge to support the work of investigators and data analysts.\nZPICs identify potential targets for fraud investigations using three categories of sources: 1. Reactive sources. Reactive sources are notifications of potential fraud submitted to ZPICs, which may result in a ZPIC conducting an investigation. A number of entities refer potential fraud to ZPICs for investigation. These entities include Medicare Administrative Contractors (MAC), which examine their contacts with beneficiaries for indications of potential fraud and may forward the contacts to ZPICs for additional scrutiny. In addition, HHS OIG operates a fraud hotline and may refer calls from it to the MACs for initial screening and then to the ZPICs for further investigation. Other sources include investigations ZPICs receive directly from CMS. 2. Proactive sources. ZPICs are required to maintain at least 3 years of Medicare claims data for analysts to examine for potential fraud using a variety of analytic tools and methods. For example, analysts examining these data may identify providers that, compared with their peers, have aberrant billing patterns, which can indicate potentially fraudulent behavior. If analysts identify such patterns, those findings may result in a ZPIC investigation. 3. FPS. FPS identifies providers for ZPICs to investigate, with the goal of identifying aberrant billing patterns early so that ZPICs can investigate suspect providers before they generate large amounts of potentially fraudulent claims.\nZPICs prioritize their investigations according to CMS guidance, which states that ZPICs should give priority to investigations with the greatest program impact and/or urgency. CMS’s Program Integrity Manual defines such investigations as those involving patient abuse or harm, multistate fraud, high dollar amounts of potential overpayments, likely increase in the amount of fraud or enlarged pattern of fraud, and complaints made by Medicare supplemental insurers. In addition, with the implementation of FPS in July 2011, CMS directed the ZPICs to investigate certain high-risk leads from that system.\nAs part of their investigations, ZPICs initiate administrative actions against Medicare providers or suppliers, coordinating with CMS and MACs to carry out those actions, which may result in Medicare savings. (See table 2 for the administrative actions ZPICs may initiate as part of their investigations.) For example, ZPICs may initiate payment suspensions that allow CMS to stop payment on suspect claims and prevent the payment of future claims until an investigation is resolved. In addition, a ZPIC may recommend to CMS that the agency revoke a provider’s Medicare billing privileges and will coordinate with a MAC to implement that action following CMS approval. In addition to administrative actions, ZPICs may forward vulnerabilities identified during an investigation to CMS for consideration as possible local or national prepayment edits.\nIn addition to administrative actions, if a ZPIC investigation uncovers suspected instances of fraud, the ZPIC must refer the investigation to HHS OIG for further examination and, if HHS OIG declines to investigate, the ZPIC may refer the issue to the FBI or any other interested law enforcement entity, such as a U.S. Attorney’s Office. A ZPIC investigation that is referred to and accepted by law enforcement for further exploration and potential prosecution is then called a case. As long as law enforcement entities have not closed a case, it is considered open by both law enforcement and ZPICs.\nCMS also requires ZPICs to support HHS OIG, the Department of Justice (DOJ), and other law enforcement entities with their Medicare fraud investigations. This support can be for these entities’ own, independently initiated cases, or for those that ZPICs initiated and then referred to law enforcement. ZPICs provide support on ZPIC-initiated and non-ZPIC- initiated cases by responding to law enforcement requests for information. These requests may be for data analysis; provider enrollment records, which ZPICs obtain from MACs; medical review; or other investigative support.",
"ZPIC contracts cover three areas of work: 1. Fee-for-service program integrity work. ZPICs are to identify and investigate potential fraud in Medicare fee-for-service. The contracts for this work outline four categories of investigations: Part A, Part B, durable medical equipment (DME), and home health and hospice. Although DME providers and home health and hospice suppliers provide services covered under Medicare Parts A and B, the ZPIC contracts identify them separately and ZPICs track their fee-for- service program integrity work based on these four categories. 2. Medicare-Medicaid Data Match Program (Medi-Medi). Medi-Medi is a joint effort between CMS and states to identify providers with aberrant Medicare and Medicaid billing patterns through analyses of claims for individuals with both Medicare and Medicaid coverage. States participate voluntarily and ZPIC Medi-Medi work and funding is dependent on the number of states, if any, actively participating in each zone. 3. Special projects. CMS may also fund ZPICs for special zone- or fraud- specific projects. Special projects can vary in duration and can be as short as several months or run for multiple years.\nThe total award amount for the six operating ZPIC contracts through all option years is more than $600 million. Of that amount, $411 million is for fee-for-service program integrity work, $169 million is for Medi-Medi, and $62 million is for special zone- and fraud-specific projects over the life of the contracts. (See fig. 2.) The contract award amounts for the six operating ZPIC contracts (inclusive of option years) range from $67 million to $182 million, which reflects variations between the zones in terms of their size, exposure to fraud risk, and receipt of special projects. For example, Zone 7 covers a geographically small area comprising one state and one territory, but is an area CMS considers to be at high risk for fraud. In comparison, Zone 2 is a geographically large but predominantly rural area comprising 14 states and including areas that may be at a lower risk of fraud. In addition, although not all ZPICs currently receive funding for a special project, all six operating ZPICs have at some time received such funding. For example, one ZPIC was awarded almost $50 million for an ongoing state-specific fraud hotline and another received almost $3 million for a completed project specifically examining potential fraud among home health providers.\nCMS primarily oversees ZPICs through the coordinated efforts of CPI and the Office of Acquisition and Grants Management (OAGM). The ZPIC Contracting Officer in OAGM is responsible for ensuring effective contracting, and the Contracting Officer’s Representatives (COR) are in CPI. Each ZPIC is assigned a different COR, who helps oversee ZPIC contractor compliance through ongoing reviews. Among other things, the CORs use CMS ARTS to review their ZPICs’ monthly invoices and aggregate workload, such as the total number of new investigations, administrative actions, and dollar amounts recouped in a month.\nEach ZPIC contract includes award fee provisions, which give contractors the opportunity to earn all or some of the award fee allowed under their contracts, depending on their level of performance. CMS evaluates each ZPIC’s performance annually and determines how much of its award fees it will receive. CMS first evaluates whether a ZPIC is eligible for an award fee. For these reviews, CMS instructs its CORs on how to assess specific areas of their ZPICs’ performance by interviewing ZPIC and other staff; reviewing a sample of open and closed investigations and cases, as well as other documents; reviewing data in CMS ARTS, FID, and other systems; and making observations during ZPIC site visits. If in this review CMS finds that a ZPIC meets certain performance thresholds, the CORs move to the second step: using their annual review findings to recommend the amount of award fees a ZPIC should receive. The ZPICs’ contracts specify through Award Fee Plans the criteria against which CMS will measure ZPICs’ performance to earn their fees. These criteria fall into two overarching areas: (1) quality of service measures that apply to all ZPICs, worth 60 percent of the award fee, and (2) ZPIC-specific plans drafted in the prior year by each ZPIC and approved by CMS on how the ZPIC will improve its administrative actions—Award Fee Administrative Action Plans—worth 40 percent. ZPICs can receive all or part of their proposed award fees based on how well they perform in each of the elements within the two areas.",
"CMS paid the six operating ZPICs about $108 million in calendar year 2012, including about $1.3 million in award fees for each ZPIC’s most recent contract year evaluation. CMS’s payments were primarily to reimburse contractors for fee-for-service work, comprising $77 million of the $108 million paid.\nZPICs reported spending most of their fee-for-service funding in 2012 on fraud case development, primarily for investigative staff. (See fig. 3 for the breakdown of ZPIC fee-for-service spending.) According to CMS officials, fraud case development costs are those related to identifying and investigating potential Medicare fraud. These costs include those associated with developing proactive sources, and addressing potential fraud identified by FPS. Personnel accounts for most of these costs, with ZPICs reporting that half their fraud case development staff are investigators and the other half are split between medical reviewers and data analysts. ZPIC officials told us that identifying and investigating potential Medicare fraud can be labor intensive, which is why the largest direct cost was for personnel. In 2012, ZPICs reported that their investigations included 3,600 beneficiary interviews, 777 onsite inspections, prepayment reviews of 190,000 suspended claims and postpayment reviews of 32,000 paid claims. Additionally, ZPICs added more than 1,100 providers to prepayment review and almost 300 providers to postpayment review.",
"In calendar year 2012, ZPICs reported more than $250 million in savings to Medicare by stopping payment on suspect claims and recouping money from overpayments. However, it is unclear if ZPICs could save more money by taking swifter actions since CMS lacks information on the speed of those actions. ZPICs took these actions based primarily on reactive sources, such as tips and complaints.",
"Example of investigations resulting in a revocation: One ZPIC described that investigations involving “false fronts”—meaning there is no provider at the designated address—allow the ZPIC to quickly initiate revocations of those providers’ billing privileges.\nZPICs reported initiating administrative actions that led to more than $250 million in savings or money recovered to Medicare in calendar year 2012 (see table 3). These savings represent nearly $100 million in claims flagged for review and then denied before payment; almost $100 million in auto-denial edits for suspect providers, suppliers, and beneficiaries; and almost $60 million recouped by MACs at the request of ZPICs. In addition, ZPICs placed more than $14 million in suspense accounts while the claims for that money were reviewed. ZPICs also reported taking actions that could result in savings that may not be easily quantifiable. For example, in 2012 ZPICs reported implementing more than 160 revocations and deactivations. Although these actions represent no direct CMS has reported that revocations are the most effective fraud savings,prevention tool because they prevent providers from submitting additional potentially fraudulent claims. (See app. II for more information on ZPICs’ actions, including by provider type.)\nZPICs coordinate with law enforcement entities on ZPIC-initiated and other investigations, resulting in additional savings to Medicare and other results. In 2012, ZPICs reported that law enforcement entities accepted more than 130 new cases from them, with HHS OIG as the primary entity accepting the cases, followed by the FBI. In addition, ZPICs reported completing almost 1,800 requests for information for cases initiated by law enforcement and almost 700 for cases that had been initiated by ZPICs, primarily for data analysis. ZPICs also reported that, as a result of their cases being accepted and prosecuted by law enforcement, convicted providers were ordered to pay almost $80 million in court- determined fines, settlements, and/or restitutions. Cases can also result in prison sentences and other actions, though CMS does not consistently track those outcomes. ZPICs are to track information on the results of their cases in FID, but the system contains few outcomes. CMS officials said that they are aware of this issue and have taken steps to both improve ZPICs’ use of FID and integrate the system with CMS ARTS and other systems to improve the data in FID. As of August 2013, CMS officials reported that the agency was testing the integration of the systems and expected the integration to be completed by late 2013.\nAccording to CMS, ZPICs are to take immediate action to protect Medicare funds, but CMS may be missing opportunities for additional savings to Medicare because the agency lacks information on the timeliness of certain ZPIC actions. ZPIC officials reported taking actions and preventing potentially fraudulent payments before they were made, in line with CMS fraud strategies, and CMS ARTS data show ZPICs implementing some aspects of these strategies. For example, ZPIC officials reported focusing on prepayment reviews of claims—preventing potentially fraudulent payments—and 2012 CMS ARTS data showed that, of the providers whom ZPICs reviewed in 2012, almost five times as many had their claims reviewed on a prepayment basis rather than a postpayment basis. However, CMS does not track information on the swiftness of these actions, such as the length of time between a ZPIC’s receipt of a complaint about a suspect provider and the ZPIC’s visit to that provider, or between identifying a potentially fraudulent provider and initiating an administrative action. Federal internal control standards state that agencies’ management should have information on performance relative to established objectives so that actual performance can be continually compared against goals and differences can be analyzed. Because CMS does not have information on ZPICs’ timeliness for these types of activities, the agency cannot benchmark any changes in timeliness or measure the effectiveness of its strategies, such as whether ZPICs are limiting unnecessary losses to Medicare from suspect providers continuing to receive potentially fraudulent Medicare payments while awaiting investigative or administrative actions.",
"Reactive sources—primarily complaints—were the major source of new ZPIC investigations in 2012, accounting for almost 90 percent of the almost 5,000 new investigations that year. (See fig. 4 for the sources of ZPIC investigations.) In 2012, ZPICs received almost 5,000 complaints, 45 percent of which were from MACs and over 50 percent from other sources, primarily the HHS OIG hotline, as reported by ZPIC officials. Proactive projects and FPS each accounted for less than 10 percent of investigations. Examples of proactive projects include analyzing data to identify spikes—large, rapid increases—in providers’ billing patterns; aberrant providers, such as those with unusual billing patterns; and schemes related to stolen beneficiary identities. ZPIC officials reported that their proactive data analysis projects are valuable because they find zone-specific fraud or new fraud schemes that reactive sources or FPS may not identify. For example, one ZPIC that covers multiple frontier states conducted a proactive project related to critical access hospitals, 40 percent of which are in that ZPIC’s geographic zone. ZPIC officials reported that as a result of this project, they identified overpayments to several hospitals that had opened new psychiatric units, as well as opportunities for education to improve patient care. (See app. II for more information on the sources of ZPIC investigations.)\nAlthough ZPIC officials previously reported issues with the quality of leads from FPS, as well as a decline in the number of proactive projects as a result of increased work to address FPS leads, officials have since reported improvements in FPS and their ability to address leads from the system. For example, officials from one ZPIC reported that the leads from FPS have improved and that the zone developed a new process for investigating those leads, thereby improving results. CPI officials reported that they will continue to direct ZPICs to investigate leads from proactive and reactive sources, as well as FPS, noting that the most successful ZPICs are those that can effectively address leads from all three categories.",
"Based on CMS’s annual reviews, five of the six operating ZPICs were eligible for some portion of their contracts’ available award fees, and ZPICs received almost 70 percent of all fees for their most recent periods of performance.the annual reviews—elements that measure aspects of quality of service, cost control, business relations, and timeliness of certain activities— ranged from satisfactory to exceptional, meeting the award fee eligibility requirement of at least a satisfactory rating in all four of these elements. CMS awarded the five eligible ZPICs about two-thirds of the available award fees—$1.3 million out of $1.9 million—in the ZPICs’ most recent contract years based on ZPIC performance both on quality-of-service measures in the annual reviews and achievement of their Award Fee Administrative Action Plan goals. CMS officials reported that they assigned the majority of available award fee amounts—60 percent—to the quality-of-service measures in the annual evaluations because quality is the most important element of ZPICs’ work. CMS apportions the 60 percent of award fee amounts for quality of service across multiple The five ZPICs’ ratings for the elements considered in assessment criteria. Table 4 lists the quality-of-service measures for which ZPICs could earn award fees. Among the highest-value elements are how well ZPICs prioritize and document investigations, conduct medical reviews, and analyze data. ZPICs’ Award Fee Administrative Action Plan goals varied by ZPIC, and included goals such as developing a project to identify and prevent phantom provider schemes and improving the timeliness of initiating and implementing payment suspensions. CMS officials said that this portion of the award fee is intended to encourage ZPICs to develop more innovative ways to take administrative actions.\nCMS follows some best practices for its oversight of ZPICs, but does not clearly link ZPIC performance to agency performance measures and goals. The award fee evaluations allow CMS to assess key elements of ZPICs’ work, which follows federal best practices. Federal standards state that performance measures may address the type or level of program activities conducted (process), the direct products and services delivered by a program (outputs), or the results of those products and services (outcomes). CMS’s measures evaluate ZPICs’ processes and outputs, but not their outcomes. Moreover, these performance measures do not connect ZPIC work to agency performance measures that are linked to its goals, which is another best practice. One way that agencies examine the effectiveness of their programs is by measuring performance as required by the Government Performance and Results Act of 1993 (GPRA), as amended by the GPRA Modernization Act of 2010. One of CMS’s GPRA goals is to fight fraud and work to eliminate improper payments. Within that goal are two Medicare fee-for-service performance measures for determining progress toward that goal, and CMS officials reported that ZPICs are the primary actors for one of the measures: increasing the percentage of providers who are identified as high risk against whom CMS takes administrative actions. CMS’s fiscal year 2014 target for this performance measure is to increase the percentage of administrative actions taken for these high-risk providers from 27 percent to 36 percent. Federal standards state that entities should link performance measurements to goals and objectives, and previous GAO work found that leading organizations try to link the goals and performance measures for each organizational level to successive levels and ultimately to the organization’s strategic goals.none of the ZPICs’ performance measures link to the agency’s measures of increasing the percentage of administrative actions taken against high- risk providers, or to the other Medicare fee-for-service program integrity performance measure of reducing improper payments. Some ZPICs had goals in their Award Fee Administrative Action Plans related to the agency’s performance measures—for example, one ZPIC set a goal of increasing the value of its referrals of overpayments, which could reduce improper payments—but these were zone-specific and do not allow CMS to evaluate the overall impact of ZPICs on agency measures and, ultimately, goals. CMS officials told us in April 2013 that they are revising the ZPIC Award Fee Plans, but based on a draft of the revisions and discussions with CMS officials, the revised plans will continue to lack measures related to outcomes and will not tie performance to agency program integrity measures or goals. difficult and setting targets can be problematic, CMS could explicitly link ZPICs’ work to the agency’s progress toward meeting its performance measures and goals. Specifically, CMS officials reported that they are using FPS to identify and track high-risk providers for the performance measure of increasing the number of administrative actions taken against those providers. Although ZPICs are the primary users of FPS and have primary responsibility for initiating administrative actions, CMS does not link ZPICs’ use of FPS to that measure, hindering the agency’s ability to effectively oversee its progress toward meeting its goal of fighting fraud and working to eliminate improper payments.",
"Given the vulnerability of the Medicare program to fraud and the lack of reliable estimates of the extent of fraud in the program, determining how well CMS is carrying out its fraud prevention strategy is a vital, if challenging, task. ZPICs, which are central to that strategy, reported that their efforts have yielded positive results, such as savings greater than their contract costs and multiple other actions that helped protect Medicare from potentially fraudulent providers, such as referring suspect providers to law enforcement. Yet little is known about how expeditiously ZPICs take action to save Medicare funds—an important consideration given that the longer a fraud scheme operates, the greater the potential financial losses. As a result, CMS would benefit from enhancing its collection and evaluation of information on the timeliness of ZPICs’ actions, including information on whether new tools or strategies have increased the speed with which ZPICs investigate potentially fraudulent providers or initiate administrative actions. In addition, as CMS attempts to achieve its agencywide program integrity goal of fighting fraud and eliminating improper payments in the Medicare program, it would benefit from knowing how ZPICs are contributing to efforts to achieve this goal. By linking the evaluation of ZPICs’ work to the agency’s program integrity performance measures—in particular the performance measure focused on administrative actions, which are a significant portion of ZPICs’ work— CMS would have greater assurance that its ZPIC activities are appropriately supporting CMS fraud prevention efforts.",
"To help ensure that CMS’s fraud prevention activities are effective and that CMS is comprehensively assessing ZPIC performance, the Administrator of CMS should take the following two actions:\nCollect and evaluate information on the timeliness of ZPICs’ investigative and administrative actions, such as how soon investigations are initiated after ZPICs identify potential fraud and how swiftly ZPICs initiate administrative actions after identifying potentially fraudulent providers.\nDevelop ZPIC performance measures that explicitly link their work to the agency’s Medicare fee-for-service program integrity performance measures and targets for its GPRA goal of fighting fraud and working to eliminate improper payments.",
"We requested comments from HHS, but none were provided.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretary of Health and Human Services, the Acting Administrator of CMS, appropriate congressional committees, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or at [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.",
"To determine Zone Program Integrity Contractors’ (ZPIC) contract costs and how ZPICs use those funds, we examined data from CMS’s Analysis, Reporting, and Tracking System (ARTS), an online system ZPICs use to submit invoices and report workload statistics and which CMS uses to track and analyze ZPIC workload, performance, and production. Specifically, we examined aggregated ZPIC invoices and workload statistics that specified how ZPICs allocate their funds, and interviewed ZPIC officials to confirm these data. We also reviewed the task orders outlining the scope of each zone’s work and obtained data from CMS on ZPIC contract amounts.\nTo describe the results of ZPIC Medicare fee-for-service investigations, we examined data from CMS ARTS and the Fraud Investigation Database (FID), a secure system that contains details related to Medicare fraud and abuse investigations. We analyzed calendar year 2012 data for the six operating ZPICs on the sources of their investigations, the numbers of administrative actions taken, and dollar values of relevant actions. We reviewed CMS guidance on how ZPICs should prioritize their work and how to conduct investigations. We interviewed officials from the CMS Center for Program Integrity about how they review and track ZPIC administrative actions and their process of approval for actions, such as revocations. We interviewed officials from all six ZPICs to learn about their internal guidance on prioritizing and conducting their work, how they determine when to take administrative actions, and how they decide to refer a case to law enforcement.\nTo examine the results of CMS’s evaluation of ZPICs’ performance and aspects of CMS’s evaluation practices, we reviewed the following: each ZPIC’s most recent Contractor Performance Assessment Report; each ZPIC’s most recently completed Award Fee Administrative Action Plan, which describes the ZPIC’s plans to improve administrative actions and how it will earn its award fee; and data from CMS on the percentage and amount of each zone’s award fee. We reviewed internal CMS guidance on how to evaluate ZPICs’ performance, as well as federal standards and best practices for measuring performance. We also interviewed CMS contracting and other officials to learn about the review process and how such guidance is applied, and to discuss changes to ZPIC evaluations and performance measures. We also interviewed ZPIC officials to learn more about how ZPICs determine their Award Fee Administrative Action Plan goals and how they evaluate themselves on these goals and other work.\nWe assessed the reliability of the data we obtained from CMS ARTS and FID through interviews with agency officials and users, system demonstrations, and, in the case of CMS ARTS, direct use of the system. We shared with CMS and the relevant ZPIC any errors we identified through reviews of the data and comparisons with other sources to obtain corrected information. We found the data sufficiently reliable for the purposes of this review.\nWe conducted this performance audit from October 2012 to September 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"The following table shows selected ZPIC activities and results reported by ZPICs in CMS ARTS. Durable medical equipment (DME) is covered under Medicare Part B, and home health and hospice under are covered under Part A, but ZPICs report data in CMS ARTS as monthly aggregates by Part A, Part B, DME, and home health and hospice. CMS ARTS data do not allow us to identify particular provider types, such as whether a Part B provider was a family physician or podiatrist.",
"",
"",
"In addition to the contact named above, Karen Doran, Assistant Director; Matthew Gever; Elizabeth Morrison; Eden Savino; Kristin Van Wychen; and Jennifer Whitworth made key contributions to this report."
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"question": [
"How did ZPICs affect Medicare savings in 2012?",
"How did ZPICs work with law enforcement?",
"Why would CMS benefit from knowing the timeliness of ZPICs' actions?",
"What kind of ratings did ZPICs receive?",
"What is the relationship between CMS and ZPIC?",
"Why do most measures used to evaluate ZPICs relate to quality of work?",
"Why is the evaluation of quality of work insufficient?",
"How could CMS improve their evaluation measures?",
"Why has GAO designated Medicare as a high-risk program?",
"How does CMS help detect and prevent Medicare fraud?",
"How do ZPICs help CMS in avoiding Medicare fraud?",
"What did GAO examine for this report?",
"How did CAO carry out these examinations?",
"How did GAO utilize interviews in their investigation?"
],
"summary": [
"ZPICs reported that their actions resulted in more than $250 million in savings to Medicare in calendar year 2012 from actions such as stopping payment on suspect claims. ZPICs also reported taking other actions to protect Medicare funds, including having more than 130 of their investigations accepted by law enforcement for potential prosecution, and working to stop more than 160 providers from receiving additional Medicare payments in 2012.",
"ZPICs also reported taking other actions to protect Medicare funds, including having more than 130 of their investigations accepted by law enforcement for potential prosecution, and working to stop more than 160 providers from receiving additional Medicare payments in 2012.",
"However, CMS lacks information on the timeliness of ZPICs' actions--such as the time it takes between identifying a suspect provider and taking actions to stop that provider from receiving potentially fraudulent Medicare payments--and would benefit from knowing if ZPICs could save more money by acting more quickly.",
"ZPICs generally received good ratings in annual reviews, with five of six eligible for incentive awards.",
"CMS follows some best practices for ZPICs' oversight, but the agency does not clearly link ZPIC performance to agency program integrity goals.",
"The majority of the measures CMS uses to evaluate ZPICs relate to the quality of their work because, according to CMS officials, quality is the most important element.",
"However, evaluation of such measures, while a best practice, does not connect ZPIC work to agency performance measures. For example, CMS aims to increase the percentage of actions taken against certain high risk Medicare providers--work central to ZPICs--but does not explicitly link ZPICs' work to the agency's progress toward that goal, another best practice that would allow the agency to better assess the ZPICs' support of CMS's fraud prevention efforts.",
"For example, CMS aims to increase the percentage of actions taken against certain high risk Medicare providers--work central to ZPICs--but does not explicitly link ZPICs' work to the agency's progress toward that goal, another best practice that would allow the agency to better assess the ZPICs' support of CMS's fraud prevention efforts.",
"GAO has designated Medicare as a high-risk program, in part because its size and complexity make it particularly vulnerable to fraud.",
"To help detect and prevent potential Medicare fraud, CMS--the agency within the Department of Health and Human Services (HHS) that administers the Medicare program--contracts with ZPICs.",
"These contractors are to identify potential fraud, investigate it thoroughly and in a timely manner, and take swift action, such as working to revoke suspect providers' Medicare billing privileges and referring potentially fraudulent providers to law enforcement.",
"GAO examined (1) ZPIC contract costs and how ZPICs use those funds, (2) the results of ZPICs' work, and (3) the results of CMS's evaluations of ZPICs' performance and aspects of CMS's evaluation practices.",
"To do this, GAO examined ZPIC funding, contracts, and related documents; data on ZPICs' workloads, investigations, and results; and CMS evaluations of ZPICs as well as federal standards for performance measurement. GAO also interviewed CMS and ZPIC officials.",
"GAO also interviewed CMS and ZPIC officials."
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CRS_R45140
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{
"title": [
"",
"Introduction",
"Economics and Statistics Administration/Bureau of Economic Analysis and the Census Bureau",
"Economics and Statistics Administration",
"Bureau of Economic Analysis",
"Census Bureau",
"The FY2018 Budget Request",
"Economics and Statistics Administration/Bureau of Economic Analysis",
"Census Bureau",
"Current Surveys and Programs",
"Current Economic Statistics",
"Current Demographic Statistics",
"Periodic Censuses and Programs",
"The 2020 Decennial Census",
"The American Community Survey",
"The 2017 Economic Census",
"The 2017 Census of Governments",
"Census Enterprise Data Collection and Processing System",
"House Action",
"Economics and Statistics Administration/Bureau of Economic Analysis",
"Census Bureau",
"Senate Action",
"Economics and Statistics Administration/Bureau of Economic Analysis",
"Census Bureau",
"Continuing Appropriations Acts, 2018"
],
"paragraphs": [
"",
"This report presents an overview of the FY2018 budget request, related congressional actions, and appropriations (discretionary budget authority) for the Bureau of Economic Analysis (BEA) and Bureau of the Census (Census Bureau). These entities historically made up the Economics and Statistics Administration (ESA) in the U.S. Department of Commerce, which is funded under annual appropriations for the Departments of Commerce and Justice, and science and related agencies (CJS).\nThe Administration's FY2018 budget justification for the Economics and Statistics Administration/BEA states that the past functions of ESA encompassed \"the Under Secretary for Economic Affairs and policy guidance in support of department-wide economic and statistical programs and initiatives.\" The Under Secretary historically \"performed as the Administrator\" of ESA, but this role is proposed to end in FY2018 because ESA is to \"cease operations,\" in \"an effort to reduce duplication, streamline operations, and realize budget efficiency.\" The proposal calls for continued funding of BEA, while the Under Secretary is to \"reside within the Office of the Secretary and provide direct support to the Secretary\" and the Commerce Department's \"economic and statistical community, which include[s] BEA and the Census Bureau.\"\nTable 1 , below, shows the FY2017-enacted and FY2018-requested amounts for ESA, BEA, and the Census Bureau, with its two major accounts. Also shown are the FY2018 amounts passed by the House and recommended by the Senate Committee on Appropriations for ESA (Senate), BEA (House), and the Census Bureau.",
"",
"As noted above, the FY2018 budget justification for the Economics and Statistics Administration/BEA provides that ESA is to \"cease operation s\" in this fiscal year and that the Under Secretary for Economic Affairs is to \"reside within\" the Commerce Secretary's office. Secretary Wilbur Ross testified to Congress in 2017 that the Under Secretary is to have \"direct oversight\" over BEA and the Census Bureau.",
"The Bureau of Economic Analysis, like the Census Bureau, is one of 13 principal federal statistical agencies, each of whose primary mission is statistical work. According to the FY2018 budget justification for ESA/BEA, \"BEA's national, industry, regional, and international economic accounts present valuable information on critical issues such as U.S. economic growth, regional economic development, inter-industry relationships, and the Nation's position in the world economy.\" The \"statistical measures produced by BEA include gross domestic product (GDP), personal income and outlays, corporate profits, GDP by state and county, GDP by metropolitan area, balance of payments, and GDP by industry.\"",
"The Census Bureau conducts the decennial census under Title 13 of the U nited S tates Code , which also authorizes the bureau to collect and compile a great variety of other sociodemographic, economic, and housing data, and information about different levels of government. The bureau's activities include the production of Current Economic Statistics that provide wide-ranging, detailed data about the U.S. economy; Current Demographic Statistics, among which are intercensal population estimates, population projections, and Current Population Reports ; and, in addition to the decennial census, the American Community Survey and two quinquennial censuses, the economic census and the census of governments.",
"",
"The Administration's FY2018 budget request for BEA is $97.0 million, $6.8 million (6.6%) less than the $103.8 million enacted for FY2017. No FY2018 funding is requested for ESA, because, under the proposed budget, it is to terminate. Proposed reductions within BEA include efforts to measure separately the \"impact of small businesses on the U.S. economy, the incorporation of enhanced healthcare measures into the core GDP accounts, and trade in services data for dynamic industries of the U.S. economy,\" such as research and development, intellectual property, financial services, health services, and information technology services. The budget justification states that \"Careful consideration was given to those initiatives that could be reduced with minimal impact on BEA's core programs.\" The Administration \"proposes no new initiatives\" for BEA in FY2018.",
"The Administration's FY2018 budget request for the Census Bureau is $1,497.0 million, $27.0 million (1.8%) more than the FY2017-enacted amount of $1,470.0 million. As noted later in this report, the bureau typically seeks large funding increases toward the end of every decade, due to its heightened preparations for the census that occurs in each calendar year ending in zero. Requested funding for the decennial census, by far the bureau's most costly and visible endeavor, usually peaks in the census year and decreases steeply thereafter.\nThe FY2018 request is divided between the bureau's two major accounts:\nCurrent Surveys and Programs would receive $246.0 million, $24.0 million (8.9%) less than the $270.0 million enacted for FY2017 and 16.4% of the total requested for the bureau; Periodic Censuses and Programs—the account that funds the decennial census—would receive $1,251.0 million, $51.0 million (4.3%) more than the $1,200.0 million approved for FY2017 and 83.6% of the bureau's total request.",
"The Current Surveys and Programs account consists of Current Economic Statistics and Current Demographic Statistics.",
"The FY2018 budget request for Current Economic Statistics is $171.9 million, $5.1 million (2.9%) less than the $177.0 million approved for FY2017.\nThese statistics, from the major sources and programs noted below, provide wide-ranging, detailed data about the U.S. economy.\nBusiness statistics come from sources such as current retail, wholesale, and service trade reports and, according to the FY2018 budget justification for the Census Bureau, \"are important inputs\" to BEA's estimates of gross domestic product and to \"the Federal Reserve Board and Council of Economic Advisers for the formulation of monetary and fiscal policies and analysis of economic policies.\" Construction statistics \"provide national performance indicators for the construction sector of the economy.\" They are derived from data on building permits, housing starts, and \"construction put in place,\" which refers to the estimated total dollar value of construction work done in the nation each month. Manufacturing statistics come from sources including the Annual Survey of Manufactures and the Annual Capital Expenditures Survey of capital investments by private nonfarm businesses. They supplement data from the economic census and, as the budget justification points out, provide a \"critical economic benchmark\" by measuring \"the overall performance of the U.S. manufacturing sector.\" General economic statistics encompass, to cite examples from the budget justification, the business register, which \"identifies the business populations covered by economic censuses and surveys\"; the North American Industry Classification System, which \"provides a consistent industry classification system for the U.S., Canada, and Mexico every five years\"; and surveys on the finances of U.S. corporations for the bureau's Quarterly Financial Reports. The budget proposal characterizes general economic statistics as \"essential to understanding the changing economic structure\" of the United States. Foreign trade statistics , from sources such as U.S. Customs and Border Protection and Canadian agencies, \"provide official monthly statistics on imports, exports, and balance of trade for all types of merchandise moving between the U.S. and its international trading partners.\" Government statistics are compiled from surveys of state and local governments. They cover the \"revenues, expenditures, debt, and financial assets\" of these governments, as well as \"public employment and payroll.\"",
"For Current Demographic Statistics in FY2018, the budget request is $74.1 million, $5.9 million (7.4%) below the $80.0 million FY2017 funding level.\nThese statistics include the following collections and analyses of demographic data:\nA key household survey under Current Demographic Statistics is the monthly Current Population Survey (CPS) of about 58,000 U.S. households that the Census Bureau has conducted for the Bureau of Labor Statistics (BLS) \"for more than 50 years,\" with about two-thirds of the funding supplied by BLS. Although the CPS's primary purpose is \"to provide detailed labor force characteristics of the civilian non-institutional population and the monthly unemployment rate, a leading economic indicator,\" the survey also produces housing vacancy data and includes regular supplements that gather additional data. As examples, the CPS conducts the Annual Social and Economic Supplement every March, a Fertility Supplement every other June, a School Enrollment Supplement every October, and a Voting and Registration Supplement every other November. Further, \"other agencies sponsor supplements to the CPS in other months.\" These supplements cover topics such as \"child support and alimony, tobacco use, volunteers, and food security.\" The bureau's population and housing analyses include the Current Population Reports , based on CPS and other data, about various characteristics of the U.S. population; research concerning income, poverty, and wealth in the United States; and housing statistics compiled from the Housing Vacancy Survey. The bureau's intercensal demographic estimates provide, between the decennial censuses, a series of population estimates by age, sex, race, and Hispanic ethnicity for the total United States, states, and counties; estimated population totals for sub-county areas and metropolitan areas; estimates by age and sex for Puerto Rico and the municipios; and national-, state-, and county-level estimates of housing units. In addition, population projections analyze administrative data and population trends to indicate the future sizes of the U.S. and state populations. The bureau's demographic surveys sample redesign provides improved sampling methods, sample designs, and data processing systems \"essential to maintain the relevance, accuracy, and quality\" of \"the major household surveys\" that the bureau conducts wholly or partly under the sponsorship of other federal agencies.",
"Under this account—with an FY2018 budget request that, as previously mentioned, constitutes 83.6% of the total for the Census Bureau—the bureau has identified certain programs considered critical for creating \"a data-driven government.\" They include the 2020 Decennial Census, American Community Survey (ACS), 2017 Economic Census, and 2017 Census of Governments. Below is a discussion of each program, followed by information about the bureau's new IT initiative, the Census Enterprise Data Collection and Processing System (CEDCaP), which will affect multiple data collections.",
"The U.S. Constitution requires a population census every 10 years, to serve as the basis for apportioning seats in the House of Representatives. Decennial census data also are used for within-state redistricting and, together with census-related American Community Survey data and intercensal population estimates, in certain formulas that partly or entirely determine the annual distribution of more than $675 billion in federal funds to states and localities.\nThe Administration requests $800.2 million for the 2020 Decennial Census in FY2018, a $32.9 million (4.3%) increase from the $767.3 million enacted for FY2017. The 2020 census request, which is 64.0% of the total for the Periodic Censuses and Programs account and 53.5% of the total for the Census Bureau, reflects the cyclical \"ramp-up\" of preparations for the next census.\nMandate to Control the Cost of the Census . As directed by Congress, the Census Bureau is attempting to design and conduct the 2020 census at a lower inflation-adjusted cost per housing unit than in 2010. In April 2015 congressional testimony, the Government Accountability Office (GAO) stated that the cost to enumerate each housing unit \"escalated from around $16 in 1970 to around $94 in 2010, in constant 2010 dollars (an increase of over 500 percent).\" At a total life-cycle cost approaching $13 billion, the 2010 census was the most expensive in U.S. history. Its cost was about 56% greater than the 2000 census total of $8.1 billion, in constant 2010 dollars.\nThe bureau is focusing on 2020 census cost-control innovations in four major areas\nBefore past censuses, the bureau conducted address canvassing to try to ensure that it had the correct addresses and map locations of all U.S. residences. For the 2020 census, the bureau proposes canvassing the whole nation, as in previous censuses, but, to the extent possible, updating its Master Address File and Topologically Integrated Geographic Encoding and Referencing system (MAF/TIGER) by in-office use of geographic information systems and aerial imagery, not by more labor intensive, and thus more costly, in-field canvassing. The 1970 through 2010 censuses were primarily mail-out, mail-back operations. The bureau proposes replacing as much of the mail phase of the 2020 census as possible by offering the public an online response option. Other options will include by telephone, with assistance from census telephone interviewers, and by mailed paper questionnaires. Besides placing greater reliance on technology to promote the census, the bureau is implementing a \"communications and partnership campaign to engage and encourage the use of the Internet as the primary response mode.\" The campaign \"will provide information to government agencies, host events at community, recreation, and faith-based organizations,\" and publicize the census \"through radio advertising and social media.\" The bureau also will permit online responses to be submitted \"without a unique identification code\" for each questionnaire. In past censuses, the bureau generally followed up with nonrespondents by telephoning them or visiting their homes. The bureau proposes using administrative records, such as existing information from the federal and state governments, as well as \"third-party data\" from, for example, \"commercial sources,\" to reduce the extent of nonresponse follow-up in 2020. For whatever nonresponse follow-up remains necessary, the bureau proposes using an \"operational control system\" to automate certain tasks and make \"decisions that were previously made by people during field operations,\" such as case assignments and number of attempted contacts with nonrespondents. The objective is to \"reduce the staffing, infrastructure, and brick and mortar footprint required for the 2020 Census.\" The bureau expects to establish six regional census centers, instead of the 12 established for the 2010 census; two paper processing centers, versus three for 2010; and about 250 area census offices, versus almost 500 local census offices for 2010. The number of enumerators is to be reduced by about half, from almost 600,000 for 2010 to about 300,000 for 2020.\nThe bureau initially estimated that these innovations could save more than $5 billion. Its estimate of the cost to repeat the 2010 design in the 2020 census was $17.8 billion, compared with $12.5 billion for a reengineered census. In 2017 congressional testimony, however, Commerce Secretary Ross gave a revised 2020 census cost estimate of $15.6 billion, which he attributed to an earlier \"overestimation of savings and an underestimation of the difficulty of implementing and integrating technological innovations to conduct the Decennial Census.\" Secretary Ross testified that the Commerce Department was \"working with our House and Senate appropriators\" on a request for \"a $187 million adjustment for FY2018.\" The additional funds, he said, would permit \"a significant course correction to keep crucial programs on track for the 2020 Census and provide much-needed financial oversight and better management at the Census Bureau.\"\nFY201 8 Activities in Preparation for the 2020 Census . Summarized below are the major census-related activities that the bureau has begun or intends to undertake or complete in FY2018.\nThe foremost activity for FY2018 is the end-to-end 2020 census test. It originally was to cover more than 700,000 housing units: approximately 330,000 units in Pierce County, Washington; 265,000 units in Providence County, Rhode Island; and 175,000 units in nine West Virginia counties that include the cities of Beckley, Bluefield, and Oak Hill. Address canvassing for the test still will occur in these sites, but, due to past budget shortfalls, other operations will be limited to Providence County. As the budget justification notes, this site was retained \"because it presents specific opportunities and challenges\" for the bureau, including high housing vacancy rates, varying levels of internet connectivity, a combination of urban and suburban areas, communication in multiple languages rather than uniformly English, a large group quarters population, \"non-traditional addressing styles,\" and sociodemographic diversity. The budget justification cautions that delayed or insufficient FY2018 appropriations could \"result in the Census Bureau not being ready\" for the crucial test, which will afford the \"last opportunity\" before 2020 to determine whether \"reengineered census operations and systems\" function as intended. \"An inability to test and refine major pieces of this complex architecture\" could jeopardize the census and result in \"significant cost increases or deterioration in data quality.\" The budget justification states that, by the end of FY2017, the bureau expected to have processed 70% of U.S. addresses through in-office canvassing and was \"on schedule\" to finish the remaining 30% in FY2018. In-field canvassing of addresses needing further verification is to begin in the first quarter of FY2019. In FY2018, the bureau is to continue developing the 2020 census communications and partnership program that it began in FY2017. Among its features will be a 2020 census website, a paid advertising campaign, \"national and regional partnership efforts,\" with a \"partnership database,\" a \"social media presence,\" and a \"Statistics in Schools program\" to engage students and, by extension, their parents in the census process. \"Significant in FY2018,\" according to the budget justification, will be the opening and staffing of six regional census centers, with associated IT infrastructure, to \"serve as the hub of field operations\" during the census. \"Additionally, during FY2018, the acquisition, leasing, and build-out processes\" for \"acquiring approximately 250 area census offices and a second paper data capture center will begin.\" Also, as required under Title 13, Section 141 (f)(2), of the United States Code , the bureau is to deliver the 2020 census questions to Congress by April 1, 2018. The questions will cover the census topics, which were delivered on March 28, 2017. They include gender, age, race, Hispanic or Latino ethnicity, relationship of each household member to the person filling out the census form, and whether the housing unit is owned or rented. In the words of the budget justification, \"Any changes to the topics or questions after that point would have significant cost and schedule impacts on all English and Non-English questionnaires, the questionnaire vehicles (Internet, telephone, and paper), translation, and printing, and will put the 2020 Census at risk.\"",
"The American Community Survey, which the Census Bureau implemented nationwide in 2005 and 2006, is the replacement for the decennial census long form. From 1940 to 2000, the bureau used the long form to collect detailed socioeconomic and housing data from a representative sample of U.S. residents in conjunction with the once-a-decade count of the whole resident population. The ACS covers about 3.5 million households a year. It is sent monthly to small samples of the population, and the results are aggregated to produce data at regular intervals, yearly for areas with at least 65,000 people and every five years for areas from the most populous to those with fewer than 20,000 people. The survey is conducted in every county of the 50 states, the District of Columbia, and all Puerto Rican municipios. The bureau releases more than 11 billion ACS estimates every year on more than 40 \"social, demographic, housing, and economic\" topics. For rural areas and small groups within the population, the ACS is the sole source of data on many of these topics.\nThe Administration's FY2018 request for the ACS is $213.6 million, $8.0 million (3.6%) below the FY2017-enacted amount of $221.6 million.\nAccording to the budget justification, the Census Bureau plans certain modifications to ACS data collection efforts in FY2018.\nIn this fiscal year, the bureau will rely primarily on mail, internet, and Computer Assisted Personal Interviewing (CAPI) to collect ACS data. It will rely less on Computer Assisted Telephone Interviewing (CATI) for nonresponse follow-up and increase use of CAPI. The declining popularity of landline phones has made CATI less productive, so that the cost of \"successful follow-up interviews has risen to the point where it equals\" the cost of \"personal visits to non-responding households.\" Simultaneously, \"the number of attempts required to reach respondents via telephone has become a source of respondent complaints about the ACS.\" Cutting back on CATI, however, \"will result in some loss to the quality of ACS data, especially in the smallest geographic areas,\" because CAPI will not include all nonresponding households. The bureau, too, \"will reduce for FY2018 operations aimed at ensuring that field representatives working on the survey are fully trained and are following best practices.\" Another reduction will pertain to \"planned research\" on new ACS contents and methods.",
"The economic census originated in the early 19 th century, when \"Congress responded to a rapid increase in industrial activity\" by instructing 1810 census enumerators to \"'take an account of the several manufactures within their several districts, territories and divisions.'\" As the budget justification states, the modern economic census, conducted every five years, is \"the cornerstone of the Nation's economic statistics programs. It is the primary source of facts about the structure and functioning of the U.S. economy.\" Data from this census provide \"the foundation for other key measures of economic performance,\" including GDP and the Bureau of Economic Analysis's national income and product accounts. Indeed, \"practically all major Federal government economic statistical series are directly or indirectly dependent\" on the economic census.\nThe Administration requests $100.6 million for economic census activities in FY2018, the same as enacted for FY2017.\nFY2018 is the fourth year of the six-year funding cycle for the 2017 Economic Census, when efforts have shifted \"from preparatory activities,\" like designing the census operations and determining the census contents, to \"collection and processing of the data.\" The major activities for the census in FY2018 will consist of gathering data \"on over 29 million establishments,\" providing \"new products that are essential to understanding the modern economy,\" and \"implementing 2017 revisions to the supply-oriented North American Industry Classification System (NAICS),\" to reflect better \"the structure of the U.S. economy.\"\nAs a cost-control measure and a way to reduce the burden of the census on respondents, according to the budget justification, the bureau has planned a 2017 Economic Census with \"100% Internet\" reporting. Also for the purpose of reducing respondent burden, the bureau is \"exploring 'Big Data' concepts using third-party data\" either in the 2017 census or later.",
"The census of governments, conducted since 1957, is the Census Bureau's other major quinquennial census. The budget justification states that, together, the economic census and census of governments account for \"nearly all\" of GDP and \"provide baseline data\" for the bureau's Current Economic Statistics. The census of governments is the principal source of information about the structure and functioning of state and local governments, which account for about 12% of GDP and 15% of the civilian labor force. Among the topics the census covers are government organization and \"intergovernmental relationships\"; the number of full-time and part-time government employees and their pay; and government finances, including revenues, expenditures, debt, \"cash and securities holdings,\" and \"assets of public pension systems.\"\nThe Administration's FY2018 request for the census of governments is $8.9 million, identical to the FY2017-enacted amount.\nFY2018 is the third year of the five-year funding cycle for the 2017 Census of Governments, when the census design and contents have been set and attention is focused on data collection and processing. In this census, as in the economic census, the emphasis is on \"100% Internet reporting.\" In addition, to reduce the reporting burden on respondents, the bureau \"hopes to expand\" the use of administrative records to obtain data through more data-sharing \"agreements with governmental units.\" The bureau currently has such agreements with about 25 states. The bureau also plans more timely release of products from the 2017 census and updated product contents to give \"a fuller picture of the financial situation of state and local governments and the economy as a whole.\"",
"FY2018 is the fourth year for the Census Enterprise Data Collection and Processing initiative, funded under the Periodic Censuses and Programs account. The budget justification states that CEDCaP is designed to be an \"integrated and standardized enterprise suite of systems,\" encompassing such major data collections as the decennial census, ACS, economic census, and census of governments. It is intended to \"reduce inefficiencies\" through \"shared data collection and processing services.\" With it, the bureau expects to \"retire unique, survey-specific system and redundant capabilities and bring a greater portion\" of IT expenditures under one \"centrally managed program.\"\nThe Administration requests $137.3 million for CEDCaP in FY2018, $22.1 million (13.9%) below the $159.4 million FY2017-enacted amount.\nThe bureau plans \"to finalize\" certain CEDCaP capabilities in FY2018, \"including delivery of several capabilities into production to support\" the 2018 end-to-end census test. Another priority for this fiscal year is \"to provide enterprise data collection capabilities for the 2017 Economic Census.\"\nThe development of CEDCaP has presented challenges, however. In April 2015 congressional testimony, GAO identified CEDCaP as \"an IT investment in need of attention.\" Two months earlier, GAO had reported that\nParticular attention to this area is warranted in order to avoid repeating the mistakes of the 2010 Decennial Census, in which the bureau had to abandon its plans for the use of handheld data collection devices, due in part to fundamental weaknesses in its implementation of key IT management practices.\nUncertainties surrounding CEDCaP were a factor when GAO included the 2020 census in its \"high-risk\" list in 2015 and 2017.\nIn 2017 congressional testimony, Commerce Secretary Ross acknowledged a 40% cost overrun in CEDCaP, the result, he observed, of initially underestimating how difficult the \"technological innovations\" for the 2020 census would be to implement and integrate.",
"",
"The House Committee on Appropriations reported H.R. 3267 , the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2018, on July 17, 2017. The committee-recommended funding for BEA in FY2018 is $96.0 million, $1.0 million (1.0%) less than the requested $97.0 million, and $7.8 million (7.5%) below the $103.8 million enacted for FY2017. The House bill does not mention ESA, which, as previously discussed, the Administration has proposed to terminate. The accompanying committee report states that the $96.0 million recommendation \"adopts the reorganization proposal,\" in which ESA is to cease operating and the Commerce Under Secretary for Economic Affairs is to be located in the Office of the Secretary. H.R. 3267 , as reported, became Division C of H.R. 3354 , an omnibus appropriations bill that the House passed on September 14, 2017.",
"H.R. 3267 , as reported by the House Appropriations Committee and incorporated into H.R. 3354 , would provide $1,507.0 million for the Census Bureau in FY2018, $37.0 million (2.5%) more than the FY2017 funding level of $1,470.0 million and $10.0 million (0.7%) above the $1,497.0 million requested for FY2018.\nCurrent Surveys and Programs would receive $256.0 million, $14.0 million (5.2%) below the FY2017-enacted amount of $270.0 million and $10.0 million (4.1%) more than the $246.0 million requested for FY2018.\nPeriodic Censuses and Programs would be funded at $1,251.0 million, the same amount as requested for FY2018 and $51.0 million (4.3%) more than the $1,200.0 million enacted for FY2017. The bill provides for transferring $2.6 million of the amount for Periodic Censuses and Programs to the Commerce Department's Office of Inspector General (OIG) for Census Bureau oversight.\nThe House committee report's minority views express concern that the Census Bureau is \"inadequately funded. Although the Periodic Censuses and Programs account is given the requested amount in FY2018,\" the Administration is proposing to \"scale back\" greatly the \"2020 Census planning and testing tools that are needed now to prevent higher costs in the next few years.\" Less early testing, these Members state, also considerably \"increases the risk of information technology failures like those in the last [2010] decennial census, which would cause significant future cost overruns.\"",
"",
"The Senate Committee on Appropriations reported its FY2018 CJS appropriations bill, S. 1662 , on July 27, 2017, with recommended funding of $99.0 million for ESA. The $99.0 million is $8.3 million (7.7%) less than the $107.3 million enacted for ESA in FY2017, $2.0 million (2.1%) more than the $97.0 million FY2018 request for BEA, and $3.0 million (3.1%) more than the House-passed $96.0 million for BEA in FY2018. The committee report states that\nThe Committee does not object to the Department's proposed consolidation of the Economics and Statistics Administration and the Bureau of Economic Analysis [BEA]; however, the proposed consolidation will not be approved until a reprogramming package detailing the planned consolidation is approved by the Committee. The reprogramming should include additional information about the impacts of the consolidation, including whether Gross Domestic Product [GDP] estimates and other critical economic reports will be released by BEA or by the Office of the Secretary; an accounting of which positions will be moved to BEA or to the Office of the Secretary, or will be eliminated entirely; and how the Under Secretary of Commerce for Economic Affairs will oversee BEA, the Bureau of the Census, and activities conducted within the Office of the Secretary.",
"As reported by the Senate Appropriations Committee, S. 1662 recommends $1,521.0 million for the Census Bureau in FY2018, $51.0 million (3.5%) over the $1,470.0 million FY2017-enacted amount, $24.0 million (1.6%) above the $1,497.0 million budget request, and $14.0 million (0.9%) more than the $1,507.0 million House-passed amount.\nThe FY2018 committee-recommended amount for Current Surveys and Programs is $270.0 million, identical to what was enacted for FY2017, $24.0 million (9.8%) more than the $246.0 million FY2018 request, and $14.0 million (5.5%) above the House-passed $256.0 million.\nFor Periodic Censuses and Programs in FY2018, the committee recommends $1,251.0 million, which matches the requested and House-passed amounts and is $51.0 million (4.3%) above the $1,200.0 million FY2017-enacted level. The committee-reported bill, like its House-passed counterpart, would provide the Commerce Department's OIG with $2.6 million for continued \"oversight and audits of periodic censuses\" and \"independent recommendations\" for operational improvements.\nThe committee report directs that \"The Bureau shall continue to work to bring down the cost of the 2020 Decennial Census to a level less than the 2010 Census, not adjusting for inflation.\" At the same time, the report mentions the committee's concern that its recommendation of the requested funding level for Periodic Censuses and Programs \"may not be adequate to meet the Bureau's planning, testing, and development needs\" for the approaching census, \"particularly in light of the 47-percent increase in the lifecycle cost estimate\" for CEDCaP. Commerce Secretary Ross, as previously noted, acknowledged in congressional testimony a 40% cost overrun in CEDCaP and stated that the Census Bureau was seeking an extra $187 million for the census in FY2018.",
"Final FY2018 CJS appropriations legislation was not enacted by the end of FY2017. Four short-term continuing appropriations acts funded federal agencies from October 1, 2017, through February 8, 2018, except for an appropriations lapse that began on January 20, 2018, and ended on January 22, 2018.\nH.R. 601 , Continuing Appropriations Act, 2018, and Supplemental Appropriations for Disaster Relief Requirements Act, 2017, was enacted on September 8, 2017, as P.L. 115-56 . In general, Division D, Continuing Appropriations Act, 2018, Section 101, provided federal agencies with FY2018 funding at FY2017 appropriations levels, reduced by 0.6791%, through December 8, 2017. Division D, Section 118, however, allowed the Census Bureau to apportion the funds provided under Section 101 for Periodic Censuses and Programs \"up to the rate for operations necessary to maintain the schedule and deliver the required data according to statutory deadlines in the 2020 Decennial Census Program.\" H.J.Res. 123 , P.L. 115-90 , Making Further Continuing Appropriations for Fiscal Year 2018, and for Other Purposes, became law on December 8, 2017. Division A, Further Continuing Appropriations Act, 2018, extended the provisions of P.L. 115-56 , Division D, through December 22, 2017. H.R. 1370 , P.L. 115-96 , An Act to Amend the Homeland Security Act of 2002, and for Other Purposes, was enacted on December 22, 2017. Division A, Further Additional Continuing Appropriations Act, 2018, extended the provisions of P.L. 115-56 , Division D, through January 19, 2018. H.R. 195 , P.L. 115-120 , Making Further Continuing Appropriations for the Fiscal Year Ending September 30, 2018, and for Other Purposes, became law on January 22, 2018. Division B, Extension of Continuing Appropriations Act, 2018, extended the provisions of P.L. 115-56 , Division D, through February 8, 2018.\nA fifth bill, H.R. 1892 , P.L. 115-123 , the Bipartisan Budget Act of 2018, was signed into law on February 9, 2018. Division B, Supplemental Appropriations, Tax Relief, and Medicaid Changes Relating to Certain Disasters and Further Extension of Continuing Appropriations, extends the provisions of P.L. 115-56 , Division D, through March 23, 2018, with an additional $182.0 million for the 2020 census."
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"question": [
"How does the FY2018 request for the Census Bureau compare to the previous year's?",
"How is the FY2018 request divided?",
"What are the most important programs under the Periodic Censuses and Programs account?",
"What did the House Committee on Appropriations do in 2017?",
"How did census funding change from 2017 to 2018?",
"What happened to H.R. 3267?",
"How were federal agencies funded at the end of FY2017?",
"How did the Census Bureau differ from other agencies in its ability to apportion funds?",
"How did H.R. 1892 affect federal agency funding for 2018?"
],
"summary": [
"The FY2018 request for the Census Bureau is $1,497.0 million, $27.0 million (1.8%) more than the FY2017-enacted $1,470.0 million.",
"The FY2018 request is divided between the bureau's two major accounts: $246.0 million for Current Surveys and Programs, $24.0 million (8.9%) less than the $270.0 million enacted for FY2017; and $1,251.0 million for Periodic Censuses and Programs, $51.0 million (4.3%) more than the $1,200.0 million approved for FY2017.",
"The foremost program under this account is the 2020 Decennial Census, with an $800.2 million FY2018 request that is $32.9 million (4.3%) above the $767.3 million enacted for FY2017. A second key program is the American Community Survey (ACS), with an FY2018 request of $213.6 million, $8.0 million (3.6%) below the $221.6 million FY2017-enacted amount.",
"The House Committee on Appropriations reported H.R. 3267, the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2018 (CJS), on July 17, 2017. Committee-recommended funding for BEA in FY2018 is $96.0 million, $1.0 million (1.0%) less than requested and $7.8 million (7.5%) less than enacted for FY2017.",
"The Census Bureau would receive $1,507.0 million in FY2018, $37.0 million (2.5%) more than enacted for FY2017 and $10.0 million (0.7%) above the FY2018 request. The $256.0 million recommended for Current Surveys and Programs is $14.0 million (5.2%) below the FY2017-enacted amount and $10.0 million (4.1%) more than requested for FY2018. Periodic Censuses and Programs would receive the requested $1,251.0 million, $51.0 million (4.3%) more than enacted for FY2017.",
"H.R. 3267, as reported, became Division C of H.R. 3354, which the House passed on September 14, 2017.",
"FY2017 ended without enactment of final FY2018 CJS appropriations legislation. Four continuing appropriations acts provided federal agencies with FY2018 funding at FY2017 appropriations levels, reduced by 0.6791%, through February 8, 2018.",
"The Census Bureau, however, could apportion the funds for Periodic Censuses and Programs \"up to the rate for operations necessary to maintain the schedule and deliver the required data according to statutory deadlines in the 2020 Decennial Census Program.\"",
"A fifth act, H.R. 1892, P.L. 115-123, continues these provisions through March 23, 2018, with an additional $182.0 million for the 2020 census."
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GAO_GAO-18-432T
|
{
"title": [
"Background",
"SSA Programs and Functions",
"Challenges to Managing SSA’s Disability Workloads and Ensuring Program Integrity",
"Making Timely Disability Decisions",
"Modernizing Disability Criteria",
"Enhancing the Accuracy and Consistency of Disability Decisions",
"Preventing and Collecting Overpayments",
"Strategic Approach to Managing Fraud Risks",
"Challenges to Modernizing SSA’s Physical Footprint and Service Delivery",
"Reconfiguring SSA’s Physical Footprint",
"Expanding Remote Service Delivery",
"Challenges to Modernizing Information Technology",
"GAO Contact and Acknowledgements",
"Appendix I: GAO Letter to SSA on Priority Recommendations to Implement"
],
"paragraphs": [
"",
"The scope of SSA’s operations and responsibilities is vast. One of SSA’s key responsibilities is to provide financial benefits to eligible individuals through three benefit programs:\nOld-Age and Survivors Insurance (OASI)—provides retirement benefits to older individuals and their families and to survivors of deceased workers.\nDisability Insurance (DI)—provides benefits to eligible individuals who have qualifying disabilities, and their eligible family members.\nSupplemental Security Income (SSI)—provides income for aged, blind, or disabled individuals with limited income and resources.\nIn support of its mission, SSA maintains workers’ earnings information and in fiscal year 2017 posted over 279 million earnings items to workers’ records. SSA also determines if claimants are eligible for benefits, completing 10 million claims and more than 680,000 hearings decisions in fiscal year 2017. SSA also maintains birth and death records and issues Social Security Numbers. In fiscal year 2017, SSA issued almost 17 million new and replacement Social Security cards.\nBeyond administering its programs and core missions, SSA provides key administrative support to the Medicare program, partners with the Department of Homeland Security in verifying employment eligibility for new hires, and assists with the administration of other programs, such as the Supplemental Nutrition Assistance Program and programs administered by the Railroad Retirement Board.\nSSA’s workforce is large, as is its physical footprint. About 62,000 federal employees and 15,000 state employees administer SSA programs in about 1,500 facilities nationwide. These facilities include regional offices, more than 1,200 field offices, teleservice centers, processing centers, hearings offices, the Appeals Council offices, and SSA’s headquarters in Baltimore, Maryland.\nCustomers can access SSA services in-person at an SSA field office; by phone with field office staff or through a National 800 number; or online. In 2018, SSA reported that, each day, about 170,000 people visit and 250,000 call one of its field offices for various reasons, such as to file claims, ask questions, or update their information. SSA also reported that its national 800 number handles over 30 million calls each year.",
"Complex eligibility rules and multiple handoffs and potential layers of review make SSA’s disability programs complicated and costly to administer. Program complexity arguably has made it challenging for SSA to make significant advances in efficiently managing high disability workloads, ensuring timely and consistent disability decisions, preventing benefit overpayments, and mitigating fraud risks.\nOur recent work highlighted some of the challenges SSA faces in making disability decisions that are timely, consistent and based on current concepts of disability, while also preventing and deterring fraud and ensuring that only beneficiaries who are entitled to benefits receive them. These findings underscore the need for SSA leadership to approach these challenges strategically and follow through with rigorous plans in order to achieve significant improvements in its disability programs.",
"In recent years, SSA made noteworthy strides in reducing its backlog of initial disability claims, but delays in deciding disability appeals continue to worsen. SSA has reduced the number of pending claims each fiscal year since 2010—from about 842,000 in fiscal year 2010 to about 523,000 in fiscal year 2017. However, the number of appealed claims pending at the end of 2017 was approximately 1.1 million compared to about 700,000 in fiscal year 2010, and the average time needed to complete appeals increased from 426 days to 605 days during that same time.\nIn our 2017 High Risk Update, we reported that SSA had taken some steps to address its growing appeals backlog, such as hiring additional administrative law judges (ALJ). SSA also published a plan in 2016 to improve appeals timeliness that called for further hiring, improving business processes, sharing workloads across offices, and making better use of IT resources, such as increasing the number of video hearings. However, SSA’s Office of Inspector General (OIG) found that many of the initiatives in SSA’s plan duplicated past efforts that had met with limited success. SSA also noted that some efforts, such as additional hiring, will depend on resource availability. We also reported that SSA is still developing plans to implement its broad vision for service delivery, Vision 2025, which addresses SSA’s capacity to provide timely initial claims and appeals decisions. To address its appeals backlog and position itself to effectively provide timely disability decisions at all levels, SSA leadership will need to continue to operationalize Vision 2025, plan and implement systems support for initial claims, and implement and monitor the success of its appeals initiatives.",
"While SSA has made significant progress in updating the outdated occupational and medical criteria it uses to make disability eligibility decisions, some of these efforts are multi-year and will require the continued focus of top leadership. Most significantly, SSA has made strides updating a decades old Dictionary of Occupational Titles with a new Occupational Information System (OIS), which contains occupational data to make disability determinations. SSA expects to have OIS in place by 2020, and currently plans to update OIS information every 5 years thereafter. Regarding the medical criteria used to make disability decisions, we reported in our 2017 high risk update that SSA had published final rules for nearly all of the 14 body systems for adults and was on track to update criteria for all body systems every 3 to 5 years. While SSA has addressed all our recommendations in this area, other opportunities exist for updating aspects of SSA’s disability decision process. For example, SSA officials have acknowledged that the vocational rules it uses to determine eligibility may no longer accurately reflect the nature and scope of work available in the national economy and stated that the agency is conducting a review to determine if changes to vocational factors are necessary. Agency leadership will play a key role in ensuring SSA pursues these opportunities to further modernize its criteria and devotes appropriate resources to continuously updating its occupational and medical criteria on a timely basis.",
"Our recent work analyzed variation in the rate that different ALJs grant disability benefits when claimants appeal an earlier denial, and found that SSA’s efforts to monitor the consistency of appeal hearing decisions are incomplete. In 2017 after analyzing data on hearings decisions, we estimated that the allowance (approval) rate could vary by as much as 46 percentage points between different judges with respect to a typical claim. SSA conducts various reviews to monitor the accuracy and consistency of ALJ decisions, but SSA has not systematically evaluated whether its reviews are effective. SSA has also struggled to sustain all of its quality review efforts, in part, because SSA reassigned staff to help expedite claims decisions. We also reported on shortcomings in SSA’s Compassionate Allowance initiative (CAL)—which fast tracks disability claims for severe medical conditions that are most likely to be approved— that could prevent claims from being consistently and accurately identified for expedited processing. These shortcomings include lacking a systematic approach and clear criteria for designating medical conditions for inclusion in CAL.\nWith about one in three beneficiaries being granted benefits at SSA’s appeals hearing level, it remains crucial that SSA leadership commit to ensuring appeal applications receive fair and consistent treatment, including assessing persistent and unexplained variations in ALJ allowance rates. Ensuring oversight and scrutiny of SSA’s CAL initiative is also essential to avoid potential equity issues with regards to SSA’s most vulnerable claimants.",
"Benefit overpayments represent avoidable losses to the DI trust fund and, for the individual who may have incurred an overpayment despite conscientiously reporting wages, a financial hardship when required to repay and a disincentive to pursue work. In fiscal year 2015, the most recent year for which we have data, SSA identified $1.2 billion in new overpayments in its DI program, and had $6.3 billion in total overpayment debt outstanding. In 2015, we reported that the SSA process for beneficiaries to report earnings (and consequently inform whether they remain eligible for DI benefits) had a number of weaknesses, including staff not following established procedures, limited oversight, and a lack of automated reporting options for beneficiaries, such as an automated telephone system or smart phone app. SSA has made progress expanding electronic work reporting, but these efforts will not eliminate vulnerabilities caused by SSA’s multi-faceted processes for receiving and handling work reports, and will require additional management focus to shore up internal controls and avoid unnecessary overpayments.\nOnce overpayments do occur, SSA will endeavor to recover those overpayments. However, we recently found that the collection of overpayment debts warrants more attention than SSA has demonstrated to date. In 2016, we reported that SSA’s largest source of debt recovery is withholding a portion of beneficiaries’ monthly benefits payments. However, we found that amounts withheld may not consistently reflect individuals’ ability to pay, and that many repayment plans could take decades to complete. We recommended SSA improve oversight and pursue additional debt recovery options—recommendations that SSA has yet to implement. Absent clear policies and oversight procedures for establishing and reviewing withholding plans—SSA’s main tool for recovering overpayments—SSA cannot be sure that beneficiaries are repaying debts in appropriate amounts within appropriate time frames.\nFurther, by not implementing additional debt collection tools that would speed up repayment, which can extend past the beneficiaries’ lifetimes and is diminished in value by inflation, SSA is missing opportunities to restore debts owed to the DI trust fund.",
"Although the extent of fraud in SSA’s benefit programs is unknown, high- profile cases—such as one case reported by SSA’s OIG involving 70 individuals and $14 million in fraudulent benefits—underscore the importance of continued vigilance on the part of SSA leadership in managing fraud risks to prevent fraud. We reported in 2017 that SSA established a new office responsible for coordinating antifraud programs across the agency, and had taken steps to gather information on some fraud risks. However, we also found that SSA had not fully assessed its fraud risks, had not developed an overall antifraud strategy to align its efforts with those risks, and did not have a complete set of metrics to determine whether its antifraud efforts are effective. SSA has already taken action on one of our recommendations by producing a fraud risk assessment, which we will evaluate, and has stated its intent to take action on our other recommendations. Nevertheless, leadership will be essential for developing and implementing an antifraud strategy aligned with the risk assessment and ensuring that SSA’s efforts to prevent and detect fraud are effective, thereby helping to safeguard the integrity of its programs and its delivery of benefits to only eligible individuals.",
"With one of the largest physical footprints of any federal agency, and in light of rising facility costs, SSA may be able to achieve efficiencies by reducing the size of its footprint and pursuing additional, cost effective service delivery options. However, as we reported in 2013, rightsizing SSA’s physical infrastructure can be complex, politically charged, and costly; expanding service delivery options is also challenging due to the complexity of SSA’s disability programs and the varying needs of SSA’s customers. Our recent review of SSA’s plans to reconfigure its physical footprint and expand how it delivers services confirmed a number of challenges SSA must navigate. It also highlighted the importance of approaching these challenges strategically and systematically, through strong leadership that guides robust planning, data collection, and assessment efforts.",
"In our 2017 work, we identified several challenges that could hinder SSA’s ability to readily reconfigure its footprint, align it with evolving needs and potentially achieve desirable cost savings. For example, we found that despite progress reducing its square footage and the number of occupied buildings, SSA’s inflation-adjusted rental costs have remained steady. SSA’s ability to further reduce or enlarge its physical space is constrained by rental markets, and by union and community concerns. According to SSA officials, high rents, limited building stock and complicated federal leasing processes present difficulties and community needs and union concerns may further complicate relocating offices. We also found that, even though SSA is expanding its remote delivery of services—online and through new technologies—overall demand for field office services has not decreased, although demand varied greatly across SSA’s offices.\nExpansion of online service—such as the SSI application, which became available online in 2017—present opportunities for SSA to further reduce or reconfigure its physical footprint. However SSA may miss those opportunities because we found that SSA had not fully integrated its strategic planning and facility planning, despite leading practices that indicate facility plans should align with an agency’s strategic goals and objectives. We recommended that SSA develop a long-term facility plan that explicitly links to its strategic goals for service delivery, and includes a strategy for consolidating or downsizing field offices in light of increasing use of and geographic variation in remote service delivery.\nSSA agreed with our recommendation, and has since formed a Space Acquisition Review Board to consider space reductions in light of operational changes. SSA executive leadership will remain an important factor in ensuring a concerted effort to align the agency’s physical footprint with its vision for future service delivery.",
"Our recent work also found that while the complexity of SSA’s programs can make it challenging for customers to use online services, the agency lacked data to identify and address challenges with online applications. The online disability applications in particular can be confusing and challenging for customers to complete, according to many SSA managers and staff we interviewed. Applications that are submitted online often require follow-up contacts with applicants to obtain missing information, according to SSA front-line staff. However, while SSA has taken steps to make its online services more user-friendly, such as adding a click-to-chat function for customers who run into problems, the agency does not routinely collect data on the reasons for staff follow-ups with online applicants. Such data are critical to SSA’s efforts to further improve its online applications and ultimately allow SSA to shift more of its business online and further reconfigure its physical footprint.\nSSA would also benefit from establishing performance goals to help it determine whether new service delivery options are succeeding. To help address access challenges such as limited broadband internet in some rural areas, SSA has rolled out self-service personal computers in field offices, icons to link to SSA services on computers in public libraries and video services accessed from senior centers. SSA also recently completed a trial of customer service kiosks in seven SSA offices and third-party locations. SSA staff in field offices reported some positive impacts from these initiatives in terms of extending remote access to certain populations, but also cited challenges, such as with customers’ varying ability to use self-service computers. While SSA collects some data on usage, it has not developed performance targets or goals that could help it assess these initiatives’ success or identify problems.\nWe recommended that SSA develop a cost-effective approach to identifying the most common issues with online benefit claims, and develop performance goals and collect performance data for alternate service delivery approaches. SSA agreed with our recommendations, and has since reported taking steps to implement them. As SSA continues to expand its service delivery options, the agency’s leadership will need to encourage data driven approaches to ensure high quality and effective alternative service delivery.",
"In 2016, we reported that SSA faces challenges with IT planning and management, based on over a decade of prior work that identified weaknesses in system development practices, IT governance, requirements management, strategic planning, and other aspects of IT. For example, in 2012, a GAO review reported that SSA did not have an updated IT strategic plan to guide its efforts and its enterprise architecture lacked important content that would have allowed the agency to more effectively plan its IT investments. In addition, SSA and others have reported substantial difficulty in the agency’s ability to implement its Disability Case Processing System—intended to replace 54 disparate systems used by state Disability Determination Services—citing software quality and poor system performance as issues. Consequently, in June 2016, the initiative was placed on the Office of Management and Budget’s (OMB) government-wide list of 10 high-priority programs requiring attention. In February 2018, the SSA OIG completed an assessment of an independent contractor’s analysis of options for the system. The SSA OIG concluded that several factors that limited the analysis supporting the contractor’s recommendation for SSA to continue investing in a new, custom-build version of the Disability Case Processing System.\nBecause OMB is no longer identifying high-priority programs, in November 2017, we recommended OMB resume identifying these programs. We also recommended OMB ensure that the Federal Chief Information Officer is directly involved in overseeing these high-priority programs as past experience has shown that this oversight could improve accountability and achieve positive results. OMB neither agreed nor disagreed with our recommendations, and has not indicated whether it will take action on these recommendations.\nBeyond the challenges identified in these previous reports, GAO’s May 2016 report on federal agencies’ IT legacy systems highlighted the increasing costs that agencies, including SSA, may face as they continue to operate and maintain at-risk legacy systems. We identified SSA’s investment in IT infrastructure operations and maintenance as being among the 10 largest expenditures of federal agencies in fiscal year 2015. Further, we pointed out that legacy systems may become increasingly expensive as agencies have to deal with issues such as obsolete parts and unsupported hardware and software, and potentially have to pay a premium to hire staff or engage contractors with the knowledge to maintain outdated systems. For example, SSA reported re- hiring retired employees to maintain its systems that include many programs written in Common Business Oriented Language (COBOL). We highlighted a group of systems for determining retirement benefits eligibility and amounts which were over 30 years old, with some written in COBOL. We also noted that the agency had ongoing efforts to modernize the systems but was experiencing cost and schedule challenges due to the complexity of the legacy systems. We recommended that the agency identify and plan to modernize or replace legacy systems, in accordance with forthcoming OMB guidance. SSA agreed, and reported that it is finalizing its Information Technology Modernization Plan.\nTo its credit, SSA has made progress in consolidating and optimizing its data centers. Specifically, in August 2017, we reported that, as of February 2017, SSA was one of only two agencies that had met three of the five data optimization targets established by OMB pursuant to provisions referred to as the Federal Information Technology Acquisition Reform Act. Meeting these targets increases SSA’s ability to improve its operational efficiency and achieve cost savings.\nIn conclusion, many of the challenges facing SSA today are neither new nor fleeting because they are inherent in the complexity and massive size of SSA’s programs and the scope of broad demographic and societal changes over time. Our past work has pointed to the need for rigorous solutions to these complex problems, such as strategic planning, evaluation efforts, measuring for impact, and leveraging data—solutions that invariably require leadership attention and sustained focus.\nChairman Johnson, Ranking Member Larson, and Members of the Subcommittee, this concludes my prepared statement. I would be pleased to respond to any questions that you or other members of the Subcommittee may have.",
"If you or your staff have any questions about this testimony, please contact Elizabeth Curda, Director, Education Workforce and Income Security Issues, at (202) 512-7215 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this testimony statement. GAO staff who made key contributions to this statement are Michele Grgich (Assistant Director), Daniel Concepcion (Analyst-in-Charge), Susan Aschoff, Alex Galuten, Jean McSween, Sheila McCoy, Lorin Obler, Sabine Paul, Almeta Spencer, and Erin McLaughlin Villas.",
"Appendix I: GAO Letter to SSA on Priority Recommendations to Implement This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately."
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{
"question": [
"What does GAO's prior work show about SSA?",
"Why are SSA's workloads increasing?",
"How does GAO's prior work address these concerns?",
"How is SSA handling disability workloads?",
"How did GAO recommend that SSA address this issue?",
"How is SSA addressing the issue after GAO's recommendation?",
"What problems has GAO identified in SSA's efforts to address the problem?",
"Why is modernization important to SSA?",
"How does modernization affect individuals interacting with SSA?",
"What issues did GAO find with SSA regarding modernization?",
"What did GAO recommend that SSA do to address these issues?",
"Why is modernization of SSA's IT systems important?",
"How did GAO recommend that SSA address their aging IT systems?",
"How did SSA respond to GAO's recommendation?"
],
"summary": [
"GAO's prior work and Social Security Administration's (SSA) strategic plan for fiscal years 2018-2022 highlight significant demographic and technological challenges facing the agency. For example, SSA's workloads are increasing due to 80 million baby boomers entering their disability-prone and retirement years, and institutional knowledge and leadership at SSA will be depleted due to an expected 21,000 employees retiring by the end of fiscal year 2022.",
"For example, SSA's workloads are increasing due to 80 million baby boomers entering their disability-prone and retirement years, and institutional knowledge and leadership at SSA will be depleted due to an expected 21,000 employees retiring by the end of fiscal year 2022.",
"GAO's prior work has identified related management challenges and opportunities for SSA to further modernize and improve its disability programs, service delivery, and information technology (IT) systems.",
"Managing disability workloads and program integrity. SSA has long struggled to process disability claims and, more recently, appeals of denied claims, in a timely manner.",
"Consistent with our 2013 recommendation, SSA produced a broad vision for improving service delivery, including ensuring prompt and accurate disability decisions.",
"Consistent with our 2013 recommendation, SSA produced a broad vision for improving service delivery, including ensuring prompt and accurate disability decisions. However, SSA is still developing concrete plans to implement its vision.",
"Although SSA has initiatives underway to improve appeals backlogs, GAO reported that some of SSA's appeals initiatives are either contingent on additional funding or have met with limited success when tried in the past. GAO's prior work also identified other challenges related to SSA's disability programs, and actions SSA could take, for example, to modernize disability criteria, prevent and recover overpayments, and manage fraud risks.",
"Modernizing physical infrastructure and service delivery. Advances in technology have the potential to change how and where SSA delivers its services.",
"For example, individuals can now apply for some disability benefits online rather than in person.",
"However, GAO found that SSA did not have readily available data on problems customers had with online applications or why staff support was needed. Additionally, the agency had not established performance goals to determine whether new service delivery options, such as off-site kiosks, are succeeding. In addition, we found that SSA has not developed a long-term plan for its building space that, among other things, includes a strategy for downsizing offices to better reflect changes in service delivery.",
"We recommended SSA improve building plans and do more to assess and monitor service delivery, with which SSA agreed.",
"Modernizing information technology. SSA's legacy IT systems are increasingly difficult and expensive to maintain and GAO identified SSA's needed investment in infrastructure operations and maintenance as among the 10 largest expenditures at federal agencies in fiscal year 2015.",
"GAO recommended SSA identify and plan to modernize or replace legacy systems, in accordance with forthcoming Office of Management and Budget guidance.",
"SSA agreed, and reported that it is finalizing its Information Technology Modernization Plan."
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GAO_GAO-13-64
|
{
"title": [
"Background",
"History of 529 Plans",
"529 Plan Operation and Features",
"Plan Disclosures",
"Student Financial Aid",
"Few Families Have 529 Plans and Those Who Do Tend to Be Wealthier",
"A Small Percentage of Families Have 529 Plans",
"Families with 529 Plans Generally Have More Wealth and Education than Those without 529 Plans",
"States’ 529 Plan Features and Other Factors Can Affect Participation",
"Tax Benefits, Fees, and Investment Options Vary Across State 529 Plans",
"Participation is Affected by Ability to Save and Other Factors, but Some States Have Adopted Strategies to Address Barriers",
"Savings in 529 Plans Affect Financial Aid the Same as Other Assets",
"Savings in 529 Plans Are Treated Similarly to Other Assets That Are Included When Calculating the Expected Family Contribution",
"Many States and Selected Institutions Also Treat 529 Plan Savings As Assets",
"States",
"Concluding Observations",
"Agency Comments",
"Appendix I: Objectives, Scope, and Methodology",
"Analysis of Government Data",
"Interviews with State 529 Plan Representatives, Academic Experts, and Industry Representatives",
"Analysis of Plan and Industry Data and Documentation",
"Literature Review",
"Financial Aid Analysis",
"Appendix II: Free Application for Federal Student Aid, 2012-2013",
"Appendix III: GAO Contacts and Staff Acknowledgments",
"GAO Contacts",
"Staff Acknowledgments"
],
"paragraphs": [
"",
"529 plans are a college savings vehicle that originated in the states. In 1986, Michigan created the Michigan Education Trust to operate what is generally considered the first state prepaid tuition plan. In 1996, Congress enacted Section 529 of the Internal Revenue Code, setting out requirements that state 529 plans must meet to be exempt from federal tax. The Economic Growth and Tax Relief Reconciliation Act of 2001 included a provision making earnings included in distributions from 529 plan accounts entirely tax-exempt as long as they are used to pay for qualified higher education expenses. For other key legislative actions and the value of assets invested in these plans, see fig. 1.\nThe number of 529 plan accounts has also increased since the plans were granted expanded federal tax advantages in 2001 (see fig. 2). 529 plans are a state-sponsored investment or savings vehicle whose purpose is to encourage people to save for college. Contributions to 529 plans are made with after-tax dollars and are not deductible for federal tax purposes. Annual contributions in excess of $13,000 are generally subject to federal gift taxes.necessary to provide for the qualified education expenses of the Total contributions may not exceed the amount beneficiary, which is determined by each state; however, individuals may open 529 plan accounts in multiple states. Earnings on contributions grow tax-deferred. When a distribution is made from a 529 plan, the earnings portion is tax-exempt as long as it is used to pay for qualified education expenses. Taxpayers must report to the Internal Revenue Service (IRS) whether the distribution was for qualified higher education expenses. Distributions not used for qualified higher education expenses can be made to either the account owner or beneficiary, but the portion of the nonqualified distribution consisting of investment earnings is taxable and subject to an additional 10 percent penalty. The federal penalty does not apply in some circumstances, for example if the distribution was considered nonqualified because the beneficiary died or received a scholarship.\nWhile section 529 provides that account owners and beneficiaries may not directly or indirectly control how contributions or earnings are invested, in 2001, IRS issued a notice setting out a rule permitting a change in investment strategy once per year and upon a change in the designated beneficiary of the account. For 2009 only, this was increased to twice per year.\nThere are few federal restrictions on 529 plan participation. For example, there are no income limits and almost anyone can initially be named as a beneficiary—an individual may open a 529 plan account for a child, grandchild, friend, spouse, or for themselves. Further, the 529 plan account owner may change the beneficiary at any time, though the subsequent beneficiary must be a member of the family of the original beneficiary in order for this change to be tax-exempt.",
"Because 529 plans are state-sponsored investments, states determine whether and what type of plans to offer (i.e., prepaid tuition or savings) as well as the eligibility criteria (for example, at the time of application prepaid tuition plans may require either the account owner or beneficiary to be a resident of the state administering the plan whereas residents and nonresidents can invest in most states’ college savings plans); administrative and investment fees; and associated state tax benefits. Almost all states offer a college savings plan. In these plans, individuals purchase interests or shares in a trust established by the state. In most cases, the trust assets are invested in mutual funds. The shares in college savings plans can be sold directly by the state or through an external program manager hired by the state (direct-sold) as well as through a financial advisor or broker (advisor-sold). College savings plans may offer a number of investment options, which often include stock mutual funds, bond mutual funds, and money market funds. These investment options can vary in terms of risk and return, ranging, for example, from investments that are insured by the Federal Deposit Insurance Corporation (FDIC) to options that are almost completely invested in aggressive-growth funds. Many plans offer age-based portfolios that shift automatically into more conservative investments as the beneficiary approaches college age. Fifteen states also offer prepaid To help run their plans, states may tuition plans to their state residents.employ marketing staff, advisors, financial consultants, or other experts.\nSome states offer a variety of tax advantages that can include a state deduction or non-refundable credit for plan contributions and tax-deferred earnings. These benefits may apply only to residents who make contributions to their own state’s plan or, in a few states, may include contributions made to other states’ plans.",
"Although most 529 college savings plans have been modeled after mutual funds, 529 plans are regulated differently than mutual funds under the federal securities laws because they are regulated as municipal securities. As municipal securities, 529 plans are exempt from the registration and reporting requirements of the federal securities laws. However, broker-dealers selling 529 plans (advisor-sold plans) must comply with the rules of the Municipal Securities Rulemaking Board (MSRB). Specifically, MSRB requires broker-dealers who sell 529 plans to follow certain guidelines, such as having reasonable grounds to believe that the recommended product is suitable for the customer; disclosing certain information, such as plan fees and state tax implications; following certain requirements when advertising; and posting disclosure documents on its Electronic Municipal Market Access Website. However, MSRB rules do not apply to state issuers when they market their 529 plans directly to the investor without the assistance of a broker-dealer (direct- sold plans). In 2004, in response to concerns that 529 plan disclosures were inadequate, CSPN, after working with the Securities and Exchange Commission, the MSRB, and the National Association of Securities Dealers, developed voluntary disclosure principles to be adopted by state issuers on plan performance, fees, and state tax information, among other things. These principles were designed to enhance investors’ ability to compare information across plans. Since 2004, the principles have been updated several times with the most recent update in May 2011.",
"As authorized under Title IV of the Higher Education Act of 1965, as amended, the Department of Education provides assistance to help millions of students and families meet the costs of higher education through grants, work-study, and loans. A substantial portion of this federal financial aid is awarded based on the amount of a student’s financial need, which is generally the difference between a student’s cost of attendance and an estimate of his family’s ability to pay these costs, known as the expected family contribution (EFC). In addition to the student’s income and assets, parents’ income and assets are also used to determine the student’s EFC unless the student is classified as independent. Independent students have their income and assets included in the EFC and their spouses’ income and assets, if applicable. Several criteria are used to determine if a student is independent, such as the student’s age, and if he or she is married or separated, enrolled in a master’s or doctoral degree program, or serving on active duty in the military, among other things.\nTo apply for federal financial aid, students and, in the case of dependent students, parents submit information on income, assets, and the number of children enrolled in college through the Free Application for Federal Student Aid (FAFSA). This information is then used to determine the student’s eligibility for federal student aid by calculating the EFC through a process known as federal methodology, which is set out in statute. In terms of assets, figure 3 shows the information required by the FAFSA regarding the net worth of students’ and parents’ investments, which includes savings in 529 plans along with other investments such as Coverdells, money market funds, stocks, and mutual funds (for a full copy of the FAFSA see app. II).\nStates and institutions may also offer financial aid. To determine the amount of such aid, some states and institutions choose to gather information in addition to what is required by the FAFSA. One form used by some institutions is the College Board’s PROFILE form. The PROFILE asks for information not included on the FAFSA, such as home equity and medical expenses, as well as more detail about information that is included on the FAFSA. The institutions may then use an individualized institutional methodology to determine the student’s EFC for institutional financial aid.",
"",
"According to the 2010 Survey of Consumer Finances (SCF), less than 3 percent of U.S. families had 529 plans or Coverdells, a similar but less often used education savings account. Even among families who acknowledged upcoming education expenses, 529 plans were not widely used. Of the approximately 25 percent of families who said they expected major education expenses in 5-10 years, about 7 percent of them had 529 plans or Coverdells. Similarly, of the approximately 18 percent of families who reported saving for education was a priority, only about 9 percent had 529 plans or Coverdells. 529 plans are also less commonly used than other savings vehicles among those saving for college. For example, a 2010 Sallie Mae survey found that most parents saved for college in general savings accounts or certificates of deposit and, of those who did invest, more used general investment vehicles than 529 plans. Based on our analysis of SCF data, the median amount in 529 plan or Coverdell accounts was about $14,700.",
"Families with 529 plans or Coverdells typically had much more wealth than families without these accounts, according to our analysis of SCF data. Based on our analysis of the 2010 SCF, we estimate that the median financial asset value for families with 529 plans or Coverdells was about $413,500, which is about twenty-five times the median financial asset value for families without 529 plans or Coverdells (about $15,400).retirement assets than other families. Of families with 529 plans or For example, families with 529 plans or Coverdells had more Coverdells, about 94 percent had retirement assets, such as those in 401(k) accounts or traditional pensions. In contrast, approximately 49 percent of families without 529 plans or Coverdells had these retirement assets. Further, the median value of retirement assets was much greater for those with 529 plans or Coverdells. Specifically, the median value in retirement accounts was about $213,600 for families with 529 plans or Coverdells, while the median value for families without 529 plans or Coverdells was about $40,300. A larger share of families with 529 plans or Coverdells (27 percent) also believed they will have more than enough retirement income from pensions and Social Security to maintain current living standards than the share of families without 529 plans or Coverdells (16 percent), which may put them in a better position to save for college.\nIn 2012, we reported similar findings using data from the 2007 SCF. GAO-12-560.",
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"Officials in every state and most experts and representatives we interviewed identified tax benefits, fees, and investment options as some of the most important features consumers consider when choosing whether or not to participate in a 529 plan and, if so, which plan to choose. These features vary by state and plan. All states offer at least one plan and many offer a combination of college savings (either direct- sold, advisor-sold, or both) and prepaid plans. For example, 14 states offer a direct-sold plan only, 22 states offer both direct-sold and advisor- sold plans, and 6 states offer all three plan types: direct-sold, advisor- sold, and prepaid. The popularity of direct-sold college savings plans has grown over time and in 2011 total assets were essentially evenly split between those and advisor-sold plans.\nStates offer a range of tax benefits for 529 plans, and these benefits are a primary incentive to investing in a 529 plan, according to many state officials we interviewed. In addition to earnings growing tax-deferred, our analysis of CSPN data shows the majority of states with an income tax offer some form of benefits: 33 offer a tax deduction and 3 offer a nonrefundable tax credit to residents who participate in their state’s Five states also extend benefits to residents who participate in any plan. state’s plan. Almost all states limit tax benefits to the account owners, but one state extends those benefits to grandparents, aunts, and uncles who contribute to the plan. Officials in some states we interviewed said they provide additional tax benefits, for example, one state offers an exemption from the state inheritance tax. Others allow contribution amounts that exceed the annual deduction limit to be carried over to the following year’s return.\nVarious fees and expenses may be associated with 529 plans, including administrative and investment fees. Administrative fees, which are charged by the state and/or the program manager hired by the state, cover administration of the 529 program, including customer service and marketing. Investment fees are charged by the investment company to manage the funds. The aggregate of these administrative and investment fees is often referred to as “annual asset-based fees,” which are expressed as a percentage of the fund’s average net assets. In addition, advisor-sold plans may also charge a “sales load”—that is, a fee paid to the selling broker when the fund is purchased or redeemed—and direct- sold and advisor-sold plans may also charge participants additional fees for services such as enrolling or changing the account owner.\nFees among 529 plans vary widely; total annual asset-based fees among plans nationwide ranged from 0 percent to 1.97 percent for direct-sold plans and 0 percent to 2.78 percent for advisor-sold plans, as of July 2012. As seen in table 2, there is variation among states in both administrative and investment fees. Such variation occurred even among states with similar administrative structures. For example, among three of the states we reviewed where most administrative functions were conducted in-house, one state charged administrative fees of between 0.44 percent and 0.46 percent of the balance annually, another charged between 0.15 percent and 0.20 percent, and a third charged no administrative fees, instead covering operational costs and salaries through an annual state appropriation. Investment fees also varied: for example, underlying mutual fund fees ranged from 0 percent to 1.82 percent of the balance annually, depending on the type of investment option a participant chooses. For advisor-sold funds, sales loads also varied, ranging from 0 percent to 5.75 percent, in part based on the fund class. In addition, among the five states we reviewed, four did not charge an enrollment or application fee, while one charged $25, although the fee may be waived through promotions to encourage participation. 529 plan fees remain higher than fees for similar mutual funds an investor might purchase outside of a 529 plan. According to a 2011 study by Morningstar, 529 plan mutual funds charged, on average, an additional 0.31 percent of the account balance annually in investment fees compared with their respective mutual fund categories in the open market. The administrative fees charged by most 529 funds raise the cost even higher. However, Morningstar does note that fees for 529 plans have declined in recent years and officials at the majority of state plans we interviewed told us they have taken steps to reduce fees – for example, by renegotiating program manager contracts, using competitive bidding for program management, or consolidating functions in-house rather than using a program manager. As we have previously reported, fees are one of many factors participants should consider when investing because even a small fee increase can significantly decrease savings over time.\nState plans offer a variety of investment options to 529 college savings plan participants. Plans in the states we reviewed, for example, include up to 17 different investment options, including age-based, static, and customized portfolios, to cater to participants’ various levels of risk tolerance and investment sophistication. Age-based options were generally the most popular and, according to state officials we interviewed, may appeal to investors who might have more limited investment experience or a lower risk tolerance. One state plan we reviewed also offers a customized option for participants who seek more control over their investments, which allows them to designate their own allocations in funds such as stocks and bonds. For more risk-averse participants, some states also offer a FDIC-insured investment option or one that in some other way guarantees the investment’s principal. To help investors determine which plan best meets their needs, officials we interviewed in two states said their states provide risk assessment information through customer call centers. One state developed a risk tolerance questionnaire to explain investment scenarios, while the other had a representative ask informal questions to help potential investors assess their own risk level.\nFamilies can also choose to invest in prepaid plans, which were offered in three of the five states we reviewed. These plans also vary in fees, payment options, and cost. Two plans, for example, charged an annual administrative fee of just under 0.50 percent and the third charged no annual fee. In terms of payment options and costs, two states we interviewed offered prepaid plans by academic periods or units that can be used to pay for future tuition costs with the option of paying in lump sum or through a monthly payment program. According to state officials, the cost of these prepaid plans is generally determined by forecasting future tuition and fees at different types of schools (4-year, community college, etc.), given a number of actuarial assumptions on tuition inflation and anticipated investment return. One state, for example, offered a contract to cover four years of college costs for a child currently under age five at a lump sum of $56,600 and another state offered a similar contract for just under $66,500. A third state we reviewed does not offer units or contracts, but allows participants to contribute any amount to the plan. When the participant withdraws the funds for qualified educational expenses, they will receive the amount they contributed adjusted by a tuition inflation value.",
"Families encounter a number of barriers as they consider saving for college: they may struggle with making saving a priority, and for those who do plan to save, many do not know 529 plans exist as a savings option. Additionally, once families decide to invest in a 529 plan they may have trouble understanding how it works and the variation across plans may affect their ability to select one that best meets their needs (see fig. 5).\nFamilies may encounter a variety of barriers saving for college, such as insufficient income, underestimating the cost of college, and misconceptions about financial aid availability, but selected states are taking steps to help address these barriers. A 2010 national survey published by Sallie Mae found that while nearly nine out of ten parents expected their child would attend some form of higher education, only three out of five parents of college-bound children have saved or invested for their oldest child’s education.\nFirst, many families may not save because they lack adequate income or have competing financial priorities. The same Sallie Mae survey reported that 68 percent of those who are not saving cited a lack of money as a major reason.this as a challenge: for example, one state official said that the economic downturn has affected some families who are reluctant to make deposits or participate in a 529 plan because they may need to choose between paying their mortgage and saving for college. In terms of competing priorities, two industry representatives we interviewed stressed that retirement should be a higher priority than saving for college. Officials from one state added when a family’s budget shrinks or the economy is uncertain, families reduce college rather than retirement savings. Furthermore, a few industry representatives said families should consider using other tax-deferred savings vehicles where funds could be used for multiple purposes, such as retirement and education. The states we selected to review have adopted strategies to expand participation among lower income families who may have limited resources to allocate towards savings, including offering matching programs, low minimum initial contributions, and less risky investment options.\nFor example, in 2011 a family of 4 earning less than $44,700 would qualify, according to plan documentation. dollar for dollar, up to $400 annually per beneficiary for up to 4 years. In addition to increasing participation, officials from one state plan noted that the matching program can also help minimize student loans and reduce the amount students will have to work while in school. An ongoing experiment conducted by the Center for Social Development also found a positive impact on the number of 529 plan accounts for families who were automatically enrolled in a state-owned 529 account with a matching program in one state. In addition to participating in the automatically opened account, families in the treatment group were offered an additional $100 to open a private account. These families opened private 529 accounts at a higher rate (17 percent of families with a match compared to 2 percent of those in the control group without the incentives), and deposited more into those accounts. While matching programs may have positive results, two states we reviewed reported challenges with funding and awareness. One state’s program had not been authorized since 2008 and officials in another state said their enrollment remained low despite being open to all participants because the state’s 529 marketing budget was eliminated.\nLow or No Minimum Initial Contributions: Low or no minimum initial contributions and fee waivers may also help increase participation among low-income families, according to state officials and others we interviewed. Nationally, minimum initial contributions range from $10 to $5,000, according to our analysis of CSPN data; however, the majority of states require an initial contribution of $25 or less. Two states allow participants to open an account with any amount. Officials in one state reported that keeping the initial deposit amounts low can also help facilitate one of their main goals: to help spur the mental commitment and habit to save.\nLess Risky Investment Options: Officials from many states we reviewed said they offer investment options that pose less risk to the investor, which can appeal to low- to moderate-income families. One state, for example, partnered with two local banks to provide a FDIC-insured option to target families who might otherwise save in the bank’s savings account. According to an official from the plan’s banking partner, clients with more assets often use financial planners and are aware of 529 plans, while the FDIC-insured option was designed for those without financial planners and who use the bank’s more traditional products.\nAccording to state officials, most of the states we reviewed are not tracking participant’s demographic information such as income, however, making the success of these efforts for low-income families difficult to assess.\nSecond, in addition to insufficient income, some families may not save because they procrastinate or underestimate the true cost of college, according to officials from most of the states we reviewed. Some parents may not budget money to save for college due to a lack of understanding about what college really costs or they become overwhelmed and do nothing, officials at one state 529 plan said. To address these challenges, selected state 529 plans have adopted financial literacy programs and marketing strategies emphasizing the importance of saving even a small amount early and often. To target families with younger children, two states provide materials to parents of newborns through the hospital or direct mail and two states work with elementary schools to distribute materials on the states’ 529 plans. Some states also establish contribution deadlines linked to certain benefits, such as discounted enrollment, or provide incentives to families who contribute during certain times of the year. To prevent families from feeling overwhelmed about college costs, one state has focused its marketing on saving a small amount each month, $25, to help reduce the student’s future debt, instead of focusing on the total cost of college.\nSallie Mae, August 2010. impact of a difficult economic climate, constraints on endowments, and tighter budgets. In response, many of the states we reviewed have attempted to address misconceptions about the financial aid process. For example, one state lists common myths about 529 plans on its website, explaining that approximately 60 percent of federal financial aid comes in the form of loans, a debt the family must repay. The site encourages families to save even in small amounts to offset the amount of debt the family will incur.\nFor those who are saving for college, awareness that 529 plans exist as a savings option is a challenge to participation, according to officials in most of the states we reviewed. In addition, among parents who are saving for college, one study found that almost half are unfamiliar with 529 plans. An additional 4 percent volunteered that they had never heard of the plan or did not know what it was. financial planners, according to many state officials we interviewed; therefore, awareness may be a particular challenge for low-income families who generally do not have access to such resources. Further, some state officials and industry representatives we interviewed encountered families with misperceptions about how 529 plans work, such as not understanding they can invest in plans outside their home state or use savings at any college or university. For example, officials from two states reported families mistakenly believe prepaid plans can only be used at an in-state institution.\nSallie Mae, August 2010. marketing and communication difficult, according to officials we interviewed in two states. Marketing officials from one state told us consumers requested more information on 529 plans, but it was difficult to communicate information about the complex plans in a simple, consumer- friendly way. Officials in another state noted that plan complexity and a lack of clear information can discourage families from researching and enrolling in a plan.\nMany state officials and some academic experts and industry representatives reported that simplifying the information available to consumers might keep families from feeling overwhelmed. Because MSRB rules do not apply to state issuers when they market their direct- sold 529 plans, CSPN developed a set of disclosure principles to help states provide consistent information. The voluntary principles contain recommendations to help consumers understand plans and compare various features, such as fees, tax issues, and risk. While disclosures have been helpful, according to one expert who consults with a number of states, there is room for improvement: disclosures could be more rigorous in ensuring that consumers are informed of less-costly options within a state if they exist and should cover information on prepaid plans, which is currently not standardized. When comparing direct-sold disclosure documents across states we reviewed, we found that the five states generally adhered to the CSPN disclosure principles and contained consistent information a consumer could compare. Three states, however, were missing some information that could be helpful to consumers, such as information on the risk of state tax law changes and a statement that 529 plans should only be used to save for qualified higher education expenses.\nThe structure of federal and state tax benefits, a primary incentive for some 529 plan investors, can also affect participation as they may not be as helpful to low-income families, according to some academic experts, industry representatives, and state officials we interviewed. Low-income families with low or no tax liability see less benefit from federal tax benefits and may see no benefit from nonrefundable state tax credits provided to 529 plan investors. According to a 2009 Treasury report, families saving in 529 plans may need to carefully consider whether their child will go to college because the penalty incurred if the funds are not used for qualified education expenses may outweigh the tax benefits for low-income families. In addition, Treasury noted most states do not extend tax benefits to residents investing in out-of-state plans, limiting competition. As a result, families have a strong incentive to choose their home state plan even if other plans offer preferable investment choices. In 2009, Treasury recommended states eliminate this “home-state bias” to provide more investment options to consumers, more intense competition between plans, and potentially lower fees. According to an annual report from one state that extends its tax benefits to residents who invest in other states’ plans, doing so, when other states do not, puts the home state plan at a competitive disadvantage. State officials explained that this policy results in other plans marketing their products in the state. Residents, therefore, may be unaware of their home state plan’s benefits, according to the report.\nFinally, the fact that account holders may change their investment option only one time per year may affect participation in 529 plans, according to state officials and some industry representatives we interviewed. Officials from one financial services company advocated removing any limits on changing investment choices beyond those imposed by the financial services company sponsoring the fund, as is the case with 401(k) plans and individual retirement accounts. Another industry representative observed some 529 plan participants changing their account beneficiary solely because it would allow them to change their investment options. However, the representative cautioned that participants should not change their investment options too frequently; many experts advocate that investors are best served by sticking with a long-term investment plan.",
"",
"The extent to which savings in 529 plans, or other investments, affect how much a family is expected to contribute to the cost of college—the federal expected family contribution (EFC)—generally depends on the family’s amount of assets. Education incorporates the amount of specific types of assets into various calculations to determine the EFC. However, in two calculations, families who meet certain criteria are either not expected to contribute to the cost of college (automatic zero EFC) or they qualify for a simplified calculation. In both cases, assets, including savings in 529 plans, are not included in the calculation of the EFC. According to the 2007-2008 NPSAS, about a quarter of families who filed FAFSAs met these criteria.\nIn other calculations, assets, including savings in 529 plans, may affect the EFC to different extents depending on whether students are dependent on their parents or are independent with dependents of their own. For dependent students, between 2.64 percent and 5.64 percent of parental assets may be included in the EFC as described below:\nFirst, the parents report the net worth (current value minus debt) of their investments (see fig. 6 #1),contribution from assets is calculated, an amount known as the “education savings and asset protection allowance” is subtracted but before the total (see fig. 6, #2). This allowance is designed to help protect a portion of the parents’ assets.\nSecond, 12 percent of any parental asset amount that exceeds the education savings and asset protection allowance is used to determine the contribution from assets that will be considered in the final EFC calculation (see fig. 6 #3).\nThird, this contribution from assets is added to the parents’ available income to determine their adjusted available income (see fig. 6, #4).\nFourth, a marginal rate, from 22 percent up to a maximum of 47 percent, is applied to the sum of the parents’ available income and contributions from assets (known collectively as the adjusted available income) to determine their EFC (see fig. 6, #5). As a result, the amount of net parental assets, including savings in 529 plans, that can be included in the EFC ranges from 2.64 percent to 5.64 percent.",
"",
"Most state financial aid offices also consider savings in 529 plans as assets. According to the 2009-2010 National Association of State Student Grant and Aid Programs survey, 35 states reported that they used the federal methodology for determining the EFC for state aid. However, some states that reported using federal methodology for their primary student needs analysis also indicated they provide special treatment for state 529 college savings or prepaid plans when determining student eligibility for aid. Specifically, seven states that used federal methodology to award their state aid excluded the state’s 529 college savings plan and three excluded the state’s prepaid plan from their calculation for state aid.\nOf the officials in the six state financial aid offices we interviewed, none said they considered assets to a greater extent than the FAFSA and a few said their state took specific steps to exempt savings in these plans from consideration. Specifically, officials in two states said there is language in their 529 plan authorizing legislation that exempts plan savings when determining a student’s eligibility for state financial aid. Officials in another state said their state issued a regulation stating that savings in a 529 plan would not affect state grant eligibility for residents attending nonprofit higher education institutions. An official in a fourth state said the legislature changed its higher education authorization language so that students would still be eligible to receive a state scholarship even if they enrolled in the state’s prepaid plan.\nInstitutional financial aid practices vary with regard to assets, but those with more aid to award may gather additional information about a family’s financial status, according to some representatives of national financial aid organizations and institutional officials we interviewed.schools require students to provide information in addition to the FAFSA, such as filling out the College Board’s PROFILE form or submitting tax returns. One official said the PROFILE provides more detailed information on a family’s assets, such as home equity and retirement account balances, which helps the university prioritize the students with the most need.\nInstitutional officials we interviewed said their schools considered savings in 529 plans as assets, even if they used different methodologies to calculate their financial aid or included the assets at different percentages. Officials at two institutions said they did not consider savings in 529 plans beyond how they are already reported by the family on the FAFSA. An official at a third institution said the school does not collect any additional information on savings in 529 plans beyond what is requested on the FAFSA even though the school requires families to fill out the PROFILE form and uses an institutional methodology to award its financial aid. The remaining institutional officials said they collect additional family financial information when calculating student aid, but consider savings in 529 plans similarly to the family’s other assets. Specifically, one institutional official said her school uses the PROFILE form to gather more detailed information about a family’s financial situation. Even so, 529 plan savings do not affect a student’s need any differently than other assets, she said, which are assessed by the institution at about five percent of their value. Additionally, she said 529 plan assets are considered parental assets even if they are reported as student assets because the school assesses parental assets at a lower percentage. An official at another institution said her school assesses assets at around 20 percent of their value when calculating the EFC for institutional aid.\nOfficials’ opinions varied on whether savings in 529 plans should affect financial aid, but many said families’ concerns that these savings will have an adverse effect are common. One state financial aid official said it would be helpful if 529 plan savings were excluded entirely from the calculation because including them can be a deterrent to saving. She said her office often encounters families who feel penalized for saving because they believe the students without savings receive financial aid. Likewise, a 529 plan official said regardless of whether the student’s financial aid will be reduced by savings in a 529 plan, there is the perception that it will. In contrast, one institutional financial aid official said savings in 529 plans should not be treated any differently than other assets because the need analysis is meant to determine the family’s fair share of college expenses and excluding 529 plans would be counter to this aim. One researcher we interviewed found that the issue may be most important for those families who are on the margin of receiving federal financial aid. Regardless of the perceived effect 529 plan savings may have on financial aid, some of the officials we interviewed said they encourage families to save for college because much of the aid they may be offered could be in the form of loans, so saving will generally be in the student’s long-term financial interest.",
"As currently designed, 529 college savings plans benefit a small percentage of U.S. families. In general these families tend to be wealthier than others. It is not clear whether the $1.6 billion in federal tax expenditures that these plans represent strategically targets limited federal resources. Although 529 plans do help some families save for college, families with less income and who are uncertain about whether their children will attend college may have less incentive to invest resources in 529 plans than in other forms of savings. In addition, the tax benefits attractive to a higher-income family do not offer as much benefit to a family with lower tax liability.\nQuestions about who benefits from this tax expenditure occur in an environment of long-term fiscal challenges and difficult choices about how the federal government allocates limited resources. Reviewing 529 plans in conjunction with the other billions of dollars in federal educational assistance provided through tax expenditures, credits, and deductions could help Congress determine whether this program is meeting its goals. Similar to GAO’s prior work on higher-education related tax expenditures, our analysis of 529 college savings plans was not able to address all questions that could inform future policy choices regarding 529 plans. For example, what is the purpose of the federal tax benefits provided through 529 plans? Are the goals and objectives clearly defined and measurable? Who is the target population for 529 plans and does the current structure provide appropriate incentives for that population? How do the 529 plan federal tax benefits interact with other programs, such as federal financial aid and other higher education tax benefits and savings vehicles?\nConsideration of these questions could facilitate continued congressional oversight of this tax expenditure.",
"We provided a draft of this report to Education, Treasury, and IRS for comment. The agencies provided technical comments that were incorporated, as appropriate.\nWe are sending copies of this report to the Secretary of Education, Secretary of the Treasury, Commissioner of Internal Revenue, relevant congressional committees, and other interested parties. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at [email protected] or 202-512-6806. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.",
"Our review examined: (1) the percentage and characteristics of families enrolling in 529 plans, (2) the plan features and other factors that affect participation in 529 plans, and (3) the extent to which savings in 529 plans affect financial aid awards. To answer these research objectives, we analyzed government data; interviewed state 529 plan officials from select states as well as industry representatives and academic experts; reviewed plan documents and analyzed industry data; conducted a literature review; interviewed federal, state, and institutional financial aid officials; and reviewed Department of Education (Education) and Internal Revenue Service (IRS) documents as well as relevant federal laws, regulations and guidance.\nWe assessed the reliability of the data we used by reviewing documentation, interviewing knowledgeable officials, and conducting electronic testing on relevant data fields. We found the data we reviewed reliable for the purposes of our analyses. We conducted this performance audit from November 2011 to December 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"To determine the percentage and characteristics of families enrolling in 529 plans, we reviewed data from the 2010 Survey of Consumer Finances (SCF); the 2007-2008 National Postsecondary Student Aid Study (NPSAS); and 2007-2010 Statistics of Income (SOI) federal tax data. The 2010 SCF, 2007-2008 NPSAS, and 2010 SOI were the most recent data available at the time of our engagement, so to ensure consistency in reporting we adjusted all dollar amounts from previous years’ data to 2010 dollars.\nEach of these three data sources (SCF, NPSAS, and SOI) are based on probability samples and estimates are formed using the appropriate estimation weights provided with each survey’s data. Because each of these samples follows a probability procedure based on random selections, they represent only one of a large number of samples that could have been drawn. Since each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95 percent confidence interval (e.g., plus or minus 2.5 percentage points). This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn. Unless otherwise noted, all percentage estimates based on the SCF, NPSAS, and SOI have 95 percent confidence intervals that are within 5 percentage points of the estimate itself, and all numerical estimates other than percentages have 95 percent confidence intervals that are within 5 percent of the estimate itself.\nFor our analysis of the percentage and characteristics of families who held 529 plans, we relied primarily on restricted data from the 2010 SCF. SCF is a triennial survey sponsored by the Board of Governors of the Federal Reserve System (Federal Reserve) to provide detailed information on the finances of U.S. households. The SCF sample of 6,492 households represented approximately 118 million households in 2010. It collects detailed financial characteristics on an economically dominant single individual or couple (married or living as partners) in a household, which we refer to as a family for the purposes of this report. For our analysis, we aggregated financial information so that, unless otherwise noted, all SCF estimates are for the family rather than the individual survey respondent. We did not restrict our analysis to families with children, in part, because 529 plans can be used for nearly anyone, including one’s child, grandchild, niece, nephew, and oneself. However, about 88 percent of families with 529 plans or Coverdell Education Savings Accounts (Coverdells), a similar education savings vehicle, had children 25 years of age or younger living with them. Our estimates for 529 plans included Coverdells because Federal Reserve officials said respondents did not always distinguish between the two account types; therefore, we did not separate these responses because of data reliability concerns. However, the officials indicated that a larger share of the SCF respondents reported having 529 plans than Coverdells. Further, using SOI data, we estimate that in 2010 approximately 85 percent of tax filers who took a distribution from either a 529 plan or a Coverdell reported distributions from a 529 plan while 14 percent reported distributions from a Coverdell and 1 percent reported distributions from both. We wrote an analysis program that the Federal Reserve ran using their restricted SCF dataset to separate information on Medical Savings Accounts and Health Savings Accounts, which had been included in the 2010 public dataset with 529 plans and Coverdells. Federal Reserve officials modified some resulting information to protect the privacy of survey respondents, for example by rounding dollar amounts.\nUsing SCF, we generated estimates on the percentage and characteristics of families enrolled in 529 plans or Coverdells and of families not enrolled in these plans. We examined family characteristics such as wealth (financial assets), income, education, and race or ethnicity. To calculate financial assets, we used the methodology the Federal Reserve uses to produce variables for its published Bulletin articles. This methodology included assets held in checking, savings, and brokerage accounts, certificates of deposit, mutual funds, stocks, bonds, life insurance, retirement accounts, and other vehicles such as 529 plans. Assets held in retirement accounts included those in defined contribution plans (e.g. a 401(k), individual retirement account, or thrift savings plan) as well as in traditional pensions or defined benefit plans. To calculate income, we used the family’s self-reported total income. To report the family’s highest educational attainment, we reviewed the education of each respondent and his or her partner or spouse and included whichever was higher. We reported information on the respondent’s race or ethnicity, which does not necessarily indicate the race or ethnicity of other family members.\nWe used 2007-2008 NPSAS data to develop a similar demographic profile for college students and generate other estimates on college costs and financial aid amounts. NPSAS is a comprehensive study by Education that examines how students and their families pay for higher education. It includes nationally representative samples of 113,535 undergraduates, 12,585 graduate students, and 1,581 first-professional students enrolled any time between July 1, 2007 and June 30, 2008. The NPSAS data are based on administrative records and student interviews, and NPSAS includes survey results from both students who received financial aid and those who did not. While we used NPSAS to develop a demographic profile for college students similar to the one we developed for the general population using SCF, families with 529 plans are not directly comparable to families of college students. For example, while our estimates using SCF are for all families (including families with children in college, with children not in college, and with no children), our estimates for families using NPSAS are exclusively for families with a current college student. In NPSAS, families include the student and the student’s parents (if the student is dependent) or the student’s spouse and dependents (if the student is independent). Further, the population of NPSAS students’ families is not the same as the population of families with a child in college because a family may have more than one student in college in a given year. Consequently students’ family characteristics derived from NPSAS are not directly comparable to family characteristics based on the SCF, though for the purposes of our report we use similar terminology to describe them. Similar to our analysis of SCF, we generated estimates of the characteristics of college students’ families— education, and race or ethnicity. To report income, we including income,calculated the total income of (1) the student’s parents (if the student was dependent) and (2) the student and the student’s spouse (if the student was independent). To report the family’s highest educational attainment, we reviewed the education of each student’s mother and father and included whichever was higher. We also reported information on the student’s race or ethnicity, which does not necessarily indicate the race or ethnicity of other family members. We also developed separate estimates for students who are considered either dependent on their parents or independent for financial aid purposes.\nWe also used NPSAS to generate other estimates related to the cost of college and amount of financial aid awards. First, we estimated the median annual cost of attendance at 4-year public and private non-profit institutions. This included tuition and fees, room and board, transportation, and personal expenses, though the estimate is valid only for students who attended one institution. Second, we estimated the percentage of students who received grants and loans, as well as the median amount of these grants and loans and the percent and amount of college expenses remaining. Third, we generated estimates for the proportion of students who filled out the Free Application for Federal Student Aid (FAFSA) and, for those who did fill out the FAFSA, the proportion who met certain criteria to have assets excluded from the federal expected family contribution (EFC) and the proportion whose assets affected the EFC. Finally, we calculated the percentage of students who received state and institutional financial aid.\nWe also analyzed 2007-2010 taxpayer data from SOI to determine the extent to which taxpayers used distributions from 529 plans for qualified education expenses and how the tax savings from these plans were distributed across income levels. The SOI individual tax return file is a stratified probability sample of income returns filed with the IRS. The SOI sample of 308,583 returns represented approximately 143 million tax returns filed for 2010. We combined data from the SOI individual tax file with information from the Form 1099-Q. A 529 plan must file a Form 1099-Q with the IRS and the account owner or beneficiary each time a taxpayer receives a distribution from a 529 plan account. This form includes information on the amount of the distribution and the earnings (or loss) on the distribution. When taxpayers receive a Form 1099-Q, they must determine if the distribution was used for qualified education expenses. If the distribution, or any portion of it, was nonqualified, the earnings portion is subject to taxes and, in some cases, a penalty. The taxpayer determines the amount of taxes and penalty owed on the nonqualified distribution by completing Form 5329, which is contained in the individual tax return file. By combining information from the 1099-Q with information in the individual tax return file, we identified the percentage of taxpayers who reported nonqualified distributions that were subject to a penalty. We also used SOI data to estimate the tax savings by using the National Bureau of Economic Research’s (NBER) TAXSIM Model, a microsimulation model of U.S. federal and state income tax systems. TAXSIM calculates estimated liabilities under U.S. federal and state income tax laws from actual tax returns that have been prepared for public use by the Statistics of Income Division of the IRS. Our analysis of the tax savings from 529 plans excludes returns with a filing status of married filing separately.",
"To provide information on the factors that affect participation we interviewed officials from the following five state 529 plans and their industry partners: Louisiana, Michigan, Pennsylvania, Utah, and Virginia. We used College Savings Plan Network (CSPN) data to select states that represented a variety of plan types (direct-sold, advisor-sold, and pre- paid), offered a number of features (i.e., various state tax benefits, state matching program), and were geographically diverse. We also used suggestions provided by academic experts and industry representatives to inform our selection as well as to provide information on 529 plan participation. We interviewed academic researchers (including the Center for Social Development), industry regulators (the Financial Industry Regulatory Authority and the Municipal Securities Rulemaking Board), financial services companies (American Funds and UPromise), financial experts (such as Financial Research Corporation and Morningstar), College Savings Plan Network, Savingforcollege.com, and consumer interest groups (Investment Company Institute and the American Association of Individual Investors).",
"We analyzed CSPN data on state 529 plans to provide a national overview of plan features, such as fees and state tax benefits. Biennially, states submit plan data to CSPN through an online system to be posted on the CSPN website. CSPN provided us with data on each state as of July 2012. We analyzed the data for every state for both direct-sold and advisor-sold plans on the following features: whether the state offers a matching grant program, whether the state offers tax deductions for contributions and the amount, whether the state offers tax credits for contributions and the amount, types of investment options offered, total contribution limits, and required initial contribution amounts. We also analyzed the following fee categories: program manager fee, state fee, annual account maintenance fee, miscellaneous fee, annual distribution fee, estimated underlying fund expenses, total annual asset-based fees, maximum deferred sales charge, and minimum initial sales charge.\nFurther, we compared CSPN disclosure principles with direct-sold plan disclosure documentation for the five states we interviewed. We reviewed the extent to which the selected states incorporated elements of the CSPN disclosure principles and whether plan documentation was easily comparable across states. Specifically, we compared whether the state documents contained eleven elements outlined in the principles, including: a summary of key features, an assessment of the individual summary features, a statement of any guarantee by the state issuer or the state, information on state tax treatment and other benefits, information that the state offers more than one plan, fee descriptions, and investment risks, among others. These elements were chosen based on discussions with states and experts who identified plan fees, tax benefits, and investment options as some of the most important features consumers consider when choosing whether or not to participate in a 529 plan. In addition to recording whether states have disclosed the information listed above, we assessed whether any information was missing, where the information was located in the document, and any other observations about the ability to find and understand plan information.",
"We reviewed studies conducted by academics, researchers, industry representatives, and federal agencies on why families choose to participate in 529 plans and what features might serve as barriers or incentives. We identified literature published since 2006, when Congress passed the Pension Protection Act of 2006, Pub. L. No. 109-250, which made permanent the tax-exemption on 529 plan distributions used for qualified education expenses. Our review included scholarly/peer reviewed material, government reports, hearings and transcripts, trade/industry articles, association/nonprofit/think tank publications, and working papers. We searched information sources such as EconLit, ProQuest, ERIC, PolicyFile, WorldCat, ECO, PapersFirst, ArticleFirst, and Academic OneFile. These online sources are nationally recognized databases that index and abstract research literature. We selected search terms to capture literature that specifically addressed 529 plans, college savings plans, qualified state tuition programs, and prepaid tuition. Of the 32 studies we identified, 12 studies met the following criteria: 1) included information on plan features in specific states, 2) addressed the consequences for consumers of choosing one type of 529 plan over another, 3) identified barriers or incentives for consumers to choose 529 plans, 4) included data collected by states on plan participation, and/or, 5) included information on plan disclosures to consumers. All studies cited in the report were reviewed by at least two GAO analysts. Studies that included statistical methods were reviewed by a GAO statistician and social science analyst. All studies were reviewed for methodological soundness and to ensure that any limitations associated with study methodologies were conveyed to readers in our report text, footnotes, or this appendix.",
"To understand the extent to which savings in 529 plans affect federal financial aid awards, we interviewed Education officials in the Office of Postsecondary Education. We also reviewed relevant statutory provisions, the FAFSA, the Federal Student Aid Handbook, and other Education documents related to calculating the EFC.\nTo understand the extent to which savings in 529 plans are considered in state financial aid calculations, we interviewed officials from state financial aid offices in six states. To select the state financial aid offices, we used information from a 2009-2010 survey by the National Association of State Student Grant and Aid Programs to identify states that indicated they used a financial aid formula other than the federal methodology in their primary needs analysis and/or provided special treatment for state 529 plans. For report consistency, we selected the same states selected for 529 plan site visit locations to the extent possible (i.e., where the data supported the selection based on the criteria). We interviewed representatives in the following state financial aid offices: Louisiana Office of Student Financial Assistance, Michigan Office of Scholarships and Grants, New York Higher Education Services Corporation, Pennsylvania Higher Education Assistance Agency, Utah Higher Education Assistance Authority, and State Council of Higher Education for Virginia.\nWe also selected six institutions from the states whose financial aid offices were selected for interviews. To obtain a national perspective on institutional financial aid and determine the best method for selecting the individual institutions, we interviewed representatives at several financial aid organizations including the Association of Private Sector Colleges and Universities, the College Board, the National Association of Student Financial Aid Administrators, the National Association of Independent Colleges and Universities, and the American Association of Community Colleges. In these interviews, some officials said that schools with larger endowments were likely to require families to provide additional information, such as that required on the College Board’s PROFILE application, to award their institutional financial aid. We matched the 2012-2013 College Board’s list of institutions that use the PROFILE application with Education’s 2009-2010 Integrated Postsecondary Education Data System to calculate endowment amounts per student at public and private non-profit four-year institutions. We also reviewed the list of schools that participate in the Private 529 Consortium and selected at least one school that was also part of this group. One state did not have an institution that used the PROFILE application so we reviewed websites of postsecondary schools in that state to identify a school that collected data in addition to the FAFSA. We interviewed representatives at the following institutions: Xavier University of Louisiana, University of Michigan, St. Lawrence University, Swarthmore College, University of Utah, and University of Richmond.",
"",
"",
"Michelle Sager, Acting Director, Education, Workforce, and Income Security Issues, 202-512-6806 or [email protected].",
"In addition to the contact named above, Gretta Goodwin (Assistant Director), Amy Anderson, Rachel Beers, and Laura Henry contributed to all aspects of this report. Also making key contributions were Carl Barden, James Bennett, Nora Boretti, Jessica Botsford, Jason Bromberg, Alicia Cackley, Melinda Cordero, Patrick Dudley, Shannon Finnegan, Kim Frankena, Mark Glickman, David Lewis, Ashley McCall, John Mingus, Mark Ramage, MaryLynn Sergent, George Scott, Walter Vance, Kathleen van Gelder, and Michelle Loutoo Wilson."
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"question": [
"How did U.S. families utilize 529 plans in 2010?",
"How popular are 529 plans?",
"Why might available income for education savings have been reduced?",
"How do families with 529 or Coverdell plans differ from families without these accounts?",
"How do different types of 529 plans differ from each other?",
"How does plan type affect total annual asset-based fees?",
"What other factors affect 529 plan participation?",
"How have some states taken steps to address these factors?",
"How do savings in 529 plans affect financial aid?",
"How is financial aid determined for students who are dependent on their parents?",
"How are 529 plans factored into family contribution in different states?",
"Why is paying for college becoming more challenging?",
"How can 529 savings plans help families pay for college?",
"How do 529 plans affect federal revenue?",
"How are 529 plans managed?",
"How hav 529 plans changed over the past decade?",
"Why did GAO conduct this report?",
"How did GAO conduct research for this report?"
],
"summary": [
"A small percentage of U.S. families saved in 529 plans in 2010, and those who did tended to be wealthier than others. According to the Survey of Consumer Finances (SCF), less than 3 percent of families saved in a 529 plan or Coverdell Education Savings Account (Coverdell)--a similar but less often used college savings vehicle also included in the SCF.",
"According to the Survey of Consumer Finances (SCF), less than 3 percent of families saved in a 529 plan or Coverdell Education Savings Account (Coverdell)--a similar but less often used college savings vehicle also included in the SCF.",
"While the economic downturn may have reduced income available for education savings, even among those families who considered saving for education a priority, fewer than 1 in 10 had a 529 plan (or Coverdell).",
"Families with these accounts had about 25 times the median financial assets of those without. They also had about 3 times the median income and the percentage who had college degrees was about twice as high as for families without 529 plans (or Coverdells).",
"States offer consumers a variety of 529 plan features that, along with several other factors, can affect participation. Some of the most important features families consider when choosing a 529 plan are tax benefits, fees, and investment options, according to experts and state officials GAO interviewed. These features can vary across the state plans.",
"For example, in July 2012, total annual asset-based fees ranged from 0 to 2.78 percent depending on the type of plan.",
"529 plan officials and experts GAO interviewed said participation is also affected by families' ability to save, their awareness of 529 plans as a savings option, and the difficulty in choosing a plan given the amount of variation between plans.",
"Selected states, however, have taken steps to address these barriers. For example, to address families' ability to save, particularly for low-income families, some states have adopted plans that include less risky investments, have low minimum contributions, and match families' contributions.",
"Savings in 529 plans affect financial aid similarly to a family's other assets. For federal aid, a family's assets affect how much it is expected to contribute to the cost of college. If the amount of those assets exceeds a certain threshold, then a percentage is expected to be used for college costs.",
"For example, for students who are dependent on their parents, the percentage of parental assets, including savings in 529 plans, that the family may be expected to contribute ranges from 2.64 to 5.64 percent.",
"Many states and selected institutions also treat 529 plan savings the same as other family assets. However, a few states provide them with special treatment, such as exempting those funds from their financial aid calculation.",
"Paying for college is becoming more challenging, partly because of rising tuition rates.",
"A college savings plan can be an option to help meet these costs. To encourage families to save for college, earnings from 529 plans--named after section 529 of the Internal Revenue Code--grow tax-deferred and are exempt from federal income tax when they are used for qualified higher education expenses.",
"In fiscal year 2011, the Department of the Treasury estimated these plans represented $1.6 billion in forgone federal revenue.",
"Managed by states, over one hundred 529 plan options were available to families nationwide as of July 2012.",
"The number of 529 plan accounts and the amount invested in them has grown during the past decade.",
"GAO was asked to describe (1) the percentage and characteristics of families enrolling in 529 plans, (2) plan features and other factors that affect participation in 529 plans, and (3) the extent to which savings in 529 plans affect financial aid awards.",
"GAO analyzed government data, including the SCF. This survey's 529 plan data are combined with Coverdells, so the SCF estimates used in the report include both 529 and Coverdell data. GAO also analyzed National Postsecondary Student Aid Study data; conducted interviews with federal and state officials, industry and academic experts, and state and institutional higher education officials; reviewed 529 plan and Department of Education documents; conducted a literature review; and reviewed relevant federal laws, regulations, and guidance."
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CRS_RL34487
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{
"title": [
"",
"Introduction",
"Background",
"An Evolving Security Environment in Asia",
"Japan's Nuclear Capacity",
"Japan's Nuclear Energy Program",
"Technological Potential",
"Japanese Legal and Political Restraints",
"Domestic Factors",
"Public Opinion",
"Elite Opinions",
"Constitutional Restraints",
"1955 Atomic Energy Basic Law",
"Three Non-Nuclear Principles",
"External Factors",
"International Law",
"Consequences for Civilian Nuclear Program",
"International Diplomatic Consequences",
"Issues for U.S. Policy",
"U.S. Security Commitment",
"Potential for Asian Arms Race",
"U.S.-China Relations",
"Future of the Korean Peninsula",
"Japan's International Reputation",
"Damage to Global Non-Proliferation Regime"
],
"paragraphs": [
"",
"The notion of Japan developing nuclear weapons has long been considered far-fetched and even taboo, particularly within Japan. Hailed as an example of the success of the international non-proliferation regime, Japan has consistently taken principled stands on non-proliferation and disarmament issues. Domestically, the largely pacifist Japanese public, with lingering memories of the destruction of Hiroshima and Nagasaki by atomic bombs in the closing days of World War II, has widely rejected any nuclear capacity as morally unacceptable. The inclusion of Japan under the U.S. nuclear \"umbrella,\" with regular reiterations from U.S. officials, provides a guarantor to Japanese security. Successive Japanese administrations and commissions have concluded that Japan has little to gain and much to lose in terms of its own security if it pursues a nuclear weapons capability.\nToday, Japanese officials and experts remain remarkably uniform in their consensus that Japan is unlikely to move toward nuclear status in the short-to-medium term. However, as the security environment has shifted significantly, the topic is no longer toxic and has been broached by several leading politicians. North Korea's test of a nuclear device in 2006 and China's military modernization have altered the strategic dynamics in the region, and any signs of stress in the U.S.-Japan alliance raises questions among some about the robustness of the U.S. security guarantee. An ascendant hawkish, conservative movement—some of whom openly advocate for Japan to develop an independent nuclear arsenal—has gained more traction in Japanese politics, moving from the margins to a more influential position. In addition, previous security-related taboos have been overcome in the past few years: the dispatch of Japanese military equipment and personnel to Iraq and Afghanistan, the elevation of the Japanese Defense Agency to a full-scale ministry, and Japanese co-development of a missile defense system with the United States. All of these factors together increase the still unlikely possibility that Japan will reconsider its position on nuclear weapons.\nAny reconsideration of Japan's policy of nuclear weapons abstention would have significant implications for U.S. policy in East Asia. Globally, Japan's withdrawal from the Nuclear Non-Proliferation Treaty (NPT) could damage the most durable international non-proliferation regime. Regionally, Japan \"going nuclear\" could set off a nuclear arms race with China, South Korea, and Taiwan and, in turn, India, and Pakistan may feel compelled to further strengthen their own nuclear weapons capability. Bilaterally, assuming that Japan made the decision without U.S. support, the move could indicate Tokyo's lack of trust in the American commitment to defend Japan. An erosion in the U.S.-Japan alliance could upset the geopolitical balance in East Asia, a shift that could indicate a further strengthening of China's position as an emerging hegemonic power. These ramifications would likely be deeply destabilizing for the security of the Asia Pacific region and beyond.",
"Japan's post-war policy on nuclear weapons and non-proliferation has been to reject officially a military nuclear program. The Japanese Army and Navy each conducted nuclear weapons research during World War II, but neither was successful in gaining enough resources for the endeavor. Despite the fact that by the early 1970s Japan had already acquired the technical, industrial and scientific resources needed to develop its own nuclear weapons, Japanese policy has repeatedly stated its opposition to the development of nuclear weapons.\nComplicating Japan's anti-nuclear weapons policy has been a post-World War II dependence on the U.S. \"nuclear umbrella\" and security guarantee. Under the terms of the Mutual Security Assistance Pact signed in 1952 and the 1960 Treaty of Mutual Cooperation and Security, Japan grants the U.S. military basing rights on its territory in return for a U.S. pledge to protect Japan's security. The rejection of nuclear weapons by the Japanese public appears to be overwhelmingly driven by moral, rather than pragmatic, considerations, but Japan's leaders have based their policy of forswearing nuclear weapons on protection by the U.S. nuclear arsenal.\nThe bedrock of domestic law on the subject, the \"Atomic Energy Basic Law\" of 1955, requires Japan's nuclear activities to be conducted only for peaceful purposes. In 1967, the \"Three Non-Nuclear Principles\" ( hikaku sangensoku ) were announced by Prime Minister Eisaku Sato, enshrining the policy of not possessing, not producing, and not permitting the introduction of nuclear weapons into Japan. When Japan ratified the Nuclear Non-Proliferation Treaty (NPT) in 1976, it reiterated its three non-nuclear principles, placed itself under the treaty obligation as a non-nuclear weapons state, and pledged not to produce or acquire nuclear weapons. Japan has been a staunch NPT supporter in good standing ever since.\nDespite multiple reiterations of Japan's non-nuclear status, this orthodoxy has been challenged on several occasions, usually when Japan has felt strategic vulnerability. Probably the most prominent episode occurred in the mid-1960s: China tested a nuclear device for the first time in 1964, and the United States was engaged in the Vietnam War. Prime Minister Eisaku Sato secretly commissioned several academics to produce a study exploring the costs and benefits of Japan's possible nuclearization, the so-called \"1968/70 Internal Report.\" Another secret investigation into Japan's nuclear option was done by the Japan Defense Agency (JDA) in 1995 as Japan assessed its standing in the new post-Cold War environment after the 1994 North Korean nuclear crisis in 1994 and as the international community was considering the indefinite extension of the NPT. Both reports concluded that Japan should continue to rely on the U.S. security guarantee and that development of nuclear weapons would threaten that relationship.",
"Since the end of the Cold War, and particularly in the past decade, developments in the region have increased Japan's sense of vulnerability and caused some in the policy community to rethink Japan's policy of forswearing nuclear weapons development. During the Cold War, the U.S. military presence in Japan represented the Pacific front of containing the Soviets, a reassuring statement of commitment to Japan's security to many Japanese. North Korea's test of a ballistic missile over Japan in August 1998 dispelled the sense of a more secure post-Cold War environment for the archipelago. Moreover, India and Pakistan both conducted underground nuclear weapons tests earlier that year, which to many undermined the success of the international non-proliferation regime and set off fears of a new nuclear arms race. Japan was particularly alarmed at the tests, and instituted a freeze on new loans and grants to the two states.\nSince then, more provocative behavior from Pyongyang, particularly its 2006 tests of medium-range missiles and a nuclear device, have heightened Japan's fear of potential attacks. The nuclear test prompted prominent officials in the ruling party to call for an open debate on whether to pursue nuclear arms: both then-Foreign Minister (and current Prime Minister) Taro Aso and chairman of the party's policy council called for such a debate before later backing off their comments. In addition to North Korea's activities, a U.S.-India civilian nuclear deal has led to concern among some Japanese non-proliferation experts that the NPT has weakened further. To these experts, the legitimacy and deterrent effect of the global non-proliferation regime underpins Japan's commitment to its own non-nuclear status.\nWhile North Korea represents a more immediate danger, many defense experts see China as the more serious and long-term threat to Japan's security. China's rapid military modernization and advancements in weapons systems have compounded Tokyo's concern. Japanese defense papers have pointed to Beijing's apparent progress in short and medium range missiles, its submarine force (some of which have on occasion intruded into Japan's territorial waters), and nuclear force modernization as specific areas of concern. As Chinese military spending continues to accelerate, Japanese defense budgets have stagnated or declined. Although Sino-Japanese relations appear to have stabilized since a period of tension under former Prime Minister Junichiro Koizumi's administration, fundamental distrust and the potential for conflict remains between the Pacific powers.",
"",
"Japan is a country poor in natural resources but with a high level of energy consumption. Since the 1960s, Japan has relied on nuclear power for a significant portion of its energy; nuclear energy currently provides 35% of its electricity. The Japan Atomic Energy Commission's 2005 Framework for Nuclear Energy Policy emphasizes the importance of nuclear power for energy independence and carbon emission reduction. Japan is currently the third-largest user of nuclear energy in the world, with 55 light-water nuclear power reactors (49.58 million kW) operated by 10 electric power companies. The first commercial power reactor began operation in 1966. Two nuclear power plants are under construction, four are in regulatory review, and an additional seven may be built over the next decade.\nJapan's policy is to achieve a fully independent, or \"closed,\" fuel cycle. The closed fuel cycle promotes the use of mixed-oxide (MOX) fuel in light-water reactors. The set goal is to have 16-18 such reactors by FY2010, and utilities in Japan are now in the process of being licensed for MOX loading and obtaining consent from the local governments. The Japan Atomic Energy Agency (JAEA) was established on October 1, 2005, to integrate Japan's R&D institutes, the Japan Atomic Energy Research Institute and the Japan Nuclear Cycle Development Institute. JAEA carries out R&D work on the full range of fuel cycle activities.\nTwo of the more controversial aspects of Japan's civilian power program are its large stocks of separated plutonium and advanced fuel cycle facilities. Plutonium is a by-product of the uranium fuel used in all nuclear reactors. Plutonium in spent fuel is not weapons-usable. Once this reactor-grade plutonium is separated out of spent fuel through reprocessing, it is potentially directly usable in nuclear weapons. This separated plutonium can also be \"recycled\" into MOX fuel for light-water power reactors. France, India, Japan, Russia and the U.K. currently all produce reactor fuel through reprocessing.\nThe global stockpile of separated plutonium is estimated to be about 500 tons, including military and civilian stocks. Stocks of civilian separated plutonium are growing around the world. Japan possesses 6.7 MT of civilian stocks of separated plutonium stored in Japan, and 38 MT of separated plutonium stored outside the country. This material has the potential to make over 1,000 nuclear weapons. Japan's civilian separated plutonium stockpile is expected to grow to 70 tons by 2020.\nTo date, Japan has sent its spent fuel to the United Kingdom (Sellafield) and France (La Hague) for reprocessing and MOX fuel fabrication. But Japan is completing facilities which will eliminate the need for such outsourcing. The private company Japan Nuclear Fuel Limited (JNFL) has built and is currently running active testing on a large-scale commercial reprocessing plant at Rokkasho-mura. The testing phase is expected to be completed in August 2009. Its expected capacity is 800tons/year. Advance site preparation work was started in October 2008 for a MOX fuel fabrication plant being built by JNFL at Rokkasho-mura. An experimental reprocessing plant has operated at Tokai-mura since 1977. It completed its contractual work to reprocess spent fuel for nuclear power utilities in March 2006. The Tokai plant is currently being prepared to conduct R&D work for fast reactor fuels.\nAround 2050, Japan plans to shift from MOX fuel in light water reactors to using MOX fuel in fast breeder reactors. R&D work continues using the prototype MONJU and JOYO fast breeder reactors, despite earlier accidents and continued technical difficulties. A final disposal site for high level radioactive waste has not yet been selected. Japan plans to store and dispose of its nuclear waste domestically. Japan also has a uranium enrichment R&D facility at Tokai-mura and is developing an advanced centrifuge uranium enrichment plant at Rokkasho-mura.\nThe industrial-scale Rokkasho-mura reprocessing plant, the first in a non-nuclear weapon state, has raised some proliferation concerns. Fast breeder reactors also produce more plutonium than they consume, potentially posing a proliferation risk. Some cautionary voices point out that advanced countries have been shifting away from the pursuit of reprocessing technologies as the international community strives to find appropriate multilateral approaches to containing the spread of enrichment and reprocessing technologies to new countries.\nTo counteract public concern, Japan emphasizes transparency in all aspects of its nuclear activities to assure the public and international community that atomic energy is used solely for peaceful purposes. All reactor-operating electric power utilities in Japan are required by law to make public the quantity of plutonium in possession and a plutonium use plan each fiscal year. All of Japan's nuclear facilities are subject to IAEA full-scope safeguards, and an Additional Protocol to its IAEA safeguards agreement came into force in December 1999. The protocol augments the agency's authority to verify that nuclear activities are not diverted to military purposes. Once the Rokkasho Reprocessing Plant starts operation, it will be the largest facility ever placed under IAEA safeguards. Japan has worked with the IAEA since the design phase to incorporate unique IAEA verification measures into the plant.\nJapan has been a leader in developing advanced safeguards technologies with the IAEA, and participates in multilateral advanced research efforts for future fuel cycle technologies, such as Generation IV International Forum (Gen-IV), International Project on Innovative Nuclear Reactors and Fuel Cycles (INPRO) and the U.S.-led Global Nuclear Energy Partnership (GNEP).",
"Japan's technological advancement in the nuclear field, combined with its stocks of separated plutonium, have contributed to the conventional wisdom that Japan could produce nuclear weapons in a short period of time. In 1994, Prime Minister Tsutomu Hata famously told reporters that \"it's certainly the case that Japan has the capability to possess nuclear weapons but has not made them.\" Indeed, few dispute that Japan could make nuclear weapons if Tokyo were to invest the necessary financial and other resources.\nHowever, the ability to develop a few nuclear weapons versus the technological, financial and manpower requirements of a full nuclear deterrent should be considered. Producing nuclear weapons would require expertise on bomb design including metallurgists and chemists; while a reliable deterrent capability may also require reliable delivery vehicles, an intelligence program to protect and conceal assets from a first-strike, and a system for the protection of classified information. The 1995 JDA report stated that Japan's geography and concentrated populations made the political and economic costs of building the infrastructure for a nuclear weapons program \"exorbitant.\" If one assumes that Japan would want weapons with high reliability and accuracy, then more time would need to be devoted to their development unless a weapon or information was supplied by an outside source.\nAs some analysts have pointed out, if Japan manufactured nuclear warheads, then it would need to at the minimum perform one nuclear test—but where this could be carried out on the island nation is far from clear. Furthermore, Japan's nuclear materials and facilities are under IAEA safeguards, making a clandestine nuclear weapons program difficult to conceal. The Rokkasho-mura reprocessing plant was built in close consultation with the IAEA, with safeguards systems installed in process lines during construction. Japan seems to have intentionally built its nuclear program so it would not be ideal for military use, in compliance with Japanese law.",
"",
"",
"In general, public opinion on defense issues in Japan appears to be shifting somewhat, but pacifist sentiment remains significant. In the past, Japanese public opinion strongly supported the limitations placed on the Japanese military, but this opposition has softened considerably since the late 1990s. Despite this overall shifting tide, the \"nuclear allergy\" among the general public remains strong. The devastation of the atomic bombings led Japanese society to recoil from any military use of nuclear energy. Observers say that the Japanese public remains overwhelmingly opposed to nuclearization, pointing to factors like an educational system that promotes pacifism and the few surviving victims of Hiroshima and Nagasaki who serve as powerful reminders of the bombs' effects.\nWhile Japanese public opinion remains, by most accounts, firmly anti-nuclear, some social currents could eventually change the conception of nuclear development. Many observers have recognized a trend of growing nationalism in Japan, particularly among the younger generation. Some Japanese commentators have suggested that this increasing patriotism could jeopardize closer cooperation with the United States: if Japan feels too reliant on U.S. forces and driven by U.S. priorities, some may assert the need for Japan to develop its own independent capability. Another wild card is the likelihood that Japan will face a major demographic challenge because of its rapidly ageing population: such a shock could either drive Japan closer to the United States because of heightened insecurity, or could spur nationalism that may lean toward developing more autonomy.",
"A review of recent articles and interviews with prominent Japanese opinion-makers and experts revealed a near-consensus of opposition to the development of nuclear weapons. Realist-minded security observers cite the danger of threatening China and causing unnecessary instability in the region, while foreign policy managers point to the risk of weakening the U.S. alliance. Some observers claim, however, that a younger generation of upcoming elites may be more nationalistic and therefore potentially more supportive of the option in the future.\nThere is some degree of disagreement in Japan on if a debate itself about whether Japan should consider the nuclear option would be a valuable exercise. Some nuclear critics argue that such a debate would solidify Japan's non-nuclear stance by articulating for the public why not possessing nuclear weapons serves the national interest. The debate could also reassure those who oppose Japan's nuclear development. Others, however, argue that simply raising the issue would alarm Japan's neighbors, arouse distrust, and negatively affect regional security. Domestically, some analysts think that a public debate on nuclear weapons would outrage the Japanese public, making most politicians averse to the proposal.",
"There are several legal factors that could restrict Japan's ability to develop nuclear weapons. The most prominent is Article 9 of the Japanese constitution, drafted by American officials during the post-war occupation, that outlaws war as a \"sovereign right\" of Japan and prohibits \"the right of belligerency.\" However, Japan maintains a well-funded and well-equipped military for self-defense purposes, and the current interpretation of the constitution would allow, in theory, the development of nuclear weapons for defensive purposes. Beginning with Prime Minister Nobusuke Kishi in 1957, and continuing through Shinzo Abe in 2006, Japanese administrations have repeatedly asserted that Article 9 is not the limiting factor to developing nuclear weapons. As Chief Cabinet Secretary in 2002, former Prime Minister Yasuo Fukuda said that the constitution did not prohibit nuclear weapons, adding that \"depending upon the world situation, circumstances and public opinion could require Japan to possess nuclear weapons.\"",
"Although the Constitution may be interpreted to allow for possession of nuclear weapons, since 1955 Japanese domestic law prohibited any military purpose for nuclear activities. Its basic policy statement (Article 2) says: \"the research, development, and utilization of atomic energy shall be limited to peaceful purposes, aimed at ensuring safety and performed independently under democratic management, the results therefrom shall be made public to contribute to international cooperation.\" This law, which also established regulatory bodies for safety and control issues, is at the core of Japanese policy in maintaining a peaceful, transparent nuclear program.",
"Japanese leaders have often cited the \"Three Non-Nuclear Principles\" as another obstacle to Japanese development of nuclear weapons. The trio consists of Japanese pledges not to allow the manufacture, possession, or importation of nuclear weapons. Many security experts, however, point out that the principles, passed as a Diet resolution in 1971 as part of domestic negotiations over the return of Okinawa from U.S. control, were never formally adopted into law, and therefore are not legally binding. Although not technically a legal constraint, Japanese leaders have consistently stated their commitment to the principles, including a reiteration by Prime Minister Shinzo Abe in the aftermath of North Korea's nuclear test in 2006.",
"",
"Japan is obligated under Article 2 of the NPT not to \"receive the transfer from any transferor whatsoever of nuclear weapons or other nuclear explosive devices or of control over such weapons or explosive devices directly, or indirectly; not to manufacture or otherwise acquire nuclear weapons or other nuclear explosive devices; and not to seek or receive any assistance in the manufacture of nuclear weapons or other nuclear explosive devices.\" Under Article 3 of the NPT, Japan is required to accept IAEA full-scope safeguards on its civilian nuclear program. Japan signed an Additional Protocol in 1998 under which the IAEA can use an expanded range of measures to verify that civilian facilities and materials have not been diverted to a military program.",
"Lacking adequate indigenous uranium supplies, Japan has bilateral civilian nuclear cooperation agreements with the United States, France, United Kingdom, China, Canada, and Australia. If a Japanese nuclear program for military purposes were declared or discovered, Japan would need to return the supplied material to its country of origin. Japan's civilian nuclear energy program—which supplies over a third of Japan's energy—would then be cut off from world supplies of natural uranium, enriched uranium and related equipment.\nThe United States most recent nuclear energy cooperation agreement with Japan took effect on July 17, 1988. Article 12 of this agreement states that, if either party does not comply with the agreement's nonproliferation provisions or violates their IAEA safeguards agreement, the other party has the right to cease further cooperation, terminate the agreement, and require the return of any material, nuclear material, equipment or components transferred or \"any special fissionable material produced through the use of such items.\"\nIf Japan withdrew from the NPT, it would likely be subject to UN Security Council-imposed sanctions and economic and diplomatic isolation. Penalties under a U.N. Security Council resolution could include economic sanctions beyond the Nuclear Suppliers Group cut-off of nuclear-related supply.",
"Diplomatically, the policy turn-about would have profound implications. Japan has built a reputation as a leader in non-proliferation and as a promoter of nuclear disarmament. It has consistently called for a \"safe world free of nuclear weapons on the earliest possible date.\" Japan submits a resolution to the General Assembly's First Committee each year on a nuclear-free world and submits working papers to the NPT review conferences and preparatory committees on disarmament. It has been a vocal advocate for IAEA verification and compliance and was the first to respond with sanctions to nuclear tests in South Asia and North Korea. It has been a constant voice in support of nuclear disarmament in international fora. An about-face on its non-nuclear weapon state status would dramatically change the global view of Japan, or might dramatically change the perception of nuclear weapons possession in the world. This move could have profound implications for nuclear proliferation elsewhere, perhaps leading to additional NPT withdrawals. Acquiring nuclear weapons could also hurt Japan's long-term goal of permanent membership on the U.N. Security Council.",
"",
"Perhaps the single most important factor to date in dissuading Tokyo from developing a nuclear arsenal is the U.S. guarantee to protect Japan's security. Since the threat of nuclear attack developed during the Cold War, Japan has been included under the U.S. \"nuclear umbrella,\" although some ambiguity exists about whether the United States is committed to respond with nuclear weapons in the event of a nuclear attack on Japan. U.S. officials have hinted that it would: following North Korea's 2006 nuclear test, former Secretary of State Condoleezza Rice, in Tokyo, said, \" ... the United States has the will and the capability to meet the full range, and I underscore full range, of its deterrent and security commitments to Japan.\" Most policymakers in Japan continue to emphasize that strengthening the alliance as well as shared conventional capabilities is more sound strategy than pursuing an independent nuclear capability.\nDuring the Cold War, the threat of mutually assured destruction to the United States and the Soviet Union created a sort of perverse stability in international politics; Japan, as the major Pacific front of the U.S. containment strategy, felt confident in U.S. extended deterrence. Although the United States has reiterated its commitment to defend Japan, the strategic stakes have changed, leading some in Japan to question the American pledge. Some in Japan are nervous that if the United States develops a closer relationship with China, the gap between Tokyo's and Washington's security perspectives will grow and further weaken the U.S. commitment. These critics also point to what they perceive as the soft negotiating position on North Korea's denuclearization in the Six-Party Talks as further evidence that the United States does not share Japan's strategic perspective. A weakening of the bilateral alliance may strengthen the hand of those that want to explore the possibility of Japan developing its own deterrence.\nDespite these concerns, many long-time observers assert that the alliance is fundamentally sound from years of cooperation and strong defense ties throughout even the rocky trade wars of the 1980s. Perhaps more importantly, China's rising stature likely means that the United States will want to keep its military presence in the region in place, and Japan is the major readiness platform for the U.S. military in East Asia. If the United States continues to see the alliance with Japan as a fundamental component of its presence in the Pacific, U.S. leaders may need to continue to not only restate the U.S. commitment to defend Japan, but to engage in high-level consultation with Japanese leaders in order to allay concerns of alliance drift. Disagreement exists over the value of engaging in a joint dialogue on nuclear scenarios given the sensitivity of the issue to the public and the region, with some advocating the need for such formalized discussion and others insisting on the virtue on strategic ambiguity.\nU.S. behavior plays an outsized role in determining Japan's strategic calculations, particularly in any debate on developing nuclear weapons. Security experts concerned about Japan's nuclear option have stressed that U.S. officials or influential commentators should not signal to the Japanese any tacit approval of nuclearization. Threatening other countries with the possibility of Japan going nuclear, for example, could be construed as approval by some quarters in Tokyo.\nU.S.-Japanese joint development of a theater missile defense system reinforces the U.S. security commitment to Japan, both psychologically and practically. The test-launch of several missiles by North Korea in July 2006 accelerated existing plans to jointly deploy Patriot Advanced Capability 3 (PAC-3) surface-to-air interceptors as well as a sea-based system on Aegis destroyers. If successfully operationalized, confidence in the ability to intercept incoming missiles may help assuage Japan's fear of foreign attacks. This reassurance may discourage any potential consideration of developing a deterrent nuclear force. In addition, the joint effort would more closely intertwine U.S. and Japan security, although obstacles still remain for a seamless integration.",
"To many security experts, the most alarming possible consequence of a Japanese decision to develop nuclear weapons would be the development of a regional arms race. The fear is based on the belief that a nuclear-armed Japan could compel South Korea to develop its own program; encourage China to increase and/or improve its relatively small arsenal; and possibly inspire Taiwan to pursue nuclear weapons. This in turn might have spill-over effects on the already nuclear-armed India and Pakistan. The prospect—or even reality—of several nuclear states rising in a region that is already rife with historical grievances and contemporary tension could be deeply destabilizing. The counter-argument, made by some security experts, is that nuclear deterrence was stabilizing during the Cold War, and a similar nuclear balance could be achieved in Asia. However, most observers maintain that the risks outweigh potential stabilizing factors.",
"The course of the relationship between Beijing and Washington over the next several years is likely to have a significant impact on the nuclearization debate in Japan. If the relationship chills substantially and a Cold War-type standoff develops, there may be calls from some in the United States to reinforce the U.S. deterrent forces. Some hawkish U.S. commentators have called for Japan to be \"unleashed\" in order to counter China's strength. Depending on the severity of the perceived threat from China, Japanese and U.S. officials could reconsider their views on Japan's non-nuclear status. Geopolitical calculations likely would have to shift considerably for this scenario to gain currency. On the other hand, if U.S.-Sino relations become much closer, Japan may feel that it needs to develop a more independent defense posture. This is particularly true if the United States and China engaged in any bilateral strategic or nuclear consultations. Despite improved relations today, distrust between Beijing and Tokyo remains strong, and many in Japan's defense community view China's rapidly modernizing military as their primary threat.",
"Any eventual reunification of the Korean peninsula could further induce Japan to reconsider its nuclear stance. If the two Koreas unify while North Korea still holds nuclear weapons and the new state opts to keep a nuclear arsenal, Japan may face a different calculation. Indeed, some Japanese analysts have claimed that a nuclear-armed reunified Korea would be more of a threat than a nuclear-armed North Korea.\nSuch a nuclear decision would depend on a variety of factors: the political orientation of the new country, its relationship with the United States, and how a reunified government approached its historically difficult ties with Japan. Although South Korea and Japan normalized relations in 1965, many Koreans harbor resentment of Japan's harsh colonial rule of the peninsula from 1910-1945. If the closely neighboring Koreans exhibited hostility toward Japan, it may feel more compelled to develop a nuclear weapons capability. The United States is likely to be involved in any possible Korean unification because of its military alliance with South Korea and its leading role in the Six-Party Talks. U.S. contingency planning for future scenarios on the Korean peninsula should take into account Japan's calculus with regard to nuclear weapon development.",
"If Japan decided to go nuclear, its international reputation as a principled advocate for non-proliferation would erode. Many observers say this would rule out Japan's ambition of eventually holding a seat on the United Nations Security Council. Japan, of course, would bear the brunt of these consequences, but it could be harmful to U.S. interests as well. Japan is generally viewed overwhelmingly positively by the international community, and its support for U.S.-led international issues can lend credibility and legitimacy to efforts such as democracy promotion, peacekeeping missions, environmental cooperation, and multilateral defense exercises, to name a few.",
"Japan's development of its own nuclear arsenal could also have damaging impact on U.S. nonproliferation policy. It would be more difficult for the United States to convince non-nuclear weapon states to keep their non-nuclear status or to persuade countries such as North Korea to give up their weapons programs. The damage to the NPT as a guarantor of nuclear power for peaceful use and the IAEA as an inspection regime could be irreparable if Japan were to leave or violate the treaty. If a close ally under its nuclear umbrella chose to acquire the bomb, perhaps other countries enjoying a strong bilateral relationship with the United States would be less inhibited in pursuing their own option. It could also undermine confidence in U.S. security guarantees more generally."
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"question": [
"What is Japan's stance on nuclear weapons?",
"Why has Japan's vulnerability to nuclear threats been called into question?",
"How has this anxiety affected the Japanese taboo of discussing nuclear weapons capabilities?",
"How have these factors affected the overall Japanese public consensus on nuclear weapons?",
"How does this paper examine the prospects for Japanese nuclear weapons capability?",
"What challenges does Japan currently face in transitioning to a military program?",
"How do legal and political factors limit Japan's military capability?",
"What would be the outcome of a shift in Japan's nuclear policy?",
"How does this report analyze the effect of Japan's nuclear debate on the U.S.?",
"How would such a policy shift in Japan affect the United States?",
"How would this lack of trust affect East Asia as a whole?",
"How would Japan's withdrawal from the NPT affect the world at large?",
"What would be the regional effects of such a shift?"
],
"summary": [
"Japan, traditionally one of the most prominent advocates of the international non-proliferation regime, has consistently pledged to forswear nuclear weapons.",
"Nevertheless, evolving circumstances in Northeast Asia, particularly North Korea's nuclear test in October 2006 and China's ongoing military modernization drive, have raised new questions about Japan's vulnerability to potential adversaries and, therefore, the appeal of developing an independent nuclear deterrent.",
"The previous taboo within the Japanese political community of discussing a nuclear weapons capability appears to have been broken, as several officials and opinion leaders have urged an open debate on the topic.",
"Despite these factors, a strong consensus—both in Japan and among Japan watchers—remains that Japan will not pursue the nuclear option in the short-to-medium term.",
"This paper examines the prospects for Japan pursuing a nuclear weapons capability by assessing the existing technical infrastructure of its extensive civilian nuclear energy program.",
"It explores the range of challenges that Japan would have to overcome to transform its current program into a military program. Presently, Japan appears to lack several of the prerequisites for a full-scale nuclear weapons deterrent: expertise on bomb design, reliable delivery vehicles, an intelligence program to protect and conceal assets, and sites for nuclear testing. In addition, a range of legal and political restraints on Japan's development of nuclear weapons, including averse public and elite opinion, restrictive domestic laws and practices, and the negative diplomatic consequences of abandoning its traditional approach is analyzed.",
"In addition, a range of legal and political restraints on Japan's development of nuclear weapons, including averse public and elite opinion, restrictive domestic laws and practices, and the negative diplomatic consequences of abandoning its traditional approach is analyzed.",
"Any reconsideration and/or shift of Japan's policy of nuclear abstention would have significant implications for U.S. policy in East Asia.",
"In this report, an examination of the factors driving Japan's decision-making—most prominently, the strength of the U.S. security guarantee—analyzes how the nuclear debate in Japan affects U.S. security interests in the region.",
"Bilaterally, assuming that Japan made the decision without U.S. support, the move could indicate a lack of trust in the U.S. commitment to defend Japan.",
"An erosion in the U.S.-Japan alliance could upset the geopolitical balance in East Asia, a shift that could strengthen China's position as an emerging hegemonic power. All of these ramifications would likely be deeply destabilizing for the security of the Asia Pacific region and beyond.",
"Globally, Japan's withdrawal from the Nuclear Non-Proliferation Treaty (NPT) would damage the world's most durable international non-proliferation regime.",
"Regionally, Japan \"going nuclear\" could set off an arms race with China, South Korea, and Taiwan. India and/or Pakistan may then feel compelled to further expand or modernize their own nuclear weapons capabilities."
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{
"title": [
"",
"Introduction",
"Recent Legislation",
"112th Congress",
"Risk Retention Modernization Act of 2011 (H.R. 2126)",
"111th Congress",
"Risk Retention Modernization Act of 2010 (H.R. 4802)",
"110th Congress",
"Increasing Insurance Coverage Options for Consumers Act of 2008 (H.R. 5792)",
"Risk Retention and Purchasing Group Structure and Regulation",
"Legislative History",
"The 1981 Product Liability Risk Retention Act",
"The 1986 Liability Risk Retention Act",
"RRGs and RPGs Since 1986",
"Growth in the Risk Retention Market17",
"Individual Difficulties Have Come Along with Growth",
"Policy Issues and Considerations",
"Appendix. Risk Retention Groups Statistics"
],
"paragraphs": [
"",
"The insurance industry, particularly property/casualty insurance, is known for alternating periods of \"hard\" and \"soft\" markets. Turns in this cycle are typically traced to unexpected changes in the investment climate, unexpected changes in insurance payouts, or both. During a typical hard market, the supply of insurance goes down, insurance prices go up, and underwriting standards become more stringent. This often leads to consumers encountering difficulty in finding and affording insurance. During a soft market, prices are typically flat, and insurers are more willing to underwrite greater risks, so consumers typically do not face such problems in obtaining insurance. Legislative attention tends to focus on insurance matters during hard markets as constituents relate complaints about finding or affording insurance to their legislators. Because regulation of the insurance market was left to the states in the McCarran-Ferguson Act of 1945, however, the legislature in question is most often a state legislature. Among the solutions offered at the state level has been the creation of, or allowance for, \"alternative\" market entities to increase the amount of insurance available to consumers. The alternative market is made up of entities or arrangements that spread and finance risk like an insurance company, but that operate outside the normal regulations governing the world of \"regular\" insurance companies.\nIn 1981, Congress authorized the creation of alternative market entities known as risk retention groups and risk purchasing groups (RRGs and RPGs). Their purpose was to expand insurance supply by simplifying state insurance regulation. In the 1981 act, subsequently amended in 1986 and known now as the Liability Risk Retention Act (LRRA), Congress crafted a narrow exception to the usual state insurance regulations for these groups in largely exempting the groups from multiple state regulation. Over the past few years, interest in risk retention and purchasing groups has increased as access to affordable insurance has become a challenge for some businesses. Some have suggested that Congress needs to expand the narrow exception that was made in the 1980s in order to expand the supply of insurance in areas outside of the liability coverage allowed under the current law. Legislation was introduced in both the 110 th and 111 th Congresses to expand the LRRA to commercial property insurance, but no action was take on these bills. Such legislation ( H.R. 2126 ) was introduced again in the 112 th Congress by Representative John Campbell.",
"",
"",
"H.R. 2126 was introduced by Representatives John Campbell, along with Representative Peter Welch, on June 3, 2011. It has been referred to the House Committee on Financial Services.\nThis bill would expand the federal preemption of state insurance laws, allowing risk retention groups to cover commercial property risks and risk purchasing groups to purchase coverage for commercial property risks. The bill would also change the enforcement mechanism for federal preemptions in the LRRA, and add additional federal corporate governance, disclosure, and fiduciary duty requirements for risk retention groups under the act.\nUnder existing law, the federal preemptions in the LRRA are enforced through court action. If a risk retention group believes a state is attempting to regulate in a manner counter to the LRRA, it can bring suit in a federal court. H.R. 2126 would create a process under which the director of the Federal Insurance Office could issue determinations as to whether a state's regulation of an RRG or RPG is preempted by the act. In addition, the director is to study and issue reports to Congress on the states' regulation of RRGs and RPGs and the compliance with the LRRA.\nThe corporate governance standards to be issued by the director of the Federal Insurance Office by the bill would include requirements that a majority of directors on an RRG's board be independent, any audit committee be made up of independent directors, written governance standards be in place, and contracts with service providers be limited to less than five years and be approved by the state insurance commissioner. Additional specific amendments to the LRRA would expand the consumer disclosure required in the act and impose a fiduciary duty on the board of directors of a risk retention group.",
"",
"H.R. 4802 was introduced by Representative Dennis Moore (along with Representatives John Campbell and Suzanne Kosmas) on March 10, 2010. It was referred to the House Committee on Financial Services but was not acted upon further. This bill was essentially similar to H.R. 2126 as introduced in the 112 th Congress (detailed above). Differences include the replacement of the \"Secretary of the Treasury\" in H.R. 4802 with the \"Director of the Federal Insurance Office\" as the primary federal official tasked with overseeing state compliance with federal law and the deletion of a section in H.R. 4802 calling for an study by the Comptroller General of the United States.\nThe sponsors of H.R. 4802 , through a separate July 22, 2010, letter to the Comptroller General, requested that the Government Accountability Office (GAO) conduct a study similar to the one required in H.R. 4802 . According to Representative Moore's office, GAO indicated that such a study would be conducted, but it is unclear when the results may be issued.",
"",
"H.R. 5792 was introduced by Representative Dennis Moore (along with Representatives Deborah Price, John Campbell, and Ron Klein) on April 15, 2008. It was addressed in an April 16 hearing \"Examining Proposals on Insurance Regulatory Reform\" held by the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises. The bill was marked up by this subcommittee on July 9, 2008, and forwarded to the full committee, but it was not acted on further in the 110 th Congress.\nH.R. 5792 would have expanded the LRRA exemptions to commercial property insurance. In addition, the bill would have implemented a number of corporate governance standards for RRGs, including requiring a majority of independent directors on an RRG's board, requiring an audit committee made up of independent directors, requiring a written charter, and limiting longer-term contracts with service providers. The bill would also have required all RRGs offering property coverage to be U.S.-licensed insurance companies.",
"Risk retention groups are required by current federal law to be state-chartered insurance companies; they are allowed to insure commercial liability risks, such as the risk that a physician will be found liable for medical malpractice, but not other property/casualty risks, such as the risk that a physician's office might burn down. These insurance companies also must be owned by the members of the group. All policies issued by a risk retention group must bear a federally mandated warning that the policy is not regulated or guaranteed in the same way as other insurance. Group members are required to be businesses, including individual professionals such as physicians and attorneys, or government entities, such as public universities, school districts, and town or city administrations, who are engaged in a similar business or face similar risks. The exact corporate structure of a risk retention group can vary. Many are licensed as \"captive\" insurers, which may have lower capital requirements, but some are licensed as \"regular\" mutual insurers. Risk purchasing groups are likewise groups of entities in a similar business or facing similar risks. Instead of creating their own insurance company, these groups join together to purchase commercial insurance from established insurance companies.\nIf risk retention groups must be licensed as an insurer under the existing laws of an individual state, two questions arise: What advantages do they possess? Why go to the trouble and expense of creating such a group? The answers are in the different regulatory treatment of these groups as they operate outside of the state where they are chartered (or \"domiciled\"). Under normal circumstances, an insurer who wishes to operate outside of its domiciliary state must receive a license and submit to regulation from every state in which it wishes to do business. This means complying with up to 51 different sets of state or district laws and regulations in order to do business across the country. The impact of this multiplicity of regulation is particularly high in insurance, as compared with other businesses, because both the prices and the content of insurance policies are highly regulated in most states. This perceived burden of multiple state regulatory systems is also the primary argument cited currently by some in the insurance industry for creating a federal charter to replace or supplement the current state system.\nRisk retention groups are exempted by federal law from the requirement to be licensed in all states in which they operate as well as from other state laws regulating the business of insurance. They must register and file documentation with a state's insurance regulator, but after this filing, they are essentially free to do business in that state. This exemption from state law extends to most laws on the business of insurance, but laws such as those on fraudulent trade practices, nondiscrimination, and unfair claim settlement practices still apply. Risk retention groups must also pay state premium taxes as regular insurers do. In addition, a non-domiciliary state's insurance regulator is empowered to monitor the financial solvency of a group, including requiring that a group submit to a financial condition examination if the chartering state regulator refuses to do such an exam, and seeking an injunction to force it to cease doing business if the group is in hazardous financial condition. This regulatory oversight is less than that accorded regular insurance companies, however, and some observers fear that this might lead to an increased danger of such groups becoming insolvent. In the case of a risk retention group insolvency, the policyholders have no recourse to a state guaranty fund because membership in these funds is specifically prohibited by the federal statute.\nRisk purchasing groups are given a similar, but more limited, exemption from state law. Many states have laws, known as \"fictitious grouping laws,\" that specifically prohibit or limit groups from purchasing insurance for the members of the group, particularly if the group exists solely for the purchase of insurance. State insurance regulators use these laws to protect consumers and ensure solvency. Risk purchasing groups are exempted from these laws and from countersignature laws, which are laws requiring a local broker's or agent's signature on an insurance contract. The insurance that such groups purchase on behalf of their members must meet the laws and regulations of the state that is designated as the domicile of that group.",
"",
"The first \"Product Liability Risk Retention Act\" was introduced in 1979, and an amended version became P.L. 97-45 in 1981. Its origin can be traced to an interagency task force created by the White House in 1975 to examine difficulties in the availability of product liability insurance. Among the proposals discussed by the task force's report was the possible creation of alternatives to the traditional insurance market. The 1981 act was relatively narrow, limiting risk retention groups and risk purchasing groups to insurance covering product liability as well as completed operations liability. The 1981 act also limited members of these groups to \"product manufacturers, wholesalers, distributors and retailers.\" Risk retention groups had to be chartered, and thus regulated, as an insurer in one of the United States or U.S. jurisdictions, or in Bermuda or the Cayman Islands. The act specifically exempted risk retention groups from most regulation by any state in which they operate, aside from the chartering state. This federal exemption, however, did not cover laws that were not specific to the business of insurance, such as fraud or deceptive practice laws. The act also preempted any state laws preventing risk purchasing groups from purchasing the same narrow range of insurance as that allowed to be offered by risk retention groups.\nBy the time the act became law in September 1981, the liability market difficulties that prompted so much attention had largely passed. With regular commercial insurance available and relatively inexpensive, there was little incentive for companies to undertake the expense of forming risk retention or purchasing groups, and only three of the former and four of the latter were formed in the first four years of the act's operation.\nDespite the lack of market action, congressional interest in the issue continued. In 1983, a Clarification of the Risk Retention Act ( S. 1046 , eventually P.L. 98-193 ) was passed by voice votes of both the House and the Senate. This act was a response to a model state law promulgated by the National Association of Insurance Commissioners (NAIC). This model law referenced the various state tort laws in its definition of \"product liability\" rather than following the definition passed by Congress in the 1981 act. The state tort laws tended to have a more narrow definition than that desired by Congress. P.L. 98-193 specified clearly that the definitions in the federal statute would be the controlling definitions for purposes of the Risk Retention Act.",
"In the mid-1980s, the insurance market began to harden again and Congress again heard of many problems faced by businesses and individuals in finding and affording insurance. One of the congressional responses was to reconsider the 1981 act. Numerous bills were introduced to expand the provisions so that more consumers might avail themselves of the additional insurance supply mechanism that Congress had created.\nCongress ultimately passed S. 2129 (eventually P.L. 99-563 ), which renamed the 1981 act the \"Liability Risk Retention Act\" and brought the law to its present form. P.L. 99-563 expanded the scope of the insurance to include most types of commercial liability insurance and expanded the organizations that could form such groups to include any business as well as state or local governments or governmental entities as long as all the members of a single group were engaged in similar business activities or were exposed to similar risks. This expansion, however, did not retroactively include the small number of foreign-based risk retention groups. These groups, formed under the temporary authority described above, were allowed to continue in the area of product liability insurance but were not permitted to expand into other kinds of commercial liability insurance. P.L. 99-563 also included changes designed to allow some increased oversight of risk retention and purchasing groups, including the requirement to file documentation in non-chartering states, and the right of non-chartering commissioners to conduct examinations if the chartering state fails to do so and to seek injunctions against groups in a hazardous financial situation. In general, however, the intent of Congress remained to allow these groups to operate throughout the country while being regulated largely, if not solely, by a single state regulator, rather than facing 51 jurisdictions with different laws and regulatory styles.",
"",
"Market reaction to the expansion of the law was relatively swift. By 1988, 52 risk retention groups had been created with more than 24,000 insured and a total premium amount of $250 million. (See the Appendix for a table containing complete risk retention group statistics) The number climbed to 79 in 1991 and then plateaued for the next 10 years, actually declining to 72 in 2001. The number of insureds and the total premium amount, however, continued to increase, reaching over 172,000 insureds and $944 million in premiums in 2001. Within the aggregate statistics, there was significant churning, as individual groups are formed and retired based on the business decisions made by those seeking insurance. In the period from 1987 to 2001, a total of 142 risk retention groups were formed and 73 retired. Reasons for a group retirement vary greatly. Some became insolvent, some changed status to become a regular insurer or were absorbed by a regular insurer, and some simply ceased operation when insurance on the regular market became more affordable.\nThe relative calm in the marketplace that prevailed through the 1990s ended quickly with the hardening of the insurance market in 2001. This hard market has been ascribed to the downturn in both interest rates and the stock market as well as to unexpected losses, particularly the approximately $35 billion in insured losses due to the terrorist attacks on September 11, 2001. Making many of the price increases even more dramatic after 2001 was the prolonged soft market of the 1990s, which led to underpricing by insurers and some complacency on the part of the insured policyholders.\nInterest in risk retention groups increased along with the prices of insurance and reinsurance. The number of RRGs and premiums increased fairly steadily from 72 groups and $994 million in premium in 2001 to 245 groups and $2.6 billion in premiums in 2006. The number of RRG insureds, however, did not follow the same pattern. The insureds numbered 172,713 in 2001, declining to 139,837 in 2002, before growing to nearly 218,000 in 2006. (This decline in insureds was due particularly to insolvencies in RRGs discussed below.)\nRisk retention group growth during the hard market of the early 2000s occurred particularly in the health care arena. In the 2004 survey, for example, 28 of the 41 new groups were insuring some form of health care liability. In the 2007 study, the comparable number was 34 of 52 new RRGs. Within health care, nursing homes showed the largest growth, going from zero nursing home RRGs in 2002 to 20 at the end of 2005. The growth in health care RRGs seemed largely due to widely reported difficulties that health care providers were encountering in obtaining medical malpractice insurance. In one interesting case, a Pennsylvania Department of Public Welfare grant reportedly provided the initial $5 million in capital for a Vermont-domiciled risk retention group with the purpose of insuring nursing homes solely in Pennsylvania. Apparently, this occurred because the chartering laws on the creation of smaller or captive insurers in Vermont were preferred to those in Pennsylvania.\nThe liability insurance market generally has softened since 2005 or so. For 2010, risk retention group premiums are estimated to have been approximately $2.7 billion, with 262 groups in operation and more than 272,000 insureds.",
"The growth of risk retention groups has not been without some problems. As was noted above, the number of insured declined from 2001 to 2004. This was largely due to the liquidation of three Tennessee-domiciled groups that insured physicians, lawyers, and other professionals for professional liability. The liquidation was forced by the insolvency of a regular Virginia-based insurer who had provided reinsurance for these risk retention groups. Individual policyholders of regular insurance are normally eligible for protection in the case of insurer insolvency under the various states' guaranty funds; this, however, would typically apply only to those directly insured by the Virginia company, not to policyholders of companies that are reinsured by this company. These policyholders are considered creditors of the company, not insureds, and thus have a lower priority claim on the assets of the failed company. Further complicating the legal situation is the statutory prohibition on risk retention group participation in state guaranty funds. Class action lawsuits were filed by insureds seeking guaranty fund protection for the insured along with damages for other malfeasance.\nAnother risk retention group failure that has attracted considerable attention is the insolvency of the National Warranty Insurance Risk Retention Group (hereafter \"National Warranty\"). Although physically headquartered in Lincoln, Nebraska, National Warranty was incorporated in the Cayman Islands. It was one of a handful of RRGs that were incorporated outside of the United States before 1985 and was thus grandfathered out of regulation by any of the individual states. Prior to its being declared insolvent in August 2003, it acted as an insurer of the obligations taken on by its members, mainly marketing companies and auto dealerships, who sold vehicle service contracts. Although the actual group was made up of only approximately 580 members, the potential effect of the insolvency is more widespread, as these members sold contracts to or through more than 5,000 auto dealerships in 49 states.\nThe text of the LRRA requires insureds to be members and part owners of a risk retention group; however, this line was apparently somewhat blurred in the National Warranty case. National Warranty acted both as an administrator, adjusting claims on behalf of its members, and as the insurer of these members. This dual role apparently gave the impression that the final consumers were purchasing service contracts directly from National Warranty rather than from the individual group members. The National Warranty liquidation process is still ongoing.",
"For several years, interest groups have made a concerted effort, including the formation of a Council for Expanding the Risk Retention Act, to advocate expanding the provisions of the Risk Retention Act to include commercial property and casualty insurance, except for workers' compensation insurance. In 2002, the National Conference of Insurance Legislators (NCOIL) approved a resolution supporting such an expansion, and a major consumer group, the Consumer Federation of America, has written in support of the idea as well. Some insurance regulators, for example, then-District of Columbia Commissioner Lawrence Mirel and then-Vermont Director of Captive Insurance Leonard Crouse, also previously expressed their support for expansion of the Risk Retention Act.\nDoubts about such an expansion, however, have also been raised. In National Association of Insurance Commissioners (NAIC) meetings, a prominent doubter was former Nebraska's insurance director, Tim Wagner, who was at the forefront of dealing with the National Warranty insolvency. At the September 2003 meeting, the NAIC was encouraged to adopt a draft resolution that would put the group on record as opposing the expansion of risk retention groups. Among the reasons cited in the resolution was the danger to consumers from a limitation on states' regulatory authority, the example of the National Warranty failure, and the absence of an availability problem in property insurance that has not been addressed by state-based solutions. No resolution has been adopted, but a \"Risk Retention Working Group\" to examine issues surrounding risk retention groups was created. Among other actions, this group has proposed corporate governance standards for RRGs. The U.S. Government Accountability Office also discussed problems in risk retention groups in a 2005 report entitled Risk Retention Groups: Common Regulatory Standards and Greater Member Protections Are Needed .\nThe fundamental questions surrounding LRRA expansion are essentially the same as those addressed by Congress when the first act was passed in 1981, and when it was expanded in 1986. Stripping away jargon, this question can be phrased as an issue of availability vs. reliability. Arguments in support of expansion often focus on a failure of the current insurance market, and the current regulatory system, to make a sufficient supply of insurance available so that consumers who need insurance can find it at a reasonable price. The question posed is essentially: \"What happens to a community when a business, a school, or a doctor cannot find or afford insurance?\" Arguments opposing expansion often focus on the dangers in allowing insurance to be sold that is not subject to same regulatory standards as \"normal\" insurance. The question posed is essentially: \"What happens to a community if the insurer from which this business, school, or doctor purchases insurance ends up bankrupt or if the policy does not cover what needs to be covered?\" The underlying basis for this question with regard to risk retention groups seems to be the assumption that the single domiciliary state regulator will do an insufficient job in protecting the consumers who live in other states. Recent legislation in Congress has addressed some concerns raised in the past about the \"reliability\" of risk retention groups through the provisions addressing corporate governance structures and disclosure.\nSecondary arguments are also made. Because the insured are the owners of a risk retention group, it could be argued that they can see to it themselves that the insurance provided is reliable. It is also argued that the rates of failure of regular insurers and risk retention groups are nearly the same, and that the failure of National Warranty was a unique situation since it was an offshore group that was unaccountable to any state regulator. Doubters may counter by questioning what sort of impact risk retention groups might have when, even with their recent growth, they still occupy a fraction of a percent of the property/casualty market. In addition, even if the failure rates are similar, the impact of a state-regulated insurer failure is likely to be mitigated by its participation in state guaranty funds, which are specifically unavailable to insurers operating under the Liability Risk Retention Act.\nAssessing the arguments on either side is a challenge for Congress. The broad question of availability vs. reliability can be framed by some as a basic philosophical question about the degree of regulation needed by insurance markets and may not have an absolute empirical answer. Some see insurance philosophically as a public good, akin to a basic utility, and one that must be highly regulated in price and content to protect consumers. Others do not share this philosophy and feel insurance should be lightly regulated, with the market determining prices and content. In general, the states, who have faced such basic insurance regulatory questions for many years, have attempted to suit the amount of regulation to the perceived sophistication of the consumer. Thus, the market for commercial insurance is usually left relatively less regulated on the theory that the businesses purchasing in the commercial market have the knowledge and experience to discern the intricacies of insurance policies and companies, or at least hire professionals to make these \"reliability\" judgments for them. Individual consumers are presumed to be less well placed to make these judgments; thus, the market for such insurance, particularly homeowners and auto, tends to be more regulated. Internationally, the insurance markets in general have tended to be less regulated, particularly with regard to the direct price and content controls found in some of the United States.\nThe differential regulatory approach based on the sophistication of the consumer can be seen, for example, in the operation of state guaranty funds. These funds are intended to step in and pay claims arising from insolvent insurers, but they typically have a relatively low cap on the amount that can be paid to each policyholder. Keeping this amount low implies that consumers with relatively low claims, presumably most individuals, will be nearly fully protected against loss, while consumers with relatively high claims, presumably larger businesses, will be only partially protected. This cap on guaranty fund claims also affects the direct arguments surrounding risk retention groups. Because most risk retention group members, as businesses, face potentially large claims, the value of guaranty fund protection will be less to them than to individuals with presumably lower claims.\nIn assessing some of the more factual arguments, it is true that risk retention and purchasing groups occupy a small part of the insurance market. The approximately $422 billion total premium written in the property/casualty market in 2009 was many times the approximately $2.5 billion in risk retention group premium. Economic theory suggests, however, that it is not necessary for a competitor to have a large market share in order to have an impact on prices or availability. Anecdotal cases, particularly ones such as the Pennsylvania nursing home risk retention group mentioned above, also suggest that the act is expanding the availability of insurance, especially in local situations with severe supply difficulties. The Department of Commerce came to the conclusion in 1989 that the 1986 act had been successful in addressing supply problems, and the GAO made similar findings in the previously mentioned 2005 report.\nAn assessment of risk retention and purchasing groups also may offer insight into wider questions involving the federal role in insurance regulation. Particularly since the passage of 1999's Gramm-Leach-Bliley Act, some have advocated for an increased federal role in insurance regulation, up to complete federalization of regulation for all interstate insurers. Others have suggested some lesser federal role to address specific problems they see caused by the multiplicity of state regulators, such as slow approval times for products and overly burdensome rate or form regulation. The recent Dodd-Frank Wall Street Reform and Consumer Protection Act includes some insurance provisions, but the debate over the federal role in insurance is expected to continue in the future. The two Risk Retention Acts are an example of one way previous Congresses have tried to solve supply problems arising from, or exacerbated by, the insurance regulatory system. The answer provided by these acts was essentially a system of enforced mutual state recognition without broad federal regulation of insurance. As such an example, these acts might provide some insight into how Congress considers addressing problems in the insurance regulatory system today.",
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"question": [
"What is the purpose of RRGs and RPGs?",
"Why were these groups created by Congress?",
"What rules apply to these groups?",
"How has interest in RRGs and RPGs changed over the last two decades?",
"What happened to the insurance market between 2001 and 2004?",
"Why have cautionary voices been raised regarding these groups?",
"What has happened to the insurance market in the past few years?",
"What is the fundamental question surrounding expansion of the LRRA?",
"What is the main argument of those who support expansion?",
"What is the main argument of those who oppose expansion?",
"What is the purpose of the Risk Retention Modernization Act of 2011?",
"How was this bill introduced?",
"How is this bill similar to past bills?"
],
"summary": [
"Risk retention groups (RRGs) and risk purchasing groups (RPGs) are alternative insurance entities authorized by Congress to expand insurance supply through a simplification of insurance regulation.",
"The McCarran-Ferguson Act of 1945 generally leaves the regulation and taxation of the business of insurance to the individual states. In 1981 and 1986, however, Congress crafted a narrow exception to the usual state insurance regulations for these groups, generally exempting them from multiple state oversight.",
"Membership in risk retention and purchasing groups is limited to commercial enterprises and governmental bodies, and the risks insured by these groups are limited to liability risks.",
"Over the past two decades, interest—both in Congress and in the market—in RRGs and RPGs has varied largely with the vagaries of the regular insurance market.",
"From 2001 to 2004, the insurance market was in one of its periodic \"hard\" markets, and regular insurance became increasingly expensive and sometimes unavailable. Since 2001, the numbers of risk retention groups rose dramatically and calls have been heard to expand the scope of insurance that they are allowed to offer.",
"At the same time, some problems occurred in individual risk retention groups, and cautionary voices have also been raised.",
"Although the liability insurance market has softened somewhat in the past few years, with policies becoming more available and relatively less expensive, risk retention groups have continued to form in significant numbers.",
"The fundamental question surrounding expansion of the Liability Risk Retention Act (LRRA) can be posed as an issue of availability vs. reliability. Those who would support expansion often emphasize a failure of the current insurance market and the current regulatory system to make a sufficient supply of insurance available so that consumers who need insurance can find it at a reasonable price. The question they pose is essentially: \"What happens to a community when a business, a school, or a doctor can not afford or find liability insurance?\" Those who would oppose expansion often emphasize the dangers in allowing insurance to be sold that is not subject to same regulatory standards as \"normal\" insurance. The question this group poses is essentially: \"What happens to a community if the insurer from which this business, school, or doctor purchases insurance ends up insolvent or if the policy does not cover what needs to be covered?\"",
"Those who would support expansion often emphasize a failure of the current insurance market and the current regulatory system to make a sufficient supply of insurance available so that consumers who need insurance can find it at a reasonable price.",
"Those who would oppose expansion often emphasize the dangers in allowing insurance to be sold that is not subject to same regulatory standards as \"normal\" insurance.",
"In the 112th Congress, H.R. 2126, the Risk Retention Modernization Act of 2011, would extend the LRRA to commercial property insurance, authorize the Federal Insurance Office to determine the states' compliance with the act and impose corporate governance standards on RRGs and RPGs.",
"Representative John Campbell introduced the bill on June 3, 2011.",
"A similar bill was introduced in the 111th Congress by Representative Dennis Moore, with Representative Campbell as a cosponsor."
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CRS_RL31936
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{
"title": [
"",
"Introduction",
"Background on General Revenue Sharing",
"Amount",
"Allocation Formula",
"Economic Rationale for GRS Grants",
"Fiscal Reallocation",
"State and Local Government Liquidity Problems",
"Federal and State-Local Fiscal Policy Synchronization",
"Analysis of GRS for Economic Stimulus in 2009",
"Magnitude of Anticipated Pro-Cyclical State Action",
"Implementation Issues",
"Fiscal Policy Time Lags",
"State Budget Options",
"(1) Increase Government Spending",
"(2) Rescind or Avoid Tax and Fee Increases",
"(3) Reduce Debt and Contribute to a Rainy Day Fund",
"Appendix. A Brief History and Analysis of Prior GRS Legislation"
],
"paragraphs": [
"",
"This report provides a brief history and analysis of general revenue sharing (GRS). GRS is commonly defined as a program of federal transfers to state and local governments that does not impose specific or categorical spending requirements on the recipient government. The United States implemented a GRS program in 1972 that expired on September 30, 1986.\nCongress looked to the bygone GRS program once before as an option designed to address the fiscal year 2003 (FY2003) and FY2004 state budget shortfalls ($21.5 billion and $72.2 billion, respectively). Some observers have suggested that a revenue sharing program that provided states with grants to forestall spending cuts and tax increases in 2009 may deter pro-cyclical actions by states and produce national fiscal stimulus. The budget gaps for is estimated to be $31.0 billion for the remainder of FY2009 and for FY2010 it is estimated to be $64.7 billion.\nAn examination of the GRS program that existed from 1972 to 1986 could provide some historical perspective if policy makers were to consider a revised GRS program in 2009. The first section provides a brief overview of GRS as authorized by the State and Local Fiscal Assistance Act of 1972 (P.L. 92-512, the 1972 Act) and the three extensions. The second section analyzes the economic rationale for GRS. The third section analyzes GRS in the context of its possible use for stimulus of the nation's economy in 2009 including estimated distribution to the states based on the original GRS formula. The Appendix provides a more detailed legislative history of the GRS program created by the 1972 Act and its three extensions.",
"General revenue sharing (GRS) is typically defined as unconditional federal grants to state and local governments. These grants are intended to provide state and local governments with spending flexibility. The total grant amount is fixed annually, sometimes called \"closed-ended,\" and allocated to the recipient governments by formula. GRS has not been explicitly identified as a primary tool to provide counter-cyclical assistance. The GRS program created by the 1972 Act exemplifies how a GRS program can work.",
"Over the almost 15-year life of the GRS program (1972 through 1986), over $83 billion was transferred from the federal government to state and local governments. To achieve a comparable magnitude of assistance today, approximately $313 billion (in 2008 dollars) would need to be distributed over the next 15 years. Table 1 provides detailed information on the 17 entitlement periods for the GRS grants (as provided for in the 1972 Act and subsequent extensions, both in nominal dollars and adjusted to 2008 dollars). The estimates provided in Table 1 for 2008 can be thought of as the relative value of a commitment made in the past in current dollars. For example, a $1 commitment in 1972 would be equivalent to a $5.08 commitment in 2008.\nThe payment periods in the 1972 Act were designed to roughly follow the budget calendars of state and local governments. The grants in subsequent extensions tracked the federal budget calendar. Note that after FY1980, only local governments, not states were entitled to GRS grants.",
"GRS allocations were determined by a formula that used a combination of the following variables: tax effort, population, and per capita income. Generally, the greater the tax effort and population, the larger the grant. In contrast, the higher the per capita personal income, the smaller the grant. More specifically, section 106 of the GRS legislation stipulates that under the three-part formula, each state shall receive:\nan amount which bears the same ratio to the amount appropriated under that section for that period as the amount allocable to that State under subsection (b) bears to the sum of the amounts allocable to all States under subsection (b)\nThe three-factor formula can be summarized symbolically:\nState \" i \" Share of GRS =\nwhere:\nA us = total appropriation,\n= population of state \" i \",\n= total personal income of state \" i \",\n, or state \" i \" relative income factor, and\n, or state \" i \" general tax effort factor.\nThe two ratios in the formula, the relative income factor (RIF) and the general tax effort factor (GTEF), were intended to adjust the state allocations based on the state's \"ability-to-pay\" and tax structure.\nThe RIF for a state is the pre capita income for the U.S. divided by the per capita income of the state. If the state's RIF is greater than one, then it is considered relatively low income. Analogously, a RIF less than one indicates a state has relatively high income. In the three-part GRS formula, the higher a state's RIF, the greater the share of revenue.\nThe GTEF was considered important for GRS because it created a disincentive for states to reduce taxes and rely more on the federal government for revenue over time. The GTEF is total state tax collections as a share of state personal income. In the GRS formula, the larger the GTEF component, the greater the share of revenue.\nUnder the original GRS, the first step in the allocation procedure was to calculate each state's share based on the three variable formula. After each state's share was determined, one-third of the total amount was allocated to the state government and two-thirds to local general purpose governments within the state. The two-thirds portion was then distributed to each geographically defined county (parish) area within the state using the same three variable formula used to determine the state share. Each government within the county area then received an amount equal to the ratio of taxes it collected to total taxes collected by all general purpose governments in the county.\nThe allocation formula was criticized for generating inequitable treatment of local governments. Generally, the arguments arose from \"similar governments within a state receiv[ing] different revenue sharing payments, primarily because of their geographic location.\" According to a GAO report, \"These inequities are created primarily by tiering allocation procedures whereby revenue sharing funds are first allocated to county geographic areas.\"\nTable 2 below employs the three-part formula to allocate a hypothetical appropriation of $40 billion and $20 billion using data for 2007, the latest year where data for the full years is available. Only states are eligible in the example provided in Table 2 .",
"From the time the active debate surrounding GRS began in the 1960s, through eventual passage of the 1972 Act and subsequent extensions, general economic conditions and the political environment changed dramatically. Thus, the proponents and opponents of GRS modified their political and economic arguments depending on the current political and economic conditions. Because of this turbulence, the rationale behind GRS cannot be traced to a single political or economic objective. This section of the report summarizes three frequently mentioned economic rationales behind GRS: to initiate an intergovermental fiscal reallocation, to address state and local government liquidity crises, and to synchronize federal and state-local fiscal policy.",
"Fiscal reallocation has two components. Generally, under a GRS program, state and local tax regimes are partly replaced by the federal tax regime. Also, the federal spending objectives are replaced, in part, by state and local spending priorities.\nProponents of reallocation cite the more \"progressive,\" and thus desirable, structure of federal taxes. However, an assessment of the merits of a more progressive tax structure require subjective claims of what is \"fair\" taxation. Even if there is agreement that a more progressive structure is needed for fairness, it is unclear that GRS on the relatively small scale of the previously implemented program could achieve that objective.\nGRS would also shift government spending decisions for the grant amount from the federal government to state and local governments. The rationale for such a shift can be traced to the assertion that state and local governments are better able to understand and satisfy the preferences of their residents. A reallocation through GRS could also address the \"assignment\" issue. The assignment issue arises when the revenue productivity of a government does not match the spending requirements for the public services assigned to that level of government. Although these observations may be true for some publicly provided goods and services, it is not clear that nationally, the net gain in spending efficiency alone would justify a GRS program. And, the small relative size of a GRS program relative to overall tax collections would limit any gains in government spending efficiency.\nThe arguments for and against fiscal reallocation are subjective because they rely on measuring fairness. Some would argue that a more progressive tax system is patently unfair, while others would argue that a tax system that redistributes income is more equitable and desirable. Fiscal reallocation would change the structure of government fiscal relationships, but analysis of the degree to which it does and the desirability of such a shift are beyond the scope of this report.",
"State, and more specifically, local governments, often face fiscal liquidity problems that arise from revenues that fluctuate more dramatically with the business cycle than do expenditures. As the economy slows, revenue falls more sharply than expenditures, creating a budget deficit. Governments without sufficient reserves are then compelled to reduce expenditures or raise taxes to balance their budgets. State and local governments cannot use debt to close deficits because of state constitutional or statutory restrictions requiring a balanced budget. In contrast, the federal government can issue more debt when expenditures exceed revenue. A countercyclical GRS program could help alleviate these relatively short-term liquidity problems for states.\nOpponents of federal assistance to state and local governments during economic slowdowns suggest that poor state-local fiscal management creates deficit problems. State and local governments could \"save\" surplus revenue during economic expansions to then use when the economy contracts and revenue falls. If the rise and fall of revenue is symmetric, then the revenue saved should be sufficient to cover revenue shortfalls when the economy slows. However, research has shown that state government budgets are generally asymmetric over the business cycle. State and local governments tend to save less during expansions for a variety of reasons. Political pressure from voters to reduce taxes when large budget surpluses accrue is a commonly cited reason.",
"This objective is related to the liquidity objective discussed above. However, the rationale for a long-term GRS program designed for economic stabilization is somewhat different than a one-time grant to remedy a temporary fiscal imbalance. The federal government will typically employ monetary and fiscal policy to help stabilize consumption patterns and the price level as the economy cycles between periods of growth and recession. Generally, stimulative fiscal policy is implemented through tax reductions or increased government spending. In theory, tax reductions and/or increased government spending stimulates the demand for goods and services. The increased demand for goods and services then leads to economic expansion and recovery. This fiscal policy counters the economic downturn and is thus termed countercyclical fiscal policy.\nHowever, state and local governments may mitigate countercyclical federal fiscal policy if they are forced to raise taxes and reduce expenditures during recessions. Such a \"pro-cyclical\" state and local government response could undermine any federal fiscal stimulus. During economic downturns, this rationale played a more prominent role for proponents of general revenue sharing. While debating the 1976 extension, Senator Muskie offered the following rationale for GRS:\nwe at the Federal level are trying to speed up economic recovery by cutting taxes, [while] state and local governments are being forced to raise their own taxes, thus delaying the impact of the Federal effort.\nThe economic situation in the early to mid 1970s, about the time of initial passage of GRS, may seem similar to today's economic situation. However, the 1973-1975 recession was much deeper and longer and coincided with a sharp oil supply shock that the current downturn has not experienced. Nevertheless, the debate surrounding countercyclical aid to the states today is reminiscent of the 1975-1976 debate.",
"This section analyzes how GRS might affect the economy if implemented in 2009. The first subsection describes the potential size of GRS compared to current state deficits. The second section analyzes implementation issues that may arise if a new GRS program were authorized, including a discussion of how states might use new federal grants.",
"The principal question is: \"Will the supposed pro-cyclical state actions in the absence of federal assistance dampen the effect of federal fiscal policy?\" From a national economic perspective, closing the remaining state FY2009 budget gaps with revenue sharing would likely have little if any effect on the national economy. The National Conference of State Legislatures reported that the remaining FY2009 gap for 38 states of $31.0 billion (as of November 2008) is approximately 0.22% of the U.S. GDP of $14.4 trillion, hardly enough to effectuate a stimulative response. The same NGA study, however, notes projected shortfalls of $64.7 billion for FY2010. The budget gaps for FY2009 are after closing a $40.3 billion budget shortfall before enacting the FY2009 budget.\nA one-time GRS type grant to states that closed the estimated FY2009 fiscal imbalance of $31 billion and forestalled anticipated state spending cuts and tax increases for FY2010 of $64.7 billion could provide significant fiscal stimulus. This assumes other federal spending would not be reduced and the states spent the federal grants immediately.\nThe degree of stimulus would be tempered by the net spending response of the recipient government. Research has generally shown that for every $1 lump sum transfer, only a portion is translated into new spending. For example, assume a state has planned spending of $100 to be paid with own source tax revenue of $100. Under this leakage theory, a $10 transfer from the federal government would not lead to $110 of spending. Instead, the state may lower own-source tax revenue $5 and use half the federal grant to cover the tax reduction. The result would be an increase in government spending of $5, not the full $10 transferred.",
"The above discussion assumed that federal spending would flow seamlessly from the federal government through states to the designated spending program. Two factors may result in a drag on this flow. First, state government administration may increase the lag time and second, each state would use the grant for budget priorities of varying stimulative effect. Following is a brief analysis of these two important implementation factors.",
"Time lags in implementation are the primary impediment to effective fiscal stimulus. Generally, the objective of fiscal policy during a recession is to boost aggregate demand and generate short term economic stimulus. However, if the stimulus comes too late, the increased spending may occur when the economy has already begun to revive and is approaching full employment. In that case, the stimulus becomes pro-cyclical and possibly inflationary. Policy makers should therefore use fiscal stimulus with caution because of the potential for mistimed action.\nGRS grants may be subject to two time lags, thus increasing the potential for mistimed fiscal policy. The first occurs at the federal level where policy makers must identify the need for stimulus then agree upon the size of the stimulus. Once the need and size are determined, Congress must then agree upon a grant allocation scheme that satisfies the competing goals of equity among jurisdictions and optimal stimulus. For example, suppose the grant allocation formula includes a component that provides greater assistance to states with greater need. If so, states that may have been more fiscally responsible would receive less, possibly violating the fairness criterion. However, from a broader macroeconomic perspective, aid that prevents more layoffs and state government budget cuts would seem to deliver greater short-term stimulus. Determining the structure of the allocation scheme could generate considerable debate, possibly delaying initial implementation efforts.\nThe second time lag occurs at the state level. Federal grants that arrive before June 30, 2009, might avert some of the pro-cyclical state actions (e.g., budget cuts and tax increases) for many states. If the grants arrive too late for FY2009, state budget officials could simply add this revenue to the operating budget for FY2010 and perhaps avoid implementing tax increases and spending cuts that would otherwise begin on July 1, 2009.",
"What could states do with unconditional revenue sharing grants? Generally, states have four options for federal grants (listed in order of stimulative response):\nincrease government spending, reduce taxes (or rescind past tax increases), reduce debt (or not issue more debt), and/or contribute to a rainy day fund (or not draw down a rainy day fund).",
"Increased spending would be the most stimulative in the short run, because the grant is immediately injected into the economy. This option for the states would include retaining state employees who would have been furloughed, maintaining current operations that would have been reduced, and not scaling back social programs such as education and healthcare. Theoretically, this fiscal stimulus works best when government spending is quickly multiplied through the economy. This means that each dollar of the federal transfer payment stimulates the economy the most if the entire dollar is spent by the recipient and then spent again. The degree of stimulative effect of avoided state actions, such as not furloughing workers, depends on this \"multiplier effect.\" Thus, to achieve the greatest stimulus, the most contractionary state actions should be the first avoided.\nThe National Conference of State Legislatures (NCSL) asked budget officials from all states to categorize their spending strategies to reduce or eliminate budget gaps remaining for FY2009. Changes in taxes are difficult to implement in the middle of a budget year and are not included. Table 3 below lists the strategies identified by NCSL and the number of states that proposed implementing those strategies for 2009. For FY2010, several state and local governments are likely going to increase taxes to help close budget gaps.\nThe spending option for states that would produce the most relative stimulus for each dollar of spending would be to avoid net job losse s ( e.g. , layoffs, furloughs, and, to a degree, early retirement and hiring freezes ) . To see why this is true, consider what would happen if net job losses occurred. First, layoffs reduce aggregate demand because when workers are laid off, their income would fall steeply until they find new jobs, causing their consumption to fall. (Even though all of the federal spending is not entirely multiplied through the economy because of employment taxes and income taxes, the stimulative action is relatively effective because the federal government is essentially \"paying\" the state employees.) Second, since government services are included in GDP, measured economic activity would be directly reduced as long as resources (workers) lay idle. In an environment of rising unemployment, it is unlikely that all of these resources would quickly be put back to use through market adjustment. If GRS prevented net job losses, these negative effects on the economy could be avoided.\nThe saving behavior of potentially separated employees would likely enhance the stimulative effect of avoiding job losses. (However, avoiding induced early retirement may provide less stimulus than avoiding furloughs and lay-offs.) If the employees are early in their careers and/or are in low skill positions—likely candidates for furloughs or lay-offs—it is likely that their incomes are lower than the median for state employees. Research has shown that low income workers save a smaller portion of their income than high income workers. Thus, preventing the employment separation of low income workers should provide more relative stimulus than the alternative of not offering early retirement.\nAcross-the-board cuts would affect a variety of spending programs that do not easily conform to one succinct appraisal. The stimulative effect of avoiding across-the-board cuts would vary from state to state based on the state's spending pattern. Aid to local governments also falls into an uncertain category because of differing intergovernmental transfers across states. The stimulative effect of avoiding cuts in local aid would be positive, though the magnitude is uncertain.",
"Generally, tax cuts are less stimulative than direct spending increases, because individuals are likely to save some of their tax cut. Analogously, a rescinded or avoided tax increase would also be less stimulative than spending increases because taxpayers would likely save some portion of the reduced tax payment.",
"Debt reduction and contributing to a rainy day fund would offer little stimulus because such action would be equivalent to an increase in public saving. In the short run, increased public saving does not stimulate the economy. If the federal grants were used to avoid tapping into tobacco revenue, the saving effect would be similar to contributing to a rainy day fund.\nThe combined effect of the various potential responses of state and local governments to federal grants is difficult to quantify a priori . Nevertheless, one could confidently assert that $1 of federal grants would not lead to a corresponding $1 increase in fiscal stimulus. While some state and local governments may spend all the federal grants and not change pre-grant taxing and spending priorities, some portions of the GRS grants would likely be used for non-stimulative purposes such as substituting for previously planned spending or tax increases.",
"The 1972 Act\nThe GRS grants authorized by the State and Local Fiscal Assistance Act of 1972 (the 1972 Act) were essentially unconditional. A trust fund was established and annual appropriations were dedicated to the trust fund. Even though the grants were identified at the time as general revenue sharing, the legislation did include a list of \"priority expenditures\" for which the shared revenue sent to local governments could be used. (The grants to states were unconditional.) GRS grants could be used by local governments for the following acceptable operating expenditures: (1) public safety; (2) environmental protection; (3) public transportation; (4) health; (5) recreation; (6) libraries; (7) social services for the poor or aged; and (8) financial administration. \"Ordinary and necessary capital expenditures\" were also allowed. The grants could not be used for education.\nNote that the priority expenditure list was discontinued by the 1976 extension. In addition to the priority expenditure list, the 1972 Act also disallowed the use of GRS for matching federal grants. That restriction was also dropped in the 1976 extension.\nCongress believed GRS was necessary for a variety of reasons. The most prominent reason at the time was the perceived need for reallocation of government responsibilities arising from the changing citizen demands for government services (fiscal reallocation as cited earlier). The congressional sentiment behind the 1972 Act that created general revenue sharing is summarized well in the following passage from the Senate report accompanying the 1972 Act:\nToday, it is the States, and even more especially the local governments, which bear the brunt of our more difficult domestic problems. The need for public services has increased manyfold and their costs are soaring. At the same time, State and local governments are having considerable difficulty in raising the revenue necessary to meet these costs.\nThe Nixon Administration seemed to have a similar perspective. When President Nixon signed the legislation, the President remarked that the GRS program would \"place responsibility for local functions under local control and provide local governments with the authority and resources they need to serve their communities effectively.\"\nHowever, the shift in the demand for and provision of government services was not the only justification for GRS. Observers at the time cited these additional reasons for implementing a revenue sharing program:\nto stabilize or reduce state and local taxes, particularly the property tax; to decentralize government; to equalize fiscal conditions between rich and poor states and localities; and to alter the nation's overall tax system by placing greater reliance on income taxation (predominantly federal) as opposed to property and sales taxation.\nCounteracting cyclical economic problems, such as state and local budget deficits induced by a slowing economy, was not explicitly mentioned as justification for GRS in the 1972 Act. However, when the debate began in 1974 on extending GRS beyond 1976, the countercyclical potential of revenue sharing apparently became important to policymakers. The counter cyclical arguments were likely initiated by the relatively severe recession that lasted from November 1973 through March 1975.\nThe 1976 Extension\nThe State and Local Fiscal Assistance Act of 1976 extended the GRS program through FY1980 with minor modifications. In the Senate report accompanying the legislation, Congress identified the following two reasons for the extension: (1) \"Rapidly rising services costs coupled with sluggish declining tax bases has meant that State and local governments have had to raise tax rates and/or cut services,\" and (2) \"A chronic problem State and local governments face is that the demand for public services is more elastic than the availability of revenues to finance them.\" The Senate report suggested that the extension of the GRS program \"not only serves to help solve the fiscal problems of individual state and local governments, but also serves to stabilize the economy.\"\nThe 1976 extension also eliminated the priority expenditure categories for local governments and the prohibition on states from using the grants for federal matching grants. Policymakers recognized the fungibility of local revenues which initiated the elimination of the spending restrictions. Although the fiscal stimulus features were mentioned during the debate surrounding extension, the ultimate purpose of revenue sharing was characterized as a long-term restructuring of the intergovernmental transfers.\nThe desire to use revenue sharing as a countercyclical fiscal policy tool was not directly addressed in the 1976 extension. However, the reference to revenue sharing's ability to \"stabilize\" the economy may have arisen due in part to the countercyclical merits of GRS as suggested during the debate leading up to the extension.\nThe total size of the extension, $25.5 billion, was approximately 2.5% of total state and local own-source tax revenue collected over the FY1977 to FY1980 period. Nationally, the transfer averaged 0.29% of national gross domestic product (GDP) annually over the four-year period.\nThe 1980 Extension\nThe State and Local Fiscal Assistance Act Amendments of 1980 ( P.L. 96-604 ) extended the general revenue sharing program through September 30, 1983, but only for local governments. According to the House report accompanying act, the state share was eliminated\nas a means of helping to balance the Federal budget. The Committee believes that State governments are better able to adjust to the discontinuance of revenue sharing allocations than local governments.\nUntil the 1980 Act, approximately one-third of the GRS grants had been allocated to the states. The 1980 Act reduced the GRS grants by one-third—from $6.850 billion to $4.567 billion—and only local governments received the grants (see Table 1 ).\nIn addition to continuing GRS for local governments, the 1980 Act also authorized the creation of a \"countercyclical assistance program\" to be triggered by national economic downturns. The purpose of the program was to provide assistance to state and local governments during recessions. To achieve this, the program authorized $1 billion for each of the fiscal years, 1981, 1982, and 1983, subject to the trigger mechanism described in the House report accompanying the legislation:\nfunding would be triggered when the national economy has experienced two consecutive quarterly declines in both real gross national product and real wages and salaries [emphasis added] (that is, corrected for inflation). Once a recession has been confirmed by these declines, funds would be provided for each recession quarter in relation to the severity of the recession. The program would be funded at a rate of $10 million for each one-tenth percentage point decline in real wages and salaries measured from the pre-recession base—the average of the real wages and salaries for the two quarters preceding the decline. The amount of money allocated in any one quarter would be limited to $300 million.\nAfter setting aside 1% of the funds for Puerto Rico, Guam, American Samoa, and the Virgin Islands, the remaining funds would then be split evenly between state governments and \"county areas.\" The relative size of payments to states and county areas would have been based on the severity of the economic downturn in that area. The state portion would be adjusted by the state's tax effort. The greater the effort, the greater the grant.\nApparently, the trigger threshold was never crossed. No grants were provided under the countercyclical fiscal assistance program. Table A-1 below reports the quarterly change in the real wage and real GNP for the second quarter of 1980 through the third quarter of 1983. The time periods reported in Table A-1 are the three federal fiscal years for which funding was authorized plus the two quarters before the first fiscal year of authorization. Note that for the 14-quarter time frame reported below, there were never two consecutive quarters where both the real GNP and real wage declined from the previous quarter.\nThe 1980 Act is significant because the act discontinued revenue sharing for the states and formally introduced the concept of providing countercyclical fiscal assistance through federal grants to state and local governments as part of GRS legislation. Ultimately, the countercyclical assistance program was never funded and thus no countercyclical fiscal assistance was provided.\nLocal governments generated $593.8 billion of own source revenue over the three fiscal years covered by the 1980 Act. GRS provided $13.7 billion in grants to local governments—approximately 2.3% of total own-source revenue. The grants to local governments probably had little effect on the national economy given they represented 0.14% of U.S. GDP over the three-year time frame. The $1 billion for each of 1981, 1982, and 1983 for countercyclical aid, authorized but never spent, would have produced a negligible effect on the economy, even if fully realized.\nThe 1983 Extension\nThe final installment of the GRS program was signed into law on November 30, 1983, as the Local Government Fiscal Amendments of 1983 ( P.L. 98-185 ). As with the 1980 Act, only local governments received grants. The 1983 extension was intended to stabilize the fiscal condition of local governments. The conference report accompanying the legislation stated that the\ntendency of State and Local governments to rely on relatively inelastic revenue sources, such as local property taxes, has limited their flexibility in responding to fiscal problems. To assist local governments in meeting the needs of their communities in a time of fiscal stringency, the Committee amendment extends the general revenue sharing program for three years.\nThe final extension provided the same amount for local governments as did the 1980 Act ($13.7 billion) in three equal annual installments of $4.567 billion. This amount was equal to the amount received by local governments from 1977 through 1980. The countercyclical aid program was not extended. The GRS program ended September 30, 1986."
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"What is the function of this report?",
"What is the history of the GRS?",
"How did states specifically benefit from GRS?",
"What was the rationale behind GRS in 1972?",
"Why did proponents and opponents of GRS modify their arguments?",
"How could GRS be implemented?",
"Why has a revised GRS program been advocated?",
"Why is there renewed concern at the state and local level?",
"What major issues does the GRS program face?",
"How does federal spending affect fiscal stimulus?"
],
"summary": [
"This report provides background and analysis of the general revenue sharing program (GRS) as authorized in the State and Local Fiscal Assistance Act of 1972 (P.L. 92-512, the 1972 Act).",
"The GRS program was extended three times before finally expiring on September 30, 1986. Over the almost 15-year life of the GRS program (1972 through 1986), more than $83 billion was transferred from the federal government to state and local governments. From 1972 to 1980, states received approximately one-third of the grants and local governments received two-thirds. State governments were excluded from GRS beginning in the 1981 fiscal year (FY).",
"From 1972 to 1980, states received approximately one-third of the grants and local governments received two-thirds. State governments were excluded from GRS beginning in the 1981 fiscal year (FY).",
"The rationale behind GRS in 1972 cannot be traced to a single political or economic objective, such as economic stimulus. The turbulent economic and political environment that characterized the 1960s and 1970s led proponents and opponents of GRS to modify their political and economic arguments as that environment changed.",
"The turbulent economic and political environment that characterized the 1960s and 1970s led proponents and opponents of GRS to modify their political and economic arguments as that environment changed.",
"Generally, GRS could be implemented to (1) initiate intergovernmental fiscal reallocation; (2) address state and local government liquidity crises; and (3) synchronize federal and state-local fiscal policy.",
"A revised GRS program intended to help close state budget deficits (estimated to be $31.0 billion for the remainder of FY2009 and estimated to be $64.7 billion for FY2010) has been advocated based on the last two objectives.",
"The budget crisis facing state and local governments in 2009 has generated renewed concern at the state and local level.",
"A GRS program designed as a countercyclical initiative would encounter two primary implementation issues: fiscal policy time lags and variability in the state response to GRS grants.",
"In addition, as with all fiscal policy, the overall size of the additional federal spending is critical to the impact of the fiscal stimulus."
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GAO_GAO-17-570
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{
"title": [
"Background",
"In Addition to Broad IoT Research and Oversight, Federal Agencies More Directly Support Communities by Funding IoT Projects and Fostering Collaboration",
"Broad Federal IoT Research and Oversight Provide Underlying Support for IoT in Communities",
"Research",
"Oversight",
"Selected Federal Agencies Directly Support Communities by Funding IoT Projects",
"Federal Government Also Supports Communities’ IoT Projects by Fostering Interagency and Community Collaboration",
"Interagency Collaboration",
"Community Collaboration",
"European Union Efforts Are Generally Similar to the United States, Although in Some Cases More Formalized",
"Broad Research and Oversight",
"Funding and Collaboration",
"Selected Communities Use Federal Funds with Other Resources to Deploy IoT Projects but Face Various Challenges Integrating Projects",
"Communities Are Using Federal Funds in Conjunction with Other Funding and Expertise to Deploy IoT Projects",
"Financial Support",
"Non-financial Support",
"Several Factors May Hinder Communities in Integrating IoT Projects",
"Siloed Community Sectors",
"Proprietary Systems",
"Resource Constraints",
"Evolving Technologies",
"Agency Comments",
"Appendix I: Information on Selected Federal Agencies",
"Appendix II: GAO Contacts and Staff Acknowledgments",
"GAO Contacts",
"Staff acknowledgments",
"Related GAO Products"
],
"paragraphs": [
"IoT has no generally accepted, all-inclusive definition. Instead, IoT is generally described as a concept referring to how connected devices interact and process information. The devices themselves are generally not computers, but have embedded components that connect to a network. We define IoT for the purposes of our report as the concept of connecting and interacting with a wide array of objects through a network. An IoT-enabled object is often referred to as a “smart” or a “connected” device, which allows that object to communicate and potentially process information and thereby provide capabilities and functionality beyond what that object would normally provide. For example, connected vehicles—vehicles that “talk” to infrastructure and other vehicles—provide the capability to identify threats and hazards on the roadway and allow drivers to receive notifications and alerts of dangerous situations, potentially reducing the number of accidents.\nIoT devices are used in a variety of settings, such as the home (e.g., smart appliances), manufacturing (e.g., predictive maintenance), or a health care setting (e.g., remote patient monitoring). In this report, we focus on the application of IoT within a community setting—often referred to as a “smart city” or “smart community”—with the aim to generally improve the livability, management, or service delivery of that community. For example, a community may deploy streetlights with embedded sensors that detect sound or motion and that are programmed to switch on and off or raise dimmed lighting levels when vehicles or pedestrians pass. By managing the level of streetlight use, communities seek to improve energy efficiency and costs, as well as reduce maintenance costs by reducing service trips to replace burned-out lights. Figure 1 illustrates other examples of how IoT technologies may be used in a community. More indirectly, these technologies can drive economic growth by generating demand for new products, new companies, and new skilled jobs, according to literature and industry experts.\nWhile the idea of connecting objects is not new, recent advancements in technologies that support IoT—such as the decreasing cost and size of electronics and the expansion of connectivity (e.g., broadband networks and Wi-Fi), are driving a proliferation in the number and types of uses of connected devices. One projection puts the future number of IoT devices (excluding computers, mobile phones, and tablets) at over 10 billion in 2020. This would represent an increase of more than 200 percent between 2015 and 2020, at which point the number of connected things would outpace the number of computers, tablets, and smartphones currently connected.\nThere are also, however, hurdles that may impede widespread use of IoT devices. Security and privacy risks can originate from unintentional threats, such as equipment failures, or intentional threats, such as from hackers. As noted in a Commerce green paper on IoT, published in January 2017, while these risks are generally not unique to IoT, ubiquitous connectivity and growth in IoT devices raise new challenges. As new and more “things” become connected, they increase not only the opportunities for security and privacy breaches, but also the scale and scope of any resulting consequences. For example, in October 2016, a cyberattack that involved the hacking of thousands of unsecured IoT devices interrupted Internet access to a number of major websites across the United States for hours. These hurdles demonstrate the need for strategies to respond to concerns about safety and increased risks to privacy and security. We have reviewed and continue to review some of these issues; for example, we recently issued a report that discusses the specific implications of IoT technologies, including safety, security, and privacy issues.\nIoT projects are also complex, crosscutting, and require expertise to design and deploy. IoT projects involve the deployment of rapidly evolving technologies and also often collect and store vast amounts of data that must be analyzed before they can be used to develop community solutions. For example, as we have previously reported, when local transportation departments deploy IoT-enabled sensors on traffic lights to monitor and collect data on traffic flow to help manage congestion, they may need assistance in developing the system requirements; collecting, analyzing, and protecting the vast amounts of data collected; and identifying interdependent goals for the community, such as improving air quality. As such, the local transportation department may hire consultants to help with procurement and deployment of a system; purchase the system from a vendor; partner with academia for support in data analysis and innovative solutions; collaborate with other local-government departments to identify interdependent goals; and collaborate with other entities, such as transit operators or regional planning departments, to leverage outcomes, among other activities.\nAs noted earlier, researchers and industry stakeholders have noted that successful integration of technologies and projects—including across sectors (e.g., transportation, energy, or public safety)—is key to realizing the full potential of IoT. That is, when systems are interoperable—or work in concert with one another—they may support interdependent goals. For example, sensors deployed in community infrastructure to report on traffic conditions or environmental conditions such as air quality can also, if equipped with audio or visual capability, provide real-time traffic information to public-safety or emergency-response persons, to help determine the fastest route to an emergency. Government departments that work with each other to build integrated systems can help optimize resource expenditures and maximize services to community residents. One research institute estimated in 2015 that IoT applications in cities could have a global economic impact between $930 billion to $1.6 trillion per year in 2025, with systems that are interoperable enabling more than 40 percent of that value.\nNo single federal agency addresses all aspects of IoT. We identified at least 11 federal agencies that have a key role in supporting IoT in communities, either because they support research or communities, oversee privacy or security protections and threats, or have direct authority over IoT issues. The 11 key federal agencies that we identified include Departments of Commerce (Commerce), Energy (DOE), Health and Human Services (HHS), Homeland Security (DHS), Justice (DOJ), Transportation (DOT), as well as the Environmental Protection Agency (EPA), Federal Communications Commission (FCC), Federal Trade Commission (FTC), National Science Foundation (NSF), and Office of Science and Technology Policy (OSTP). See appendix I for more information on selected agencies’ missions and examples of relevant support for communities’ IoT applications.\nThe EU also has made investments in supporting IoT projects in communities. For example, in 2013 the EU adopted a research and innovation framework program for 2014 to 2020 (Horizon 2020) that includes cross-cutting focus areas in both: IoT, which aims to enable the emergence of an IoT environment that is supported by open (i.e., publicly available) technologies and platforms, and “Smart cities and communities,” which aims to bring together cities, industry, and citizens to demonstrate solutions and business models that can be scaled up and replicated.\nThese focus areas are supported by bi-annual funding strategies. The European Commission, similarly to the U.S. government, is divided into departments and executive agencies that have varied responsibilities. For example, the European Commission has departments for Energy; Mobility and Transport; and Communications Networks, Content, and Technology that each have responsibility in carrying out the European Commission’s policies related to the respective industry sector that the departmental entity oversees. With support from the EU, as well as local initiatives, European communities are increasing investments in IoT projects, and according to literature we reviewed and some U.S. and European industry experts we interviewed, some of those communities are generally recognized as having more advanced and mature IoT projects than communities in the United States.",
"",
"",
"Many of the federal agencies we reviewed are conducting or funding broad research in IoT-related technologies. As communities increasingly deploy IoT devices, they are more dependent on the underlying communications systems—both wired and wireless network systems— that enable those devices to communicate with each other and with other systems. And with wireless systems likely playing an increased role in supporting IoT, demand for access to spectrum—a limited resource already in high-demand—will also rapidly increase. Recognizing the increasing demand for connectivity and spectrum access, 8 of the 11 federal agencies are conducting or funding research on communication systems and the related impacts of those systems—such as privacy, security, and demand for spectrum access—that could subsequently support communities’ IoT projects. For example:\nNSF awarded 19 universities over $8 million over 3 years beginning in 2016, through its US Ignite program, for fundamental research in networking technologies to further both the capabilities and understanding of high-speed networking infrastructure to meet the demands of future applications, including community applications. NSF also awarded in 2016 more than $6 million over 2 years for exploratory research in connecting networked computing systems with physical devices through NSF’s EArly-concept Grants for Exploratory Research (EAGER) funding mechanism.\nCommerce’s National Telecommunications & Information Administration (NTIA) has a research lab that is developing an IoT testbed for testing the potential of interference posed by new IoT- related spectrum use to existing spectrum users in a dense environment, such as a city. The growth in wireless communications has increased the potential for harmful interference—an action that interrupts or obstructs communication service—when two systems use the same or adjacent spectrum frequencies in the same geographic area. NTIA officials also told us that this lab is also supporting DOT’s efforts to investigate the potential interference of unlicensed wireless devices operating in the licensed spectrum for dedicated short-range communications (DSRC)—the wireless technology that, according to DOT, is expected to be used in a connected vehicle environment.\nFTC’s Office of Technology Research and Investigation researches and evaluates the impact of IoT technologies on consumers, including issues related to privacy and security. In addition, in January 2017, the FTC announced a prize competition that challenges the public to develop a tool that consumers can deploy to guard against security vulnerabilities in IoT devices. And while the challenge is not directed to communities, FTC staff noted that it is possible that some of the proposed submissions could help address security issues related to IoT devices in communities.\nIn late 2016, DOJ formed a threat analysis team to study the potential national-security threats posed by IoT devices as part of a broader effort to assess the next -generation of cyber threats. According to DOJ officials, the team has focused on how IoT devices may be exploited by terrorists or others to cause loss of life or disrupt the nation’s increasing reliance on IoT technologies, which included surveying other federal agency efforts and non-government experts on this issue. DOJ hopes in the future to support an interagency approach to this issue.\nIn addition to networked communications systems, federal agencies are conducting or funding broad technical research on IoT devices that support communities, such as sensors and intelligent transportation systems technologies, as described in the examples below.\nDHS awarded three $100,000 small business innovation research contracts in January 2016 for research and development of modular (i.e., composed of standardized units), low-cost, integrated, IoT- enabled flood inundation sensors. These sensors would (1) monitor flood-prone areas in real-time across large geographic areas and (2) allow emergency responders to predict, detect, and react to flood conditions, among other things. All three awardees received follow-on awards to test and evaluate the sensors in the field, beginning in April 2017. The final phase of the awards involves commercialization of the sensors, and while not funding commercialization directly, DHS plans, among other things, to help bridge relationships between the awardees (sensor developers) and potential buyers (such as first responders).\nEPA’s Office of Research and Development formally coordinates with two universities on research related to management and analysis of data collected through sensor networks. This research has included collaborating to develop a freely available data-hosting and visualization tool, as well as analyzing high-resolution air pollution emissions data.\nDOE established the Grid Modernization Initiative to support modernization, including ensuring the resiliency and security, of the nation’s electricity grid—commonly referred to as a smart grid. Under this initiative, DOE not only makes funding available but also supports research projects related to IoT technologies, such as sensors, which, according to the initiative’s multi-year program plan, are necessary to assess the health of the grid in real time, predict its behavior, and respond to events effectively. According to DOE officials, the initiative’s projects are in their first year, so no reported results are available, but a peer review panel was held in April 2017 to provide lessons learned and share best practices. DOE officials also told us that they anticipate the initiative to continue through at least 2018.\nNSF, through its Smart and Connected Communities program, anticipates awarding about $18.5 million in grants under a 2016 program. This program solicits projects that support interdisciplinary research activities to improve understanding of smart and connected communities and enable sustainable change to enhance community functioning. Also, in 2015, NSF’s $3 million grant awarded through its Major Research Instrumentation program supported the development of a new tool for a project known as the Array of Things. The project’s goal is to install a sensor platform in the City of Chicago that collects data on a variety of community factors, including air quality and traffic, and makes these data publicly available to encourage innovative community solutions from third parties.\nFinally, DOT’s Intelligent Transportation Systems Joint Program Office conducts a variety of research and demonstration projects that, according to its current strategic plan, includes the testing of ideas that might be developed into intelligent transportation systems technologies and subsequently deployed to advance transportation.",
"The federal government is also engaged in overseeing IoT-related issues. In doing so, all but two of the federal agencies we reviewed are developing and distributing IoT-related guidelines, seeking input on and making policy recommendations, and convening or participating on working groups that support the development of voluntary consensus standards. As communities continue to deploy IoT devices and analyze the increasing amount of resulting data, federal policies and guidance can help them better understand the benefits of using IoT-related technologies, and help them address the challenges. Notably, Commerce issued a paper in January 2017 that, among other things, sought input on the role of the federal government in fostering IoT and related policy recommendations. The paper also discusses both benefits, such as improvements in safety and efficiency for consumers and governments, and challenges of IoT, including risks to security and privacy. Other examples include:\nSafety: DOT issued an Automated Vehicles Policy in September 2016 in order to speed the delivery of an initial regulatory framework and best practices to guide the safe design and deployment of automated vehicles.\nSecurity: In October 2016, through public meetings, NTIA convened a multi-stakeholder process on IoT security upgradability and patching with a goal of fostering a marketplace that offers devices and systems that support security upgrades through increased consumer awareness and understanding, among other things. And, in November 2016, DHS issued a set of industry-neutral, non-binding principles to provide stakeholders with suggested practices that help to account for security and other challenges as stakeholders develop, implement, or use IoT devices.\nPrivacy: FTC staff issued a report in January 2015 that both summarized a 2013 staff-hosted workshop discussion on benefits and risks of IoT and provided an update on post-workshop developments, including a report on data privacy issued by the President’s Council of Advisors on Science and Technology., The report also included the FTC staff’s recommendations on privacy and security, which continued to recommend that Congress enact broad-based privacy legislation. Also, HHS published a report in July 2016 that highlighted what it referred to as gaps in regulation, as well as confusion among consumers on privacy of health data collected by entities not regulated by the Health Insurance Portability and Accountability Act (HIPAA)., Interoperability: Commerce’s National Institute of Standards and Technology (NIST) participates in international standards-setting organizations. NIST has convened an international public working group to help develop a consensus framework to enable interoperable community IoT solutions and plans to publish a draft consensus framework in late 2017. This effort (and others at NIST) provides the technical basis for NIST contributions to work in international standards-setting organizations. DHS contracted with an international consortium of more than 500 companies, government agencies, and universities to demonstrate how proprietary systems, specifically sensors used by first responders, could be made interoperable using open standards—that is, standards that are publicly available and maintained by a collaborative and consensus-driven process.",
"In addition to broad research and oversight of IoT issues, we identified three federal agencies (Commerce, DOT, and EPA) that are more directly supporting communities through expanded funding for community IoT projects. In December 2015, DOT launched a two-phase prize competition, the Smart City Challenge, which, to date, included the largest single award amount ($50 million) made available by the federal government to support IoT in communities. According to DOT, it had unprecedented community interest, attracting 78 mid-sized cities to apply for the first phase. According to DOT, it was one of the first times, if not the first, that federal funds were made available to explicitly encourage communities to integrate systems across sectors to achieve interdependent goals. As of April 2017, the challenge winner— Columbus, Ohio—is still finalizing its project schedule and details. DOT officials noted that it is challenging to identify measurements that define success and ensure that the projects provide adequate data to inform any evaluation, but that DOT officials are working with Columbus representatives and an independent evaluator to develop a strategy to do so. DOT officials also noted that they provided seven finalist communities $100,000 each and that some communities have used that money to revise their original proposals and bid on other available federal funds.\nTwo other federal agencies also recently announced funding for deployment of community IoT projects.\nIn August 2016, EPA launched prize competition—called the Smart City Air Challenge—for the purpose of learning how communities would deploy hundreds of air quality sensors, manage high volumes of data, and make the data public. EPA awarded $40,000 each to Baltimore, Maryland, and Lafayette, Louisiana, to develop innovative strategies for deploying sensor platforms and managing the data collected from 300 sensors, as well as sharing lessons learned with other communities. According to EPA officials, as of April 2017, the communities are testing and deploying the sensors and will meet quarterly throughout 2017 with EPA officials to share knowledge and will participate in webinars with other communities to share best practices. EPA will evaluate the projects at the end of 2017 to determine whether it will award a second round of funding of $10,000 each.\nCommerce’s NIST awarded, in September 2016, a total of $350,000 to four communities to collaborate and deploy replicable smart solutions to address community issues. These grants include such projects as using Wi-Fi-enabled sensors to alert first responders to emergencies in a senior community and developing computer models to predict urban flood events. In September 2017, the awardees are expected to submit final reports that include evaluation of the projects against specific criteria including evidence of effective use of existing standards for interoperability across systems and clear and quantifiable performance goals with measurement capabilities incorporated into the system design. NIST officials noted that communities may find it challenging to meet these criteria during a 1- year, small-scale project but noted that regular bi-weekly meetings and continuing interaction between NIST and the communities is intended to help.\nDOT also provides funds through other federal grant programs that do not specifically target IoT, but can still be used to support IoT projects. For example, DOT published a guide for communities that identifies existing funding programs or initiatives, such as its Advanced Transportation and Congestion Management Technologies Deployment (ATCMTD) initiative and DOT’s Transportation Investments Generating Economic Recovery (TIGER) grant program that could be used towards funding IoT projects, according to the DOT guide. The guide provides examples of IoT technologies that meet eligibility criteria under these programs, such as the ability of sensor-based infrastructure as an eligible technology for maintenance and monitoring under the ATCMTD Initiative. DOT officials reported that DOT announced for fiscal year 2016, nine ATCMTD and TIGER grants supporting IoT projects, such as a project in the city and county of Denver, Colorado that includes deploying technologies to support its connected freight program with a goal of reducing freight congestion.\nSome federal agencies are also working to maximize those federal funds by encouraging or requiring grant recipients to leverage private funds. For example, both DOT’s Smart City Challenge and EPA’s Smart City Air Challenge strongly encouraged communities to leverage funding from the private sector and others. DOT officials told us that Columbus, Ohio, the winner of the DOT Smart City Challenge, was able to leverage an additional $350 million or more from community partners beyond DOT’s $40 million contribution. The EPA challenge solicitation specifically noted that the two community awards of $40,000 each were intended to be seed money for communities to leverage other resources.\nFurthermore, federal agencies are promoting project replicability, so that solutions in one community can be more easily deployed in other communities. Due to the complexity of IoT projects and communities’ limited resources, two representatives from industry and academia highlighted that communities are hesitant to be the first adopters of these projects without models or leading practices to follow. In recognizing this hesitance, some federal agencies are promoting the design of projects that are replicable to other communities. Most notably, NIST launched its Global City Teams Challenge (GCTC) program—a collaborative platform for the development of “smart cities”—to encourage collaboration and the development of technology standards. In doing so, NIST recognized that IoT projects tend to be isolated and customized—that is, not interoperable with other projects or replicable to other communities. According to NIST, many custom-designed systems are not cost effective, and the growth of the smart cities market is also hindered by deployments that are customized. And, with standards-based solutions—or replicable projects—communities can build on each other’s work and make their solutions available to other communities that may lack resources. For example, the multi-stakeholder team that is deploying the sensor and computer research platform, called the Array of Things, in the City of Chicago first began as a partnership between the City of Chicago, University of Chicago, and Argonne National Laboratory. This partnership participated in the GCTC program and also received an NSF research instrumentation grant, as discussed above. The team has had inquiries from nearly 90 cities around the world, and is preparing to deploy the IoT technology in an initial set of pilot cities, including Seattle, Washington, and Amsterdam, the Netherlands. $3.1 million award through NSF’s major research instrumentation program and more than $1 million from DOE’s Argonne National Laboratory.\nProject description: Chicago’s Array of Things project plans to install hundreds of interactive, modular sensor boxes across the city to collect real-time data on the city’s environment, infrastructure, and activity for research and public use, essentially measuring factors that impact livability such as climate, air quality and noise. The project also reserves space for additional sensors in support of future data collection in other areas and industry sectors.\nElectric Power Board (EPB) of Chattanooga, the owner and operator of the region’s smart grid, staff from DOE’s Oak Ridge National Lab use their expertise to test new technologies and develop new analyses, among other things, to help EPB to use its electricity data to improve its operations.\nDHS officials also told us that while in the past they have not provided in- kind support, they are currently drafting a contract in which they will be providing in-kind support, including drones and some open-source software, to a quasi-governmental organization that works to advance community IoT projects.",
"",
"Issues related to IoT in communities cut across multiple sectors and government agencies—that is, no single government agency addresses all aspects of IoT or communities’ IoT efforts. And similar to other cross- cutting federal efforts, achieving meaningful results requires collaborative efforts of multiple programs and agencies spread across the federal government and often more than one sector or level of government. Both Congress and the executive branch have recognized the need for improved collaboration across the federal government. We also have previously reported that agencies face challenges when attempting to work collaboratively and that the agencies can enhance and sustain their collaborative efforts by engaging in such practices as establishing mutually reinforcing or joint strategies designed to help achieve a common outcome and identifying and addressing needs by leveraging resources to support common outcomes.\nTo promote government-wide collaboration in supporting deployment of IoT in communities, the White House created an interagency Smart Cities and Communities task force in July 2016—co-chaired by representatives from DOT, NIST, and NSF—that is coordinated through the Networking and Information Technology Research and Development (NITRD) program. Twenty-two federal departments and agencies have participated on the task force as of January 2017 with initial efforts focused on developing (1) a federal strategic plan and (2) a resource guide for communities. On January 12, 2017, the task force released for public comment a draft federal strategic plan that offers a high-level framework to guide and coordinate smart community-related federal initiatives, with an emphasis on local government and stakeholder engagement. The draft plan highlighted five goals motivating the strategy, including accelerating innovation and infrastructure improvement and facilitating cross-sector collaboration and bridging existing silos. It also identified four strategic priorities and next steps that include promoting interagency collaboration and developing a road map for specific federal actions to execute the strategic priorities. According to federal officials who are chairing the efforts, the public comments will help inform a revised federal strategic plan, which, as of April 2017, is anticipated for publication in the summer of 2017. According to these officials, following the completion of the strategic plan, the task force will be dissolved, and the NITRD program’s standing Cyber-Physical Systems interagency working group will identify and coordinate any additional action that is needed to support these efforts, such as any activities related to the execution of the federal strategic plan. The task force’s second effort included the launching of an interactive website resource guide in March 2017 that describes federally funded research and development programs in smart cities and communities. According to the task-force, the guide aims to facilitate collaboration and coordination among task force member agencies, academia, industry, local cities and communities, and other government entities. These officials noted that the guide will be reviewed and updated annually, and that they are using aggregate data on use and search patterns to evaluate the effectiveness and usability of the guide.\nAt the same time, individual federal agencies are formally and informally collaborating at a program level on specific agency projects or efforts related to community IoT projects. Federal agency officials told us that this collaboration helps bridge issues that cut across agencies, as well as leverage expertise. For example, in 2016, DOT and DOE signed a memorandum of understanding (MOU) that recognizes their departments’ mutual interest in realizing the economic, environmental, and national security benefits achieved by the growing use of smart transportation technologies. The MOU formally states their intention to coordinate actions to leverage DOE’s traditional focus and expertise in transportation energy technology systems and DOT’s traditional focus and expertise in transportation safety technology systems to accelerate the analysis and application of “smart” transportation systems. Under this MOU, and as mentioned above, DOE supports a national lab expert, as part of a technologist-in-cities pilot program, in Columbus, Ohio, who serves as a complement to DOT’s Smart City effort and focuses on energy-related components of the planned projects. In addition, according to NTIA officials, its research lab also coordinates with DOT’s Intelligent Transportation Systems Joint Program Office, including investigating the potential interference of unlicensed wireless devices operating in the licensed spectrum for DSRC—the wireless technology that, according to DOT, is expected to be used in a connected vehicle environment.",
"Some federal agencies have undertaken efforts to support collaboration at the community level, across local governments, academia, and the private sector. NIST’s GCTC program, as discussed earlier, enables local governments, nonprofit organizations, academic institutions, technologists, and private corporations from all over the world to form project teams, or “action clusters,” to work on community IoT projects and facilitate interoperability, according to NIST officials. And since the GCTC program launched in September 2014, GCTC has recruited and supported over 160 project teams, with participation from over 150 cities and 400 companies or organizations from urban and rural communities across the United States and their counterparts in other countries. The White House also has supported collaboration at the community level through promotion of the MetroLab Network—a networking consortium of city-university partnerships that seeks to bring interested cities and universities together to share expertise and lessons learned across municipalities. According to a 2016 MetroLab Network report, the membership consists of more than 35 partnerships and has developed a library of more than 120 research, development, and deployment projects that are currently under way across its membership. The library resource, as well as knowledge-sharing and networking events convened as part of the consortium, enables collaboration with, and the sharing of lessons from communities that have deployed innovative community solutions. For example, according to an official from the Portland Bureau of Planning and Sustainability, a meeting at a MetroLabs event resulted in a partnership between Portland and a stakeholder leading Chicago’s Array of Things project to share information and leverage resources in testing sensors and a sensor platform for an air quality project.",
"",
"In the European Union (EU), the European Commission directs research on IoT-related technologies and oversees IoT policy-related issues, similar to the U.S. federal government.\nWithin the EU’s Horizon 2020’s 7-year research program, the European Commission developed an initiative to support innovation, which includes a specific focus area for IoT that is cross-cutting. The focus area aims to enable an IoT environment that is supported by technologies and technology platforms that are open (i.e., publicly available). Funds for the 2016-2017 programs are to be used to demonstrate scientific progress that enables advanced IoT applications.\nThe EU also has taken legislative steps related to IoT oversight. For example, the EU adopted the General Data Protection Regulation in spring 2016, which, according to European Commission officials, seeks to simplify protection for individuals’ data, including data from IoT devices, by providing a single set of rules that apply to all EU member states. It is scheduled to be implemented over the next 2 years. At the country level, according to community representatives in Sweden with whom we spoke, policy makers are also investigating potential regulatory changes. For example, in one instance, the Swedish government created “policy labs” (also sometimes called a “regulatory holiday,”) specifying some geographic locations or a specific time frame that is free of regulation so that project partners can test what policies are needed in that environment—such as a connected vehicle environment—to make the solution successful.",
"The EU also directly supports IoT applications in communities through direct funding. Sometimes it does so through formalized programs, such as joint-departmental funding that is focused on “smart cities and communities.”\nSpecifically, the Horizon 2020 research program includes a cross- cutting focus area on “smart cities and communities”—which aims, in part, to bring together cities, industry, and citizens to demonstrate community solutions and business models that can be scaled up and replicated, and that lead to measurable benefits in energy and resource efficiency, new markets, and new jobs. The supporting funding program combines funds from multiple departments—the European Commission’s departments on energy, transportation, and communications technology—to support IoT projects in communities that span these sectors. Under this program, the EU has funded three different large-scale pilot projects since 2015 that focus on replicability and support IoT projects. For each pilot project, three European cities were selected as “lighthouse cities,” with up to five different follow-on cities in which successful projects are to be replicated. The lighthouse cities design and implement their smart projects, and when successful, the follow-on cities begin deployment.\nWe also found examples where individual countries supported community deployment of IoT projects and encouraged those communities to leverage resources from private industry and others. For example, according to community representatives in Sweden, the Drive Sweden project—focused in part on local and national traffic management and deployment of autonomous vehicles and fleets—is jointly funded by three Swedish government agencies: the Swedish Energy Agency, the Swedish Research Council, and Sweden’s Innovation Agency. The project has to leverage private funds, as it is part of a program supporting nationally funded projects that require private industry cost-sharing.\nEuropean Commission departments and countries also collaborate in administering programs for community IoT projects and support collaboration among other stakeholders. For example, in 2012, recognizing that IoT technologies span all sectors of the economy and society, the European Innovation Partnership on Smart Cities and Communities (EIP-SCC) was launched. The partnership is a stakeholder group that aims to significantly accelerate the deployment of smart city solutions integrating technologies from energy, transportation, and communications technology. The EIP-SCC is jointly administered by three European Commission departments with jurisdiction over the energy, transportation, and communications technology sectors. It has a mechanism called a stakeholder platform that serves as a collaborative, networking, and knowledge-sharing tool for communities, collecting and analyzing input from all stakeholders. According to its agenda, it seeks to provide bottom-up contributions, such as those from communities, to ensure that EU policy on smart communities reflects the needs and engagement of communities. Also, at the country level, Sweden announced in June 2016 a formal program that supports collaboration among government, private, and academic stakeholders to create innovative solutions for specific societal challenges, one of which is “smart cities.”",
"",
"",
"In planning and deploying IoT projects, all of the communities we reviewed are using federal funds with other direct funding and in-kind support. As described previously, grant recipients are sometimes required by federal agencies to leverage private funds. For example, the Chattanooga Electric Power Board leveraged more than $115 million in nonfederal investment as part of its federal award of $111.6 million through DOE’s smart grid investment grant program in 2010. Chattanooga used these federal and nonfederal funds to expand its fiber optic network to support communication of its smart grid equipment, which includes smart meters for more than 170,000 energy utility customers.\nAccording to community representatives we interviewed, without a federal cost-sharing requirement, federal funds alone may not be sufficient to cover all project costs. For example, according to City of Columbus representatives, it used its $50 million award from DOT’s Smart City Challenge to leverage about an additional $90 million in support from community partners. Some of the support has come in direct funding while other support has been in-kind, such as research, programmatic support, or equipment contributions. installed a fiber based gigabit internet infrastructure to improve efficiency and resiliency in its utility energy distribution The project included installation of more than 170,000 smart meters for utility customers. Since this project was completed, Chattanooga is making this fiber infrastructure available to other community stakeholders for other IoT projects, including deploying a network of air quality sensors to detect asthma- aggravating particulate matter and pollen in metropolitan Chattanooga. million in direct funds and in-kind contributions, including a $10 million grant from Vulcan, Inc. projects: The Integrated Data Exchange is an open data environment that will: (1) contain data from many different sources; (2) generate performance metrics for program monitoring and evaluation; (3) transparently serve the needs of public agencies, researchers, and entrepreneurs; and (4) provide practical guidance and lessons learned to other potential deployment sites.\nLocal government officials from two of the communities that we reviewed discussed beginning to leverage value from public assets, making public infrastructure available in exchange for financial support, such as in-kind donations of technology equipment. For example, representatives from two communities highlighted their use of community-based “technology incubators.” In these cases, a technology incubator is generally an entity that supports the collaboration of public, private, and oftentimes academic partners and provides public assets—such as data, resources, and infrastructure—to test technologies and develop innovative solutions to community needs. For example, Chattanooga provides access to its fiber network for use as a test bed to a variety of partners and a variety of projects. One project involves deploying and connecting a network of air quality sensors to detect asthma-aggravating particulate matter and pollen in the community with a goal of providing real-time alerts to end users, such as asthma patients, health institutions, and others affected by elevated pollen levels. Representatives from three of the communities we reviewed, as well as four other industry and academic stakeholders that we spoke with, discussed that developing such business models where local governments leverage value from public assets can help finance the project, and in some cases help sustain the project after initial grant funding runs out.\nHighlights of Sweden’s technology incubators Sweden has 33 science parks, which are described as a stimulating meeting place for academia, research, the public sector, and industry. Stockholm Science Park: Kista Science City (KSC) is operated by a not- for-profit foundation that includes public, private, and academic organizations, for the purpose of facilitating collaboration among these stakeholders. An open testbed—the Urban ICT Arena—will serve as the testbed and co-creation arena for developing, testing, and showcasing community IoT solutions. For example, the City of Stockholm will provide access to a fiber optic network for industry and academics to test community technology solutions, including solutions for clean water and efficient transportation.\nRepresentatives from all three of the European communities that we visited also reported having technology incubators where public, private, and academic entities partner to test innovative community solutions. While incubator-like entities can be found all over the world, Sweden has 33 formal technology incubators across the country, called Science Parks, which are jointly funded by industry, universities, and the local governments. These science parks facilitate collaboration among these stakeholders to develop community solutions. Representatives from three science parks that we met with in Gothenburg and Stockholm highlighted the importance of collaboration of public, private, and academic entities— typically referred to as the “triple-helix” model—to the success of the projects. For example, at a science park open testbed in Stockholm, the local and regional government, an industry partner, among others, have provided access to wired and wireless communications networks for other entities to use in developing innovative community solutions, such as improving water quality and transportation efficiency.",
"Representatives from communities we reviewed and industries we spoke with discussed the importance of collaboration among public, private, and academic entities to make the best use of the unique expertise that each member group brings to the table.\nRepresentatives from two communities discussed that local governments can provide a policy framework and help ensure that the solutions are based in the community’s needs, as opposed to driven by the latest technology invention.\nA Columbus representative discussed its “culture of collaboration” and how private partners have brought invaluable resources to its DOT Smart City Challenge projects, particularly expertise on technologies and connections to other industry players for innovative ideas and solutions.\nRepresentatives from two of the communities we spoke with have active “convener” organizations that bring public, private, and academic stakeholders together on an on-going basis to discuss collaborative opportunities to address community problems.\nWhile representatives from all of the communities discussed the benefits of collaboration, an industry representative also highlighted that maintaining well-functioning partnerships takes time and resources.\nRepresentatives from all three European communities also discussed the value of collaboration for providing a variety of expertise, and in some cases, independence. For example, in The Netherlands, a non-profit organization oversees part of Eindhoven’s “smart city” projects. Representatives from this organization highlighted this as advantageous to providing government and commercial independence—that is, to best balance the government’s oversight needs with private industry interests. In Stockholm, a local government representative highlighted that the role of some academics is to independently evaluate the IoT projects’ success, both in meeting environmental sustainability goals and economic goals.",
"Although integrated projects can help maximize the potential of IoT applications, communities can face challenges in integrating projects. All of the domestic communities we reviewed are planning or have deployed discrete IoT projects—projects that, at least initially, generally focus on addressing a singular issue, such as traffic congestion on a particular corridor. Domestic and foreign community representatives that we spoke with pointed to four main factors that can hinder the deployment of integrated projects, and in some cases, offered perspectives on solutions to these challenges.",
"Siloed community sectors can make it challenging to integrate IoT projects. A variety of representatives that we spoke with—representatives from three of the domestic communities and two of the foreign governments, as well as seven academic and industry representatives— highlighted that local government departments and federal grants tend to be focused on one sector (e.g., transportation, energy, public safety) of a community, inhibiting IoT project integration. An industry representative who works with communities on IoT projects said that community projects tend to be planned and deployed in isolation, in part because it is difficult to leverage resources and benefits across the silos created by government departments. A local government representative from a domestic community noted that there is no sense of a single organization at the federal level when pursuing grants and that while federal grants are helpful, tracking opportunities and developing proposals are a lot of work, and consumes both time and resources. Representatives from one domestic community noted that collaboration between transportation, energy, and environmental monitoring appears be most advanced, in part because these industries have recognizable synergies.\nDomestic and industry representatives that we spoke with offered perspectives on how internal or external leadership and a federal strategy could help overcome silos and promote integration.\nLeadership: Representatives from a domestic community, as well as four industry representatives, noted that an individual or department within the local government could serve as a mechanism to bridge silos. For example, an industry representative that works with communities on IoT projects noted that some domestic communities are using a Chief Information Officer or Chief Data Officer as a leader who can help integrate projects across departments. And according to local representatives from three domestic communities and two industry representatives, entities that are external to the local government, such as the community’s technology incubator or other consortium, could help convene various stakeholders. For example, in one domestic community, a consortium of public, private, and academic entities helped identify how to leverage a past investment in traffic sensors to expand the capacity to evaluate air quality.\nFederal Strategy: While collaboration is helpful to integrating projects, representatives from three communities, three industry and academic representatives, and officials from two federal agencies noted that some kind of federal strategy or guidelines could be helpful. For example, a representative from one community noted the desire for a federal vision or framework that organizes multiple industries and agencies and supports strategies and resources for working together to achieve common goals. As discussed above, through the White House’s NITRD program, a task force that consists of 22 federal agencies, recently issued a draft federal strategic plan that includes a high-level framework to guide and coordinate smart community- related federal initiatives, with an emphasis on local government and stakeholder engagement. Federal officials working on the task force anticipate that the final plan, which will be informed by public comments, will be published in summer 2017.",
"Representatives from three of the domestic communities and one of the foreign communities, as well as four industry stakeholders we interviewed, identified challenges related to proprietary vendor systems in deploying integrated projects. For example, while private industry can provide communities with needed financial support and expertise, representatives from two communities noted that private interests also encourage the development of proprietary systems that are solely owned by a vendor. Representatives from two communities also noted that proprietary systems risk making the community dependent on one vendor that could go out of business or raise maintenance costs. The use of proprietary systems raises confidence that the components within a system will work together, but challenges arise when communities seek to integrate systems from different vendors, perhaps across sectors. We also recently reported on similar challenges experienced by transit providers, including difficulties changing vendors after an intelligent transportation system has been deployed and getting vendors to work with one another to integrate systems amid concerns about making changes to those systems.\nRepresentatives from all of the domestic and foreign communities we reviewed, as well as four academic and industry stakeholders, said that standards-based and open data platforms could help support integrated projects and innovative solutions. Some federal agencies—such as NIST, EPA, and DHS—are taking steps to address interoperability issues, including promoting consensus-based standards that would encourage proprietary systems to at least be designed to be interoperable. For example, NIST recognized that IoT projects are generally based on custom systems that are not interoperable, portable across cities, or cost- effective. Subsequently, NIST is helping convene an international public working group to develop a consensus framework to enable smart city solutions. Representatives from one foreign community told us that they are working to create an “umbrella” platform to unify all of the diverse systems developed by different projects with different business plans and timelines. Representatives from all three of the foreign communities noted that publicly funded projects often require that data collected be open— that is, available for others to use, including the public or other vendors. Representatives from two of these communities, as well as representatives from three of the domestic communities, noted that open data allow third-party entities access to information they can use to develop innovative solutions.",
"Communities with limited resources—both financial and staff expertise— can face challenges integrating IoT projects due, in part, to the complexity and cross-cutting nature of these projects. As two academic representatives who work to support community projects noted, it is less resource-intensive for communities to deploy singular, discrete IoT projects than to deploy integrated projects that require time and resources to develop a holistic vision and business plan. Industry representatives from two communities and three other industry representatives, however, highlighted that leveraging value from public assets could help finance communities’ IoT projects, as well as help financial sustainability. For example, as discussed above, some communities are making public infrastructure available in return for payment or in-kind donations of technology equipment. Representatives from one of the foreign communities discussed a government push to design projects that are financially sustainable, in such a way that they would be financially viable after grant funding runs out. U.S. federal efforts to support community collaboration have helped communities share their lessons learned on developing new business models, a process that also helps communities invest their funds more efficiently and effectively, by reducing the unknowns and subsequently the risk of investment.\nThese rapidly developing technologies often also require new and unique expertise, particularly across sectors or disciplines, to deploy and maintain. A local transportation department representative from one community noted that his department’s responsibilities are no longer confined to technical engineering skills but also involve expertise in information technology and data management, which requires additional training. Representatives from two domestic and three foreign communities discussed efforts to create new staff positions or retrain staff in existing positions. Representatives from a foreign community discussed creating a chief digital officer whose responsibilities include using data to improve efficiency for citizens and combining knowledge in data analytics with public policy.",
"Representatives from two domestic communities we reviewed highlighted the fact that IoT-related technologies are constantly evolving, an evolution that ultimately makes integrating projects even more challenging. And, as we have reported in the past, integrating technologies often requires multiple phases of testing, which requires time and resources, and ultimately may require changes to the system or technology and re- testing. Communities with limited resources may prefer to focus on discrete projects, rather than risk investment in integrated projects with uncertain results. For example, representatives from two of the domestic communities spoke about project integration as the “next step” after they deploy the discrete projects. And representatives from two domestic communities, as well as three other industry and academic representatives, said that it is risky to develop a holistic, integrated project when the specific technology is not proven to be effective or could be completely different in 5 or 10 years. Selected federal efforts seek to help communities design replicable IoT projects and reduce the risk for subsequent communities. These and other efforts, while under way, are likely to take several years or longer to fully implement and measure success.",
"We requested comments on a draft of this product from Commerce, DOE, HHS, DHS, DOJ, DOT, EPA, FCC, FTC, NSF, and OSTP. Commerce, DOE, FTC, NSF, and OSTP provided technical comments, which we incorporated as appropriate. HHS, DHS, DOJ, DOT, EPA, and FCC did not provide comments.\nWe are sending copies of this report to the appropriate congressional committees, relevant federal agencies, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or members of your staff have questions about this report, please contact Mark Goldstein at (202) 512-2834 or [email protected] or Nabajyoti Barkakati at (202) 512-4499 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix II.",
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"",
"",
"In addition to the contacts named above, Susan Zimmerman (Assistant Director), Gretchen Snoey (Analyst in Charge), Eli Albagli, Edward Alexander, Jr., Ana Ivelisse Avilés, Brett Caloia, Joseph Cook, John de Ferrari, Camilo Flores, Sara Ann Moessbauer, Christopher Murray, Amy Rosewarne, and Andrew Stavisky made key contributions to this report.\nTommy Baril, Jennifer Beddor, Leia Dickerson, Karen Doran, Lawrance Evans, Jr., Philip Farah, John Neumann, Malika Rice, Stephen Sanford, and Sarah Veale also made contributions to this report.",
"Internet of Things: Enhanced Assessments and Guidance Are Needed to Address Security Risks in DOD. GAO-17-514SU. Washington, D.C.: June 7, 2017.\nTechnology Assessment: Internet of Things: Status and implications of an increasingly connected world. GAO-17-75. Washington, D.C.: May 15, 2017.\nHealth Care: Telehealth and Remote Patient Monitoring Use in Medicare and Selected Federal Programs. GAO-17-365. Washington, D.C.: April 14, 2017.\nCybersecurity: Actions Needed to Strengthen U.S. Capabilities. GAO-17-440T. Washington, D.C.: February 14, 2017.\nData Analytics and Innovation: Emerging Opportunities and Challenges. GAO-16-659SP. Washington, D.C.: September 20, 2016.\nIntelligent Transportation Systems: Urban and Rural Transit Providers Reported Benefits but Face Deployment Challenges. GAO-16-638. Washington, D.C.: June 21, 2016.\nCritical Infrastructure Protection: Measures Needed to Assess Agencies’ Promotion of the Cybersecurity Framework. GAO-16-152. Washington, D.C.: December 17, 2015.\nIntelligent Transportation Systems: Vehicle-to-Infrastructure Technologies Expected to Offer Benefits, but Deployment Challenges Exist. GAO-15-775. Washington, D.C.: September 15, 2015.\nCritical Infrastructure Protection: Cybersecurity of the Nation’s Electricity Grid Requires Continued Attention. GAO-16-174T. Washington, D.C.: October 21, 2015.\nSpectrum Management: FCC’s Use and Enforcement of Buildout Requirements. GAO-14-236. Washington, D.C.: February 26, 2014.\nIntelligent Transportation Systems: Vehicle-to-Vehicle Technologies Expected to Offer Safety Benefits, but Deployment Challenges Exist. GAO-14-13. Washington, D.C.: November 1, 2013."
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{
"question": [
"How does DOT support communities?",
"How does the White House plan to support such efforts?",
"How are communities funding IoT projects?",
"What types of actions were taken with federal funding?",
"Why have some communities found IoT projects difficult to deploy?",
"Why are communities deploying IoT?",
"What was GAO asked to do?",
"What information does the report contain?",
"How did GAO assess federal support for IoT in communities?",
"What else did GAO do to assess support?"
],
"summary": [
"More direct efforts to support communities, including funding community IoT projects (see figure) and fostering collaboration among the agencies and communities: For example, DOT recently awarded $40 million in federal funds to a community for a suite of “smart” projects related to improving surface transportation performance, and EPA awarded $40,000 each to two communities to develop strategies for deploying air quality sensors and managing the data collected from them.",
"To foster such collaboration, in July 2016, the White House formed an interagency task force that has developed a draft Smart Cities and Communities Federal Strategic Plan . A final plan will be released in summer of 2017, according to federal officials.",
"All four of the communities that GAO reviewed are using federal funds in combination with other resources, both financial and non-financial, to plan and deploy IoT projects.",
"For example, one community used the $40 million DOT award to leverage, from community partners, more than $100 million in additional direct and in-kind contributions, such as research or equipment contributions.",
"Communities discussed four main challenges to deploying IoT, including community sectors (e.g., transportation, energy, and public safety) that are siloed and proprietary systems that are not interoperable with one another.",
"Communities are increasingly deploying IoT devices generally with a goal of improving livability, management, service delivery, or competitiveness.",
"GAO was asked to examine federal support for IoT and the use of IoT in communities.",
"This report describes: (1) the kinds of efforts that selected federal agencies have undertaken to support IoT in communities and (2) how selected communities are using federal funds to deploy IoT projects.",
"GAO reviewed documents and interviewed officials from 11 federal agencies identified as having a key role in supporting IoT in communities, including agencies that support research or community IoT efforts or that have direct authority over IoT issues.",
"GAO interviewed a non-generalizeable sample of representatives from multiple stakeholder groups in four communities, selected to include a range of community sizes and locations and communities with projects that used federal support. GAO also reviewed relevant literature since 2013 and discussed federal efforts and community challenges with 11 stakeholders from academia and the private sector, selected to reflect a range of perspectives on IoT issues."
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CRS_RS22947
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{
"title": [
"",
"Background",
"The EFV Program",
"What Is the EFV?3",
"Program Structure",
"Program History5",
"Problems During the SDD Phase",
"2006 Operational Assessment14",
"EFV Redesign",
"Critical Design Review and Additional Prototypes20",
"Current EFV Testing23",
"Program Cost and Funding25",
"Solutions for EFV IED Vulnerability",
"DOD Questions the Need for the EFV",
"Recent EFV-Related Studies",
"Decision to Terminate the EFV43",
"Opposition to EFV Cancellation48",
"General Dynamics' Proposal to Continue the Program",
"The Marines' Plan for EFV Funds54",
"The Amphibious Combat Vehicle (ACV)55",
"FY2012 EFV Budget Request56",
"Potential Issues for Congress",
"General Dynamics' Proposal",
"Use of EFV Technologies",
"Is a Four Year ACV Development Cycle Overly Ambitious?"
],
"paragraphs": [
"",
"The Marine Corps is responsible for the conduct of amphibious operations in support of the full spectrum of U.S. national security objectives. If the Marines need armored fighting vehicles in the early stages of an amphibious landing, these vehicles must either be transported by landing craft with limited protection against enemy fire, or the armored vehicle must come ashore under its own power. Like current AAVs, the EFV is designed to roll off a Navy amphibious assault ship, move under its own power to the beach, and cross the beach and operate inland. The EFV is designed to be launched 25 miles off shore (the AAV can be launched only 2 miles from shore) permitting the fleet to operate \"over the horizon,\" where it theoretically would be less vulnerable to enemy fire. There are concerns that the 25-mile over the horizon operating capability may no longer provide the protection to the fleet that it once did. One example of such lack of protection is the 2006 Hezbollah C-802 cruise missile attack against an Israeli ship where two missiles were fired, with one hitting the Israeli warship, which was about 10 miles from shore, and the second missile striking an Egyptian ship 36 miles from shore. Concerns also have been raised that, when ashore, the flat-bottomed EFV may be excessively vulnerable to improvised explosive devices (IEDs).",
"",
"The EFV would be an armored, fully tracked infantry combat vehicle operated by a three-person crew that can carry 17 combat-equipped Marines. It is to be a self-deploying, high-speed amphibious vehicle capable of transporting Marines from ships to objectives inland and aims to have the speed, maneuvering capabilities, fire power, and protection to operate with main battle tanks on land. It is intended to have a 20-knot speed in the water and a 345-mile range ashore with a 45-kilometer-per-hour speed on hard-surfaced roads. The EFV is to be designed to have modular armor and expanded mine blast protection and mount a 30mm high-velocity cannon in a stabilized turret. The EFV is also supposed to be able to communicate in joint networks and operate as part of a joint land force. There are to be two EFV variants. The EFV-P1 would carry a Marine rifle squad and its equipment and provide direct fire support during combat operations. The EFV-C1 variant would provide command and control capabilities for commanders and their staffs.",
"The EFV is described as the Marines' number one priority ground weapon system acquisition program and is the only Acquisition Category (ACAT) 1D program managed by the Marine Corps. The Marine Corps EFV Program Office is collocated with the EFV's prime contractor—General Dynamics—in Woodbridge, VA, and the Marines claim that collocation—the first of its kind for a major weapon system—has greatly reduced government contractor design costs and streamlined the program decision-making process.",
"In 1988, Acquisition and Program Decision Memorandums were signed by defense officials to initiate the Concept Exploration/Definition Phase (CE/D) of what was then known as the Advanced Amphibious Assault Vehicle (AAAV) program. In 1995, the program entered into the Program Definition and Risk Reduction (PDRR) phase, where it was considered by many to be a \"model defense acquisition program,\" winning two DOD awards for successful cost and technology management. In June 1996, a contract was awarded to General Dynamics Land Systems to begin full-scale engineering development of their design. Based on the aforementioned early success of the program, the Marine Corps awarded a cost-plus contract to General Dynamics in July 2001 for the Systems Development and Demonstration (SDD) phase of the program. General Dynamics and the Marines envisioned that the SDD phase would be completed by October 2003, a schedule that some say \"proved too ambitious.\" In 2003, the Marines renamed the program the Expeditionary Fighting Vehicle (EFV) program.",
"In 2006, the Government Accountability Office (GAO) reported that:\nThe program did not allow enough time to demonstrate maturity of the EFV design during SDD. The original SDD schedule of about three years proved too short to conduct all necessary planning and to incorporate the results of tests into design changes. Specifically, the original schedule did not allow adequate time for testing, evaluating the results, fixing the problems, and retesting to make certain that problems are fixed before moving forward.\nBecause of these and other difficulties, the EFV program was \"rebaselined\" in November 2002, adding an additional year to the program schedule, and then rebaselined again in March 2003, also adding another year to the program schedule. In December 2004, EFV prototypes experienced major failures of the hull electronics unit (HEU), the vehicle's main computer system. These failures caused the water-mode vehicle steering to freeze, making the vehicle non-responsive. The EFV also experienced significant problems in September and October 2004 with the bow flap—a folding panel extended forward to generate additional hydrodynamic lift as the EFV moves through the water. The EFV experienced a myriad of hydraulics system failures, leaks, and pressure problems during testing that contributed to low reliability ratings. Because of reliability problems, the originally required 70-hour mean time between operational mission failure (MTBOMF) rate for the EFV was reduced by the Marines to 43.5 hours. Because of these demonstrated failures and related concerns about a lack of program management and oversight, the program was rebaselined for a third time in March 2005, this time adding an additional two years to the extra two years added during the previous rebaselinings.",
"In 2006, the EFV was subject to an Operational Assessment—a series of tests to demonstrate that it could meet performance requirements—that, if successfully completed, would permit the program to move into the production phase. During this assessment, the EFV experienced numerous critical failures and, because of repeated breakdowns, the EFV failed to meet reliability requirements and failed the assessment. For example, during the test, the vehicles were able to operate for only 4.5 hours between breakdowns and required about 3.4 hours of corrective maintenance for every 1 hour of operation—a maintenance burden that evaluators said would \"wear out a unit under realistic combat operations.\" Poor reliability also resulted in 117 Operational Mission Failures and 645 Unscheduled Maintenance Actions during testing. The EFV's low reliability resulted in the EFV completing 2 out of 11 attempted amphibious tests, 1 out of 10 gunnery tests, and none of the 3 scheduled land mobility tests. The EFV prototypes tested were approximately 1,900 pounds too heavy to achieve the desired high water speed and, in some circumstances, could not accommodate equipment needed by Marines for special climatic conditions. Evaluators also noted significant problems in terms of limited visibility, excessive noise, and difficulty in reloading the EFV's main gun.",
"In the aftermath of 2006 Operational Assessment, the Marines \"went back to the drawing board.\" In February 2007, the EFV program office issued a \"sources sought\" notice, requesting information from industry leaders on \"tracked combat vehicles that can provide an alternative design concept of the EFV\"—a perceived vote of no confidence in General Dynamics by the Marines. Also that month, the Navy formally advised Congress that the EFV program would incur a cost breach, requiring program recertification under the Nunn-McCurdy Act (10 U.S.C. 2433). Finally, in late February 2007, the Navy announced that it would have to relax EFV performance and reliability requirements in order for the program to continue. In March 2007, the Marines modified the original SDD contract and awarded General Dynamics an additional $143.5 million to redesign the EFV. In what has been termed \"the largest program setback,\" the Marines decided in June 2007 to repeat the entire SDD phase, meaning that instead of the original completion date of 2003, the SDD phase—if successful—would now be completed in 2011, eight years behind the original schedule. In August 2008, the Marines and General Dynamics signed an SDD II contract, and work on seven new EFV prototypes was projected to begin in January 2009. These new prototypes were to include, inter alia, rewired electronics to better protect against sea water, a rebuilt and strengthened gun turret to improve ammunition feed to the main gun, and the addition of trim tabs to make the EFV more stable in the water. The EFV was scheduled to be built at the U.S. military's joint tank production facility at Lima, OH.",
"The Government Accountability Office (GAO) noted that the EFV passed its December 2008 Critical Design Review (CDR) and, with 94% of the system's design models releasable, that EFV's critical technologies were mature and its design is stable. Because the EFV's design has been stabilized, a number of critical manufacturing processes can be established. Because the EFV passed the CDR, the go-ahead was given for the production of the seven new prototypes. These new prototypes are expected to include almost 400 engineering design improvements to improve vehicle reliability. It is likely that many of these engineering design improvements will add weight to the EFV. One potential change that could have helped reduce EFV weight was incorporating a lighter-weight linked track that the Army was researching, which could reduce EFV weight by 800 pounds.",
"The Marines have reportedly received four personnel carrier EFV prototypes and one command and control variant and are taking them through developmental testing at the Amphibious Assault Test Branch at Camp Pendleton, CA. EFV testing is scheduled to run through late January 2011. Each vehicle is slated to receive about 500 hours of reliability testing. Marine officials report that so far, \"we've had no real significant surprises, either good or bad, about the performance of the vehicle.\"",
"The Marines originally planned to procure 1,025 EFVs at a total cost of $8.5 billion. According to GAO, as of March 2010, the EFV program will require $866.7 million in research and development and $10.226 billion in procurement funding, for a total of $11.163 billion to complete the program and field 573 EFVs. Each EFV was expected to cost about $24 million apiece. There were concerns that the high cost of the EFV could consume up to 90% of the Marines' ground equipment budget. The former Commandant of the Marine Corps, General James Conway, reportedly was concerned that with potential future cuts to the defense budget, 573 EFVs might not be affordable. The Marines have stated that it will cost approximately $185 million to terminate the EFV program.",
"As previously noted, there is a great deal of concern that the flat-bottomed EFV would be overly vulnerable to IEDs detonated under the vehicle. The lack of a V-shaped hull, which can mitigate underbelly IED explosions, is a long-standing concern of some in Congress. The Marines contend that the EFV would have to be totally redesigned at great cost to incorporate a V-shaped hull. The Marines suggest that installing an add-on underbelly armor appliqué after the EFV comes ashore will provide necessary protection. Marine officials also suggest that IEDs would not be a big concern during the initial stages of an operation and the EFV's mobility would provide protection from IEDs. It might be argued, however, that the Marines are assuming away the EFV's vulnerabilities by suggesting that the enemy would not employ IEDs against Marine forces coming ashore and that the EFV could \"out run\" IEDs—something that has eluded smaller and faster combat vehicles in Iraq and Afghanistan.",
"During an April 17, 2009, address at the Naval War College, Secretary of Defense Gates noted that:\nI have also directed the QDR [Quadrennial Defense Review] team to be realistic about the scenarios where direct U.S. military actions would be needed – so we can better gauge our requirements. One of those that will be examined closely is the need for a new capability to get large numbers of troops from ship to shore – in other words, the capability provided by the Marine Expeditionary Fighting Vehicle.... But we have to take a hard look at where it would be necessary or sensible to launch another major amphibious action again. In the 21 st century, how much amphibious capability do we need?\nWhile there had been speculation that the EFV might be eliminated by the 2010 Quadrennial Defense Review (QDR), the report contained no recommendations that the EFV be cancelled or that major amphibious operations capabilities were no longer needed.",
"In response to a request by some members of Congress, the Sustainable Defense Task Force published a report in June 2010, Debt, Deficits, & Defense: A Way Forward , that recommends, inter alia, cancelling the EFV program. The task force recommends that cancelling the program would save $8 billion to $9 billion between 2011 and 2020 and that the requirement can be met by refurbishing AAV7A1s, the Corps' current amphibious assault vehicle, and an unspecified newly built, updated version of this vehicle.\nIn response to recommendations from a June 2010 GAO Report, the Navy, in conjunction with DOD, is to conduct a review of the business case for the EFV. The results of this business case review, in conjunction with the results of reliability testing, would be used by senior defense officials assessing the overall program. It is not known when this review will be completed.\nThe Marines are also conducting a force structure review to determine what the Corps will look like post-Afghanistan to include size and types of equipment needed. This review will likely emphasize the Marines returning to their amphibious roots and promises to take a hard look at vehicle requirements. While there was no date indicated for study completion, Marine officials maintain that the results of this study will be part of the FY2013 Program Objective Memorandum (POM).\nOn August 12, 2010, it was reported that Secretary of Defense Gates had ordered a review of the future role of the Marine Corps, given the \"anxiety\" that service in Iraq and Afghanistan had turned the Corps into \"a second land army.\" This review is intended to define a 21 st -century mission for the Marines distinct from the Army. This review will likely directly address the issue that critics of the EFV frequently cite: that large amphibious assaults on fortified coastlines have become obsolete because of the changing nature of warfare and long-range, precision weapons. During an October 2010 Expeditionary Warfare Conference, Marine leaders reportedly stated that if the EFV failed to show adequate improvement during reliability testing, they would cancel the program and \"start over.\"",
"On January 6, 2011, Secretary of Defense Robert Gates announced that, based on recommendations from the Secretary of the Navy and the Commandant of the Marine Corps, he had decided to recommend termination of the EFV. His rationale is explained below:\nThe EFV's aggressive requirements list has resulted in an 80,000- pound armored vehicle that skims the surface of the ocean for long distances at high speeds before transitioning to combat operations on land. Meeting these demands has, over the years, led to significant technology problems, development delays and cost increases. The EFV, originally conceived during the Reagan administration, has already consumed more than $3 billion to develop, and will cost another $12 billion to build, all for a fleet with the capacity to put 4,000 troops abroad—ashore. To fully execute the EFV, which costs far more to operate and maintain than its predecessor, would essentially swallow the entire Marine vehicle budget, and most of its total procurement budget for the foreseeable future.\nTo be sure, the EFV would, if pursued to completion without regard to time or cost, be an enormously capable vehicle. However, recent analysis by the Navy and Marine Corps suggest that the most plausible scenarios requiring power projection from the sea could be handled through a mix of existing air and sea systems employed in new ways, along with new vehicles, scenarios that do not require the exquisite features of the EFV. As with several other high-end programs cancelled in recent years, the mounting costs of acquiring this specialized capability must be judged against other priorities and needs.\nSecretary Gates stated that his decision \"does not call into question the Marines' amphibious assault mission.\" He also committed the Department of Defense to budget the funds to develop a more affordable and sustainable amphibious assault vehicle and funds to upgrade the existing AAV fleet with new engines, electronics, and armaments until a new AAV could be fielded. The Commandant of the Marine Corps stated that the Marine Corps would \"shortly issue a special notice to industry requesting information relative to supporting our required amphibious capabilities.\" Reports suggest that the Marines will release three distinct requests for information to develop interim and long-term solutions for what the Marines were calling the \"New Amphibious Assault Vehicle\" (NAV) as well accelerating the development of the Marine Personnel Carrier (MPC).",
"Reports suggest that Secretary Gates's decision to cancel the EFV could face congressional opposition. Despite the Marines' agreement to cancel the program, some Members reportedly believe that the EFV is central to the Marines' ability to launch an amphibious assault far enough off shore to protect the fleet. Other Members have also suggested that the EFV cancellation would lead to eliminating hundreds of high-skilled manufacturing jobs as well as hurting local economies in states and districts associated with the EFV program. Reportedly, a number of letters have been sent by Members to the President and Secretary of Defense Gates opposing the recommendation to cancel the program. Even if the EFV program can not be saved, some Members suggest that ongoing EFV testing and associated activities should be fully funded and continued so that \"technology can be harvested from the EFV program\" and applied to any future amphibious vehicle development. Toward that end, there is support in the House to allow $145 million in the FY2011 Defense Appropriations Bill that was slated for termination costs or to continue SDD to be used to continue SDD work that can be used to support the development of the EFV's successor.",
"General Dynamics, the EFV's developer, suggests that it would be more affordable to \"finish what's already been started,\" and build 200 EFVs and save the amount of money that it will take to terminate the program. General Dynamics contends that 184 EFVs, divided between the East and West Coast could provide amphibious lift for four battalions and that 16 EFVs could be used for training purposes. General Dynamics says that this would save $6 billion, which it believes would be the costs to terminate the EFV, upgrade current AAVs, and to develop and procure a new amphibious vehicle. In order to implement its plan, General Dynamics estimates that it would need approval of the FY2011 $243 million budget request and $129 million in FY2012.",
"One report suggests that if Secretary of Defense Gates can overcome congressional opposition to terminate the EFV program, the Marines could have $2.588 billion over the next five years that could be directed at other programs. If successful, some of those funds could be used to develop the New Amphibious Vehicle (NAV) and to upgrade the current AAV. The Marines reportedly would dedicate $500 million over five years of the redirected EFV monies to the NAV and $1 billion to AAV upgrades. In addition, the Marines are said to be considering using $200 million of the EFV savings to recapitalize its High Mobility, Multi-Wheeled Vehicle (HMMWV) fleet over the next five years as well as allocating $400 million to develop the Marine Personnel Carrier (MPC), which has been delayed due to lack of funding. Also, $488 million would go to the Marine Corps general procurement needs to make up for war-related shortages.",
"The Marines, a little more than a month after Secretary Gates's EFV cancellation announcement, initiated a new competition to upgrade existing AAVs and develop a successor to the EFV (previously called the New Amphibious Assault Vehicle [NAV] but now called the Amphibious Combat Vehicle [ACV]). On February 21, 2011, the Marines issued three request for information (RFIs) to industry. In terms of the ACV, the Marines are looking for a vehicle that will carry a squad-sized force from a 12-mile minimum distance from shore and be able to maneuver with Marine mechanized units while maintaining a counter-IED capability. The Commandant of the Marine Corps, General James Amos, has committed the Marine Corps to fielding the ACV within four years.",
"The Marines did not submit a budget request for FY2012 funding for the EFV. Instead, FY2011 and FY2010 funds will be used to cover termination costs as well as complete ongoing testing and developmental work, to include delivery of EFV-related software.",
"",
"Congress might decide to evaluate General Dynamics' proposal to build 200 EFVs instead of 573. One evaluation criteria could be the EFV's overall performance in operational testing, which is in its final stages. While General Dynamics claims that current testing is reportedly \"exceeding requirements by 90 percent,\" the Marines have not yet issued their final test results. Another issue for consideration is if the technologically advanced EFV now fits in with the Marines' planned restructuring to what it describes as a \"middle weight force\" with less equipment that it currently possesses. While General Dynamics is promoting a 200 EFV procurement, it is likely that if this course of action is chosen, that they would then advocate for the acquisition of additional EFVs over time, perhaps approaching the 500 plus or even 1,000 vehicle requirements of the past.",
"If the EFV program is terminated as Secretary Gates intends, there could likely be two decades-worth of knowledge and associated technologies, which could be a major benefit—as well as potential cost savings—for the AAV upgrade and ACV programs. While it is reasonable to assume that the Marines would make good use of work previously done on the EFV, Congress might consider examining what EFV technologies the Marines plan to migrate to the ACV. This examination could help to ensure that there is \"value added\" by these technologies and that they meet \"cost-benefit\" criteria—in other words, these technologies meet ACV key performance parameters (KPPs) and are not expensive \"nice to have\" features that could potentially drive up the ACV per unit cost.",
"Congress might wish to review whether the Marines' plan to field the ACV in four years is overly ambitious. During the Navy's presentation of its FY2012 Budget Request, it was reported that Navy and Pentagon officials stated that the \"soonest that the ACV would be ready was 2024.\" Originally, General Amos had reportedly wanted the GCV to be fielded using an acquisition track similar to the Mine-Resistant Ambush-Protected (MRAP) vehicle, which was fielded in a matter of months as opposed to years. As previously noted, the Commandant of the Marine Corps, General James Amos, has committed the Marine Corps to fielding the ACV within four years. It is not known if this four-year requirement is based on a specific operational need or if it is driven by other factors. Because of the wide disparity in expectations for the delivery date of the ACV, it might be beneficial to take a comprehensive look at the requirements and expected resources available to the Marines to ensure that a four-year development cycle is not both overly optimistic and ambitious. While the Marines certainly cannot afford another two-decades long developmental effort, some believe that they cannot afford to rush ACV development and testing in order to meet an arbitrary timeline."
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{
"question": [
"Why was the EFV created?",
"What is the purpose of the AAV?",
"What has characterized the EFV development process?",
"What is its current status?",
"How did the Secretary of Defense respond to the issues with the EFV?",
"Why did General Dynamics propose to only build 200 EFVs?",
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"summary": [
"The Expeditionary Fighting Vehicle (EFV) is an armored amphibious vehicle program that originated two decades ago to replace the 1970s-era Amphibious Assault Vehicle (AAV).",
"Like current AAVs, the EFV is designed to roll off a Navy amphibious assault ship, move under its own power to the beach, and cross the beach and operate inland.",
"The EFV has experienced a variety of developmental difficulties, resulting in significant program delays and cost growth.",
"The EFV is currently in its second systems design and development (SDD) phase attempting to improve the EFV's overall poor reliability and performance that it demonstrated during its 2006 operational assessment.",
"On January 6, 2011, Secretary of Defense Robert Gates announced, based on the recommendation of the Secretary of the Navy and Commandant of the Marine Corps, that he would recommend the cancellation of the EFV. Secretary Gates also reaffirmed the Marines' amphibious assault mission and pledged to fund future efforts to acquire a more affordable and sustainable replacement and also to upgrade existing amphibious assault vehicles.",
"Potential issues for Congress include the possible evaluation of General Dynamics' proposal to build only 200 EFVs, which it contends would save $6 billion.",
"Another issue is a possible examination of EFV technologies that the Marines plan to incorporate into the ACV to help to ensure that there is \"value added\" by these technologies and that they meet \"cost-benefit\" criteria.",
"Another possible issue is the Marines' plan to field the ACV in four years, which could be considered by some as overly ambitious.",
"Navy and Pentagon officials stated that the soonest that the ACV would be ready was 2024, while the Commandant of the Marines Corps has committed the Marines to field the ACV in four years."
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CRS_R42854
|
{
"title": [
"",
"Overview",
"Federal Emergency Assistance for Agricultural and Rural Land",
"Emergency Conservation Program",
"Purpose, Activities, and Authority",
"Eligible Land",
"Eligible Participant",
"Funding and Allocation",
"Emergency Forest Restoration Program (EFRP)",
"Purpose, Activities, and Authority",
"Eligible Land",
"Eligible Participant",
"Funding and Allocation",
"Emergency Watershed Protection (EWP) Program",
"Purpose, Activities, and Authority",
"Eligible Land",
"Eligible Participant",
"Funding and Allocation",
"Emergency Watershed Protection (EWP) Program—Floodplain Easements",
"Purpose, Activities, and Authority",
"Eligible Land",
"Eligible Participants",
"Funding and Allocation",
"Other Programs",
"Emergency Disaster Loans",
"Conservation Programs",
"Conservation Reserve Program (CRP)",
"Environmental Quality Incentives Program (EQIP)",
"Issues for Congress",
"Funding Mechanisms",
"Stafford Act Limitations",
"Mitigation"
],
"paragraphs": [
"",
"Natural disasters can have varying effects on the landscape. For agricultural producers, natural disasters are part of the inherent risk of doing business. The federal role for mitigating weather risk is primarily through federal crop insurance and a suite of agricultural disaster assistance programs to address a producer's crop or livestock production loss.\nOther, separate U.S. Department of Agriculture (USDA) programs are designed to repair agricultural and forest land following a natural disaster and potentially mitigate future risk. These programs offer financial and technical assistance to producers to repair, restore, and mitigate damage on private land. Agricultural land assistance programs include the Emergency Conservation Program (ECP), the Emergency Forest Restoration Program (EFRP), and the Emergency Watershed Protection (EWP) program. In addition to these programs, USDA also has flexibility in administering other programs that allow for support and repair of damaged cropland in the event of an emergency.\nThis report describes these emergency agricultural land assistance programs. It presents background on the programs—purpose, activities, authority, eligibility requirements, and authorized program funding levels—as well as current congressional issues.",
"Agricultural land assistance programs help producers rehabilitate crop and forest land following natural disasters. These programs are described below.",
"",
"The Emergency Conservation Program (ECP) assists landowners in restoring land used in agricultural production when damaged by a natural disaster. This can include removing debris, restoring fences and conservation structures, and providing water for livestock in drought situations. Restoration practices are authorized by the Farm Service Agency (FSA) county committee, with approval from state FSA committees, and the FSA national office.\nPayments are made to individual producers based on a share of the cost of completing the practice. This can be up to 75% of the cost, or up to 90% of the cost if the producer is considered to be a limited-resources producer. Payments are made following completion and inspection of the practice.\nThe ECP was created under Title IV of the Agricultural Credit Act of 1978 ( P.L. 95-334 ) and codified at 16 U.S.C. Sections 2201-2205. The program is permanently authorized, subject to appropriations. Authorized funding is for \"such funds as may be necessary,\" and once appropriated, funds are typically available until expended.",
"Land eligibility is determined by the FSA county committee except in the event of a drought, in which case the national FSA office authorizes the use of funds. Following an on-site inspection, the land may be considered eligible if it is determined that the lack of treatment would:\nimpair or endanger the land; materially affect the productive capacity of the land; lead to damage that is unusual in character and, except for wind erosion, is not the type that would recur frequently in the same area; and be so costly to rehabilitate that future federal assistance is or would be required to return the land to productive agricultural use.\nLand conservation issues that existed prior to the natural disaster are not eligible for assistance.",
"An eligible participant is defined as an agricultural producer with an interest in the land affected by the natural disaster. The applicant must be a landowner or user in the area where the disaster occurred and must be a party who will incur the expense that is the subject of the ECP cost-share application. Participants are limited to $200,000 per natural disaster.\nFederal agencies and states, including all agencies and political subdivisions of a state, are ineligible to participate in ECP.",
"Funding for ECP varies widely from year to year. Most funding is authorized through supplemental appropriations acts rather than annual appropriations. Table 1 provides a funding history for ECP.\nFunding is generally appropriated to remain available until expended. In some instances, Congress has required that ECP funding be used for specific disasters, activities, or locations. For example, a portion of funding appropriated in FY2016 is to be used for major disasters declared pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act). Since ECP does not typically require a Stafford Act declaration, this requirement limits the use of ECP funds to select locations as well as for future disasters. For further discussion, see the \" Issues for Congress \" section.\nOnce funding is appropriated, the FSA national office generally allocates ECP funds to the FSA state offices. The local FSA county committees will then obligate the funds on a first-come, first-served basis.",
"",
"The Emergency Forest Restoration Program (EFRP) provides cost-share assistance to private forestland owners to repair and rehabilitate damage caused by natural disasters on nonindustrial private forest land. Natural disasters include wildfires, hurricanes or excessive winds, drought, ice storms or blizzards, floods, or other resource-impacting events, as determined by USDA. The program is administered by FSA.\nFSA may provide up to 75% of the cost of emergency measures that would restore forest health and forest-related resources following a disaster. Individual or cumulative requests for financial assistance of $50,000 or less per person (or legal entity) per disaster are approved by the FSA county committee. Financial assistance requests from $50,001 to $100,000 are approved by the FSA state committee. Financial assistance over $100,000 must be approved by the FSA national office.\nThe EFRP was created under Section 8203 of the Food, Conservation, and Energy Act of 2008 (2008 farm bill, P.L. 110-246 ), by adding a new Section 407 to Title IV of the Agricultural Credit Act of 1978. It is codified at 16 U.S.C. Section 2206 and is permanently authorized subject to appropriations. Authorized funding is for \"such funds as may be necessary,\" and once appropriated, funds are typically available until expended.",
"For land to be eligible for EFRP, it must be nonindustrial private forest land and must:\nhave existing tree cover or have had tree cover immediately before the natural disaster and be suitable for growing trees; have damage to natural resources caused by a natural disaster, which occurred on or after January 1, 2010, that, if not treated, would impair or endanger the natural resources on the land and would materially affect future use of the land; and be physically located in a county in which EFRP has been implemented.\nLand is ineligible if it is owned or controlled by the federal government, a state, a state agency, or a political subdivision of a state.",
"Eligible recipients include owners of nonindustrial private forest land, defined as rural land that is owned by any nonindustrial private individual, group, association, corporation, or other private legal entity that has definitive decision making authority over the land. A payment limitation of $500,000 per person or legal entity applies per disaster.",
"The EFRP was created in the 2008 farm bill. Congress initially appropriated $18 million to the program in an FY2010 supplemental appropriations act. Funds were not obligated, however, until FY2011, when final regulations were published. Table 2 provides a funding history for EFRP.",
"",
"The Emergency Watershed Protection (EWP) program assists sponsors, landowners, and operators in implementing emergency recovery measures for runoff retardation and erosion prevention to relieve imminent hazards to life and property created by natural disasters. Eligible activities may include removing debris from stream channels, road culverts, and bridges; reshaping and protecting eroded banks; correcting damaged drainage facilities; establishing cover on critically eroding lands; removing carcasses; and repairing levees and structures.\nEWP funds cannot be used to perform operation or maintenance for existing structures or to repair, rebuild, or maintain private or public transportation facilities or public utilities. The EWP is administered by both USDA's Natural Resources Conservation Service (NRCS) and the U.S. Forest Service (USFS).\nThe federal contribution toward the implementation of emergency measures may not exceed 75% of the construction cost. This can be raised to 90% if the area is considered to be a limited-resource area.\nThe EWP was created under Title IV of the Agricultural Credit Act of 1978 ( P.L. 95-334 ) and codified at 16 U.S.C. Sections 2203-2205. The program is permanently authorized, subject to appropriations. Authorized funding is for \"such funds as may be necessary,\" and once appropriated, funds are typically available until expended.",
"Private, state, tribal, and federal lands are eligible for EWP. EWP is administered by NRCS on state, tribal, and private lands and by USFS on National Forest System lands. EWP assistance funded by NRCS may not be provided on any federal lands if the assistance would augment the appropriations of another federal agency.",
"All projects under EWP must have a sponsor. Sponsors must be a state or political subdivision, qualified Indian tribe or tribal organization, or unit of local government. Private entities or individuals may receive assistance only through the sponsorship of a governmental entity.\nSponsors are responsible for:\nobtaining necessary land rights and permits to do repair work; providing the nonfederal portion of cost-share assistance; completing the installation of all emergency measures; and carrying out any operation and maintenance responsibilities that may be required.",
"Funding for EWP varies widely from year to year ( Table 3 ). Most funding is authorized through supplemental appropriations acts rather than annual appropriations.\nNRCS provides assistance based upon a determination by the NRCS state conservationist that the current condition of the land or watershed impairment poses a threat to health, life, or property. Sponsors must submit a formal request to the NRCS state conservationist within 60 days of the natural disaster or 60 days from the date when access to the site becomes available. No later than 60 days from receipt of the request, the state conservationist will investigate the situation and prepare an initial cost estimate to be forwarded to the NRCS national office. Before release of any funds, the project sponsor must sign a cooperative agreement with NRCS that details the responsibilities of the sponsor (e.g., funding, operation, and maintenance). No funding is provided for activities undertaken before the cooperative agreement is signed.\nApproval of funding is based on the following rank order:\nexigency situations; sites where there is a serious (but not immediate) threat to human life; and sites where buildings, utilities, or other important infrastructure components are threatened.",
"",
"Floodplain easements under EWP are administered separately from the general EWP program. The easements are meant to safeguard lives and property from future floods, drought, and the consequences of erosion through the restoration and preservation of the land's natural values. USDA holds all EWP floodplain easements in perpetuity. Floodplain easements are purchased as an emergency measure and on a voluntary basis. If a landowner offers to sell a permanent conservation easement, then NRCS has the full authority to restore and enhance the floodplain's functions and values. This includes removing all structures, including buildings, within the easement boundaries and providing up to 100% of restoration costs. In exchange, the landowner receives the smallest of the three following values as an easement payment:\n1. a geographic area rate established by the NRCS state conservationist; 2. the fair-market value based on an area-wide market analysis or an appraisal completed according to the Uniform Standards of Professional Appraisal Practices (USPAP); or 3. the landowner's offer.\nSection 382 of the Federal Agricultural Improvement and Reform Act of 1996 (1996 farm bill, P.L. 104-127 ) amended the EWP authorization to include the purchase of floodplain easements. Prior to this amendment, NRCS had been directed in a 1993 emergency supplemental appropriations act ( P.L. 103-75 ) to use EWP funds for the purchase of floodplain easements under the Wetlands Reserve Program (WRP)—a farm bill program for restoring wetlands through the voluntary purchase of long-term and permanent easements on agricultural land. This became known as the Emergency Wetlands Reserve Program, which purchased floodplain easements on cropland with a history of flooding in the 1993 and 1995 Midwest flooding events. Following the 1996 farm bill amendment, NRCS began an EWP floodplain easement pilot program in 17 states in FY1997.\nThe Agricultural Act of 2014 (2014 farm bill, P.L. 113-79 ) amended the floodplain easement section of the EWP program to allow USDA to modify or terminate floodplain easements when the landowner agrees and the change \"addresses a compelling public need for which there is no practical alternative, and is in the public interest.\" Modification or termination requires a compensatory arrangement determined by USDA.\nSimilar to the general EWP program, EWP floodplain easements are authorized under Title IV of the Agricultural Credit Act of 1978 ( P.L. 95-334 ) and codified at 16 U.S.C. Sections 2203-2205. The authorization of appropriations is for \"such funds as may be necessary\" and does not expire.",
"Lands are considered eligible for an EWP floodplain easement if they are:\nfloodplain lands that were damaged by flooding at least once within the previous calendar year or have been subject to flood damage at least twice within the previous 10 years; other lands within the floodplain that would contribute to the restoration of the flood storage and flow, erosion control, or would improve the practical management of the easement; or lands that would be inundated or adversely impacted as a result of a dam breach.\nLand is considered ineligible if:\nrestoration practices would be futile due to \"on-site\" or \"off-site\" conditions; the land is subject to an existing easement or deed restriction that provides sufficient protection or restoration of the floodplain's functions and values; or the purchase of an easement would not meet the purposes of the program.",
"EWP participants must have ownership of the land. Unlike the general EWP program, EWP floodplain easements do not require a project sponsor.",
"The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) provided $290 million to Watershed and Flood Prevention Operations, of which half ($145 million) was to be used for the purchase and restoration of EWP floodplain easements. Per requirements in ARRA, the funding was obligated by FY2011. Additional funding following Hurricane Sandy resulted in two EWP floodplain easement sign ups, which funded 246 applications on over 1,000 acres of eligible land. Through the end of 2016, NRCS reported enrolling a total of 1,586 easements on 184,911 acres, as well as 1,573 closed and restored easements on 184,423 acres.",
"",
"Emergency disaster (EM) loans are available through the FSA when a county has been declared a disaster area by either the President or the Secretary of Agriculture. Agricultural producers in the declared county and contiguous to the county may become eligible for low-interest EM loans. EM loan funds may be used to help eligible farmers, ranchers, and aquaculture producers recover from production losses (when the producer suffers a significant loss of an annual crop) or from physical losses (such as repairing or replacing damaged or destroyed structures or equipment or replanting permanent crops such as orchards). A qualified applicant can then borrow up to 100% of actual production or physical losses (not to exceed $500,000) at low interest rates.",
"In addition to the authorized land assistance programs, USDA uses a number of existing conservation programs to assist with rehabilitating land following natural disasters. In many cases this assistance comes through the use of waivers and flexibility provided to the Secretary of Agriculture. The following section discusses programs recently used by USDA to offer assistance.",
"The Conservation Reserve Program (CRP) provides annual payments to agricultural producers to take highly erodible and environmentally sensitive land out of production and install resource-conserving practices for 10 or more years. In limited situations, harvesting and grazing may be conducted on CRP land in response to drought or other emergencies (except during primary nesting season for birds). In many cases environmentally sensitive land is ineligible for harvesting and grazing. Emergency harvesting and grazing is authorized by the national FSA office at the request of a county FSA committee.",
"The Environmental Quality Incentives Program (EQIP) is a voluntary program that provides financial and technical assistance to agricultural producers to address natural resource concerns on agricultural and forest land. USDA has recently announced a special EQIP signup for farmers and ranchers in hurricane-affected areas. EQIP may also be used to proactively mitigate potential damage from natural disasters through the use of conservation practices (e.g., residue management to improve the soil's capacity to be more drought-resilient, or vegetative buffer strips along waterways to reduce erosion and crop damage in the event of a flood).",
"",
"Historically, the majority of emergency assistance for agriculture was funded through supplemental appropriations or as an add-on to regular annual appropriations. A supplemental appropriation provides additional budget authority during the current fiscal year either to finance activities not funded in the regular appropriation or to provide funds when the regular appropriation is deemed insufficient.\nSince most agricultural land assistance programs do not receive the level of attention that triggers a standalone supplemental appropriation bill, annual appropriation bills are increasingly seen as a vehicle for funding these programs. The change in funding mechanism from standalone supplemental appropriations to annual appropriations has presented a challenge for agricultural land assistance programs. The timing of annual appropriations bills may not coincide with natural disasters and the subsequent requests for assistance. This can increase the time between eligible disasters and funding availability. Disaster funds are typically provided to remain available until expended, which has allowed smaller, more localized disasters to be addressed in years without appropriations. However, despite this flexibility, the inconsistent funding has left some agricultural land assistance programs without funding during times of high request volume.\nBeginning in the 2008 farm bill, and continued in the 2014 farm bill, Congress authorized a series of permanent disaster assistance programs that receive mandatory funding, rather than relying on supplemental appropriations. These programs assist with crop and livestock production loss and are generally authorized at funding amounts that are \"such sums as necessary\" and by their mandatory nature are not subject to annual appropriations. For the three agricultural land rehabilitation programs discussed in this report, however, funding remains discretionary and is provided on an ad hoc basis.\nThe variability of funding for agricultural land rehabilitation has led some to suggest that these programs have been left behind in favor of providing assistance for crop and livestock production loss rather than for land rehabilitation and natural resources degradation. Some have suggested that the use of permanent mandatory funding could be expanded beyond production to include land rehabilitation assistance. Others point out that permanent mandatory funding would be difficult to achieve in the current fiscal climate.",
"The Budget Control Act of 2011 (BCA, P.L. 112-25 ) limits emergency supplemental funding for disaster relief. Under Section 251(b)(2)(D) of the BCA, funding used for disaster relief must be used for activities carried out pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, P.L. 93-288 ) for FY2012 through FY2021. This means funds appropriated through emergency supplemental acts for disaster relief through FY2021 may apply only to activities with a Stafford Act declaration.\nIn recent years, agricultural land rehabilitation programs have received funding through annual appropriations. However, it is still considered supplemental in nature and, in some cases, classified as disaster relief. When classified as disaster relief, the funds must be used for a major disaster declared pursuant to the Stafford Act.\nSince emergency agricultural land assistance programs do not normally require a federal disaster declaration from either the President or a state official, the Stafford Act requirement has become a limiting factor in the way agricultural land assistance programs work, potentially assisting fewer natural disaster events. For example, droughts are traditionally not declared as major disaster events under the Stafford Act. However, droughts are one of the eligible natural disasters for land assistance programs—primarily to assist livestock producers to provide water to animals. Since agricultural land assistance program funds are typically available until expended, the Stafford Act requirement also limits what areas may receive future assistance with any remaining funding.\nFor example, the FY2016 appropriated levels classify only a portion of the funding provided as disaster relief and therefore subject to the requirements of the BCA and the Stafford Act. The remaining funds are not considered disaster relief for budget scoring purposes and are therefore appropriated within the regular limitations of the current budget agreement. These funds are not subject to a Stafford Act declaration and may be used according to the authorities of the program.",
"Another contentious issue for federal land assistance programs is mitigation. Mitigation actions are steps taken to reduce risk before a natural disaster occurs. Currently only one mitigation program exists for emergency agricultural land assistance—the EWP floodplain easement program (described above). This program purchases floodplain easements on agricultural land that has a history of flooding (two of the previous 10 years). Under the program, the land is permanently taken out of production and restored to a natural function. This program has been authorized since 1997. However, prohibitions in appropriations acts have limited available funding for the program.\nSome have questioned the use of federal restoration funds in areas with a high risk of damage by natural disasters, arguing that it encourages poor land use decisions. While the alternative of mitigation can potentially reduce the future cost of federal assistance, the initial cost of the permanent easement and restoration is sometimes viewed as too expensive a federal cost."
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{
"question": [
"What is the purpose of ECP?",
"How does ECP accomplish this?",
"What limitations does ECP have for who receives money?",
"Why was EFRP created?",
"What agencies administer the EWP programs?",
"How does the EWP program work?",
"What kinds of land might be affected?",
"How does the EWP floodplain easement program work?",
"How are agricultural land assistance programs expected to be funded?",
"How does this affect the consistency of yearly funding?",
"What is being proposed as a solution to the variation in funding from year to year?",
"How have restrictions on supplemental disaster assistance appropriations affected funding allocation?",
"How were these restrictions codified?",
"What are the restrictions?",
"Why do these restrictions limit assistance for natural disasters?"
],
"summary": [
"ECP assists landowners in restoring agricultural production damaged by natural disasters.",
"Participants are paid a percentage of the cost to restore the land to a productive state.",
"ECP is available only on private land, and eligibility is determined locally.",
"EFRP was created to assist private forestland owners to address damage caused by a natural disaster on nonindustrial private forest land.",
"The EWP program and the EWP floodplain easement program are administered by USDA's Natural Resources Conservation Service (NRCS) and the U.S. Forest Service (USFS).",
"The EWP program assists sponsors, landowners, and operators in implementing emergency recovery measures for runoff retardation and erosion prevention to relieve imminent hazards to life and property created by a natural disaster.",
"In some cases this can include state and federal land.",
"The EWP floodplain easement program is a mitigation program that pays for permanent easements on private land meant to safeguard lives and property from future floods, drought, and the consequences of erosion.",
"Since most agricultural land assistance programs do not receive the level of attention that triggers a standalone supplemental bill, annual appropriation bills are increasingly seen as a vehicle for funding these programs.",
"Funding for emergency agricultural land assistance varies greatly from year to year. The timing of annual appropriation bills may not coincide with natural disasters, thus leaving some programs without funding during times of high request volume.",
"This irregular funding method has led some to suggest the authorization of permanent mandatory funding similar to what was authorized in the Agricultural Act of 2014 (2014 farm bill, P.L. 113-79) for agricultural disaster assistance programs that support crop and livestock production loss.",
"Restrictions placed on supplemental appropriations for disaster assistance have changed the way the agricultural land assistance programs allocate funding, potentially assisting fewer natural disasters.",
"Language in the Budget Control Act of 2011 (P.L. 112-25) limits to the use of emergency supplemental funding for disaster relief.",
"Specifically, funding used for disaster relief must be used for activities carried out pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, P.L. 93-288) for FY2012 through FY2021.",
"This means funds appropriated through emergency supplemental acts for disaster relief for these 10 years may apply only to activities with a Stafford Act designation (generally requiring a federal disaster declaration from either the President or a state official). Since emergency agricultural land assistance programs do not normally require a federal disaster declaration, the Stafford Act requirement has become a limiting factor in the way agricultural land assistance programs work, potentially assisting fewer natural disaster events."
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CRS_R45723
|
{
"title": [
"",
"What is Fiscal Policy?",
"Expansionary Fiscal Policy",
"Potential Offsetting Effects to Expansionary Fiscal Policy",
"Investment and Interest Rates",
"Exchange Rates and the Trade Balance",
"Inflation",
"Fiscal Expansion Multipliers",
"Long-Term Considerations Regarding Fiscal Stimulus",
"Unsustainable Public Debt",
"Decreased Business Investment",
"Crowding Out Government Spending",
"Withdrawing Fiscal Stimulus",
"Potential Offsetting Effects to Withdrawing Fiscal Stimulus",
"Investment and Interest Rates",
"Exchange Rates and the Trade Balance",
"Inflation",
"Fiscal Contraction Multipliers",
"Fiscal Policy Stance"
],
"paragraphs": [
"T he federal government has two major tools for affecting the macroeconomy: fiscal policy and monetary policy. These policy interventions are generally used to either increase or decrease economic activity to counter the business cycle's impact on unemployment, income, and inflation. This report focuses on fiscal policy; for more information related to monetary policy, refer to CRS Report RL30354, Monetary Policy and the Federal Reserve: Current Policy and Conditions , by Marc Labonte.",
"Fiscal policy is the means by which the government adjusts its budget balance through spending and revenue changes to influence broader economic conditions. According to mainstream economics, the government can impact the level of economic activity, generally measured by gross domestic product (GDP), in the short term by changing its level of spending and tax revenue. Expansionary fiscal policy—an increase in government spending, a decrease in tax revenue, or a combination of the two—is expected to spur economic activity, whereas contractionary fiscal policy—a decrease in government spending, an increase in tax revenue, or a combination of the two—is expected to slow economic activity. When the government's budget is running a deficit, fiscal policy is said to be expansionary: when it is running a surplus, fiscal policy is said to be contractionary.\nFrom a policymaker's perspective, expansionary fiscal policy is generally used to boost GDP growth and the economic indicators that tend to move with GDP, such as employment and individual incomes. However, expansionary fiscal policy also tends to affect interest rates and investment, exchange rates and the trade balance, and the inflation rate in undesirable ways, limiting the long-term effectiveness of persistent fiscal stimulus. Contractionary fiscal policy can be used to slow economic activity if policymakers are concerned that the economy may be overheating, which can cause a recession. The magnitude of fiscal policy's effect on GDP will also differ based on where the economy is within the business cycle—whether it is in a recession or an expansion.",
"During a recession, aggregate demand (overall spending) in the economy falls, which generally results in slower wage growth, decreased employment, lower business revenue, and lower business investment. Recessions occur for a number of reasons, but as seen during the most recent recession from 2007 to 2009, they can result in serious negative consequences for both individuals and businesses. However, the government can replace some of the lost aggregate demand and limit the negative impacts of a recession on individuals and businesses with the use of fiscal stimulus by increasing government spending, decreasing tax revenue, or a combination of the two. Government spending takes the form of both purchases of goods and services by the government, which directly increase economic activity, and transfers to individuals, which indirectly increase economic activity as individuals spend those funds. Decreased tax revenue via tax cuts indirectly increases aggregate demand in the economy. For example, an individual income tax cut increases the amount of disposable income available to individuals, enabling them to purchase more goods and services. Standard economic theory suggests that in the short term, fiscal stimulus can lessen the negative impacts of a recession or hasten a recovery. However, the ability of fiscal stimulus to boost aggregate demand may be limited due to its interaction with other economic processes, including interest rates and investment, exchange rates and the trade balance, and the rate of inflation.",
"",
"To engage in fiscal stimulus by either increasing spending or decreasing tax revenue, the government must increase the size of its deficit and borrow money to finance that stimulus. This can lead to an increase in interest rates and subsequent decreases in investment and some consumer spending. This rise in interest rates may therefore offset some portion of the increase in economic activity spurred by fiscal stimulus.\nAt any given time, there is a limited supply of loanable funds available for the government and private parties to borrow from—a global pool of savings. If the government begins to borrow a larger portion of this pool of savings, it increases the demand for these funds. As demand for loanable funds increases, without any corresponding increase in the supply of these funds, the price to borrow these funds, also known as interest rates, increases. Rising interest rates generally depress economic activity, as they make it more expensive for businesses to borrow money and invest in their firms. Similarly, individuals tend to decrease so-called interest-sensitive spending—spending on goods and services that require a loan, such as cars, homes, and large appliances—when interest rates are relatively higher. The process through which rising interest rates diminish private-sector spending is often referred to as crowding out . However, the degree to which crowding out occurs is partially dependent on where the economy is within the business cycle, either in a recession or in a healthy expansion.\nDuring a recession, crowding out tends to be smaller than during a healthy economic expansion due to already depressed demand for investment and interest-sensitive spending. Because demand for loanable funds is already depressed during a recession, the additional demand created by government borrowing does not increase interest rates as much, and therefore does not crowd out as much private spending as it would during an economic expansion.\nIn addition to fiscal policy, the government can influence the business cycle through the use of monetary policy, which is implemented by the Federal Reserve. The Federal Reserve is an independent government agency charged with maintaining stable prices and maximum employment through its monetary policy. The Federal Reserve can influence interest rates throughout the economy by adjusting the federal funds rate, a very short-term interest rate faced by banks. Decreasing interest rates reduces the cost to businesses and individuals of borrowing funds to make new investments and purchases. Conversely, increasing interest rates raises the cost to businesses and individuals of borrowing funds to make new investments and purchases. The Federal Reserve can conduct monetary policy in a complementary nature to fiscal policy, offsetting the rise in interest rates by decreasing the federal funds rate. Alternatively, the Federal Reserve can pursue a policy that offsets stimulus, pushing interest rates up by increasing the federal funds rate.",
"Another potential consequence of government fiscal stimulus is an increase in the value of the U.S. dollar and a subsequent increase in the trade deficit, which mitigates some portion of the rise in economic activity resulting from the fiscal stimulus. As discussed above, fiscal stimulus can cause interest rates to rise. In a global context where interest rates are rising in the United States relative to the rest of the world, demand for investment inside the United States is likely to increase among investors around the world as they seek out higher rates of return. The greater demand for investment in the United States is likely to temper the increase in interest rates resulting from fiscal stimulus. However, foreign investors must first exchange their own currency for U.S. dollars to invest in the United States. The increased demand for U.S. dollars increases the value of a U.S. dollar relative to other foreign currencies. As the U.S. dollar appreciates in value, domestic demand for imported goods increases because a U.S. dollar can now buy more goods and services abroad, but foreign demand for U.S. goods and services decreases because they are now relatively more expensive for foreigners. The end result is generally an increase in the U.S. trade deficit, as exports decrease and imports from abroad increase in the United States. An increasing trade deficit, all else equal, means that consumption and production of domestic goods and services are falling, partly offsetting the increase in aggregate demand caused by the stimulus.\nAs discussed above, however, during a recession interest rates are less likely to rise, or are likely to increase to a lesser degree, due to an already depressed demand for investment and spending within the economy. Without rising interest rates, or if they increase to a lesser degree, the associated increase in the trade deficit is also likely to be smaller. In addition, if the Federal Reserve engages in similarly stimulative monetary policy, it may be able to mitigate some of the anticipated increase in the trade deficit by further preventing an increase in interest rates.",
"As discussed above, the goal of fiscal stimulus is to increase aggregate demand within the economy. However, if fiscal stimulus is applied too aggressively, or is implemented when the economy is already operating near full capacity, it can result in an unsustainably large demand for goods and services that the economy is unable to supply. When the demand for goods and services is greater than the available supply, prices tend to rise, a scenario known as inflation. A rising inflation rate can introduce distortions into the economy and impose unnecessary costs on individuals and businesses, although economists generally view low and stable inflation as a sign of a well-managed economy. As such, rising inflation rates can hinder the effectiveness of fiscal stimulus on economic activity by imposing additional costs on individuals and interfering with the efficient allocation of resources in the economy.\nThe Federal Reserve has some ability to limit inflation by implementing contractionary monetary policy. If the Federal Reserve observes accelerating inflation as a result of additional fiscal stimulus, it can counteract this by increasing interest rates. The rise in interest rates results in a slowing of economic activity, neutralizing the fiscal stimulus, and may help to slow inflation as well.",
"Economists attempt to evaluate the overall impact of fiscal stimulus on the economy by estimating fiscal multipliers , which measure the ratio of a change in economic output to the change in government spending or revenue that causes the change in output. A fiscal multiplier greater than one suggests that for each dollar the government spends, the economy grows by more than one dollar. A multiplier may be larger than one if the initial government stimulus results in further spending by private actors. For example, if the government increases spending on infrastructure projects as part of its stimulus, directly increasing aggregate demand, numerous contractors and construction workers will likely receive additional income as a consequence. If those workers then spend a portion of their new income within the economy, it further increases aggregate demand. Alternatively, a fiscal multiplier of less than one suggests that for each dollar the government spends, the economy grows by less than one dollar, suggesting the expansionary power of the fiscal stimulus is being offset by the contractionary pressures discussed above.\nEstimates of fiscal multipliers vary depending on the form of the fiscal stimulus and on which economic model the economist uses to measure the multiplier. For example, a 2012 academic research article estimated fiscal multipliers for various forms of stimulus utilizing several different prominent economic models from the Federal Reserve Board, the European Central Bank, the International Monetary Fund (IMF), the European Commission, the Organisation for Economic Co-operation and Development (OECD), the Bank of Canada, and two models developed by academic economists. The authors found varying estimates (see Table 1 ) for different forms of fiscal stimulus ranging from 1.59 for cash transfers to low-income individuals to 0.23 for reduced labor income taxes. Based on these estimates, increasing government spending on consumption by 1% of GDP would result in a 1.55% increase in GDP, and decreasing labor income taxes by 1% of GDP would result in a 0.23% increase in GDP.\nThe magnitude of fiscal multipliers likely depends on where the economy is in the business cycle. As discussed above, during a recession fiscal stimulus is less likely to result in offsetting contractionary effects—such as rising interest rates, trade deficits, and inflation—resulting in a larger increase in economic activity from fiscal stimulus. Accordingly, another academic research article attempted to estimate fiscal multipliers depending on whether the economy was in an expansion or a recession, and found that the multiplier for government spending was between 0 and 0.5 during expansions and between 1.0 and 1.5 during recessions.",
"Persistently applying fiscal stimulus can negatively affect the economy through three main avenues. First, persistent large budget deficits can result in a rising debt-to-GDP ratio and lead to an unsustainable level of debt. Second, persistent fiscal stimulus—particularly during economic expansions—can limit long-term economic growth by crowding out private investment. Third, rising public debt will require a growing portion of the federal budget to be directed toward interest payments on the debt, potentially crowding out other, more worthwhile sources of government spending.\nSome economic research has suggested that relatively high public debt negatively impacts economic growth. For example, one academic research paper suggested that for developed countries, a 10-percentage-point increase in the debt-to-GDP ratio is associated with a 0.15- to 0.20-percentage-point decrease in per capita real GDP growth.",
"As noted, persistent fiscal stimulus can result in a rising debt-to-GDP ratio and lead to an unsustainable level of public debt. A rising debt-to-GDP ratio can be problematic if the perceived or real risk of the government defaulting on that debt begins to rise. As the perceived risk of default begins to increase, investors will demand higher interest rates to compensate themselves.\nThe tipping point at which public debt becomes unsustainable is difficult to predict. A continually rising debt-to-GDP ratio is likely to lead to an unsustainable level of debt over time. The threshold at which a nation's debt becomes unsustainable depends on a number of factors, such as the denomination of the debt, political circumstances, and, potentially most importantly, underlying economic conditions. A change in these circumstances may shift a nation's debt to unsustainable without the underlying amount of debt changing at all. To date, it does not appear that the United States has an immediate concern with respect to unsustainability; however, the U.S. debt-to-GDP ratio is projected to continually rise under current policy.",
"Persistent fiscal stimulus, and the associated budget deficits, can decrease the size of the economy in the long term as a result of decreased investment in physical capital. As discussed previously, the government's deficit spending can result in higher interest rates, which generally lead to lower levels of business investment. Business investment—spending on physical capital such as factories, computers, software, and machines—is an important determinant of the long-term size of the economy. Physical capital investment allows businesses to produce more goods and services with the same amount of labor and raw materials. As such, government deficits that lead to lower levels of business investment can result in lower quantities of physical capital, and therefore may reduce the productive capacity of the economy in the long term.\nAs discussed earlier, some of the increase in interest rates and decline in domestic investment resulting from fiscal stimulus will likely be offset by additional investment in the United States from abroad. The inflow of capital from abroad is beneficial, as it allows for additional investment in the United States economy. However, in exchange for these investment flows, the United States is now sending a portion of its national income to foreigners in the form of interest payments. With a larger portion of investment flows coming from abroad, rather than from within the United States, a larger portion of the U.S. national income will be sent abroad.",
"Rising public debt may also be of concern due to its associated interest payments. All else equal, an increase in the level of public debt will result in an increase in interest payments that the government must make each year. Rising interest payments may displace government spending on more worthwhile programs. In 2019, interest payments on the debt are projected to be about 1.8% of GDP, or about $382 billion. By 2029 interest payments on the debt are expected to increase significantly, rising to about 3.0% of GDP or about $921 billion.",
"As the economy shifts from a recession and into an expansion, broader economic conditions will generally improve, whereby unemployment falls and wages and private spending increase. With improving economic conditions, policymakers may choose to begin withdrawing fiscal stimulus by decreasing the size of the deficit or potentially by applying contractionary fiscal policy and running a budget surplus. As discussed in the previous section, policymakers may choose to withdraw fiscal stimulus for a number of reasons. First, persistent fiscal stimulus when the economy is near full capacity can exacerbate the negative consequences of fiscal stimulus, such as decreasing investment, rising trade deficits, and accelerating inflation. Second, decreasing the size of the budget deficit slows the accumulation of public debt.\nThe government can withdraw fiscal stimulus by increasing taxes, decreasing spending, or a combination of the two. When the government raises individual income taxes, for example, individuals have less disposable income and decrease their spending on goods and services in response. The decrease in spending reduces aggregate demand for goods and services, slowing economic growth temporarily. Alternatively, when the government reduces spending, it reduces aggregate demand in the economy, which again temporarily slows economic growth. As such, when the government reduces the deficit, regardless of the mix of fiscal policy choices used to do so, aggregate demand is expected to decrease in the near term. However, withdrawing fiscal stimulus is expected to result in lower interest rates and more investment; a depreciation of the U.S. dollar and a shrinking trade deficit; and a slowing inflation rate. These effects tend to spur additional economic activity, partly offsetting the decline resulting from withdrawing fiscal stimulus. Whether the decrease in aggregate demand is problematic for overall economic performance depends on the state of the overall economy at that time.",
"",
"Withdrawing fiscal stimulus is likely to put downward pressure on domestic interest rates, which encourages additional spending and investment, increasing economic activity. When the government decreases its budget deficit, the demand for loanable funds decreases because the government reduces the amount of those funds it is borrowing. The decrease in demand for loanable funds decreases the price to borrow those funds (i.e., interest rates decline). Declining interest rates encourage increased business investment into new capital projects and consumer spending into durable goods by reducing the cost of borrowing.",
"Withdrawing fiscal stimulus is also expected to result in a depreciation of the U.S. dollar and an improved trade balance with the rest of the world. Assuming the shrinking deficit causes a decline in U.S. interest rates relative to interest rates abroad, individuals in the United States and abroad would rather make investments outside of the United States to benefit from those higher interest rates. Individuals shifting their investments outside the United States must first exchange their U.S. dollars for foreign currency, which decreases the value of the U.S. dollar relative to foreign currencies. As the U.S. dollar depreciates, foreign goods and services become relatively more expensive for U.S. residents and U.S. goods and services become relatively less expensive for foreign individuals. This generally results in an improved trade balance as foreign demand for U.S. goods and services (exports) increases and domestic demand for foreign goods and services (imports) decreases.",
"When fiscal stimulus is withdrawn, aggregate demand for goods and services in the economy also tends to shrink, which is expected to slow inflation. Economists generally view relatively low and stable inflation as beneficial for economic growth, because businesses and consumers are relatively certain about the future price of goods and can make efficient decisions with respect to investment and consumption over time.",
"The ultimate impact on the economy of withdrawing fiscal stimulus depends on the relative magnitude of its effects on aggregate demand, interest rates and investment, exchange rates and the trade deficit, and inflation. The same fiscal multipliers discussed earlier in the \" Fiscal Expansion Multiplier \" section can be used to estimate the impact of withdrawing fiscal stimulus by simply reversing the sign for each multiplier. As shown in Table 1 , decreasing government spending on consumption by 1% of GDP is expected to reduce real GDP by 1.55% after the first year, compared to no change in fiscal policy. Alternatively, increasing labor income taxes by 1% of GDP is expected to reduce real GDP by 0.23% after the first year.\nAgain, monetary policy can be used alongside fiscal policy to affect the overall impact on the economy. For example, the Federal Reserve could lower interest rates to spur aggregate demand as the federal government withdraws fiscal stimulus in an effort to offset the decline in aggregate demand resulting from the shrinking deficit. This could allow the government to withdraw fiscal stimulus without decreasing aggregate demand or economic activity.",
"As shown in Figure 1 , the federal government has generally been running a budget deficit for much of the past 30 years—save for two short periods in the 1960s and 1990s. This suggests that the federal government has been applying some level of fiscal stimulus to the economy for much of the past three decades, although the level of stimulus has increased and decreased over time. However, simply examining the overall budget deficit to judge the level of fiscal stimulus can be misleading, as the levels of federal spending and revenue differ over time automatically due to changes in the state of the economy, rather than deliberate choices made each year by Congress. During economic expansions, tax revenue tends to increase and spending tends to decrease automatically, as rising incomes and employment result in higher average incomes and therefore greater individual and corporate income tax revenues. Federal spending on income support programs, such as food stamps and unemployment insurance, tends to fall as fewer people need financial assistance and unemployment claims fall during economic expansions. The combination of rising tax revenue and falling federal spending tends to improve the government's budget deficit. The opposite is true during recessions, when federal spending rises and revenue shrinks. These cyclical fluctuations in revenue and spending are often referred to as automatic stabilizers. Therefore, when examining fiscal policy, it is often beneficial to estimate the budget deficit excluding these automatic stabilizers, referred to as the structural deficit , to get a sense of the affirmative fiscal policy decisions made each year by Congress.\nAs shown in Figure 1 , budget deficits tend to increase during and shortly after recessions (denoted by grey bars) as policymakers attempt to buoy the economy by applying fiscal stimulus. This can be seen explicitly by viewing the structural deficit/surplus, as this only shows affirmative changes in fiscal policy made by Congress. The budget deficit then tends to shrink as the economy enters into recovery and fiscal stimulus is less necessary to support economic growth. However, in recent years, the federal budget has bucked this trend. After the structural deficit peaked in 2009 at roughly 7.5% of GDP, it began to decline through 2014, falling to about 2.0% of GDP. Beginning in 2016, in spite of relatively strong economic conditions, the structural deficit has started to rise again, nearing 4.0% of GDP in 2018.\nGiven that the economy is arguably at or exceeding full employment currently, the increase in fiscal stimulus since 2016 is notable. As discussed earlier, expanding fiscal stimulus when the economy is not depressed can result in rising interest rates, a growing trade deficit, and higher inflation. As of publication of this report, interest rates and inflation do not appear to have been affected by the additional fiscal stimulus; interest rates are at historic lows and inflation shows no signs of acceleration. The trade deficit has been growing in recent years; however, it is not clear that this growth in the trade deficit is a result of increased fiscal stimulus."
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"question": [
"What is fiscal policy?",
"What does it look like to implement fiscal policy?",
"How does the government increase or decrease economic activity?",
"How does the government stimulate the economy?",
"How does increasing government spending spur economic activity?",
"How does decreasing tax revenue spur economic activity?",
"What side effects does expansionary fiscal policy have?",
"How does the government slow economic activity?",
"What effects does a decrease in government spending have?",
"How does increasing tax revenue slow economic activity?",
"Why would a government choose to slow economic activity?"
],
"summary": [
"Fiscal policy is the means by which the government adjusts its spending and revenue to influence the broader economy.",
"By adjusting its level of spending and tax revenue, the government can affect the economy by either increasing or decreasing economic activity in the short term.",
"For example, when the government runs a budget deficit, it is said to be engaging in fiscal stimulus, spurring economic activity, and when the government runs a budget surplus, it is said to be engaging in a fiscal contraction, slowing economic activity.",
"The government can use fiscal stimulus to spur economic activity by increasing government spending, decreasing tax revenue, or a combination of the two.",
"Increasing government spending tends to encourage economic activity either directly through purchasing additional goods and services from the private sector or indirectly by transferring funds to individuals who may then spend that money.",
"Decreasing tax revenue tends to encourage economic activity indirectly by increasing individuals' disposable income, which tends to lead to those individuals consuming more goods and services. This sort of expansionary fiscal policy can be beneficial when the economy is in recession, as it lessens the negative impacts of a recession, such as elevated unemployment and stagnant wages.",
"However, expansionary fiscal policy can result in rising interest rates, growing trade deficits, and accelerating inflation, particularly if applied during healthy economic expansions. These side effects from expansionary fiscal policy tend to partly offset its stimulative effects.",
"The government can use contractionary fiscal policy to slow economic activity by decreasing government spending, increasing tax revenue, or a combination of the two.",
"Decreasing government spending tends to slow economic activity as the government purchases fewer goods and services from the private sector.",
"Increasing tax revenue tends to slow economic activity by decreasing individuals' disposable income, likely causing them to decrease spending on goods and services.",
"As the economy exits a recession and begins to grow at a healthy pace, policymakers may choose to reduce fiscal stimulus to avoid some of the negative consequences of expansionary fiscal policy, such as rising interest rates, growing trade deficits, and accelerating inflation, or to manage the level of public debt."
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CRS_R43446
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{
"title": [
"",
"Introduction",
"Budget Summary",
"Medicare",
"Medicaid",
"Program Integrity",
"CHIP",
"State Grants and Demonstrations",
"Private Health Insurance Programs",
"Centers for Medicare & Medicaid Innovation (CMMI)",
"Program Management",
"Legislative Proposals",
"Medicare Legislative Proposals",
"Medicare Part A",
"Reduce Medicare Coverage of Bad Debts",
"Current Law",
"President's Proposal",
"Better Align Graduate Medical Education Payments with Patient Care Costs",
"Current Law",
"President's Proposal",
"Reduce Critical Access Hospital Payments to 100% of Costs",
"Current Law",
"President's Proposal",
"Prohibit Critical Access Hospital Designation for Facilities that are less than 10 Miles from the Nearest Hospital",
"Current Law",
"President's Proposal",
"Adjust Payment Updates for Certain Post-Acute Care Providers",
"Current Law",
"President's Proposal",
"Implement Bundled Payment for Post-Acute Care Providers",
"Current Law",
"President's Proposal",
"Encourage Appropriate Use of Inpatient Rehabilitation Facilities",
"Current Law",
"President's Proposal",
"Adjust Skilled Nursing Facilities Payments to Reduce Hospital Readmissions",
"Current Law",
"President's Proposal",
"Equalize Payments for Certain Conditions Treated in Inpatient Rehabilitation Facilities and Skilled Nursing Facilities",
"Current Law",
"President's Proposal",
"Clarify the Medicare DSH Statute",
"Current Law",
"President's Proposal",
"Medicare Parts A and B",
"Implement Value-Based Purchasing for Additional Providers",
"Current Law",
"President's Proposal",
"Medicare Part B",
"Modernize Payments for Clinical Laboratory Services",
"Current Law",
"President's Proposal",
"Modify Reimbursement for Part B Drugs",
"Current Law",
"President's Proposal",
"Exclude Certain Services from the In-Office Ancillary Services Exception",
"Current Law",
"President's Proposal",
"Modify the Documentation Requirement for Face-to-face Encounters for DME Claims",
"Current Law",
"President's Proposal",
"Medicare Advantage",
"Increase the Minimum Medicare Advantage Coding Intensity Adjustment",
"Current Law",
"President's Proposal",
"Align Employer Group Waiver Plan Payments with Average Medicare Advantage Plan Bids",
"Current Law",
"President's Proposal",
"Medicare Part D",
"Align Medicare Drug Payment Policies with Medicaid Policies for Low-Income Beneficiaries",
"Current Law",
"President's Proposal",
"Accelerate Manufacturer Drug Discounts to Provide Relief to Medicare Beneficiaries in the Coverage Gap",
"Current Law",
"President's Proposal",
"Establish Quality Bonus Payments for Part D Plans Based on Quality Star Ratings",
"Current Law",
"President's Proposal",
"Suspend Coverage and Payment for Questionable Part D Prescriptions",
"Current Law",
"President's Proposal",
"Encourage the Use of Generic Drugs by Low Income Beneficiaries",
"Current Law",
"President's Proposal",
"Ensure Retroactive Part D Coverage of Newly-Eligible Low Income Beneficiaries",
"Current Law",
"President's Proposal",
"Prohibit Brand and Generic Drug Manufacturers from Delaying the Availability of New Generic Drugs and Biologics",
"Current Law",
"President's Proposal",
"Modify Length of Exclusivity to Facilitate Faster Development of Generic Biologics",
"Current Law",
"President's Proposal",
"Premiums and Cost Sharing",
"Increase Income Related Premiums under Medicare Part B and Part D",
"Current Law",
"President's Proposal",
"Modify Part B Deductible for New Enrollees",
"Current Law",
"President's Proposal",
"Introduce a Part B Premium Surcharge for New Beneficiaries Purchasing Near First-Dollar Medigap Coverage",
"Current Law",
"President's Proposal",
"Introduce Home Health Copayments for New Beneficiaries",
"Current Law",
"President's Proposal",
"Administrative Proposals",
"Strengthen IPAB to Reduce Long-Term Care Drivers of Medicare Cost Growth",
"Current Law",
"President's Proposal",
"Integrate the Appeals Process for Medicare-Medicaid Enrollees",
"Current Law",
"President's Proposal",
"Other Proposals",
"Expand Medicare Data Sharing with Qualified Entities",
"Current Law",
"President's Proposal",
"Pilot the Program of All-Inclusive Care for the Elderly to Individuals between Ages 21 and 55",
"Current Law",
"President's Proposal",
"Extend the Qualified Individuals Program through 2015",
"Current Law",
"President's Proposal",
"Medicaid Legislative Proposals",
"Medicaid Payments",
"Extend the Medicaid Primary Care Payment Increase Through 2015 and Include Mid-Level Providers",
"Current Law",
"President's Proposal",
"Rebase Future Disproportionate Share Hospital Allotments",
"Current Law",
"President's Proposal",
"Limit Medicaid Reimbursement of Durable Medical Equipment Based on Medicare Rates",
"Current Law",
"President's Proposal",
"Medicaid Coverage",
"Permanently Extend Express Lane Eligibility for Children",
"Current Law",
"President's Proposal",
"Extend the Transitional Medical Assistance Program through 2015",
"Current Law",
"President's Proposal",
"Medicaid Benefits",
"Provide Home and Community-Based Waiver Services to Children and Youth Eligible for Psychiatric Residential Treatment Facilities",
"Current Law",
"President's Proposal",
"Expand State Flexibility to Provide Benchmark Benefit Packages",
"Current Law",
"President's Proposal",
"Medicaid Prescription Drugs",
"Clarify the Medicaid Definition of Brand Drugs",
"Current Law",
"President's Proposal",
"Apply Inflation-Associated Penalty to Medicaid Rebates for Generic Drugs",
"President's Proposal",
"Require the Coverage of Prescribed Prenatal Vitamins and Fluorides under the Medicaid Drug Rebate Program",
"Current Law",
"President's Proposal",
"Correct the ACA Medicaid Rebate Formula for New Drug Formulations",
"Current Law",
"President's Proposal",
"Limit Dispute Resolution Timeframe in the Medicaid Drug Rebate Program to Twelve Quarters",
"Current Law",
"President's Proposal",
"Exclude Authorized Generics from Medicaid Brand-Name Rebate Calculations",
"Current Law",
"President's Proposal",
"Exclude Brand and Authorized Generic Drug Prices from the Medicaid Federal Upper Limits",
"Current Law",
"President's Proposal",
"Require Manufacturers that Improperly Report Items for Medicaid Drug Coverage to Fully Repay States",
"Current Law",
"President's Proposal",
"Enforce Manufacturer Compliance with Drug Rebate Requirements",
"Current Law",
"President's Proposal",
"Require Drugs be Electronically Listed with FDA to Receive Medicaid Coverage",
"Current Law",
"President's Proposal",
"Increase Penalties for Fraudulent Noncompliance on Rebate Agreements",
"Current Law",
"President's Proposal",
"Provide Continued Funding for Survey of Retail Pharmacy Prices",
"Current Law",
"President's Proposal",
"Require Drug Wholesalers to Report Wholesale Acquisition Costs to CMS",
"Current Law",
"President's Proposal",
"Other",
"Demonstration to Address Over-Prescription of Psychotropic Medications for Children in Foster Care",
"Current Law",
"President's Proposal",
"Establish Hold-Harmless for Federal Poverty Guidelines",
"Current Law",
"President's Proposal",
"Extend Special Immigrant Visa Program",
"Current Law",
"President's Proposal",
"Extend Supplemental Security Income Time Limits for Qualified Refugees",
"Current Law",
"President's Proposal",
"Eliminate Medicaid Recoupment of Birthing Costs from Child Support",
"Current Law",
"President's Proposal",
"Program Integrity Legislative Proposals",
"Medicare",
"Allow Prior Authorization for Medicare Fee-for-service Items",
"Current Law",
"President's Proposal",
"Allow Civil Monetary Penalties for Providers and Suppliers who Fail to Update Enrollment Records",
"Current Law",
"President's Proposal",
"Allow the Secretary to Create a System to Validate Practitioners' Orders for Certain High Risk Items and Services",
"Current Law",
"President's Proposal",
"Increase Scrutiny of Providers Using Higher-Risk Banking Arrangements to Receive Medicare Payments",
"Current Law",
"President's Proposal",
"Retain a Percentage of Incentive Reward Program Recoveries",
"Current Law",
"President's Proposal",
"Medicaid",
"Support Medicaid Fraud Control Units for the Territories",
"Current Law",
"President's Proposal",
"Track High Prescribers and Utilizers of Prescription Drugs in Medicaid",
"Current Law",
"President's Proposal",
"Consolidate Redundant Error Rate Measurement Programs",
"Current Law",
"President's Proposal",
"Expand Medicaid Fraud Control Unit Review to Additional Care Settings",
"Current Law",
"President's Proposal",
"Prevent Use of Federal Funds to Pay State Share of Medicaid or CHIP",
"Current Law",
"President's Proposal",
"Medicare and Medicaid",
"Retain a Portion of RAC Recoveries to Implement Actions That Prevent Fraud and Abuse",
"Current Law",
"President's Proposal",
"Permit Exclusion from Federal Health Care Programs if Affiliated with Sanctioned Entities",
"Current Law",
"President's Proposal",
"Strengthen Penalties for Illegal Distribution of Beneficiary Identification Numbers",
"Current Law",
"President's Proposal",
"CHIP Legislative Proposals",
"Extend the CHIP Performance Bonus Fund",
"Current Law",
"President's Proposal",
"State Grants and Demonstrations Proposals",
"Demonstration to Address Over-Prescription of Psychotropic Medications for Children in Foster Care (State Grants and Demonstrations Impact)",
"Current Law",
"President's Proposal",
"Medicaid Integrity Program Investment and Expanded Authority",
"Current Law",
"President's Proposal",
"Extend and Improve the Money Follows the Person Demonstration",
"Current Law",
"President's Proposal",
"Private Health Insurance Programs Proposals",
"Accelerate Issuance of State Innovation Waivers",
"Current Law",
"President's Proposal",
"Program Management Proposals",
"Provide Mandatory Administrative Resources for Implementation",
"Current Law",
"President's Proposal",
"Allow CMS to Reinvest Civil Monetary Penalties Recovered from Home Health Agencies",
"Current Law",
"President's Proposal",
"Assess Administrative Costs for the Federal Payment Levy Program",
"Current Law",
"President's Proposal",
"Enact Survey and Certification Revisit User Fees",
"Current Law",
"President's Proposal",
"Extend Funding for CMS Quality Measurement Development",
"Current Law",
"President's Proposal",
""
],
"paragraphs": [
"",
"Federal law requires the President to submit an annual budget to Congress no later than the first Monday in February. The budget informs Congress of the President's overall federal fiscal policy based on proposed spending levels, revenues, and deficit (or surplus) levels. The budget request lays out the President's relative priorities for federal programs, such as how much should be spent on defense, education, health, and other federal programs. The President's budget may also include legislative proposals for spending and tax policy changes. While the President is not required to propose legislative changes for those parts of the budget that are governed by permanent law (i.e., mandatory spending), such changes are generally included in the budget. President Obama submitted his FY2015 budget to Congress on March 4, 2014.\nThe Centers for Medicare & Medicaid Services (CMS) is the division of the Department of Health & Human Services (HHS) that is responsible for administering Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and the private health insurance programs. CMS is the largest purchaser of health care in the United States with Medicare and federal Medicaid expenditures accounting for 29.0% of the total national health expenditures in 2012. In FY2015, CMS estimates 123 million individuals will be covered by Medicare, Medicaid, or CHIP, which is more than one in three Americans.\nThis report summarizes the President's budget estimates for each section of the CMS budget. Then, for each legislative proposal included in the President's budget, this report provides a description of current law and the President's proposal. The explanations of the President's legislative proposals are grouped by the following program areas: Medicare, Medicaid, program integrity, CHIP, state grants and demonstrations, private health insurance programs, and program management. At the end of each of these sections, there is a table summarizing the estimated costs or savings for each legislative proposal.",
"The CMS budget includes a mixture of both mandatory and discretionary spending. However, a vast majority of the CMS budget is mandatory spending, such as Medicare benefits and grants to states for Medicaid.\nThe President's budget estimates that under current law CMS mandatory and discretionary net outlays would amount to $881.2 billion in FY2015. This is an increase of $44.4 billion, or 5.3%, over the estimated net outlays for FY2014.\nThe President's FY2015 budget increases the baseline for Medicare spending by assuming no reduction in Medicare payments for physician services, relative to current levels, from FY2015 through FY2024, in contrast to the sustainable growth rate formula (SGR) under current law, which calls for significantly lower physician payments during this 10-year period. The President's budget estimates this adjustment will increase CMS's net outlays by $6.2 billion in FY2014 and $13.7 billion in FY2015. With this adjustment, CMS's total net outlays are estimated to be $894.9 billion in FY2015.\nThe President's FY2015 budget proposes to make a number of legislative changes to Medicare, Medicaid, program integrity, CHIP, state grants and demonstrations, private health insurance programs, and program management. The President's budget estimates that if these legislative proposals were implemented, CMS's total net outlays would increase by $0.5 billion in FY2014 and increase by a net of $3.0 billion in FY2015.\nWith the Medicare physician payment adjustment, the estimated impact of the legislative proposals, and the estimated savings from program integrity activities ($0.6 billion), the President's budget estimates CMS's net outlays will be $897.4 billion in FY2015, which is an increase of $53.8 billion, or 6.4%, over the net outlays for FY2014.\nFor budgetary purposes, CMS is divided into the following sections: Medicare, Medicaid, program integrity, CHIP, state grants and demonstrations, private health insurance, the Center for Medicare and Medicaid Innovation (CMMI), and program management. The President's budget estimates for each of these budget sections are summarized below, along with a description of each of these sections of the CMS budget.",
"Medicare is a federal program that pays for covered health care services of qualified beneficiaries. It was established in 1965 under Title XVIII of the Social Security Act as a federal entitlement program to provide health insurance to individuals 65 and older. Over the years, Medicare has been expanded to include individuals under 65 who cannot work because they have a medical condition that is expected to last at least one year or result in death, have end-stage renal disease (permanent kidney failure requiring dialysis or transplant), or have amyotrophic lateral sclerosis (ALS, Lou Gehrig's disease). Medicare, which consists of four parts (A-D), covers hospitalizations, physician services, prescription drugs, skilled nursing facility care, home health visits, and hospice care, among other services.\nThe President's FY2015 budget estimates that under current law Medicare outlays net of offsetting receipts will be $521.6 billion in FY2015 (see Table 1 ). The President's budget makes adjustments to the baseline assuming congressional action preventing a reduction in Medicare physician payments, which increases the FY2015 baseline outlays net offsetting receipts by $13.7 billion. The budget includes a number of legislative proposals for Medicare. If implemented, these legislative proposals are estimated to decrease Medicare outlays by $2.8 billion in FY2015 and a cumulative $407.2 billion over the next 10 years. With the baseline adjustments and the estimated impact of the legislative proposals, the President's budget estimates that Medicare's total net mandatory and discretionary outlays for FY2015 will be $532.9 billion, which is an increase of $13.8 billion, or 2.7%, over the estimated net outlays for FY2014.\nThe \" Medicare Legislative Proposals \" section below includes an explanation of current law and a description of each legislative proposal pertaining to the Medicare program. At the end of the section, there is a table summarizing the costs or savings for each of the President's legislative proposals.",
"Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term services and supports. Medicaid is jointly funded by the federal government and the states. The federal government pays a share of each state's Medicaid costs, and states must contribute the remaining portion in order to qualify for federal funds.\nParticipation in Medicaid is voluntary for states, though all states, the District of Columbia, and the territories choose to participate. Each state designs and administers its own version of Medicaid under broad federal rules. While states that choose to participate in Medicaid must comply with all federal mandated requirements, state variability is the rule rather than the exception in terms of eligibility levels, covered services, and how those services are reimbursed and delivered.\nThe President's FY2015 budget estimates that under current law Medicaid total net outlays will amount to $331.4 billion, which is an increase of $23.0 billion, or 7.5%, over estimated net outlays for FY2014 (see Table 1 ). The President's budget includes a number of legislative proposals that would impact Medicaid. If these proposals are implemented, the President's budget estimates that total net outlays for Medicaid would increase by $4.5 billion in FY2015 and decrease by a cumulative $7.3 billion over the next 10 years. Including the estimated impact of the legislative proposals and savings from program integrity investments, the President's budget estimates FY2015 net outlays for Medicaid will amount to $336.0 billion, which is an increase of $27.3 billion, or 8.9%, over the estimated net outlays for FY2014.\nThe \" Medicaid Legislative Proposals \" section below includes a brief discussion of current and proposed law for each of the legislative proposals for the Medicaid program. At the end of the section, there is a table summarizing the costs or savings for each of these proposals.",
"Title II of the Health Insurance Portability and Accountability Act of 1996 ( P.L. 104-191 ) established the Health Care Fraud and Abuse Control (HCFAC) program to detect, prevent, and combat health care fraud, waste, and abuse. HCFAC has traditionally focused on Medicare fraud, waste, and abuse through activities such as medical review, benefit integrity, and provider audits. In FY2009, discretionary funding was appropriated, which allowed HCFAC to expand its activities to Medicare Advantage and Medicare Part D among other things. In addition, HCFAC mandatory and discretionary funding is used to prevent fraud, waste, and abuse in the Medicaid program.\nThe budget estimates for the program integrity activities are built into the budget summaries discussed above for Medicare and Medicaid and are not explicitly broken out in Table 1 . However, when the funding for program integrity activities are broken out, the President's FY2015 budget estimates total budget authority for program integrity activities will amount to $2.0 billion in FY2015. This is an increase of $461 million, or 29.6%, over FY2014. Funding for program integrity consists of both mandatory and discretionary funding. In FY2015, the mandatory funding for program integrity activities is estimated to be $1.7 billion, and the discretionary funding is estimated to be $0.3 billion.\nThe \" Program Integrity Legislative Proposals \" section below includes a description of current and proposed law for each of the program integrity legislative proposals. At the end of the section, there is a table summarizing the costs or savings for each of the President's legislative proposals.",
"The Balanced Budget Act of 1997 (BBA97, P.L. 105-33 ) established CHIP to provide health insurance coverage to low-income, uninsured children in families with incomes above applicable Medicaid income standards. Authorization and funding for CHIP has been extended a number of times, and most recently, the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 as amended) extended federal funding for CHIP through FY2015. CHIP is jointly funded by the federal government and the states, and federal CHIP funding is capped on a state-by-state basis according to annual allotments.\nThe President's FY2015 budget estimates that under current law CHIP's total outlays will amount to $10.6 billion, which is an increase of $0.3 billion, or 3.1%, over the estimated outlays for FY2014 (see Table 1 ). The President's budget includes a couple of legislative proposals that would impact CHIP, and if these proposals are implemented, the President's budget estimates CHIP outlays would increase by $10 million in FY2015 and $345 million over the next 10 years.\nThe \" CHIP Legislative Proposals \" section below includes a brief discussion of current and proposed law for each of the legislative proposals impacting CHIP. At the end of the section, there is a table summarizing the costs or savings for each of these proposals.",
"The state grants and demonstrations portion of the budget funds a diverse set of grant programs and other activities. The grants and activities funded through this portion of the budget include the following: Money Follows the Person Demonstration, Medicaid Integrity Program, incentives for prevention of chronic diseases in Medicaid, CHIP Outreach and Enrollment Grants, Medicaid Emergency Psychiatric Demonstration, and emergency services for undocumented aliens.\nThe President's budget estimates that under current law FY2015 total outlays for state grants and demonstrations will amount to $0.7 billion, which is a decrease of $76 million, or -10.1%, from FY2014 (see Table 1 ). The President's budget includes a few legislative proposals impacting the budget for state grants and demonstrations that are estimated to increase outlays by $25 million in FY2015 and $776 million over the next 10 years.\nThe \" State Grants and Demonstrations Proposals \" section below includes a brief discussion of current and proposed law for each of the legislative proposals impacting state grants and demonstrations. At the end of the section, there is a table summarizing the costs or savings for each of these proposals.",
"The ACA includes reforms that focus on restructuring the private health insurance market by creating new programs (e.g., health insurance exchanges) and by imposing requirements on private health insurance plans. The Center for Consumer Information and Insurance Oversight (CCIIO) within CMS is charged with helping implement the provisions of the ACA related to the private health insurance programs.\nThe President's budget estimates that under current law FY2015 total outlays for the private health insurance programs will amount to $15.5 billion, which is an increase of $11.7 billion, or 306.6%, from FY2014 (see Table 1 ). Most of this increase ($10.0 billion) is attributable to the Transitional Reinsurance Program, and the Risk Adjustment Program will increase the budget for the private health insurance programs by $3.4 billion.\nThese increases are offset by the Pre-Existing Conditions Insurance Program ending in FY2014, which causes the budget for the private health insurance programs to decrease by almost $1.0 billion from FY2014 to FY2015. Also, funding for the exchange grants to states decreases by $0.6 billion (or 22.4%) from FY2014 to FY2015.\nThe President's budget includes one legislative proposal that would impact the private health insurance programs, but the President's budget estimates this proposal will not have a budgetary impact. The \" Private Health Insurance Programs Proposals \" section below includes a description of current and proposed law for the President's legislative proposal.",
"CMMI was established by Section 3021 of the ACA and is tasked with testing innovative health care payment and delivery models with the potential to improve quality of care and reduce Medicare and Medicaid expenditures. The ACA appropriated $10 billion to support CMMI activities from FY2011 through FY2019. CMMI initiatives include Partnership for Patients, Health Care Innovation Awards, bundled payments, Accountable Care Organizations (ACOs), the Federally-Qualified Health Center Advanced Primary Care Practice demonstration, the comprehensive primary care initiative, and the Strong Start initiative.\nThe President's budget estimates that under current law FY2015 total outlays for CMMI will amount to $1.4 billion, which is an increase of $0.4 billion, or 37.0%, from FY2014 (see Table 1 ). The President's budget does not include any legislative proposals impacting CMMI.",
"The program management portion of the CMS budget includes funding for the administration of Medicare, Medicaid, CHIP, and other CMS activities. The budget estimates for the program management activities are built into the budget summaries discussed above and are not explicitly broken out in Table 1 . However, when the funding for program management activities are broken out, the President's budget estimates that under current law the FY2015 budget for program management activities (including both discretionary budget authority and mandatory spending) will be $6.5 billion, which is $1.2 billion (or 21.9%) more than the FY2014 level.\nFunding for program management consists of both discretionary and mandatory funding. The discretionary funding for program management activities is estimated to be $4.2 billion in FY2015, which is an increase of $0.2 billion, or 5.7%, over FY2014 funding. The discretionary funding for program management activities is broken into five different budget lines—program operations, federal administration, survey and certification, research, and state high risk pools.\nIn FY2015, under current law, the mandatory funding for program management activities is estimated to be $199 million, which is a $64 million decrease from the FY2014 funding. The President's budget includes a few legislative proposals that would impact program management activities. If these proposals are implemented, the President's budget estimates that total program level funding for program management activities would increase by $36 million in FY2015 and $500 million over the next 10 years. The legislative proposals impacting program management are discussed in the \" Program Management Proposals \" section of the CMS budget.\nIncluding the impact of the legislative proposals, the President's budget estimates total program level funding for program management activities would amount to $6.9 billion in FY2015, which is an increase of $1.6 billion, or 30.2%, over FY2014. When risk corridor charges are included, the estimated program level funding for program management activities increases to $12.4 billion in FY2015.",
"The President's FY2015 budget contains a number of proposals that would impact the CMS budget. Some are program expansions, and others are designed to reduce federal spending. For each proposal, this report provides a description of current law and the President's proposal. This report groups these legislative proposals by program areas: Medicare, Medicaid, program integrity, CHIP, state grants and demonstrations, private health insurance programs, and program management. At the end of each of these sections, there is a table summarizing the costs or savings for each legislative proposal as estimated by the Administration, and the tables classify each proposal as new, modified from the President's FY2014 budget, or repeated from the President's FY2014 budget.",
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"Medicare reimburses providers for beneficiaries' unpaid coinsurance and deductible amounts after reasonable collection efforts. Historically, Medicare has reimbursed 100% of these bad debts. BBA97 had scheduled bad debt in acute care hospitals to be reduced from 100% reimbursement to 75% reimbursement in FY1998, to 60% reimbursement in FY1999, and to 55% reimbursement in subsequent years; however, BIPA froze the reduction at 70% reimbursement in FY2001 and for subsequent years. DRA reduced the payment amount for Medicare-allowable skilled nursing facility (SNF) bad debt from 100% to 70%, except for the bad debt attributable to beneficiaries eligible for both Medicare and Medicaid (i.e., dual eligibles), effective for cost reporting periods beginning on or after October 1, 2005. For other Medicare providers, allowable beneficiary bad debt had been reimbursed at 100%. Other Medicare providers that receive bad debt reimbursement are critical access hospitals, rural health clinics, federally qualified health clinics, community mental health clinics, dialysis facilities, health maintenance organizations reimbursed on a cost basis, competitive medical plans, and health care prepayment plans. The MCTRJCA reduced Medicare bad debt reimbursement to 65% for all providers. Providers who were reimbursed at 70% receive 65% bad debt reimbursement beginning in FY2013. Other providers who were reimbursed at 100% of bad debt are reimbursed at 88% in FY2013 and are reimbursed at 76% in FY2014 and 65% in FY2015 and subsequent years.",
"The President's budget would reduce bad debt reimbursement to 25%. The scheduled reduction would be phased-in over three years beginning in FY2015 for all providers that receive bad debt payments. This proposal was included in the President's FY2014 budget proposal.",
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"Medicare pays hospitals with approved medical residency programs an additional amount to support the higher costs of patient care associated with training physicians. These indirect medical education (IME) payments are calculated as a percentage increase to Medicare's inpatient payment rates. The IME payments vary depending on the size of the hospital's teaching program (subject to Medicare's cap) as measured by the hospital's ratio of residents to hospital beds. Generally, teaching hospitals receive a 5.5% increase in IME payments for every 10% increase in their resident-to-bed ratio. The Medicare Payment Advisory Commission (MedPAC) has found that less than half of the IME payments can be empirically justified. In its June 2010 report, MedPAC recommended that Medicare's funding of graduate medical education be changed to support necessary workforce skills and that the Secretary of HHS set standards for receiving such funds.",
"The President's budget would reduce IME funding by a total of 10%, starting in FY2015. The Secretary would be given the authority to set standards for teaching hospitals to encourage the training of primary care residents and develop necessary workforce skills. This proposal was included in the President's FY2014 budget proposal.",
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"As established by BBA97, critical access hospitals (CAHs) are limited-service rural facilities that meet certain distance criteria or have been designated as a necessary provider, offer 24-hour emergency care, have no more than 25 acute care inpatient beds, and have no more than a 96-hour average length of stay.\nGenerally, CAHs receive enhanced cost-based Medicare payments, rather than payments paid to acute care hospitals under the Medicare's prospective payment systems (PPS). Since FY2004, CAHs receive 101% of reasonable, cost-based reimbursement for inpatient care, outpatient care, ambulance services, and skilled nursing facility (SNF) care provided in swing beds to Medicare beneficiaries. Prior to this date, CAHs received Medicare payment based on 100% of reasonable costs for these services.",
"The President's budget would reduce Medicare's reimbursement to CAHs to 100% of reasonable costs, beginning in FY2015. This proposal was included in the President's FY2014 budget proposal.",
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"In order to be certified as a CAH, a rural entity must meet certain distance criteria or have been designated as a necessary provider by the state. Under federal distance standards, a CAH must meet one of the following criteria: (1) be located 35 miles from another hospital or (2) be located 15 miles from another hospital in areas with mountainous terrain or with only secondary roads. Until January 1, 2006, states could waive these federal mileage requirements for those entities determined to be necessary providers. Existing necessary providers maintained their status as CAHs.",
"The President's budget would rescind state's ability to waive federal mileage requirements for entities less than 10 miles from another hospital or CAH, thus eliminating their Medicare cost-based payments beginning in FY2015. This proposal was included in the President's FY2014 budget proposal.",
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"MedPAC has found that Medicare payments generally exceed providers' costs for post-acute services. Each year, MedPAC makes recommendations for provider payment increases for the next fiscal or rate year. In its March 2015 report, MedPAC recommended that the Medicare payment updates for SNFs, inpatient rehabilitation facilities (IRFs), long term care hospitals (LTCHs), and home health agencies (HHAs) be eliminated for the upcoming year. The ACA amended the annual update policy for these post-acute providers to include an adjustment to account for economy-wide productivity increases for cost savings. The productivity adjustment for SNFs, IRFs, and LTCHs was implemented on October 1, 2011. The productivity adjustment for HHAs will be implemented on January 1, 2015. The annual updates for IRFs, HHAs, and LTCHs are subject to other reductions as well. The amount and the timing of such reductions vary by provider. Every post-acute provider may have an update less than 0.0 which would result in a lower payment rate than in the preceding year.",
"The President's budget would implement additional update reductions for IRFs, LTCHs, and HHAs of 1.1 percentage points from FY2015 through FY2024. Payment updates for these providers would not drop below 0.0 due to the 1.1 percentage point reduction. The annual update for SNFs would bet set at -2.5% update in FY2015 declining to 0.97% update in FY2022. This proposal is a modification of a legislative proposal from the President's FY2014 Budget.",
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"Post-acute care services primarily include nursing and rehabilitation services following a beneficiary's inpatient hospital stay. These services can be offered in institutional settings, such as LTCHs, IRFs, SNFs, as well as in community-settings by HHAs. Use of post-acute care services is dramatically different across states. The Institute of Medicine (IOM) has noted that geographic variation in overall Medicare spending is heavily influenced by the use of post-acute care services, particularly SNFs and home health services. To encourage a more efficient use of post-acute care and improve care coordination, MedPAC's June 2008 report suggested a single predetermined payment for an episode of care that includes the beneficiary's inpatient hospital stay as well as physician services, post-acute care services, and any hospital readmissions. Additionally, CMS has a Bundled Payment for Care Improvements (BPCI) Initiative to test different bundling payment models. In Model 2 of the BPCI, participants in the initiative will manage a beneficiary's episode (either 30, 60, or 90 days) that includes the acute-care hospital services, physician services, and post-acute care services. Participants that achieve a reduction in episode spending when compared to a pre-determined spending benchmark will be allowed to share in the savings.",
"The President's budget would implement a bundled payment for post-acute care providers (LTCHs, IRFs, SNFs, and HHAs) beginning in FY2019. The bundled payment would be based on patient characteristics and other factors and be set to reduce Medicare expenditures by 2.85% by FY2021. Payments would be bundled for at least half of the total payments for post-acute care providers, but little detail was provided as to how this would work. This proposal was included in the President's FY2014 Budget.",
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"IRFs are either freestanding hospitals or distinct units of other hospitals that are exempt from Medicare's inpatient prospective payment system (IPPS), which is used to pay acute care, general hospitals. Until recently, the Medicare statute gave the Secretary the discretion to establish the criteria that facilities must meet in order to be considered IRFs. Starting October 1, 1983, CMS has required that a facility must treat a certain proportion of patients with specified medical conditions in order to qualify as an IRF and receive higher Medicare payments. IRFs were required to meet the \"75 percent rule,\" which determined whether a hospital or unit of a hospital qualified for the higher IRF payment rates or was paid as an acute care hospital. According to the rule, at least 75% of a facility's total inpatient population must be diagnosed with one of 13 pre-established medical conditions for that facility to be classified as an IRF. This minimum percentage is known as the compliance threshold. The rule was suspended temporarily and reissued in 2004 with a revised set of qualifying conditions and a transition period for the compliance threshold as follows: 50% from July 1, 2004, and before July 1, 2005; 60% from July 1, 2005, and before July 1, 2006; 65% from July 1, 2006, and before July 1, 2007, and at 75% from July 1, 2007, and thereafter. During the transition period, secondary conditions (comorbidities) were to be considered as qualifying conditions. The DRA extended the 60% threshold an additional year beginning on July 1, 2006. As established by MMSEA, starting July 1, 2007, the IRF compliance threshold is set at 60% and comorbidities are included as qualifying conditions.",
"The President's budget would reinstitute the 75% threshold, starting in FY2015. This proposal was included in the President's FY2014 budget proposal.",
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"As established by the ACA, acute care hospitals with relatively high readmission rates are subject to penalties starting in FY2013. The penalties are capped at 1% of the Medicare payment in FY2013, at 2% in FY2014, and at 3% in FY2015 and beyond. SNFs with high readmission rates are not subject to such penalties. In its March 2012 report, MedPAC recommended that Congress reduce Medicare payments to SNFs with relatively high risk-adjusted rehospitalization rates to improve care coordination across different health care settings. According to MedPAC, in FY2011, 19% of beneficiaries receiving SNF care are rehospitalized for potentially avoidable conditions within 30 days of their SNF stay.",
"The President's budget would reduce payments to SNFs with high rates of preventable hospital readmissions by up to 3% beginning in FY2018. This proposal was included in the President's FY2014 Budget.",
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"Patients receiving treatment for certain conditions such as hip and knee replacements can receive rehabilitative care in a variety of post-acute care settings, including SNFs and IRFs. Generally, care provided in an IRF is paid at a higher rate than care provided in an SNF.",
"The President's budget would adjust reimbursement rates in the different post-acute care settings for certain overlapping conditions treated in multiple settings. Beginning in FY2015, the proposal would limit payment differentials for three conditions involving hips and knees, pulmonary conditions, and additional conditions the Secretary considers applicable. IRFs that provide intensive rehabilitation services to patients with relatively uncomplicated conditions would be paid as SNFs. This proposal was included in the President's FY2014 Budget.",
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"Prior to FY2015, qualifying acute care hospitals received disproportionate share hospital (DSH) funds through an adjustment within the IPPS. Generally, DSH hospitals received the additional payments based on their DSH patient percentage and the applicable formula established in statute. A few urban acute care hospitals receive DSH payments under an alternative formula. The Medicare DSH payment adjustment has been the subject of substantial litigation.\nIn FY2015, Medicare DSH funding to acute care hospitals changed. Qualifying IPPS hospitals that get Medicare DSH funding receive 25% of the amount of DSH funds established by the existing DSH formula. The remaining DSH funds, reduced by the amount of the change in the uninsured from the enactment of ACA and other ACA adjustments, are distributed to these qualifying DSH hospitals based on their share of uncompensated care. In FY2015, CMS is using a hospital's share of DSH patient days to approximate its share of uncompensated care. DSH patient days are those provided to patients who are eligible for Supplemental Security Income (SSI) and entitled to Medicare Part A benefits and those days provided to Medicaid patients.",
"The President's budget would clarify that hospital days for beneficiaries who have exhausted their inpatient Medicare Part A benefits and who are enrolled in Medicare Advantage plans under Part C of Medicare are counted as DSH patient days. This proposal was included in the President's FY2014 budget proposal.",
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"Value-based purchasing refers to a CMS initiative that rewards health care providers with incentive payments for the quality of care provided to Medicare beneficiaries, motivated by the intent to reward quality of care and not just quantity of care. Value-based purchasing is an extension of pay-for-reporting programs established for hospitals (initially called the reporting hospital quality data for annual payment update program, now renamed the hospital inpatient quality reporting program) and for physicians (the physician quality reporting system). Additional initiatives consistent with this approach include the development of other adjustments to payments that are value-based, for example, the value-based physician payment modifier.",
"The President's budget would require that value-based purchasing programs be implemented, beginning in 2016, for several additional provider types, including SNFs, HHAs, ambulatory surgical centers, and hospital outpatient departments. The proposal would require that at least 2% of payments be tied to the quality and efficiency of care. This proposal was not included in the President's FY2014 Budget.",
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"Clinical lab services are paid on the basis of area-wide fee schedules. The fee schedule amounts are updated for each calendar year. There is a nation-wide ceiling on each payment amount set at 74% of the median of all fee schedule amounts for that laboratory test. Generally, the Secretary is required to adjust payments annually by the percentage change in the consumer price index for all urban consumers (CPI-U) together with other adjustments as the Secretary deems appropriate. BBA eliminated updates for 1998 through 2002; MMA eliminated updates for 2004 through 2008; and MIPPA established that, for 2009 through 2013, the update was to be equal to the percentage change in the CPI-U minus 0.5 percentage points (this was amended by the ACA to apply only to 2009-2010). Under current law, as added by the ACA, the annual clinical laboratory fee schedule update for 2011 through 2015 is equivalent to the CPI-U update reduced by (1) a multi-factor productivity adjustment; and (2) 1.75%.",
"The President's budget would lower the payment rates under the clinical laboratory fee schedule by 1.75% every year from 2016 through 2023. The proposal would also provide the Secretary with the authority to adjust payment rates under the clinical laboratory fee schedule in a budget-neutral manner. Additionally, the proposal would support policies to encourage electronic reporting of laboratory results. This proposal was included in the President's FY2014 budget proposal.",
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"Medicare covers some drugs under Medicare Part B, rather than under Medicare's Part D outpatient prescription drug benefit. Part B drugs are administered \"incident to physician services.\" Providers buy Part B drugs then bill Medicare when they administer the drugs to patients. Physicians and other providers receive two Medicare Part B drug payments (1) for administration of the drug and (2) for purchasing and supplying the drug. Medicare reimburses providers for supplying most Part B drugs based on a formula of 106% of the drug's average sales price (ASP), regardless of providers' drug acquisition cost. Providers negotiate with drug wholesalers and other entities to purchase Part B drugs. Higher volume Part B drug purchasers often can purchase Part B drugs at prices considerably below 106% of ASP, thereby earning profit each time they administer a drug. Lower volume Part B drug purchasers are unable to receive comparable discounts, so they make less profit and may sometimes lose money on Part B drug transactions. The Department of Health and Human Services Office of the Inspector General (OIG) is required to conduct drug price monitoring studies to determine if Part B drug reimbursement based on 106% of ASP exceeds these drugs' widely available market price (WAMP) by 5% or more. When a drug's ASP exceeds WAMP or AMP by 5% or more, the Secretary has authority to substitute for ASP the lesser of either WAMP or 103% of a drug's AMP for Part B drugs. The OIG has found that there was at least a 5% difference between WAMP or AMP and ASP for some portion of Part B drugs. CMS published a final rule that implemented a Part B drug price substitution policy began January 1, 2013.",
"Beginning in FY2015, the President's proposed budget would reduce Medicare Part B drug reimbursement from 106% of ASP to 103% of ASP, except when providers' drug acquisition costs were higher than 103% of ASP. When providers' Part B drug acquisition costs exceeded 103% of ASP, then drug manufacturers would be required to pay providers rebates that would reduce the cost to the provider to ASP +3% less a standard overhead fee to be determined by the Secretary. These Part B drug rebates would be excluded from ASP calculations. The Secretary also would have authority to substitute a flat fee in setting Medicare Part B reimbursement for drugs instead of using the percentage-based ASP +3% formula. This proposal was included in the President's FY2014 Budget.",
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"Limitations on physician self-referrals were enacted into law in 1989 under the Ethics in Patient Referrals Act, commonly referred to as the \"Stark law.\" The Stark law, as amended, and its implementing regulations prohibit certain physician self-referrals for designated health services (DHS) that may be paid for by Medicare or Medicaid. In its basic application, the Stark law provides that if a physician (or an immediate family member of a physician) has a financial relationship with an entity, the physician may not make a referral to the entity for the furnishing of DHS for which payment may be made under Medicare or Medicaid. It also provides that the entity may not present (or cause to be presented) a claim to the federal health care program or bill to any individual or entity for DHS furnished pursuant to a prohibited referral. Under one general exception to the Stark law, physicians and group practices are permitted to order and provide certain self-referred DHS in their offices when they meet specific statutory requirements. Although the exception was intended to protect the convenience of patients and to allow patients to receive certain services during their doctor visits, concerns have been raised that it has the potential to promote the overuse of these services.",
"Effective in 2016, the President's budget proposal would exclude radiation therapy, therapy services, advanced imaging, and anatomic pathology services from the in-office ancillary services exception to the Stark law, except when a practice meets certain accountability standards, as defined by the Secretary. This proposal is a modification of a legislative proposal from the President's FY2014 Budget.",
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"The ACA required that, beginning January 1, 2010, a physician must document that a physician, nurse practitioner, physician assistant, or clinical nurse specialist has had a face-to-face encounter with the patient during the six-month period prior to prescribing durable medical equipment (DME). The Secretary has delayed implementation of this provision until a date to be announced in 2014, in order to give physicians additional time to establish protocols to comply with the requirement.",
"This proposal would modify the requirement by allowing certain non-physician practitioners to document the face-to-face encounter. This proposal was not included in the President's FY2014 Budget.",
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"",
"Medicare Advantage (MA or Medicare Part C) is an alternative to original fee-for-service Medicare wherein beneficiaries can receive all Medicare covered benefits (except hospice) through a private health plan. MA plans are paid a per person monthly amount to provide the covered benefits to enrolled beneficiaries. In general, MA payments are risk-adjusted to account for the variation in the cost of providing care. Risk adjustment is designed to compensate plans for the increased cost of treating older and sicker beneficiaries, and thus discourage plans from preferential enrollment of healthier individuals.\nThe DRA required the Secretary to adjust MA risk scores for patterns of diagnosis coding differences between MA plans and providers under Parts A and B of Medicare for plan payments in 2008, 2009, and 2010. The ACA required the Secretary to conduct further analyses on the differences in coding patterns and adjust for those differences after 2010. Starting in 2014, the ACA specifies minimum coding intensity adjustments, which were subsequently amended by ATRA. In 2014, the coding intensity adjustment is to be at least the value of the adjustment in 2010 plus 1.5 percentage points; for 2015 to 2018, the adjustment is to be not less than the adjustment for the previous year increased by 0.25 percentage points; and starting in 2019, the coding intensity adjustment is to be not less than 5.9%. The minimum required adjustments are to be applied to risk scores until the Secretary implements risk adjustment using MA diagnostic, cost, and use data.",
"The President's budget would increase the minimum coding intensity adjustment; starting in 2016, the yearly increase to the minimum coding intensity adjustment would be increased from the current law level of 0.25 percentage points to 0.67 percentage points until the minimum adjustment reached an 8.51% adjustment in 2020 and would be held at that level thereafter. This proposal is a modification of a legislative proposal from the President's FY2014 Budget.",
"",
"Under the Medicare Advantage program, employers and unions may sponsor Medicare Advantage (MA) plans for their Medicare-eligible employees, retirees, and/or their Medicare-eligible spouses and dependents. The Secretary has statutory authority to waive or modify requirements that may hinder the design, offering, or enrollment in these plans, which are referred to as Employer Group Waiver Plans (EGWPs). Like other MA plans, the EGWPs are paid a per person monthly amount to provide all Medicare covered benefits except hospice, and the method for determining the payment is the same for all plans. Payments to MA plans are based on a comparison of each plan's estimated cost of providing Medicare covered services (a bid) relative to the maximum amount the federal government will pay for providing those services in the plan's service area (a benchmark). If a plan's bid is less than the benchmark, its payment equals its bid plus a rebate. Starting in 2012, the size of the rebate is dependent on plan quality, ranging from 50% to 70% of the difference between the bid and the benchmark. The rebate must be returned to enrollees in the form of either additional benefits, reduced cost sharing, reduced Part B or Part D premiums, or some combination of these. If a plan's bid is equal to or above the benchmark, its payment is the benchmark amount and each enrollee in that plan pays an additional premium, equal to the amount by which the bid exceeds the benchmark. EGWPs tend to bid closer to the benchmark relative to the bids of non-EGWP plans.",
"Beginning in payment year 2016, the President's budget would establish payment amounts for EGWPs based on average MA plan bids in each individual market. This proposal was included in the President's FY2014 Budget.",
"",
"",
"Medicare Part D provides coverage of outpatient prescription drugs to beneficiaries who choose to enroll in this optional benefit. About 63% of eligible Medicare beneficiaries are currently enrolled in Part D. Some beneficiaries with limited income and resources may qualify for the low-income subsidy (LIS), which provides assistance with their Part D premiums, cost sharing, and other out-of-pocket expenses. In 2013 an estimated 11.3 million Medicare beneficiaries qualified for low-income subsidies. Medicare beneficiaries who qualify for Medicaid based on their income and assets (dual-eligibles), who are recipients of Medicare Savings Programs, or who receive Supplemental Security Income are automatically eligible for the full LIS. Others who do not qualify for one of the above, but who have limited assets and incomes below 150% of FPL may also be eligible for the LIS and receive assistance for some portion of their premium and cost sharing charges. About 30% of Part D enrollees qualify for the LIS.\nPrescription drug coverage is provided through private prescription drug plans (PDPs), which offer only prescription drug coverage, or through MA prescription drug plans which offer prescription drug coverage that is integrated with the health coverage provided under Part C. Part D plan sponsors determine payments for drugs and are expected to negotiate prices with drug manufacturers, which may involve an agreement from the manufacturer to provide a rebate. Under Medicaid, basic prescription drug rebates are determined by the larger of either a comparison of a drug's quarterly average manufacturers' price (AMP) to the best price for the same period, or a flat percentage (23.1%) of the drug's quarterly AMP. The basic rebate percentage for multi-source, non-innovator, and all other drugs is 13% of AMP.",
"Beginning in 2016, the President's budget would require drug manufacturers to pay the difference between rebates provided to Part D plans and the corresponding Medicaid rebate levels for brand name and generic drugs provided to LIS beneficiaries. Manufacturers would be required to provide an additional rebate for brand-name and generic drugs when prices for the drugs rise faster than the rate of inflation. This proposal is a modification of a legislative proposal from the President's FY2014 Budget .",
"",
"The Medicare Part D standard drug benefit includes a coverage gap or \"doughnut hole\"—a period when enrollees who have reached the plan's initial coverage limit, but have not yet spent enough to qualify for more generous catastrophic coverage—face higher out-of-pocket costs. In 2014, an enrollee in a standard plan pays a $310 deductible, and 25% coinsurance or copayments on drug spending up to the initial coverage limit of $2,850. Between $2,850 and the catastrophic threshold of $6,455—the current coverage gap—a beneficiary faces higher cost sharing.\nPrior to the ACA, Part D enrollees who did not receive a low-income subsidy generally paid the full cost of drugs in the coverage gap. The ACA gradually phases out the coverage gap through a combination of manufacturer discounts on brand-name drugs, and federal subsidies for brand-name and generic drugs. By 2020, enrollees in Part D standard plans will have a 25% cost share for all prescriptions from the time they meet the deductible until they reach the catastrophic limit, after which cost sharing is negligible.\nIn accordance with the ACA, manufacturers in 2011 began providing a 50% discount for brand-name drugs purchased in the coverage gap. From 2011 to 2020, the federal government is providing gradually increasing subsidies for brand name and generic drugs. By 2020, the government will subsidize 25% of the cost of brand-name drugs (in addition to the manufacturer's 50% discount) and 75% of the cost of generic drugs in the coverage gap.",
"The President's budget would increase the manufacturer discount for brand-name drugs to 75% from 50%, beginning in 2016. The change would effectively eliminate the coverage gap for brand-name drugs in 2016, though federal generic drug subsidies continue to be phased in through 2020. This proposal was included in the President's FY2014 Budget.",
"",
"CMS uses a Star Ratings system to assess the quality of Part D stand-alone PDP and MA plans with a prescription drug component (MA-PD). PDP sponsors are rated on up to 15 quality and performance measures, while MA-PD plan sponsors are evaluated on up to 48 measures. A 5-star rating is excellent; a 4-star rating is above average; a 3-star rating is average; a 2-star rating is below average; and a 1-star rating is poor. The average PDP star rating (weighted by enrollment) is 3.04 for 2014. About 37% of PDPs have a 2014 rating of four or more stars, accounting for about 9% of PDP enrolment. The average star rating for MA-PDs (weighted by enrollment) is 3.84 for 2014. About 38% of MA-PDs have a 2014 ranking of four stars or higher, accounting for about 52% of MA-PD enrollees.\nUnder Medicare Part D, private insurers provide drug coverage and bear part of the financial risk of the program. Congress designed Part D as a market-oriented program, with insurers competing for enrollees by offering lower prices or more generous benefits. Part D is not wholly market-based; the federal government provides substantial subsidies to participating plans. On average, beneficiary premiums represent roughly 25% of the cost of a standard Part D plan, as determined through annual bids submitted by insurers.",
"The President's budget would allow CMS to revise the Part D payment system to reimburse prescription plans based on their Star Rating. Plans earning four stars or higher would have a larger portion of their costs reimbursed by CMS, while plans with ratings below four stars would receive a smaller subsidy. The proposal is based on a similar MA quality bonus payment program. This proposal was not included in the President's FY2014 Budget.",
"",
"Recent investigations of the Part D program, including a 2011 Government Accountability Office (GAO) study, found that some beneficiaries had obtained overlapping prescriptions from multiple physicians for frequently abused prescription drugs. CMS has taken several actions to reduce the potential for inappropriate utilization of Part D prescription drugs, with an emphasis on opioids and acetaminophen. CMS has instructed plan sponsors to institute controls at the point of sale to better control access to medications and to use quantity limits to guard against over-utilization of drugs. Plan sponsors must institute closer reviews of filled prescriptions to identify at-risk beneficiaries and enter into case management with the beneficiaries' prescribers.",
"This President's proposal would give the Secretary authority to suspend Part D coverage and payment for drugs prescribed by providers who mis-prescribe or overprescribe drugs that have the potential to be abused by beneficiaries. The Secretary would be allowed to suspend coverage and payment for Part D prescription drugs when the prescriptions present an imminent risk to patients. In addition, the proposal would allow the Secretary authority to require that providers include additional information on certain Part D prescriptions, such as diagnosis codes, in order to obtain coverage. This proposal was not included in the President's FY2014 Budget.",
"",
"LIS beneficiaries enrolled in Medicare Part D may qualify for additional assistance with some, or all, of their prescription drug cost sharing. LIS beneficiary cost sharing varies by income, and is adjusted annually.\nFor 2014:\nDual-eligible beneficiaries (who qualify for both Medicare and Medicaid) who are institutionalized or are receiving home and community-based services have no drug copays or coinsurance; Full-benefit, dual-eligible LIS beneficiaries with income less than 100% of FPL have a $1.20 copay for generic drugs and $3.60 for brand-name drugs, until they reach the catastrophic threshold, when their copayment is zero; Full-benefit, dual-eligible LIS beneficiaries with income above 100% of FPL, and other LIS beneficiaries with incomes up to 135% of FPL and limited assets, pay $2.55 for a generic drug prescription and $6.35 for a brand-name drug until they reach the catastrophic threshold, when their copayment is zero. Other beneficiaries with incomes up to 150% of FPL and limited assets pay a flat 15% coinsurance rate for all drugs up to the catastrophic threshold, cost sharing above that level of $2.55 for a generic drug or preferred, multiple-source drug prescription, and $6.35 for a brand-name drug.\nLIS beneficiaries are more likely to have multiple, chronic ailments than other Part D beneficiaries and also are more likely to have higher drug costs. At the same time, a smaller share of LIS beneficiary prescriptions is filled with lower-cost, generic drugs, as compared to non-LIS beneficiaries. CMS data show that non-LIS enrollees had a generic dispensing rate of about 80% in 2011, compared to about 75% for LIS enrollees. Part D plan sponsors often use incentives, such as higher copayments for expensive drugs, to persuade enrollees to switch to cheaper generics. Because LIS beneficiaries pay a set amount, regardless of the price of a drug, such incentives may be less successful with the LIS population.",
"The President's budget proposes reducing copayments for generic drugs for LIS beneficiaries. At the same time, the proposal would double copayments for brand-name drugs to twice the level under current law. The Secretary would have authority to exclude brand-name drugs in therapeutic classes if therapeutic substitution was not clinically appropriate or a generic substitute was not available. LIS beneficiaries could submit an appeal to CMS to continue buying brand-name drugs at current rates. The proposed cost sharing change would not apply to LIS beneficiaries who are in an institution. Part D beneficiaries with incomes between 135% and 150% of FPL would face higher cost sharing only if they reached their plan's catastrophic coverage limit. This proposal is a modification of a legislative proposal from the President's FY2014 Budget.",
"",
"Generally, there is a two-step process for low-income persons to gain a LIS for their Part D coverage. First, a determination must be made that they qualify for the assistance; second, they must enroll, or be enrolled, in a specific Part D plan. Some LIS individuals who have not elected a Part D plan are automatically enrolled into one by CMS. CMS identifies plan sponsors offering basic prescription drug coverage with a premium at or below the Part D low-income premium subsidy amount, set annually through a formula. If more than one sponsor in a region meets the criteria, CMS auto-enrolls beneficiaries on a random basis among available plans. There is also a \"facilitated enrollment\" process for enrollees in Medicare Savings programs, SSI enrollees, and persons who applied for and were approved for low-income subsidy assistance. The basic features applicable to auto-enrollment are the same for facilitated enrollment.",
"The President's budget would allow CMS to contract with a single Part D plan to provide coverage for LIS beneficiaries while their eligibility is being processed, rather than assigning them to plans through the current, random process. This would mean that one plan would serve as the contact point for LIS beneficiaries, who must often seek reimbursement for retroactive drug claims. The single plan would be paid by CMS through an alternative method. This proposal was included in the President's FY2014 Budget. [This proposal affects both the Medicare and Medicaid budgets.]",
"",
"The Drug Price Competition and Patent Term Restoration Act of 1984 ( P.L. 98-417 , commonly known as the Hatch-Waxman Act) established the abbreviated new drug application (ANDA) path to Food and Drug Administration (FDA) marketing approval of a generic version of a drug after a brand-name product's patent has expired. An ANDA allows a sponsor of a generic version of an FDA-approved drug to use, in the ANDA, safety and effectiveness data that the brand-name firm had provided to the FDA in its new drug application (NDA). Because the generic sponsor, therefore, does not have to repeat all of the expensive and time-consuming clinical testing FDA requires in an original NDA, generic prices generally are much lower than the brand-name product's price. The sponsor of a proposed generic product may challenge a brand-name manufacturer's patent by filing an ANDA with a paragraph IV certification (that the patent is invalid or not infringed). FDA provides to the first successful paragraph IV filer(s) a 180-day market exclusivity, not allowing another generic entry on the market during that period.\nBrand-name and generic sponsors engaged in litigation within the Hatch-Waxman statutory framework sometimes conclude their litigation through settlement, rather than awaiting a formal decision from a court. In some settlements, the brand-name company pays the generic firm in exchange for the generic firm's agreement not to market the pharmaceutical. These arrangements have been termed \"reverse\" payments or \"pay-for-delay\" agreements.",
"Beginning in FY2015, this legislative proposal presented in the President's budget would authorize the Federal Trade Commission to prohibit \"pay-for-delay\" agreements between brand and generic pharmaceutical companies that delay entry of generic drugs and biologics into the market. This proposal was included in the President's FY2014 budgets. [This proposal affects both the Medicare and Medicaid budgets.]",
"",
"The Biologics Price Competition and Innovation Act of 2009 (incorporated into the ACA) established a licensure pathway for competing versions of previously marketed biologics. In particular, the legislation creates a regulatory regime for two types of follow-on biologics, termed \"biosimilar\" and \"interchangeable\" biologics. The FDA is afforded a prominent role in determining the particular standards for biosimilarity and interchangeability for individual products.\nIn addition, the legislation created FDA-administered periods of data protection and marketing exclusivity for certain brand name drugs and follow-on products. Brand name biologic drugs receive four years of marketing exclusivity during which time other companies are prevented from filing an application for approval of a follow-on product. Brand biologics also receive 12 years of data exclusivity during which time the follow-on manufacturer cannot rely on the clinical data generated by the innovator firm in support of FDA approval of a competing version of the drug. Unlike market exclusivity, data protection does not block competitors that wish to develop their own clinical data in support of their application for marketing approval. In addition, applicants that are the first to establish their product is interchangeable with the brand name biologic are provided a term of marketing exclusivity.",
"Effective in FY2015, the legislative proposal presented in the President's budget would award brand biologics seven years of data exclusivity rather than the current 12 years, and there would be no additional exclusivity periods for \"minor\" changes in product formulations. This proposal was included in the President's FY2014 budgets. [This proposal affects both the Medicare and Medicaid budgets.]",
"",
"",
"Most Medicare beneficiaries pay Part B premiums, which are set at 25% of the program's estimated (projected) costs per aged enrollee (i.e., enrollees who are age 65 or older). Since 2007, higher-income beneficiaries pay a larger share of premiums—35%, 50%, 65%, or 80%, depending on income. In 2014, the income thresholds for those premium shares are $85,000, $107,000, $160,000, and $214,000, respectively for single filers. (For married couples, the corresponding income thresholds are twice those values.) The ACA imposed similar income-related premiums for Part D beginning in 2011. In addition, the ACA suspended inflation-indexing of income thresholds for Parts B and D through 2019 at 2010 levels. In 2012, about 4% of Part B enrollees were estimated to pay these higher income-related premiums.",
"Beginning in 2018, the President's budget would increase the applicable percentage of the program's cost per aged enrollee for higher income beneficiaries to between 40% and 90%, replacing the current 35% to 80% range under current law. The proposal would also lower the highest income threshold, and increase the number of high-income brackets from four to five. The new income thresholds would be $85,000, $107,000, $133,500, $160,000, and $196,000, and the respective applicable cost percentages would be 40%, 52.5%, 65%, 77.5%, and 90%. The proposal would also further suspend inflation-indexing of the income thresholds until 25% of beneficiaries under Parts B and D were subject to these premiums. This proposal is a modification of a legislative proposal from the President's FY2014 Budget.",
"",
"In addition to paying monthly premiums for Medicare Part B, Medicare beneficiaries also pay certain out-of-pocket cost-sharing amounts for their Part B services including an annual deductible. Prior to 2003, the amount of the Part B deductible was set in statute. MMA set the 2005 deductible level at $110 and required that the deductible be increased each year by the annual percentage increase in the Part B expected per capita costs for enrollees aged 65 and over beginning with 2006 (rounded to the nearest $1). The 2014 Part B annual deductible is $147.",
"The President's budget would increase the annual deductible by an additional $25 in calendar years 2018, 2020, and 2022 for new Medicare enrollees. Specifically, under this proposal, there would be two categories of beneficiaries; and, the members of one group would pay a different annual deductible amount than the members in the second. The first group, comprised of beneficiaries who enroll in Medicare prior to January 1, 2018, would not be affected by this proposal and their annual Part B deductible would continue to be adjusted each year according to the current methodology. The deductible for Medicare beneficiaries in the second group, that is, those who enroll in Medicare beginning in January 1, 2018, and thereafter, would pay deductibles that would be subject to both the annual adjustments based on expected costs (current method) plus an additional increase of $25 starting in 2018, another $25 increase in 2020, and a third $25 increase in 2022. For example, in a scenario under which the deductible amount remained the same through 2022 (unlikely), in 2022, new beneficiaries would pay a $75 higher deductible than those who had been enrolled in Medicare prior to 2018. However, because deductibles are expected to grow each year due to expected growth in annual per capita costs, the application of the annual growth rate adjustments to the incrementally larger deductible amounts would mean that the difference in deductible amounts paid by individuals in the two groups would likely be higher than $75. This proposal was included in the President's FY2014 Budget.",
"",
"Medigap is private health insurance that supplements Medicare coverage. It typically covers some or all of Medicare's deductibles and coinsurance, and may also include additional items or services not covered by Medicare, such as coverage while traveling overseas. Medigap is available to Medicare beneficiaries who have fee-for-service Medicare Part A and voluntarily enroll in Medicare Part B by paying the monthly premium. Individuals who purchase Medigap must pay a monthly premium which is set by the insurance company selling the policy. There are 10 standardized Medigap plans with varying levels of coverage. Two of the 10 standardized plans cover Parts A and B deductibles and coinsurance in full (i.e., offer \"first-dollar\" coverage). In 2012, about 66% of all Medigap enrollees were covered by one of these two plans.",
"Beginning in 2018, the President's budget would impose a Part B premium surcharge for new Medicare beneficiaries who select a Medigap plan with very low cost-sharing requirements. The surcharge would be equal to approximately 15% of the average Medigap premium (or about 30% of the Part B premium). This proposal was included in the President's FY2014 Budget.",
"",
"For beneficiaries who are eligible for Medicare-covered home health care, Medicare provides payment for a 60-day episode of home health care under a prospective payment system. The 60-day episode covers in-home skilled nursing, therapy, medical social services, and aide visits as well as medical supplies. Medicare, originally, required a 20% coinsurance for home health services covered under Part B in addition to having met the annual Part B deductible; however, legislative changes (P.L. 92-603 and P.L. 96-499 ) eliminated Medicare cost sharing for home health services. There are currently no Medicare cost-sharing requirements for home health services; however, beneficiaries may be responsible for copayments associated with Medicare-covered DME and osteoporosis drugs provided during a home health episode of care. In its March 2013 report, MedPAC recommended that Congress establish a per episode copayment for home health episodes that are not preceded by hospitalization or post-acute care use.",
"Beginning in FY2018, the President's budget would institute a $100 copayment for new beneficiaries for each home health 60-day episode with five or more visits that is not preceded by a hospital or inpatient post-acute stay. This proposal was included in the President's FY2014 Budget.",
"",
"",
"The ACA established the Independent Payment Advisory Board (IPAB) to develop and submit detailed proposals to Congress and the President to reduce the growth rate of Medicare spending. Proposals will only be required in certain years when the CMS Chief Actuary determines that the projected Medicare per capita growth rate exceeds predetermined spending targets, and will have to meet specific savings targets. Recommendations made by the Board automatically go into effect unless Congress enacts specific legislation to prevent their implementation. The first year the Board's proposals can take effect is 2015 (which ties to the 2013 determination year). For the first five years of implementation, the target growth rate will depend on changes in consumer price indices. However, beginning with the sixth year of implementation, the Medicare target per capita growth rate will be the projected five-year average percentage increase in nominal Gross Domestic Product (GDP) per capita plus 1.0 percentage point. In its April 2013 determination, the CMS Actuary noted that the conditions for activating the IPAB trigger would not be met for 2015. Based on projections of the rate of growth in health care expenditures, the Congressional Budget Office has estimated that IPAB activity will not be triggered in any of the next 10 fiscal years.",
"The President's budget would lower the target rate applicable for 2018 and after from GDP per capita growth plus 1 percentage point to GDP per capita growth plus 0.5 percentage points. This proposal is a modification of a legislative proposal from the President's FY2014 Budget, which proposed lowering the target beginning in 2020.",
"",
"The Medicare and Medicaid appeals processes differ significantly. Even within Medicare, although the processes are conceptually similar, the appeals process varies depending on whether it is for Medicare Parts A, B, C, or D. These appeal variations can produce confusion, inefficiency, and increased administrative cost for beneficiaries, providers, and states. The difficulty in navigating these appeals processes can be especially troublesome for dual-eligible beneficiaries (i.e., Medicare beneficiaries who also are eligible for Medicaid, because of their lower income).\nFor dual-eligible beneficiaries, Medicaid is the payer of last resort, meaning that if services are covered by Medicare, Medicare pays for dual-eligible beneficiaries first, then, if Medicaid covers the services, Medicaid pays the remaining costs. If services are only covered by Medicaid, then Medicaid is the only and primary payer. Dual-eligible beneficiaries sometimes are in the situation where coverage of an item or service under one program is possible only after the other program has denied coverage. The Medicare and Medicaid appeal process variances are important for dual-eligible beneficiaries because duals might face delays in receiving medical services and may experience care interruptions due to appeals process differences. In addition, these coordination issues can be expensive for both programs, potentially adding administrative costs and duplicative treatments.",
"The President's budget proposes to introduce legislation that would create an integrated Medicare and Medicaid appeals process for dual-eligible beneficiaries. This proposal was included in the President's FY2014 Budget. [This proposal affects both the Medicare and Medicaid budgets.]",
"",
"",
"The ACA includes a provision that allows CMS to make standardized extracts of Medicare Parts A, B, or D claims data available to qualified entities for the purpose of publishing reports evaluating the performance of providers of services and suppliers. The ACA also required that qualified entities combine claims data from sources other than Medicare with the Medicare data when evaluating the performance of providers and suppliers.",
"The President's budget would expand the scope of how qualified entities could use Medicare data beyond that of performance measurement. The proposal would allow qualified entities to use the data for fraud prevention activities and for value-added analysis for physicians. Also, qualified entities would be able to release raw claims data, instead of simply summary reports, to interested Medicare providers for care coordination and practice improvement. This proposal would make claims data available to qualified entities for a fee equal to Medicare's cost of providing the data. This proposal was included in the President's FY2014 budget proposal.",
"",
"The Program of All-Inclusive Care for the Elderly (PACE) is a voluntary Medicaid and Medicare integration program established under Sections 1894 and 1934 of the Social Security Act for dual-eligible beneficiaries ages 55 and over. PACE providers receive capitated payments from both Medicaid and Medicare to cover a comprehensive package of benefits generally provided in adult day health center settings. The goal is to provide seamless coordinated care to certain low-income individuals who would otherwise require the level of care in an institution, such as a nursing facility.",
"This proposal would create a new pilot demonstration in selected states to expand PACE eligibility to qualifying individuals who are ages 21 to 55 years old. This proposal was not included in the President's FY2014 Budget. [This proposal affects both the Medicare and Medicaid budgets.]",
"",
"BBA97 required states to pay Medicare Part B premiums for a new group of low-income Medicare beneficiaries—Qualifying Individuals (QIs)—whose income was between 120% and 135% of FPL. BBA97 also amended the Social Security Act to provide for Medicaid payment for QIs through an annual transfer from the Medicare Part B Trust Fund to be allocated to states. States (and the District of Columbia) receive 100% federal funding to pay QI's Medicare premiums up to the federal allocation, but no additional matching beyond this annual allocation. In December 2012, there were approximately 480,400 low-income Medicare beneficiaries who received financial assistance from state Medicaid programs to pay their Part B premiums. The QI program was reauthorized and funded a number of times since it was established by BBA97, and most recently, Section 1201 of BBA authorized the QI program through March 31, 2014, and appropriated $200 million in funding.",
"The President's budget would extend authorization and funding for the QI program through December 31, 2015. This proposal was included in the President's FY2014 Budget. [This proposal affects both the Medicare and Medicaid budgets.]",
"",
"",
"",
"For the most part, states establish their own payment rates for Medicaid providers. Federal statute requires that these rates be sufficient to enlist enough providers so that covered benefits will be available to Medicaid enrollees at least to the same extent they are available to the general population in the same geographic area. Low Medicaid physician payment rates in many states and their impact on provider participation have been perennial concerns for policy makers. The ACA requires that Medicaid payment rates for certain primary care services be raised to what Medicare pays for these services for 2013 and 2014. Physicians in subspecialties of family medicine, general internal medicine, and pediatrics are eligible to receive the increased primary care rates for certain primary care services. The federal government is picking up the entire cost of the increased primary care rates (i.e., the difference between Medicare payment rates and the Medicaid payment rates as of July 1, 2009) for those two calendar years. In 2015, the ACA requirement for enhanced primary care rates and the 100% federal financing of that increase expire.",
"The President's budget proposes to extend the enhanced primary care rates with 100% federal financing through 2015. In addition, the budget proposal would expand the providers eligible for the enhanced primary care rates to mid-level providers, including physician assistants and nurse practitioners. This proposal was not included in the President's FY2014 Budget.",
"",
"Under federal law, states are required to make Medicaid DSH payments to hospitals treating large numbers of low-income and Medicaid patients. States receive federal matching funds for making DSH payments up to a capped federal allotment that generally equals the previous year's allotment increased by the percentage change in CPI-U. In FY2013, federal Medicaid DSH allotments to states totaled $11.5 billion. The ACA required the Secretary to make aggregate reductions in Medicaid DSH allotments for each year from FY2014 to FY2020. Since the ACA, three laws have amended the ACA DSH reductions. Under current law, Medicaid DSH allotment reductions will begin in FY2016 and end in FY2023. In FY2024, states' Medicaid DSH allotments will rebound to their pre-ACA reduced levels with annual inflation adjustments for FY2016 through FY2024.",
"Instead of having the Medicaid DSH allotments rebound to their pre-ACA reduced levels, the President's budget proposes to extend the ACA-reduced Medicaid DSH allotment levels to FY2024 and subsequent years. The FY2024 Medicaid DSH allotments would be each state's FY2023 allotment increased by the percentage change in CPI-U, and the allotments for subsequent years would be the previous year's allotment increased by the percentage change in CPI-U. This proposal was included in the President's FY2014 Budget.",
"",
"States are generally free to set payment rates for items and services provided under Medicaid as they see fit, subject to certain exceptions and a general requirement that payment policies are consistent with efficiency, economy, and quality of care and are sufficient to provide access equivalent to the general population's access. Providers for which federal upper payment limits (UPLs) apply under Medicaid include hospitals and nursing facilities; federal regulations specify that states cannot pay more in the aggregate for inpatient hospital services or nursing facility services than the amount that would be paid for the services under the Medicare principles of reimbursement. No UPL currently applies to DME under Medicaid.\nHistorically, Medicare has paid for most DME on the basis of fee schedules. Unless otherwise specified by Congress, fee schedule amounts are updated each year by a measure of price inflation. MMA established a Medicare competitive acquisition program (i.e., competitive bidding) under which prices for selected DME sold in specified areas would be determined not by a fee schedule but by suppliers' bids. The first round of competitive bidding started in nine areas in January 2011. The second round started in 91 additional areas in July 2013. The Secretary is required to extend the competitive acquisition program, or use information from the program to adjust fee schedule rates in remaining areas by 2016.",
"The President's budget would limit federal reimbursement for a state's Medicaid spending on certain DME to what Medicare would have paid in the same state for the services. This proposal was included in the President's FY2014 Budget.",
"",
"",
"CHIPRA created a state plan option for \"Express Lane\" eligibility, through September 30, 2013, whereby states are permitted to rely on a finding from specified \"Express Lane\" agencies (e.g., those that administer programs such as Temporary Assistance for Needy Families, Medicaid, CHIP, and Food Stamps) for (1) determinations of whether a child has met one or more of the eligibility requirements necessary to determine his or her initial eligibility, (2) eligibility redeterminations, or (3) renewal of eligibility for medical assistance under Medicaid or CHIP. ATRA permits states to rely on \"Express Lane\" for child eligibility determinations through September 30, 2014.",
"The President's Budget would allow for a permanent extension of the state option to rely on \"Express Lane\" eligibility determinations for Medicaid and CHIP-eligible children. This proposal was not included in the President's FY2014 Budget. [This proposal affects both the Medicaid and CHIP budgets.]",
"",
"States are required to continue Medicaid benefits for certain low-income families who would otherwise lose coverage because of changes in their income. This continuation of benefits is known as transitional medical assistance (TMA). Federal law permanently requires four months of TMA for families who lose Medicaid eligibility due to (1) increased spousal support collections, or (2) an increase in earned income or hours of employment. Congress expanded work-related TMA benefits in 1988, requiring states to provide at least 6, and up to 12, months of TMA coverage to families losing Medicaid eligibility due to increased hours of work or income from employment, as well as to families who lose eligibility due to the loss of a time limited earned income disregard (such disregards allow families to qualify for Medicaid at higher income levels for a set period of time). Congress created an additional work-related TMA option in ARRA. Under the ARRA option, states may choose to provide work-related TMA for a full 12-month period rather than two 6-month periods and may waive the requirement that the family must have received Medicaid in at least 3 of 6 months preceding the month in which eligibility is lost. Congress has acted on numerous occasions to extend these expanded TMA requirements (which are outlined in Sections 1902(e)(1) and 1925 of the Social Security Act) beyond their original sunset date of September 30, 1998. Most recently, BBA extended the authorization and funding of expanded TMA requirements through March 31, 2014.",
"The President's budget would extend authorization and funding of expanded TMA requirements through December 31, 2015, and would permit states that adopt the ACA Medicaid expansion to opt out of TMA. This proposal was included in the President's FY2014 Budget.",
"",
"",
"Section 1915(c) of the Social Security Act authorizes 1915(c) waivers, which provides the Secretary authority to waive certain Medicaid state plan requirements effectively allowing states to offer home and community-based services to additional groups of persons with long-term care needs while containing costs. Among other requirements, states must target 1915(c) waivers to specific populations, which can include individuals with mental illness. Eligible individuals must have a level of care need that would otherwise be covered under a Medicaid institutional benefit defined as either nursing facility services, services in an Intermediate Care Facility for the Mentally Retarded (ICF/MR), or inpatient hospital services.",
"This proposal would add services in psychiatric residential treatment facilities to the list of qualified institutional benefits for 1915(c) waivers. Thus, it would extend coverage of home and community-based services under 1915(c) waivers to eligible individuals who meet the level of care need for services in psychiatric residential treatment facilities. This proposal was not included in the President's FY2014 Budget.",
"",
"As an alternative to traditional Medicaid benefits, states may enroll certain Medicaid beneficiaries into what were once referred to as Benchmark and Benchmark-equivalent plans, but are now being called Alternative Benefit Plans (ABPs). ABPs are a Medicaid benefit structure that has different requirements than the traditional Medicaid benefits. This flexibility permits the state to define populations that will be served and the specific benefit packages that will apply. ABPs must cover at least the 10 essential health benefits that also apply to the qualified health plans offered in the private health insurance exchanges. In addition, ABP coverage must comply with the federal requirements for mental health parity, and special rules also apply with regard to prescription drugs, rehabilitative and habilitative services and devices, and preventive care. As a part of the benefit design process, CMS established a policy whereby states can use benefit substitution as a tool to fill in coverage gaps to ensure that all essential health benefits are represented and/or to align their benefit plans with traditional Medicaid state plan coverage and/or with exchange coverage. States that choose to implement the ACA Medicaid expansion are required to provide the individuals eligible for Medicaid through the expansion Medicaid services through ABPs (with exceptions for selected special-needs subgroups). However, states have the option to provide ABP coverage to other subgroups.",
"The President's budget would allow benchmark-equivalent coverage for non-elderly, nondisabled adults with income that exceeds 133% of FPL. This proposal was included in the President's FY2014 Budget.",
"",
"",
"For the purpose of determining prescription drug rebates, Medicaid distinguishes between two types of drugs: (1) single source drugs (generally, those still under patent) and innovator multiple source drugs (drugs originally marketed under a patent or original NDA but for which generic equivalents now are available); and (2) all other, non-innovator, multiple source drugs. Rebates for the first drug category (i.e., drugs still under patent or those once covered by patents) have two components: a basic rebate and an additional rebate. For brand name drugs, Medicaid's basic rebate is determined by the larger of either a comparison of a drug's quarterly average manufacturer price (AMP) to the best price for the same period, or a flat percentage (23.1%) of the drug's quarterly AMP. Drug manufacturers owe an additional rebate when their unit prices for individual products increase faster than inflation. For generic drugs, manufacturers' Medicaid rebates are 13% of the drug's AMP.\nManufacturers sometimes market their patented products, or versions of their patented products, as over-the-counter (OTC) products, before their patents expire. When AMPs for OTC sales are combined with AMPs for patented product sales, drug manufacturers' Medicaid rebate obligations can be reduced because OTC prices generally are lower than AMPs.",
"The President's budget proposes to introduce legislation clarifying that even though manufacturers had converted innovator multiple source products to OTC products, those drugs would still be considered brand name drugs for calculating Medicaid rebates. This proposal was included in the President's FY2014 Budget.",
"Under the federal Medicaid law, Medicaid rebate calculations for brand name drugs have two components, a basic rebate and an additional rebate. The basic rebate is the higher of a drug's best price compared to its quarterly AMP or 23.1% of AMP. An additional rebate is applied when a drug's price increased faster than the rate of inflation since the drug was first introduced to the market. The additional rebate is added to the basic rebate to get a brand drug's total rebate. Medicaid rebates for generic drugs have only a basic rebate component without an adjustment when prices rise faster than inflation.",
"The President's FY2015 Budget proposes to require that the additional inflation adjustment brand name drug rebate also be applied to generic drugs. This proposal was not included in the President's FY2014 Budget.",
"",
"With certain exceptions, federal Medicaid law requires states participating in the Medicaid rebate program to cover all outpatient drugs offered by drug manufacturers that have signed drug pricing agreements with the Secretary. Medicaid law excludes certain drugs from the coverage requirement. The excluded drug list identifies prescription vitamins and minerals as drugs that states have the option of not covering, even when considered medically necessary. However, federal Medicaid law exempts prenatal vitamins and fluoride preparations. Even though prenatal vitamins and fluoride preparations are identified as exceptions to the prescription vitamin and mineral exclusion, there may have been confusion that states were required to cover these drugs when they were determined to be medically necessary.",
"This proposal would clarify that prenatal vitamins and fluoride preparations are covered outpatient drugs, meaning states must cover these products under the Medicaid drug rebate program if they are considered medically necessary. This proposal was not included in the President's FY2014 Budget.",
"",
"Under previous law, modifications to existing drugs—new dosages or formulations—generally were considered new products for purposes of reporting AMPs to CMS. As a result, when drug makers introduced new formulations of existing products they sometimes would have lower additional rebate obligations for these line-extension products. For example, manufacturers have developed extended-release formulations of existing products which, because they were considered new products under previous Medicaid drug rebate rules, were given new base period AMPs. The new base period AMPs for line-extension products would be higher than the original product's AMP. For line-extension products, manufacturers are less likely to owe additional rebates since the product's AMP would not have had time to have risen faster than the rate of inflation. ACA included a provision that required manufacturers to pay Medicaid rebates (both basic and additional rebates) on line-extension products as if they were the original product on which the line extension was based.",
"The President's budget would make a technical correction to an ACA provision that amended federal Medicaid law to ensure that Medicaid rebates were applicable to line-extension drugs by removing the word \"original\" from the definition of single source and innovator multiple source drugs. This proposal was included in the President's FY2014 Budget.",
"",
"Under Medicaid law, in order for drug manufacturers to sell their products to state Medicaid programs they must agree to the conditions of the Medicaid Drug Rebate (MDR) program. Among other MDR requirements, drug manufacturers must pay state Medicaid programs rebates on covered outpatient drugs and report certain drug pricing information. States report the amount of drugs used, then drug manufacturers compute Medicaid drug rebates for each drug, then send states rebates for all drugs used during the reporting period. Manufacturers have the right to audit the drug utilization information reported by states. Drug manufacturers may dispute MDRs and are not restricted by federal Medicaid law to a time limit in which to dispute states' drug rebate claims, so manufacturers can dispute rebates as far back as 1991 when the rebate program started.",
"The President's budget would establish a 12-quarter time limit for manufacturers to dispute state utilization data. The time limit would provide an incentive to manufacturers and states to resolve outstanding disputes. This proposal was not included in the President's FY2014 Budget.",
"",
"Authorized generics are drugs that the original patent holder has licensed to a generic drug manufacturer to sell at a negotiated, reduced price. It is argued that authorized generics raise prices for consumers and reduce incentives for generic manufacturers to challenge single source drug patents. Including authorized generic sales with brand product sales has the effect of lowering a product's AMP, thereby decreasing manufacturers' Medicaid rebate obligations for those products (both the basic and the additional rebate might be decreased).",
"The President's budget would change the calculation of Medicaid rebates for single source (i.e., brand name) products to exclude sales of authorized generic drugs. By removing authorized generic sales from the single source product's AMP calculation, the AMP would be higher thus increasing the rebate owed by manufacturers on brand name drugs. This proposal was included in the President's FY2014 Budget.",
"",
"The ACA refined the definition of Medicaid multiple-source, generic, drugs. The ACA increased the number of drugs considered by the FDA as therapeutically and pharmacologically equivalent products from two to three, which requires the Secretary to establish federal upper limits (FULs) for those products. Medicaid prescription drug FULs are used to limit reimbursement for certain multiple source drugs. Medicaid drug FULs are calculated based on the weighted average price of all drugs, brand, authorized generic, and generic drugs, under each product code.",
"The President's budget would specify that the amounts paid for brand and authorized generics would be excluded from the Medicaid prescription drug FUL calculations. This proposal was included in the President's FY2014 Budget.",
"",
"Drug manufacturers that want to sell their products to Medicaid programs must agree to pay rebates for drugs provided to Medicaid beneficiaries. Under the terms of the Medicaid drug rebate program, manufacturers must make their entire product line available, and Medicaid must cover all of a manufacturer's products, except certain drugs drug classes, or uses identified in law on an \"excluded drug list.\" Rebates paid by manufacturers to Medicaid are calculated based on each manufacturer's AMP for a drug. AMP is defined in law. Studies and legal settlements between drug manufacturers and state Medicaid programs have shown some irregularities in how manufacturers interpreted CMS guidance on what sales transactions should be included in AMP. States are permitted to exclude coverage of drugs on the excluded drug list, but they also may cover these drugs. Manufacturers sometimes include excluded drug sales transactions and other non-FDA approved products in their AMP calculations. By including these excluded and non-approved drug sales in the calculation of AMP, rebates owed to states can be reduced.",
"The President's budget proposal would require manufacturers that improperly reported drugs not covered by Medicaid in their AMP calculations to fully compensate states for the drug rebates the manufacturers would have owed to states if non-covered drugs were not included in AMP. This proposal was included in the President's FY2014 budget proposal.",
"",
"CMS has authority to survey drug manufacturers, and HHS OIG has authority to audit drug manufacturers. CMS and OIG monitor Medicaid prescription drug prices submitted by manufacturers and the rebates these companies pay to the Medicaid program, which are shared between states and the federal government. CMS conducts automated data checks on the drug prices reported by manufacturers and notifies manufacturers when it identifies discrepancies or errors. There is substantial variation in the methodologies and assumptions drug manufacturers follow in reporting drug price data to CMS. Even though drug manufacturers' methodologies and assumptions for reporting drug prices can have a great impact on rebates, CMS does not generally verify that manufacturers' documentation supports their prices and does not routinely check that their price determinations are consistent with the Medicaid statute, regulations, or the rebate agreement. Studies have found and False Claims Act settlements have shown irregularities in manufacturers' drug price reporting. The ACA made a number of changes to Medicaid prescription drug pricing policies, including provisions to create more uniform manufacturer drug reporting standards.",
"The President's budget would require to the extent they are cost effective, that regular audits and surveys of drug manufacturers be conducted to evaluate manufacturers' compliance with drug rebate agreements, the Medicaid statute, and regulations. This proposal was included in the President's FY2014 budget proposal.",
"",
"Under federal law and regulation, outpatient prescription drugs may be covered by Medicaid if the drugs were approved for safety and effectiveness by the FDA under the Federal Food Drug and Cosmetics Act (P.L. 75-717). The FDA approves drugs when a manufacturer obtains a New Drug Approval, generally for sole source brand name drugs, or where a manufacturer obtains an ANDA, generally for multiple source, generic drugs. Federal regulations limit Medicaid reimbursement for outpatient drugs prescribed off label to those indications where a drug is listed in one or more of several named compendia, which are reference documents that list how most drugs could be used both on-label and off-label. Even though current law requires drug manufacturers to list their products with the FDA, not all drugs on the market are properly listed. CMS published a proposed guidance on changes authorized by the ACA.",
"The President's budget would require that drug manufacturers list their products electronically with the FDA in order to be covered and reimbursed by Medicaid. This proposal also would align Medicaid drug coverage requirements with Medicare's requirements. This proposal was included in the President's FY2014 budget proposal.",
"",
"Drug manufacturers that want to sell products to state Medicaid programs must agree to offer rebates to states, which are shared with the federal government. As part of the Medicaid rebate agreement, drug manufacturers are required to report accurate drug price information to CMS so it can compute or verify drug rebates. CMS guidance permits manufacturers to make \"reasonable assumptions\" consistent with the \"intent\" of the law, regulations, and rebate agreement. Thus, manufacturers determine which sales transactions to include when reporting prices to CMS. Provisions in the ACA amended the Medicaid drug rebate statute, and CMS published a proposal that would implement ACA's Medicaid drug rebate changes. Individuals, including an organization, agency, or other entity, who knowingly make or cause to be made false statements, omissions, or misrepresentations of material fact in applications, bids, or contracts could be subject to fines, program exclusions, and/or criminal penalties. However, the civil monetary and criminal provisions applicable to all federal health care programs are not specifically designed to address Medicaid drug rebate reporting violations.",
"The President's budget proposed to increase penalties on drug manufacturers that knowingly report false information under Medicaid drug rebate pricing agreements that are used to calculate Medicaid rebates. This proposal was included in the President's FY2014 budget proposal.",
"",
"Section 6001 of DRA amended the Social Security Act to require the Secretary to survey retail pharmacy prices and appropriated $5 million annually for five years to fund the survey and other reporting requirements. The retail price survey was to be a nationwide survey of average consumer prices of outpatient drugs, net of all discounts and rebates (price concessions). In order to obtain information on retail consumer prices and price concessions, CMS implemented a two part survey where Part I collected consumer price information and Part II collected information on pharmacies' acquisition costs. Acquisition cost is used to help states set reasonable prescription drug payment rates. CMS retained a vendor to assist in the survey, but suspended the consumer price survey in July 2013 due to budget limitations.",
"The President's budget proposes to provide a mandatory annual $6 million appropriation for five years to sustain the nationwide retail pharmacy survey and incorporate cash, third-party insured, and Medicaid purchase price information. The proposal also would fund the collection of acquisition cost data from retail community pharmacies. This proposal was not included in the President's FY2014 Budget.",
"",
"Even though the Social Security Act gives the Secretary authority to survey wholesalers to verify manufacturer prices when necessary, the statute does not provide the authority to collect wholesale prices on a regular basis nor does the authority apply the data collection to all Medicaid-covered drugs. To determine if drug manufacturers are accurately reporting required pricing information on AMP, ASP, and where appropriate, best price, it would be necessary for CMS to collect wholesale acquisition cost data from drug wholesalers.",
"This proposal would give the Secretary authority to survey wholesale acquisition costs for all Medicaid-covered drugs on a regular basis. The proposal also would enable CMS to verify AMPs that currently are being reported by drug manufacturers and to better set Medicaid drug FULs. This proposal was not included in the President's FY2014 Budget.",
"",
"",
"Nearly all children in foster care are eligible for Medicaid and are generally entitled to the same set of Medicaid benefits as other children enrolled in Medicaid, including coverage for psychotropic medications (i.e., prescribed drugs that affect the brain chemicals related to mood and behavior to treat a variety of mental health conditions). Certain factors, such as longer involvement with the child welfare agency, being of school age, and living in a group setting, forecast a greater chance that a child in foster care takes psychotropic medications. Little research has been conducted to show that psychotropics are effective and safe for children with mental health disorders. Federal child welfare law (Title IV-B, Subpart 1 of the Social Security Act) requires states to provide HHS with information about protocols they have in place for the appropriate use and monitoring of psychotropic medication.",
"The President's budget proposes a five-year joint initiative between CMS and the Administration for Children and Families (ACF), which administers child welfare programs and activities, to provide performance-based incentive payments to states through Medicaid in order to reduce reliance on psychotropic medications for children in foster care by encouraging the use of evidence-based screening, assessment, and treatment of trauma and mental health disorders. ACF would receive separate funding to provide competitive grants for related purposes. This proposal was not included in the President's FY2014 Budget.",
"",
"The HHS poverty guidelines (also referred to as the FPL) are a simplified version of the poverty thresholds that the Census Bureau uses to prepare its estimates of the number of individuals and families in poverty. The HHS poverty guidelines are published annually in the Federal Register (usually in January) and are used for administrative purposes such as determining financial eligibility for certain federal programs, including Medicaid. Federal law requires the Secretary to update the poverty guidelines at least annually by increasing the latest published Census Bureau poverty thresholds by the relevant percentage change in the CPI-U as calculated by the Bureau of Labor Statistics. After this inflation adjustment, the guidelines are rounded and adjusted to standardize the differences between family sizes. The 2014 poverty guidelines reflect actual price changes between calendar years 2012 and 2013.",
"The President's budget would establish a permanent hold harmless provision to ensure that the HHS poverty guidelines are only adjusted when there is an increase in the CPI-U, which would prevent individuals from losing Medicaid coverage if CPI-U is negative. The provision would impact social programs that rely on the poverty guidelines for administrative purposes (such as Medicaid, Supplemental Nutrition Assistance Program, Women, Infants and Children, etc.). This proposal was included in the President's FY2014 Budget.",
"",
"A special immigrant visa program for Afghans originally established under the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) makes Afghan nationals eligible for special immigrant visas if they were employed by or on behalf of the U.S. government in Afghanistan for not less than one year during a specified period and meet other requirements. This special immigrant visa program was capped at 1,500 principal aliens (excluding spouses and children) annually for FY2009-FY2013 and is capped at 3,000 principal aliens for FY2014. The statute allows for unused visa numbers to be carried forward from one year to the next through FY2015. Foreign nationals with special immigrant visas are granted legal permanent resident (LPR) status upon admission to the United States. As a result, Afghans granted special immigrant visas under this program are eligible for the same resettlement assistance, entitlement programs, and other federal benefits as refugees.",
"The President's budget would provide for up to 3,000 special immigrant visas to be issued to principal aliens under this program in FY2015 and would allow for unused visa numbers to be carried forward through FY2016. This proposal is a modification of a legislative proposal from the President's FY2014 Budget.",
"",
"SSI, which provides means-tested cash benefits to aged, blind, and disabled persons, is generally only available to U.S. citizens and in some limited cases, certain legal permanent residents of the United States. However, certain classes of refugees; asylees; and other humanitarian immigrants, such as Cuban and Haitian entrants or Iraqi and Afghan special immigrants may receive SSI benefits for up to seven years after entering the United States or attaining refugee status. If, after the conclusion of this seven-year period, a refugee, asylee, or humanitarian immigrant has not attained citizenship or permanent resident status, then he or she is ineligible for any future SSI benefit payments.",
"The President's budget proposes to extend the current seven-year period of SSI eligibility for refugees, asylees, and humanitarian immigrants to nine years through the end of FY2016. At the end of FY2016, the eligibility period for refugees, asylees, and humanitarian immigrants would return to seven years. This proposal was included in the President's FY2014 Budget.",
"",
"Currently, if a custodial parent has no private medical coverage at the time of her child's birth, the father can be held financially responsible for payment of the birth costs. Federal law (Section 1902(a)(25)(F) of the Social Security Act) permits states to use the Child Support Enforcement program to collect money from noncustodial fathers to reimburse Medicaid for birth costs of children receiving Medicaid benefits.",
"The President's budget proposes to prohibit the use of child support to repay Medicaid costs associated with giving birth—a practice retained by 10 states. This proposal was included in the President's FY2014 Budget.",
"",
"",
"",
"Under current law, Medicare covers DME, including power wheelchairs and other power mobility devices (PMDs), when it is determined to be medically necessary. There is a history of fraud and abuse associated with DME and PMDs, wherein beneficiaries receive PMDs that are not medically necessary, or Medicare is charged for equipment that is never delivered. CMS began a demonstration in 2012 that requires PMDs in seven states (California, Illinois, Michigan, New York, North Carolina, Florida, and Texas) receive Medicare prior authorization, before beneficiaries receive equipment.\nMedicare also covers certain imaging services. Over the last decade, the growth of imaging services provided under the Medicare program has exceeded those of most other Part B services. From 2000 through 2006, the Government Accountability Office (GAO) has found that \"spending on advanced imaging, such as CT scans, MRIs, and nuclear medicine, rose substantially faster than other imaging services such as ultrasound, X-ray, and other standard imaging.\" More recently, another GAO study found that \"[f]rom 2004 through 2010, the number of self-referred and non-self-referred advanced imaging services—magnetic resonance imaging (MRI) and computed tomography (CT) services—both increased, with the larger increase among self-referred services.\" These and other findings raise concerns about whether advanced imaging services are being used appropriately in the Medicare program.",
"The President's budget proposal would continue extend the Secretary's authority to require prior authorization for all Medicare fee-for-service items. In addition, the proposal would require the Secretary to continue the Medicare PMD prior-authorization demonstration and adopt prior authorization for advanced imaging services. This proposal is a modification of a legislative proposal from the President's FY2014 Budget.",
"",
"Participating Medicare providers and suppliers are required to submit updated enrollment information within specified time frames. CMS uses provider/supplier enrollment records to monitor provider status. Current provider records help to ensure that providers who could pose a higher risk of fraudulent activity receive greater scrutiny when applying and afterwards in submitting reimbursement claims.",
"The President's budget would authorize the Secretary to impose civil penalties when providers and suppliers fail to update enrollment records on a timely basis. This proposal was included in the President's FY2014 budget proposal.",
"",
"Claims processing systems currently do not contain data that could be used to determine if a patient actually saw a practitioner or whether services billed on a claim were determined to be medically necessary. Many providers and health systems are implementing electronic health records (EHR) systems. Provisions in ARRA and the ACA provided financial incentives to providers to invest in EHR. Many EHR systems either are linked or have the capability to interact with clinical decision support systems and electronic claims processing. Electronic patient records may contain information on what services practitioners ordered, whereas claims processing systems only have information necessary to request reimbursement from payers, such as Medicare, Medicaid, or CHIP. As these EHR and claims processing systems become the standard of practice, it may be possible for program integrity systems to routinely validate that practitioners ordered specific treatments, tests, or other procedures at high risk for fraud. Current law does not specifically require the Secretary to develop or implement a system for validating practitioner orders for high-risk services.",
"The President's budget would implement an electronic Medicare claims ordering system that could validate whether practitioners determined high-risk services were medically necessary and whether patients received those services. This proposal was included in the President's FY2014 budget proposal.",
"",
"There is no restriction or increased oversight when providers employ banking arrangements, such as sweep accounts and wire-transfers to off-shore accounts that might be at higher risk of fraudulent activities. In some cases, Medicare has been unable to recover improper payments because providers quickly transferred Medicare's payments to other jurisdictions. These providers were able to shield large Medicare payments from recovery actions because the improper payments were deposited into accounts where federal prosecutors had limited authority.",
"The President's budget proposes to authorize the Secretary to require Medicare providers and suppliers to report the use of accounts that immediately transfer funds to sweep accounts in other jurisdictions where it might be difficult for Medicare to recover improper payments from these providers. This proposal was included in the President's FY2014 budget proposal.",
"",
"The Health Insurance Portability and Accountability Act (HIPAA, P.L. 104-191 ) required the Secretary to establish a Medicare incentive reward program to encourage individuals to report cases of suspected fraud or abuse. The HIPAA incentive reward program authorized the Secretary to pay a portion of amounts collected to individuals who identified cases of suspected misconduct. Individuals are eligible to collect a maximum of 10% of the recovered overpayments or $1,000, whichever is less. CMS proposed to expand the incentive reward program by, among other things, increasing the amount an individual could collect to 15% of the final amount collected applied to the first $66 million.",
"The President's budget would authorize the Secretary to retain a portion of the overpayment recoveries identified by individuals to administer the incentive reward program. This proposal was not included in the President's FY2014 Budget.",
"",
"",
"The territories operate Medicaid programs under rules that differ from those applicable to the states and the District of Columbia. For example, the federal Medicaid funding to the states and the District of Columbia is open-ended, but the Medicaid programs in the territories are subject to annual federal spending caps. The territories are supposed to abide by many of the same Medicaid requirements as the 50 states and the District of Columbia, but it has been documented that the Medicaid programs in the territories do not include all of the federal mandates. For instance, federal law requires each state to have a Medicaid Fraud Control Unit (MFCU), but territories do not have MFCUs.\nMFCUs are separate state government entities certified to investigate and prosecute health care providers suspected of defrauding the state's Medicaid program. MFCUs also have authority to review nursing home residents' neglect or abuse complaints and patient abuse complaints in other health care facilities receiving Medicaid payments. MFCUs may review complaints alleging misappropriation of patient funds. Subject to limitations, MFCUs are funded partially through a grant from OIG (75%) and partially with matching state funds (25%).",
"This proposal would encourage territories to establish MFCUs by exempting federal support for MFCUs from the territories' Medicaid funding cap and by exempting territories from the statutory ceiling on quarterly federal payments for the units. This proposal was not included in the President's FY2014 Budget.",
"",
"Medicaid statute gives states broad authority to implement a variety of prescription drug monitoring activities, though not all states have adopted such activities. A number of states have implemented voluntary or mandatory \"lock-in\" programs that require Medicaid beneficiaries who use prescription drugs at levels above certain medically necessary utilization guidelines, to obtain services only from designated providers, such as one pharmacy or a specific primary care provider. States also have linked Medicaid data with statewide prescription drug monitoring programs to help identify controlled substance abuse. In addition to Medicaid authority to impose restrictions, some states have passed laws to increase penalties on individuals who participate in diverting Medicaid drugs from medically necessary uses to drug abuse or fraudulent activities.",
"The President's proposal would require states to monitor high risk Medicaid drug billing to identify and remediate prescribing and utilization patterns that could indicate potential abuse or excessive prescription drug utilization. States would have discretion to tailor their programs, for example, by choosing one or more drug classes subject to overuse or abuse, and states would be required to develop or review and update their high-utilization remediation plan. This proposal was included in the President's FY2014 budget proposal.",
"",
"The Improper Payments Information Act of 2002 (IPIA, P.L. 107-300 ) required federal agencies to annually review the programs they oversee that may be susceptible to erroneous payments, in order to estimate improper payments and report the estimates to Congress before March 31 of the following year. In addition, if estimated improper payments exceeded $10 million per year, IPIA required federal agencies to identify ways to reduce erroneous payments. In response to IPIA, CMS implemented the Medicaid Payment Error Rate Measurement (PERM), which estimates improper Medicaid and CHIP payments. In addition to PERM, federal Medicaid law requires states to assess Medicaid eligibility and quality control (MEQC) by calculating and reporting erroneous Medicaid payment and eligibility determination rates. States have discretion to develop and implement their own MEQC methodologies. Under CMS PERM regulations, states now have the option to use PERM to fulfill the MEQC requirement.",
"The President's budget would authorize the Secretary to consolidate the MEQC and PERM programs. This proposal was included in the President's FY2014 budget proposal.",
"",
"MFCUs are separate state government entities certified to investigate and prosecute health care providers suspected of defrauding the state's Medicaid program. MFCUs also have authority to review nursing home residents' neglect or abuse complaints and patient abuse complaints in other health care facilities receiving Medicaid payments. MFCUs may review complaints alleging misappropriation of patient funds. MFCUs may not receive federal matching funds for patient abuse or neglect investigations that occur in non-institutional settings, such as home- and community-based services (HCBS). As more Medicaid long-term care services and supports have moved from institutional to non-institutional settings, there may be more need to monitor and investigate beneficiary complaints on non-institutional providers.",
"The President's budget would allow MFCUs to receive federal matching funds for the investigation and prosecution of abuse and neglect in non-institutional settings, such as HCBS. This proposal was included in the President's FY2014 budget proposal.",
"",
"Medicaid and CHIP are both programs that are jointly funded by the federal government and states. Federal reimbursement for the federal share of the cost of Medicaid services is provided on an open-ended basis to states that meet federal program requirements. The federal government's share of most Medicaid expenditures is called the federal medical assistance percentage (FMAP) rate. However, exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, services, and administration. Federal CHIP matching funds are paid to states at an enhanced FMAP (E-FMAP) rate. The CHIP E-FMAP applies to both services and administration, but federal CHIP matching funds are capped based on annual allotments. In general, federal regulations prohibit states from using other federal sources to fund the state share of Medicaid, unless authorized by law.",
"The President's budget would codify the principle that states are prohibited from using federal funds to pay the state share of Medicaid or CHIP, unless specific exceptions were authorized in law. This proposal was included in the President's FY2014 Budget.",
"",
"",
"Recovery audit contractors (RACs) receive a percentage of any improper payments they recover. Congress initially authorized RACs as limited demonstrations for Medicare Parts A and B fee-for-service, but expanded the program nationally. Then, under the ACA, Congress authorized further RAC expansion to Medicare Parts C and D and Medicaid. Under current law, Medicare RAC recoupments, net of the percentage payments to contractors and other administrative expenses, are returned to the Medicare Trust Fund. Medicaid recoupments are returned to the state and federal government in the same proportion as FMAP rates with federal RAC recoveries deducted from the next federal Medicaid payment. CMS also can use RAC recoveries to administer the program, but is prohibited from using RAC recoveries to fund further corrective actions, such as new processing edits and provider education and training.",
"The President's budget would authorize CMS to retain a portion of RAC recoveries from Medicare and Medicaid to fund corrective actions, such as new processing edits and provider education and training, to prevent future improper payments. This proposal was included in the President's FY2014 Budget.",
"",
"HHS OIG has authority to exclude health care providers (individuals and entities) from participation in federal health care programs. HHS OIG exclusion authority is mandatory in some circumstances and optional in others. The ACA extended HHS OIG authority to include individuals or entities that make false statements or misrepresentations on federal health care program enrollment applications, including explicit applicability to MA plans, PDPs, and these organization's providers and suppliers.",
"The President's budget would expand HHS OIG authority to exclude individuals and entities from federal health programs if they are affiliated with sanctioned entities. The proposal would eliminate a loophole that allows the officers, managing employees, or owners of sanctioned entities to evade exclusion from federal health programs by resigning their positions or divesting their ownership interests. This proposal's exclusion authority also would be extended to entities affiliated with sanctioned entities. This proposal was included in the President's FY2014 Budget.",
"",
"There are no specific penalties for selling, trading, bartering, or otherwise distributing beneficiary or identification numbers or billing privileges. Beneficiary identification numbers and provider/supplier billing privileges could be used to submit fraudulent claims to Medicare, Medicaid, or the CHIP programs.",
"The President's budget proposal would strengthen penalties for knowingly distributing Medicare, Medicaid, or CHIP beneficiaries' identification or billing privileges. This proposal was included in the President's FY2014 Budget.",
"",
"",
"The Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA, P.L. 111-3 ) established performance bonus payments for states that increase their Medicaid (not CHIP) enrollment among low-income children above a defined baseline. To qualify for bonus payments, states have to implement five of eight outreach and enrollment activities and achieve state-specific targets for increasing Medicaid enrollment among children. CHIPRA performance bonus payments began in FY2009, and under current law, FY2013 was the final year a state can earn a bonus payment. From FY2009 through FY2013, 27 states received CHIPRA performance bonus payments totaling $1.1 billion over the five years. Some states received payments in more than one year.\nFunding for the CHIPRA performance bonus payments was provided through an initial one-time appropriation of $3.2 billion in FY2009. In addition, funding for the bonus payments was transferred from unspent national appropriation amounts for FY2009 through FY2013 for CHIP allotments and unspent redistribution amounts. The fund balance for the CHIPRA performance bonus payments increased significantly every year because the unspent national allotment and redistribution amounts transferred into the fund were substantially higher than the actual CHIPRA performance bonus payments to states. From FY2011 through FY2014, multiple appropriations laws have rescinded a total of $22.6 billion in the funding for CHIPRA performance bonus payments. As of February 2014, the fund balance for the CHIPRA performance bonus funding was $1.8 billion.",
"The President's budget proposes to extend the CHIPRA performance bonus payments for one year, which would make states eligible for bonus payments in FY2014. The proposal would also change the programmatic requirements for states to qualify for the CHIPRA performance bonus payments. This proposal was not included in the President's FY2014 Budget.",
"",
"",
"Nearly all children in foster care are eligible for Medicaid and are generally entitled to the same set of Medicaid benefits as other children enrolled in Medicaid, including coverage for psychotropic medications (i.e., prescribed drugs that affect the brain chemicals related to mood and behavior to treat a variety of mental health conditions). Certain factors—longer involvement with the child welfare agency, being of school age, and living in a group setting—forecast a greater chance that a child in foster care takes psychotropic medications. Little research has been conducted to show that psychotropics are effective and safe for children with mental health disorders. Federal child welfare law (Title IV-B, Subpart 1 of the Social Security Act) requires states to provide HHS with information about protocols they have in place for the appropriate use and monitoring of psychotropic medication.",
"The President's budget proposes a five-year joint initiative between CMS and the Administration for Children and Families (ACF), which administers child welfare programs and activities, to provide performance-based incentive payments to states through Medicaid in order to reduce reliance on psychotropic medications for children in foster care by encouraging the use of evidence-based screening, assessment, and treatment of trauma and mental health disorders. ACF would receive separate funding to provide competitive grants for related purposes. This proposal was not included in the President's FY2014 Budget.",
"",
"DRA required the Secretary to establish a Medicaid Integrity Program (MIP), which was the first dedicated appropriation providing dedicated Medicaid program integrity resources. Prior to MIP, program integrity was jointly funded by states and the federal government, but when state revenue declined during recessions, program integrity activities tended to decrease. MIP supports state Medicaid program integrity efforts through a combination of oversight and technical assistance. Although individual states work to ensure the integrity of their respective Medicaid programs, MIP provides CMS with resources to implement and monitor broader program integrity activities to support and enhance individual state efforts. DRA designated MIP funds to be used in the following four areas: audits, state support, data analysis, and education.",
"This proposal would increase annual MIP appropriations by $25 million (adjusted by CPI-U) and expand statutory authority for using MIP resources, such as funding an expansion of the Medicaid Financial Management program (currently funded under the HCFAC program) and technical assistance to states (including oversight of managed care entities, claims processing improvements, advanced fraud prevention analysis, and provider screening). This proposal was not included in the President's FY2014 Budget.",
"",
"Under the Money Follows the Person (MFP) Demonstration, the HHS is authorized to award competitive grants to states to transition institutionalized Medicaid enrollees into community residential settings with the goal of increasing the use of Medicaid home and community-based services. MFP was established under the DRA, and Section 2403 of the ACA extended the demonstration and appropriated an additional $2.25 billion through FY2016. For each eligible Medicaid enrollee who is transitioned into the community the state Medicaid program receives an increased federal matching rate for 12 months. Eligible Medicaid enrollees must be a resident in an institution for at least 90 consecutive days and continue to require the level of care provided in an institution. Medicare-covered days for short-term rehabilitative services are excluded from counting toward the 90-day period.",
"The President's budget proposes to extend the MFP Demonstration through FY2020 within the existing appropriation. The proposal would authorize funds to be used to prevent individuals from entering an institution rather than only transitioning individuals from an institutional setting to a community-based setting. The proposal would also reduce the institutional requirement from 90 to 60 days and allow Medicare-covered days to count towards this requirement. Finally, it would allow individuals in certain mental health facilities to transition to community residential settings. This proposal was not included in the President's FY2014 Budget.",
"",
"",
"Under Section 1332 of the ACA, a state may apply to the Secretaries of HHS and Treasury for waivers of certain ACA requirements with respect to health insurance coverage in that state for plan years beginning on or after January 1, 2017. A state may apply for a \"state innovation waiver\" for all or any of the following ACA requirements:\nTitle I, subtitle D, Part I (relating to the establishment of qualified health plans); Title I, subtitle D, Part II (relating to consumer choice and insurance competition through health benefit exchanges); Section 1402 (relating to reduced cost sharing for individuals enrolling in qualified health plans); Section 36B of the Internal Revenue Code (relating to refundable tax credits for coverage under a qualified health plan offered through an exchange); 4980H of the Internal Revenue Code (relating to shared responsibility for employers regarding health coverage); and 5000A of the Internal Revenue Code (relating to the requirement to maintain minimum essential coverage).\nThe Secretaries have the authority to grant a request for one or more state innovation waivers if the Secretaries determine that the state has legislation in place that creates a system or plan that will provide health insurance coverage that is at least as comprehensive and affordable as coverage provided under the ACA; will provide that coverage to a comparable number of its residents as provisions of the ACA would provide; and will not increase the federal deficit.",
"The President's budget would allow states to obtain state innovation waivers beginning in 2015, two years earlier than is currently permitted. This proposal was included in the President's FY2014 budget proposal. [The Administration estimates this legislative proposal would have no budgetary impact.]",
"",
"",
"CMS's program management account funds the majority of Medicare's administrative and oversight functions, and program management activities include both discretionary and mandatory appropriations. Discretionary program management includes the following five account categories: program operations, federal administration, survey and certification, research, and state high-risk pools. The largest program management expenditure category is program operations, which funds a range of contractor and information technology activities necessary to administer Medicare, Medicaid, CHIP, implementation of private health insurance programs, and additional activities required by legislation. Mandatory program management appropriations ($199 million) were established by the following five laws: ACA, ARRA, MIPPA, ATRA, and BBA. In addition, the President's FY2015 budget for program management includes reimbursable administration ($936 million) and provisions for new legislative initiatives ($433 million).",
"The President's budget would increase mandatory funding for Program Management by $400 million to fund implementation of the mandatory health care proposals in the President's budget. This proposal was included in the President's FY2014 budget proposal.",
"",
"Section 1891 of the Social Security Act requires HHAs participating in the Medicare program to comply with certain conditions of participation, such as quality of care and safety standards. To verify an HHA's compliance with Medicare's conditions of participation, CMS contracts with each state survey agency to conduct a recertification survey every three years. HHAs that are out of compliance can be cited for deficiencies and face intermediate sanctions, such as directed plans of correction and temporary management changes. Beginning July 1, 2014, intermediate sanctions for noncompliant HHAs will also include suspension of Medicare payments for new patient admissions and civil monetary penalties. Unless otherwise specified, Section 1128A of the Social Security Act requires such civil monetary penalties levied and collected in accordance with the Medicare program to be returned to the Medicare Trust Funds. However, Section 6111 of the ACA allows a portion of civil monetary penalties levied against noncompliant SNFs to be retained to support initiatives that improve the quality of SNF care.",
"The President's budget would allow civil monetary penalties collected from HHAs to be retained and invested for activities to improve the quality of care of patients receiving home health services. This proposal was not included in the President's FY2014 Budget.",
"",
"Under current law, the Federal Payment Levy Program authorizes CMS to impose levies on Medicare providers for debts to the federal government. CMS and states electronically match Medicare provider payments with delinquent tax and non-tax debts and payments disbursed by the federal government. The program allows the Department of the Treasury to assess a fee up to 15% of a provider's outstanding Medicare reimbursement as collateral against outstanding debts.",
"The President's FY2015 budget would authorize CMS to assess a fee to offset the administrative costs of the Federal Payment Levy Program. The Department of the Treasury would continue to receive the full amount of the levy, and Medicare providers would be required to pay CMS fees to cover administrative costs for operating the Federal Payment Levy Program, which are estimated to be $2 million in FY2015. This proposal was not included in the President's FY2014 Budget.",
"",
"Federal and state governments share responsibility for ensuring that many Medicare and Medicaid providers and suppliers provide quality care and meet certain safety standards. The federal government sets quality and safety requirements that these entities must meet to participate in the Medicare and Medicaid programs. In general, CMS contracts with organizations (often state survey agencies) to conduct periodic inspections and investigate quality or safety complaints. CMS estimated that in FY2014 survey and certification entities will complete over 24,434 initial surveys and re-certifications and investigate over 51,400 complaints. All facility providers must undergo initial survey and certification inspections when they enroll as providers in Medicare or Medicaid, and be recertified on a regular basis thereafter. CMS intends to add inspection requirements for community mental health centers in FY2014. When surveyors identify deficiencies, surveyed entities have a certain period of time to correct the issues before surveyors revisit the facility to verify that the deficiencies were corrected.",
"The President's budget proposes to require the Secretary to begin requiring user fees for survey and certification revisit. The revisit fee would provide CMS with additional resources to conduct follow up visits to poor performing providers, while also creating financial incentives for organizations to quickly correct deficiencies. The revisit fee would be phased in over a number of years. This proposal was included in the President's FY2014 budget proposal.",
"",
"Under current law, two provisions authorize specified quality and performance measurement duties for a contracted consensus-based entity. Section 183 of MIPPA requires the Secretary to have a contract with a consensus-based entity (e.g., National Quality Forum) to carry out specified performance improvement and quality measurement duties. These duties include, among others, priority setting; measure endorsement; measure maintenance; convening multi-stakeholder groups to provide input on the selection of quality measures and national priorities; and annual reporting to Congress. Section 3014 of the ACA requires the Secretary to establish a pre-rulemaking process to select quality measures. This process involves gathering multi-stakeholder input; making measures under consideration available to the public; transmitting the input of multi-stakeholder groups to the Secretary; and publishing the rationale for the use of any quality measure in the Federal Register. The Secretary must also establish a process for disseminating quality measures used by the Secretary and to periodically review quality measures and determine whether to maintain them or phase them out. Under current law, funding expired for Section 183 of MIPPA in FY2013 and for Section 3014 of ACA in FY2014.",
"The President's budget would extend funding for both quality and performance measurement duties by providing $30 million per year, available until expended, for both Section 183 of MIPPA and Section 3014 of the ACA for each of the fiscal years FY2015 through FY2017. The allocation of funding between the two sections is not specified in the proposal. This proposal is a modification of a legislative proposal from the President's FY2014 Budget.",
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{
"question": [
"What does CMS do?",
"Why is CMS significant?",
"What relation do CMS programs have to the American public?",
"How does CMS relate to the Affordable Care Act?",
"What is the CMS budget for FY2015?",
"Why is that significant?",
"What does this budget include?"
],
"summary": [
"The Centers for Medicare & Medicaid Services (CMS) is the division of the Department of Health & Human Services (HHS) that is responsible for administering Medicare, Medicaid, and the State Children's Health Insurance Program (CHIP), and the private health insurance programs.",
"CMS is the largest purchaser of health care in the United States, with expenditures from CMS programs accounting for roughly one-third of the nation's health expenditures.",
"In FY2015, it is estimated that more than one in three Americans will be provided coverage through Medicare, Medicaid, and CHIP.",
"CMS is also responsible for administering the private health insurance programs established in the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 as amended).",
"The President's proposed budget for CMS would be $897.4 billion in net mandatory and discretionary outlays for FY2015.",
"This would be an increase of $53.8 billion, or 6.4%, over the net outlays for FY2014.",
"This estimate includes the cost of the Medicare physician payment adjustment ($13.7 billion), the net cost of legislative proposals ($2.5 billion), and the estimated savings from program integrity investments (-$0.2 billion)."
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|
GAO_GAO-13-212
|
{
"title": [
"Background",
"Organizational Responsibilities for Operational Contract Support",
"Contingency Planning",
"OSD, the Joint Staff, and the Services Have Taken Steps to Integrate Operational Contract Support, but Most of the Military Services Have Not Issued Comprehensive Guidance",
"OSD and the Joint Staff Have Taken Actions and Have Other Efforts Underway to Plan for Operational Contract Support",
"The Military Services, with the Exception of the Army, Have Not Issued Comprehensive Guidance on Integrating Operational Contract Support",
"Combatant Commands and Components Have Taken Positive Steps, but Face Challenges in Fully Integrating Operational Contract Support into Their Contingency Planning Processes",
"The Combatant Commands and Their Components Have Taken Some Positive Steps to Integrate Operational Contract Support in Their Planning Processes",
"Combatant Commands and Components Did Not Plan for the Potential Use of Contractors in All Areas Where They Might Be Needed, and Have Recently Been Issued Guidance",
"Joint Staff Training on Operational Contract Support to Commands and Components Is Focused on the Logistics Area",
"Planners Are Aiding the Combatant Commands with Operational Contract Support, but They Are Not Focused on Working with All Planners throughout the Commands",
"Components Have Not Received Expertise Such as Provided to Combatant Commands to Integrate Operational Contract Support into Their Planning",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Scope and Methodology",
"Appendix II: Comments from the Department of Defense",
"Appendix III: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments",
"Related GAO Products"
],
"paragraphs": [
"",
"The U.S. military routinely uses contracted support in contingency operations. Military forces will often be significantly augmented with contracted support because of the continual introduction of high- technology equipment, coupled with force structure and manning limitations, and the high pace of operations. Accordingly, DOD has recognized that the planning for and integration of contracted support into joint operations is important for the successful execution of military operations. Moreover, the Secretary of Defense’s January 2011 memorandum addresses the need to better plan for operational contract support at the strategic and operational levels. The following describes the roles of various DOD offices involved in planning for operational contract support:\nThe Under Secretary of Defense for Personnel and Readiness is responsible for policy, plans, and program development for the total force, which includes military, DOD civilian, and DOD contractor personnel.\nThe Under Secretary of Defense for Acquisition, Technology and Logistics has the overall responsibility for the performance of the department’s acquisition system, including establishing and publishing policies and procedures governing the operations of the acquisition system and the administrative oversight of defense contracts.\nThe Chairman of the Joint Chiefs of Staff has specific responsibilities in the areas of strategic direction as well as in strategic and contingency planning. The Joint Staff Logistics Directorate (J-4) provides plans, policy, guidance, and oversight on joint logistics, including joint contingency operational contract support matters.\nThe Army, Navy, Marine Corps, and Air Force (under their respective Secretaries) are responsible for planning and executing contract support to their own forces unless directed otherwise by a combatant commander. The Secretaries of the military departments have been tasked in the Secretary of Defense’s January 2011 memorandum to assess how total force data (that is, the mix of military forces, contractors, and civilians) can inform planning and to assess opportunities for in-sourcing contracted capabilities that represent a high risk to the warfighter.\nThe geographic combatant commands plan and oversee the military operations for their areas of responsibility. Combatant commanders are assigned military service components that assist them with further planning and execution of the missions (see fig. 1).\nThe Defense Logistics Agency, at the request of the combatant commands, has two expert planners from its Joint Contingency Acquisition Support Office placed in the logistics offices at each combatant command to improve the incorporation of operational contract support into combatant command plans.",
"The combatant commands and their components create plans to prepare for possible missions in their area. This planning begins with broad strategic guidance provided by the President, the Secretary of Defense, and the Chairman of the Joint Chiefs of Staff. This strategic guidance includes DOD documents, such as the Guidance for the Employment of the Force and the Joint Strategic Capabilities Plan, which tell combatant commanders what to plan for within their areas of responsibility. On the basis of the strategic guidance, combatant command planners write an operation plan to address particular contingencies. During this stage, a combatant commander can also task and provide guidance to the component commands to develop supporting plans for an operation plan. DOD doctrine suggests that, as a plan is developed, frequent dialogue between planners and senior DOD leadership is necessary to ensure that results are sufficient and feasible to meet mission objectives.\nAn operation plan describes how DOD will respond to a potential contingency that might require the use of military force. Such plans are used to deal with a wide range of events, such as terrorism, hostile foreign nations, and natural disasters. An operation plan consists of a base plan and annexes. A base plan describes the concept of operations, major forces, sustainment concept, and anticipated timelines for completing the mission. Base plans are written following a five-paragraph structure—Situation, Mission, Execution, Administration and Logistics, and Command and Control. Plans will generally include assumptions that are relevant to the development or successful execution of the plan and the concept of operation that the commander plans to use to accomplish the mission, including the forces involved, the phasing of operations, and the general nature and purpose of operations to be conducted. In addition to the base plan, operation plans sometimes include annexes that provide further details on areas such as intelligence (Annex B), operations (Annex C), logistics (Annex D), personnel (Annex E), communications (Annex K), and operational contract support (Annex W)—the latter generally includes information such as contract support, contracting capabilities, and capacities support estimates. While Annex D includes operational contract support considerations, we have previously reported that because DOD has typically relied on contractors in areas beyond logistics, it is important for DOD to conduct up-front planning for the use of contractors in all functional areas, not just logistics. In 2010, we recommended that the Chairman of the Joint Chiefs of Staff require all base plans and nonlogistics annexes (e.g., intelligence and communication) to address the potential need for contractor support where appropriate.",
"OSD and the Joint Staff have taken steps to integrate operational contract support into departmental planning, but the Navy, Marine Corps, and Air Force have not issued comprehensive guidance for integrating operational contract support throughout each service’s planning efforts.",
"OSD and the Joint Staff have issued several new or revised policies, undertaken other actions, and are revising other policies regarding operational contract support. These efforts are described in figure 2.\nOSD and the Joint Staff have issued several new or revised policies on planning for operational contract support. In January 2011, the Secretary of Defense issued a memorandum to address the risks introduced by DOD’s level of dependency on contractors, its future total force mix, and the need to better plan for operational contract support in the future. The memorandum required, among other things, that the Under Secretary of Defense for Policy integrate operational contract support considerations into strategic planning documents and provide policy guidance on planning for contracted support in force planning scenario development. Also, the memorandum required that the Chairman of the Joint Chiefs of Staff collaboratively develop procedures to support operational contract support planning in the Joint Operation Planning and Execution System, including contractor support estimates and visibility of contractors accompanying the force. A memorandum issued by the Director of the Joint Staff in June 2011 further assigned Joint Staff directors to either lead or support specific tasks to implement the Secretary of Defense’s direction.\nWorking with the Joint Staff, the Under Secretary of Defense for Policy completed revisions in April 2011 to the Guidance for the Employment of the Force requiring that the combatant commands, together with their service components and relevant combat support agencies, plan for the integration of contracted support and contractor management in all phases of military operations. Additionally, the Joint Staff completed revisions in April 2011 to the Joint Strategic Capabilities Plan. The revisions included the requirement that operational contract support planning must occur at all plan levels and that, at a minimum, plans will identify anticipated contract support requirements by joint capability area, phase of operation, and area of need.\nIn addition to policy revisions, OSD and the Joint Staff have undertaken additional actions to ensure that planners better integrate operational contract support into the planning process. For example, at the request of the combatant commands, the Joint Staff has conducted operational contract support training that explains changes to the planning requirements for the integration of operational contract support. Specifically, the Joint Staff held training seminars for operational contract support planners at Central Command and Southern Command in November 2011, at Pacific Command in January 2012, and at Africa and European Commands in May 2012 to highlight recent changes in guidance and processes.\nIn addition, the Functional Capabilities Integration Board, which was created in 2010, is actively monitoring ongoing operational contract support–related efforts across DOD and the progress toward timely completion of the direction in the Secretary’s January 2011 memorandum. Chaired by the Deputy Assistant Secretary of Defense for Program Support and the Vice Director for Logistics of the Joint Staff, the Functional Capabilities Integration Board is a senior executive–level body that includes officials from OSD, the military services, defense agencies, and the Joint Staff. The board meets quarterly to conduct independent assessments and analyses of operational contract support capabilities (to include supporting doctrine, organization, training, materiel, leadership and education, personnel, and facilities of the armed forces). It also seeks to establish and assess ways to improve performance and processes for assessing operational contract support readiness.\nOSD and the Joint Staff are also revising other guidance on operational contract support and examining the extent to which operational contract support is integrated in DOD’s planning for operations, as noted in figure 2. For example, the Joint Staff is overseeing an effort to revise a key doctrine document, Joint Publication 4-10, to incorporate, among other things, lessons learned from the Iraq and Afghanistan wars. Joint Publication 4-10 establishes doctrine for planning, conducting, and assessing operational contract support integration and contractor management functions in support of joint operations. The joint doctrine in the publication applies to the combatant commands and their service components, subunified commands, joint task forces, the services, and defense agencies in support of joint operations. According to Joint Staff officials, they expect to complete revisions to the guidance in November 2013.\nMoreover, the Joint Staff recently published, on October 18, 2012, the Chairman of the Joint Chiefs of Staff Manual 3130.03 on Adaptive Planning and Execution, Planning Formats and Guidance, which replaces the Joint Operation Planning and Execution System Volume II. This manual will be used by joint commanders and war planners to monitor, plan, and execute mobilization, deployment, employment, and sustainment activities associated with joint operations and provide users with access to joint operations planning policies and procedures. Specifically, the Adaptive Planning and Execution manual requires that functional planners identify major support functions planned for commercial support sourcing. The manual also references Annex W in the instructions for many of the individual annexes. Also, the Adaptive Planning and Execution manual, in keeping with the Secretary of Defense’s memorandum requirements, requires the expansion of the Annex W, the operational contract support annex, in operation plans to include appendixes on (1) estimates of contracting capabilities and capacities support, (2) a contractor management plan, and (3) estimates of contractor support. As stated in the recently revised Joint Strategic Capabilities Plan, operational contract support planning is now required in much greater detail because of the volume of participation and resulting lessons learned in current operations.\nAdditionally, the Joint Staff is drafting the Chairman of the Joint Chiefs of Staff Manual 4300.01, which will include information on integrating operational contract support in joint logistics planning. Specifically, the manual will assist logistics planners in developing procedures and guidance for a logistics planning process that effectively integrates, synchronizes, prioritizes, and focuses joint logistics capabilities on achieving a supported commander’s operational objectives and desired effects for various types of plans, including contingency plans, tasked in the Joint Strategic Capabilities Plan or as directed by the combatant commander. The Joint Staff’s revisions will include setting minimum requirements for operational contract support by plan level and providing templates and tools for planners to use to estimate contractor support and contracting capabilities. DOD officials stated that this manual will be published following revisions to the Logistics Supplement to the Joint Strategic Capabilities Plan, expected by the end of 2012.\nFinally, OSD has drafted an action plan, in conjunction with the Joint Staff and military services, that will establish operational contract support objectives and performance measures in the department’s attempt to fully institutionalize operational contract support by the end of fiscal year 2016. Specifically, the draft action plan identifies major actions and the projected cost to institutionalize operational contract support capabilities and capacity across the doctrine, organization, training, materiel, leadership and education, personnel, facilities and policy spectrum. It identifies timelines and lead organizations for specified tasks to help guide operational contract support planning and programming initiatives required to resolve urgent capability gaps. DOD officials stated that they expect the draft of the action plan to be approved by January 2013.",
"The military services, with the exception of the Army, have not issued comprehensive guidance to enable the integration of operational contract support into their planning efforts, thus limiting the institutionalization of operational contract support at the service level. Joint Publication 4-10, issued in 2008, notes that each military service, under its respective military department, is responsible for planning and executing contracting support to its forces, unless otherwise directed by the combatant commander. Joint Publication 4-10 also notes that the military services are responsible for integrating identified contract requirements into training. Further, the Secretary of Defense’s January 2011 memorandum also directs the military services to take certain actions, which could improve how they plan for and use operational contract support.\nIn large part because of the Army’s leading role in the major contingencies over the past decade that required it to employ operational contract support, the Army has issued guidance and created various organizations for integrating contract support into its planning and for developing related training. The Secretary of the Army established an independent panel, known as the Gansler Commission, which issued a final report in October 2007 that highlighted issues and needs for better military operations and cited critical deficiencies in the Army’s contracting and contract management. Since that report’s issuance, the Army has made it a priority to address highlighted deficiencies in areas such as guidance and training. In particular, the Army has issued service-specific guidance for integrating contract support into the service. For example, the Army issued Army Regulation 715-9 in 2011 that provides guidance regarding planning and managing operational contract support for the nonacquisition force, such as operational commanders or contracting officer’s representatives. It describes responsibilities, policy, and implementing procedures for operational contract support. Specifically, the regulation describes, among other things, planning, requirements definition, and oversight in the context of contracted support. For example, the regulation notes that, in general, contracted support will be utilized after full consideration of all sources of support, including deployable civilians. The Army also developed a manual containing tactics, techniques, and procedures for operational contract support. The manual provides “how to” guidance about operational contract support for Army operational commanders and their nonacquisition officer staff. In addition, the manual describes the roles of Army officials and organizations regarding operational contract support and serves as the primary reference document for execution of operational contract support planning, integration, and oversight tasks provided in other guidance, including Army Regulation 715-9. Moreover, the manual contains checklists that include considerations related to operational contract support. Furthermore, in direct response to the Gansler Commission report, the Army created the Army Contracting Command in 2008, which performs the majority of the contracting work for the Army, including assisting in operational contract support planning needs, training development, and execution. Other Army entities, along with DOD’s Defense Acquisition University, have developed and are implementing additional operational contract support training initiatives. Key Army training initiatives include the following:\nThe Expeditionary Contracting Command, a subordinate to the Army Contracting Command, provides contracting support to the Army and other federal organizations at installations outside of the United States. Additionally, the Expeditionary Contracting Command has seven contracting support brigades that provide direct support to Army service component commanders, including providing predeployment contingency contracting unit training, which includes training contracting officers’ representatives.\nThe Assistant Secretary of the Army (Acquisition, Logistics and Technology) Integration Office works with other entities including the Expeditionary Contracting Command to develop collective and individual training standards and material for acquisition and nonacquisition personnel involved with the planning, requirements definition, contracting, and management of operational contract support. Also, the integration office oversees the incorporation of planning of operational contract support for brigade-level training.\nThe Army Contracting Command, along with other entities, developed and launched enhanced training of contracting officer’s representatives through the Defense Acquisition University. This course assists with deploying more prepared and trained contracting officer’s representatives into contingencies.\nFinally, according to statements of senior Army officials before the Commission on Wartime Contracting, the Assistant Secretary of the Army (Acquisition, Logistics and Technology) chartered the Operational Contracting Support and Policy Directorate in December 2009. As described in an Army briefing, this directorate develops, issues, manages, and measures the effectiveness of policies regarding operational contract support. According to the briefing, it provides strategic contract management and oversight of the U.S. Central Command Joint Theater Support Contracting Command, an organization that provides theater contracting support to the combined joint operations area of Afghanistan. The directorate provides oversight of contingency contracting operations in Iraq and Afghanistan as the focal point for the Army for contracting in- theater. According to the briefing, among other activities, such as validation of operational contract support in doctrine, organization, training, materiel, leadership, and personnel considerations, members of the directorate also serve on DOD’s Operational Contract Support Functional Capabilities and Integration Board. In addition, this directorate, along with the Army’s other efforts, assists the Army in meeting the operational contract support requirements in both Joint Publication 4-10 and the Secretary of Defense’s January 2011 memorandum.\nWhile the Army has established guidance and taken several steps to integrate operational contract support within its service, the other services have not taken similar actions to incorporate operational contract support into their planning. Joint Publication 4-10 and the Secretary of Defense’s January 2011 memorandum require the military departments to take certain steps that could improve how they plan for and use operational contract support. While the Navy, Marine Corps, and Air Force have developed some training and other efforts to improve the planning and use of operational contract support, they have not developed service- specific guidance detailing how operational contract support will be integrated into each of their services’ planning and execution efforts for contingency operations. Navy, Marine Corps, and Air Force officials told us that they generally do not have a major role in operational contract support because the Army has been the lead service for contracting in present conflicts.\nNavy officials acknowledged that some sailors need to understand the role that operational contract support plays in their deployed locations. As a result, Navy officials have included information about operational contract support in logistics training, which provides a basic overview of contract execution. However, as acknowledged by Navy officials, the Navy has not issued guidance that includes information regarding roles and responsibilities for ensuring better execution of planning, integration, and oversight of operational contract support within the service. Marine Corps officials acknowledged that the Marine Corps has also not issued service-wide, specific operational contract support guidance, although they explained that the service’s role in the Afghanistan and Iraq contingencies showed that operational contract support was important and that the Marine Corps needed specific, related training. In Afghanistan, the Marine Corps established two operational contract support cells, which have managed contract support and management- related activities for the service and provided oversight of operational contract support training to relevant personnel. In addition, a 2009 Marine Corps reference publication on contingency contracting contains doctrinal information for commanders and their staff members to plan for and obtain contracting support when deployed. While this information is helpful to commanders and their staff to understand the process for contingency contracting, the document does not comprehensively describe how the Marine Corps plans to integrate operational contract support throughout the service. Further, as part of planning before deployment, the Marine Corps identified and trained contracting officer’s representatives prior to their deployment. Additionally, officials told us that the Marine Corps has begun to include some operational contract support in training in areas such as on regulations related to contracting. While the Marine Corps has incorporated some operational contract support in predeployment planning, the training is limited and, according to Marine Corps officials, it is at the commanders’ discretion to include it into their units’ training. According to Marine Corps officials, the Marine Corps has not provided guidance detailing the roles and responsibilities for nonacquisition personnel on how operational contract support will be integrated into the Marine Corps’ planning and execution efforts for contingency operations. Since training often changes, there is no permanent enforcement to maintain competencies of operational contract support, such as contractor oversight, into planning or training within the Marine Corps, thus limiting full institutionalization of operational contract support.\nAir Force officials acknowledged that the Air Force has not developed service-wide guidance regarding the integration of operational contract support within the service. The guidance that officials did identify is focused on the role of contracting officer’s representatives and actions for deployed commanders and contingency contracting officers to take during initial deployment (such as establishing shelter requirements and other needs of the unit). GAO identified similar acquisition-related implementing guidance related to basic contingency contracting actions during phases of an operation as well as implementing guidance regarding review of operation plans for contractor support integration plans, contractor management plans, and other contracting considerations. However, these documents do not comprehensively describe how the Air Force plans to integrate operational contract support throughout the service. Further, it is not clear how familiar officials are with these documents, as they were not mentioned during the course of discussions. The Air Force’s current training related to operational contract support is limited to the contract familiarization training provided to the contracting officer’s representatives, which is typical of training provided to contracting officer’s representatives in all services. As a result, the integration of operational contract support throughout the Air Force’s planning is limited because, as acknowledged by Air Force officials, the Air Force has not issued comprehensive guidance explaining the roles and responsibilities for the execution of planning, integration, and oversight of operational contract support within the service.\nThus, while the Navy, Marine Corps, and Air Force have developed some training and other individual efforts to familiarize servicemembers with operational contract support, these services have not issued comprehensive guidance to assist in fully institutionalizing operational contract support. DOD and service officials told us that they do not need to plan for operational contract support in advance because the Army has been the lead service in recent conflicts. However, according to DOD, the Navy, Marine Corps, and Air Force spent over a billion dollars combined for contracted services in Afghanistan in fiscal year 2011, and therefore contracted support has been utilized for which planning should have occurred. Without specific service-wide guidance to help institutionalize operational contract support, the other services may not fully understand their role in operational contract support and may not be prepared to execute operational contract support in the future—when it is possible that one of these services, instead of the Army, will play a leading role. Further, unless the services’ guidance describes how each service plans to integrate operational contract support into each organization—including planning for contingency operations and training—the other services’ planning efforts may not reflect the full extent of the use of contract support and the attendant cost and requirements for oversight.",
"The combatant commands and their components have begun to incorporate operational contract support into their planning, but they have not fully integrated operational contract support into their planning for contingencies. While the combatant commands and their components have taken steps to integrate operational contract support into contingency planning, mostly in the area of logistics, they are not planning for such support across all areas—such as intelligence and communications—that are likely to use contractors in future contingencies. We found that DOD’s efforts to fully integrate operational contract support at the command and component levels are hindered by not training all planners about new operational contract support requirements, a lack of focus of operational contract support planners on areas beyond logistics, and not providing operational contract support planning expertise at the commands’ components.",
"The combatant commands and their components have taken some positive steps to integrate operational contract support in their planning processes. According to DOD officials, at the time of this review, there were 95 plans with 45 approved Annex Ws. In addition, our current review of selected operation plans at each of the combatant commands found that officials are now including planning assumptions about operational contract support within either the base plan or Annex W. For example, in a draft humanitarian assistance and foreign disaster response plan that we reviewed, officials at Southern Command had included an Annex W that integrated assumptions for operational contract support. Similarly, officials incorporated assumptions for operational contract support in operation base plans and Annex Ws that we examined at Central Command, Pacific Command, Africa Command, and European Command. This integration of operational contract support is an improvement from February 2010 when we found that only 4 of 89 operation plans had approved Annex Ws.\nAlso, the Joint Staff has developed training for logistics officials at the combatant commands and components to better understand how to integrate operational contract support into their planning processes. The Joint Staff’s training informs planners of requirements in the Guidance for the Employment of the Force that the combatant commands, together with their service components and relevant combat support agencies, plan for the integration of contracted support into all phases of military operations. The training also makes officials aware of the new requirement in the Joint Strategic Capabilities Plan that states that geographic combatant commands, together with their service components and logistics planners, will synchronize and integrate contracted support into military operations. According to U.S. Central Command officials, they have already begun to employ the new guidance shared with them during the training for developing the Annex W.\nWe also noted several other positive efforts to integrate operational contract support into planning. For example, the Defense Logistics Agency, at the request of the combatant commands, has assigned two expert planners from its Joint Contingency Acquisition Support Office to the logistics offices at each combatant command to improve the incorporation of operational contract support into combatant command plans. Also, U.S. Africa Command has developed its own instruction to help the command integrate operational contract support into its planning process.",
"While the combatant commands and their components have taken steps to integrate operational contract support into contingency planning, mostly in the area of logistics, they are not planning for such support across all areas—such as intelligence and communications—that are likely to use contractors in future contingencies. Under regulations and DOD Instruction 3020.41, when officials anticipate the need for contractor personnel and equipment to support military operations, military planners are directed to develop orchestrated, synchronized, detailed, and fully developed contract support integration plans and contractor management plans as components of concept plans and operational plans in accordance with appropriate strategic planning guidance. The regulations and instruction also state that plans should contain additional contract support guidance, as appropriate, in applicable annexes and appendixes within the respective plans. Our previous work has shown that DOD has typically relied on contractors in areas beyond logistics, and thus we have emphasized the importance of the up-front planning for their use across all functional areas.\nA Joint Staff official indicated that, in 2011, the Joint Staff added a requirement to incorporate planning for operational contract support in the base plan and Annex W of all operation plans; but the official noted that requirement did not include incorporating operational contract support in the nonlogistics annexes of plans. In a briefing document on changes and anticipated changes to strategic and planning guidance, the Joint Staff suggested that, among other things, planners would be required to include assumptions for the use of contractor support in paragraph one of the base plan and provide estimates of contractors in the Annex W. Although the combatant commands and their components have integrated operational contract support in the base plans and Annex Ws we reviewed, they did not, at the time we reviewed their plans, have more-specific and comprehensive guidance within the key operations planning system manual for integrating planning for operational contract support across all functional areas where contractors might be used. As a result, officials working in areas outside of logistics were not integrating operational contract support into their respective sections of plans. For example, nonlogistics officials at Central Command—such as those in the communications (Annex K) and intelligence (Annex B) divisions—stated that they do not plan for operational contract support in their respective annexes although contract support had been utilized in the past in these areas. Similarly, at Southern Command, we found that operational contract support was incorporated in Annex D (logistics) and Annex W (operational contract support), but its Annex Ks (communications) and Annex Bs (intelligence) did not directly contain considerations for operational contract support. Moreover, nonlogistics officials at Africa Command stated that they did not incorporate considerations of operational contract support in annexes other than Annex W. Some nonlogistics officials at Central Command further stated that they tend to assume the logistics planners will address the need to incorporate operational contract support throughout operation plans, but we found that this was not occurring. Finally, nonlogistics officials at Pacific Command stated that they had also used contracted support in past operations but believed they did not need to plan for operational contract support until a contingency was under way.\nThe Under Secretary of Defense for Policy completed revisions in April 2011 to include broad language in the Guidance for the Employment of the Force requiring that the combatant commands plan for the integration of contracted support and contractor management in all phases of military operations. However, the Joint Staff only recently issued in October 2012 the Adaptive Planning and Execution manual that calls on functional planners beyond the logistics area alone to identify major support functions planned for commercial support sourcing. As a result, the effect of this new manual remains to be determined. Until all functional area planners begin to integrate operational contract support into their respective sections of plans, the combatant commands and their components risk being unprepared to fully plan for the use of contractors in contingencies. Without plans that adequately consider the use of contract support in areas beyond logistics, DOD has an increased risk of being unprepared to manage deployed contractor personnel and services and to provide necessary oversight during contingencies.",
"As previously discussed, the Joint Staff J-4 has developed training on the requirements for planning for operational contract support at the combatant commands and their components, but, up to this point, this training has been focused on planners only in the logistics area and not on planners in all functional areas. Joint Staff J-4 officials stated that they are developing an operational contract support planning and execution training course to train all strategic and operational planners on the specific requirements and complexities of planning for operational contract support in all functional areas and types of operations. However, this training has not been fully developed and implemented. According to regulations and DOD guidance, the Chairman of the Joint Chiefs of Staff will incorporate, where appropriate, program management and elements of the operational contract support guidance into joint training. Further, according to the Secretary of Defense’s January 2011 memorandum, the Chairman of the Joint Chiefs of Staff shall sustain ongoing efforts and initiate new efforts to institutionalize processes, tools, and doctrine that facilitate and strengthen planning for operational contract support and, by extension, joint operational contract support training, exercises, and execution.\nAlthough the Joint Staff has developed new training for planning for operational contact support, this training is not focused on training officials from functional areas other than logistics. According to a Joint Staff official, while the training was open to all planners, it was focused on training operational contract support planners on the new operational contract support requirements and guidance. With the lack of training across all functional areas, along with the absence, until recently, of more-specific and comprehensive joint operations planning guidance on including operational contract support in plans, we found that planning by the combatant commands and their components included limited integration of operational contract support in areas where contracted support has been used, such as communications or intelligence. For example, some officials involved in intelligence and communications planning at Central Command acknowledged that, while contracted support has been used in these areas in recent operations, they have not initially planned for the capability. In addition, in the operation plans that we reviewed at the various combatant commands, the potential use of contracted support was not mentioned in any of the nonlogistics annexes.\nIn our previous work, we reported weaknesses in DOD’s planning for using contractors to support future military operations, and that DOD risked being unprepared to provide the management and oversight of contractor personnel deployed in contingencies. In this review, we found in some cases that officials outside of the logistics area were unaware of the planning requirements for operational contract support that are outlined in the Guidance for the Employment of the Force. Without training to incorporate operational contract support into all areas of their plans, the combatant commands and components risk not fully understanding the extent to which they will be relying on contractors to support combat operations outside of the logistics area and may be unprepared to provide the necessary management and oversight of deployed contractor personnel. Until DOD takes steps to address these gaps, it may be limited in its ability to fully institutionalize operational contract support in planning for current and future contingency operations at both the combatant command and component levels—where the planning for specific operations generally occurs.",
"At the request of the combatant commands, the Defense Logistics Agency has assigned planners from its Joint Contingency Acquisition Support Office to assist all combatant commands with the integration of operational contract support into the commands’ planning. However, the two planners embedded within each combatant command are not integrated across all functional areas and are not always focused on working with the planners from all the functional directorates to integrate operational contract support in all areas of plans.\nAccording to guidance from the Chairman of the Joint Chiefs of Staff, OSD established the Joint Contingency Acquisition Support Office within the Defense Logistics Agency in July 2008 as one of several initiatives to respond to congressional mandates in the John Warner National Defense Authorization Act for Fiscal Year 2007. As explained in the guidance, DOD viewed the act as requiring the department to adopt a preplanned organizational approach to program management and to provide a deployable team during contingency operations when requested, to ensure jointness and cross-service coordination. According to the guidance, the purpose of the Joint Contingency Acquisition Support Office is to help synchronize, integrate, and manage the implementation and execution of operational contract support among diverse communities in support of U.S. government objectives during peacetime and contingency operations. As envisioned by the guidance, the planners of the Joint Contingency Acquisition Support Office assigned to each combatant command would enable joint operational contract support planning and strengthen combatant commands’ planning for contingencies. Specifically, among other things, the guidance directs the Joint Contingency Acquisition Support Office, when requested, to provide resources and expertise to the combatant commands to conduct deliberate operational contract support planning, and establish and implement program management strategies to address and resolve operational contract support challenges; assist combatant commands in preparation of plans and orders by drafting, coordinating, and establishing Annex Ws; and participate in exercises, training, meetings, and conferences to integrate and advance operational contract support across DOD.\nAll planners from the Joint Contingency Acquisition Support Office have been organizationally placed within the logistics directorate at each of the combatant commands. According to combatant command officials, these planners have helped to integrate operational contract support into combatant command planning through their participation in planning meetings, communication of new planning requirements for operational contract support to the combatant command planners, and the development—and sometimes the writing—of the Annex W for certain plans. However, because these planners are placed within the logistics directorates, the planners are not integrated across all functional areas and are not always focused on working with all planners at the combatant commands to enable planning for the use of contracted support. Some planners, such as those at U.S. Southern Command, coordinate with combatant command planners from the nonlogistics areas and have helped these planners to become aware of operational contract support considerations. Other planners, such as those at U.S. Central Command, focus on integrating operational contract support into the logistics annex and Annex W sections of plans and are not involved in other areas such as communications or intelligence, which are areas that also have relied on contracted support in recent operations.\nThe Secretary of Defense’s January 2011 memorandum calls for better planning for contracted support at the strategic and operational levels. Further, our prior work on DOD’s development of contract support plans recommended that the Chairman of the Joint Chiefs of Staff require personnel to address the potential need for contractor support where appropriate. In addition, the DOD guidance for combatant commander employment of the Joint Contingency Acquisition Support Office calls for the office, when requested, to embed planners from the Joint Contingency Acquisition Support Office within the combatant commands to enable joint operational contract support planning, and to integrate and synchronize operational contract support efforts across DOD and other partners. Without full coordination of the planners from the Joint Contingency Acquisition Support Office with all planners at the combatant commands to incorporate operational contract support into all areas of their plans, the combatant commands risk not fully understanding the extent to which they will be relying on contractors to support combat operations outside of the logistics area and may be unprepared to provide the necessary management and oversight of deployed contractor personnel. Until DOD takes steps to address these gaps, it may be limited in its ability to fully institutionalize operational contract support in planning for current and future contingency operations.",
"While the Defense Logistics Agency, at the request of the combatant commands, has provided planning expertise to aid combatant commands in integrating operational contract support into planning, the combatant commands’ components have not been provided such expertise to aid them in meeting their operational contract support planning requirements. As a result, the components face difficulties incorporating operational contract support considerations into their planning efforts. Two planners are assigned to each combatant command. After a combatant command plan is developed, it is sent to the combatant command’s components for those organizations to develop their own plans to support the combatant command’s requirements, including the requirements for the integration of operational contract support. For example, a component may be required to develop its own Annex W to support a combatant command’s Annex W within a particular plan. This level of planning is essential since components generally identify and provide the resources necessary to support the combatant command’s requirements in order to accomplish the mission of the specific operation.\nWithout this expertise, component planners are limited in their ability to integrate operational contract support into their plans to support combatant command requirements and, in some cases, are unaware of the overall requirements to integrate operational contract support into their planning as directed by the combatant commander. For example, some component officials with whom we met stated they were unfamiliar with the operational contract support planning requirements found in DOD’s strategic planning guidance such as the Guidance for the Employment of the Force. Some component officials also stated that they were not familiar with how to write an Annex W to support the combatant command requirements. There was consensus among the component officials whom we interviewed, as well as several combatant command officials, that the components would benefit from additional training or expertise in planning for operational contract support.\nThe Secretary of Defense’s memorandum regarding DOD’s implementation of operational contract support requires the Chairman of the Joint Chiefs of Staff to take various steps to improve operational contract support planning. In addition, as described by DOD guidance for the employment of the Joint Contingency Acquisition Support Office, combatant commands are responsible for strategic theater planning, and the joint force commander and component commands are responsible for operational planning. Further, the DOD guidance states that the Joint Contingency Acquisition Support Office’s mission is to bring its enabling capability to support planning activities at the strategic and operational levels. However, the Joint Staff has not acted to ensure that both the combatant commands and their components have planning expertise to address operational contract support in planning for operations. As a result, the components may not be able to fully integrate operational contract support into their planning for contingency operations; therefore, they may be unprepared to manage deployed contractor personnel and provide the necessary oversight.",
"The Secretary of Defense’s January 2011 memorandum, and several of the ongoing and recently completed efforts we have noted in this report, illustrate the department’s recognition of and commitment to integrating operational contract support throughout all aspects of military planning. While progress has been made at high levels within the department to emphasize an awareness of operational contract support, DOD has not yet fully institutionalized planning for operational contract support throughout the military services, or at the combatant commands or components where much of the operational planning occurs for contingencies. Although the Army has made strides in creating guidance and training on the importance of planning for operational contract support because of the challenges it encountered in Iraq and Afghanistan, the other military services have not taken additional steps to develop and implement comprehensive guidance within each service to ensure the full institutionalization of operational contract support. Moreover, at the combatant commands and components, there is a lack of emphasis on training for all planners, operational contract support planners are not working with all planners, and expertise on operational contract support is not provided for component planners. As a result, these challenges hinder DOD’s ability to achieve the cultural change that we called for 2 years ago—a change that emphasizes an awareness of operational contract support throughout all entities of the department. Without a focus on recent changes in planning guidance and more training on incorporating operational contract support in all areas of operation plans—not just in the logistics area—DOD may face challenges to successfully plan for the use of contractors in critical areas such as intelligence and communications.\nSimilarly, without the operational contract support planners assisting the commands with planning in all areas and without such expertise at the service component commands, DOD risks being unprepared to manage deployed contractor personnel and provide the necessary oversight in the next contingency.",
"To further the integration of operational contract support into all of the services’ planning, we recommend that the Secretary of Defense direct the Secretaries of the Navy and Air Force to provide comprehensive service-wide guidance for the Navy, Marine Corps, and Air Force that describes how each service should integrate operational contract support into its respective organization to include planning for contingency operations.\nTo further the integration of operational contract support into all areas of the operation planning process, we recommend that the Secretary of Defense direct the Chairman of the Joint Chiefs of Staff to focus its training about operational contract support, which is currently focused on the logistics planners, on training all planners at the combatant commands and components as necessary.\nTo further enable all planners at the combatant commands to integrate operational contract support into plans across their functional areas, we recommend that the Secretary of Defense direct the Chairman of the Joint Chiefs of Staff to identify and implement actions by the combatant commanders needed to ensure that planners from the Joint Contingency Acquisition Support Office supporting the combatant commands expand their focus to work with planners throughout all functional areas.\nTo enable the integration of operational contract support into service component command–level planning efforts, we recommend that the Secretary of Defense direct the Chairman of the Joint Chiefs of Staff to work with the military services as necessary to improve the level of expertise in operational contract support for the combatant commands’ components.",
"In written comments on a draft of this report, DOD concurred with three of our recommendations and partially concurred with one. DOD’s comments are reprinted in appendix II. DOD also provided technical comments which we have incorporated where appropriate.\nDOD concurred with our recommendation that the Secretary of Defense direct the Secretaries of the Navy and the Air Force to provide comprehensive service-wide guidance for the Navy, Marine Corps, and Air Force that describes how each service should integrate operational contract support into its respective organization to include planning for contingency operations. DOD stated that the Marine Corps has made significant progress in integrating operational contract support into its warfighting capabilities. DOD noted that the Marine Corps uses Marine Corps Reference Publication 4-11E, “Contingency Contracting,” dated February 12, 2009, which it described as the service-wide guidance on contingency contracting support. According to DOD, this publication contains doctrine for commanders and their staff to plan for and obtain contracting support when deployed. DOD also noted that the Marine Corps has integrated operational contract support with respect to its primary mission, with a focus on support to the Marine Air Ground Task Force. While our report acknowledges the progress made by the services to integrate operational contract support into service training, as well as acknowledging the Marine Corps’ use of Marine Corps Reference Publication 4-11E, we believe that the Navy, Marine Corps, and Air Force should develop comprehensive service-wide guidance to fully institutionalize operational contract support.\nDOD also agreed with our recommendation that the Secretary of Defense direct the Chairman of the Joint Chiefs of Staff to focus its training about operational contract support on training all planners at the combatant commands and components as necessary. DOD stated that the Joint Staff is working with the services and the geographic combatant commands to develop an appropriate training plan and gather the necessary resources to conduct operational contract support training. We agree that if fully implemented this action could address this recommendation.\nDOD partially concurred with our recommendation that the Secretary of Defense direct the Director of the Defense Logistics Agency to identify and implement actions needed to ensure that planners from the Joint Contingency Acquisition Support Office expand their focus to work with planners throughout all functional areas at the combatant commands. DOD agreed with the thrust of our recommendation—the need for efforts to broaden the focus of planners from the Joint Contingency Acquisition Support Office as part of an effort to integrate operational contract support in combatant command planning. DOD stated, however, that the combatant commands—not the Joint Contingency Acquisition Support Office—are responsible for operational contract support planning across “all functional areas.” DOD also stated that, when requested, the Joint Contingency Acquisition Support Office operational contract support planners support combatant commands in meeting this planning requirement. DOD noted that the geographic combatant commanders are responsible for conducting the planning of their respective war plans, not the Defense Logistics Agency. Consequently, DOD stated that, to enable all planners at the combatant commands to integrate operational contract support into plans across their functional areas, the Secretary of Defense should direct the Chairman of the Joint Chiefs of Staff to continue efforts to develop operational contract support planning capabilities and encourage the geographic combatant commanders to utilize the Joint Contingency Acquisition Support Office for planning. We recognize that the Joint Contingency Acquisition Support Office supports the combatant commands in their efforts to incorporate operational contract support planning within their respective war plans, and that the individual combatant commanders are ultimately responsible for how they utilize embedded Joint Contingency Acquisition Support Office planners. We acknowledge that the Chairman of the Joint Chiefs of Staff is in a position to encourage the combatant commanders to utilize the Joint Contingency Acquisition Support Office planners. As such, we agree that the Chairman of the Joint Chiefs of Staff would be an appropriate official to implement our recommendation, and we have revised our recommendation accordingly. However, we continue to believe that the Defense Logistics Agency, which is responsible for the Joint Contingency Acquisition Support Office, must ensure that its planners are prepared to assist the combatant commanders in these efforts, when requested. Full implementation of the recommendation would therefore likely necessitate cooperation and coordination by the Defense Logistics Agency, the Joint Contingency Acquisition Support Office, the Chairman of the Joint Chiefs of Staff, and the geographic combatant commands.\nFinally, in concurring with our recommendation that the Secretary of Defense direct the Chairman of the Joint Chiefs of Staff to work with the military services as necessary to improve the level of expertise in operational contract support for the combatant commands’ components, DOD stated that the Joint Staff is taking action to integrate operational contract support into the services’ component command-level planning efforts. DOD also stated that the Joint Staff is developing a Joint Professional Military Education course that focuses on the planning and execution of operational contract support. DOD noted that this course is additive to other courses offered by Defense Acquisition University as well as courses offered by the U.S. Army Logistics University. According to DOD, the Joint Staff will continue to work with the other services on operational contract support issues. We agree that if DOD takes these actions, these efforts could address our recommendation.\nWe are sending copies of this report to the appropriate congressional committees and the Secretary of Defense. The report also is available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff has any questions about this report, please contact me at (202) 512-5431 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix III.",
"To determine the extent to which the Department of Defense (DOD) is integrating planning for operational contract support through efforts of the Office of the Secretary of Defense (OSD), Joint Staff, and military services, we collected and analyzed documentation such as planning guidance and policies related to the integration of operational contract support into DOD’s planning for contingency operations. Specifically, we analyzed the implementation of DOD guidance, such as Joint Publication 4-10, the Secretary of Defense’s memorandum on Strategic and Operational Planning for Operational Contract Support and Workforce Mix, and related policies and instruction through discussions with officials from OSD and the Joint Staff to understand the various efforts to address the integration of operational contract support throughout the department. We reviewed and analyzed provisions from the Guidance for the Employment of the Force to understand the new requirements DOD has in place for planning for operational contract support in all phases of military operations. We also spoke with officials specifically focused on integrating operational contract support department-wide, such as officials from the Operational Contract Support Functional Capabilities Integration Board to obtain their perspective on the progress the department has made in integrating operational contract support as well as learning of related initiatives. We reviewed DOD guidance on the civilian expeditionary workforce and interviewed officials from OSD, the Joint Staff, the civilian expeditionary workforce program office, military services, and combatant commands to understand the intent and the status of the development of the civilian expeditionary workforce program. To determine how the military services have integrated operational contract support into their operations, we collected and analyzed service- specific documentation related to operational contract support initiatives from each of the services and met with officials from the Army, Navy, Marine Corps, and Air Force. We also held discussions with officials from each of the services to gain an understanding of how each organization has implemented operational contract support. Further, we reviewed related GAO reports on operational contract support, as well as related reports issued by other agencies.\nTo determine the extent to which DOD is integrating planning for operational contract support in operations planning at the combatant commands and their components, we reviewed plans, such as operation and contingency plans, and other efforts, such as specific related guidance, to understand the commands’ and components’ implementation of requirements to integrate operational contract support. As mentioned above, we interviewed officials from OSD and the Joint Staff in order to assess the extent to which DOD has integrated operational contract support requirements for planning in policies. We then spoke with officials from all of the geographic combatant commands (except Northern Command) and their components regarding their knowledge of the requirements and the extent to which they are planning for operational contract support. Additionally, we spoke to officials to gain knowledge about their current processes for planning for contingency operations. During our meetings with the combatant commands, we spoke with officials from various directorates, such as strategic plans, logistics, and intelligence, in order to obtain an understanding of the extent to which operational contract support is being planned for in the base plan and the directorates’ respective annexes. During our meetings we also reviewed sample operation plans and annexes to analyze the extent to which DOD has integrated operational contract support considerations in its contingency planning. To determine the level at which the combatant commands and components are integrating operational contract support into plans, we requested combatant command and component officials to provide sample operation plans that included base plans with operational contract support considerations, Annex Ws, and other functional area annexes that also contained operational contract support language. Further, we obtained and analyzed specific policies the combatant commands and service component commands had in place governing the planning for operational contract support in their contingency and operation plans.\nOur review focused on DOD’s planning efforts and thus did not include an examination of how operational contract support is integrated in professional military education or in the execution of current operations.\nWe visited or contacted the following organizations during our review:\nOffice of the Under Secretary of Defense for Personnel and Readiness, Washington, D.C.\nCivilian Expeditionary Workforce Program Office, Washington, D.C.\nOffice of the Under Secretary of Defense for Policy, Washington, D.C.\nForce Development, Washington, D.C.\nOffice of the Deputy Assistant Secretary of Defense (Program Support), Washington, D.C.\nOffice of the Under Secretary of Defense for Acquisition, Technology\nOperational Contract Support Functional Capabilities Integration\nU.S. Africa Command, Stuttgart, Germany, and several of its service\nU.S. Central Command, Tampa, Florida, and several of its service\nU.S. European Command, Stuttgart, Germany, and several of its\nU.S. Pacific Command, Honolulu, Hawaii, and several of its service\nU.S. Southern Command, Miami, Florida, and several of its service Chairman, Joint Chiefs of Staff Joint Staff J-4 (Logistics) Directorate, Washington, D.C.\nAcquisition, Logistics, and Technology-Integration Office, Hopewell,\nG-43, Strategic Operations, Washington, D.C.\nManpower and Reserve Affairs, Washington, D.C.\nU.S. Navy Headquarters, Washington, D.C.\nNavy Expeditionary Contracting Command, Little Creek, Virginia\nU.S. Marine Corps Headquarters, Washington, D.C.\nDepartment of the Air Force\nU.S. Air Force Headquarters, Acquisition, Washington, D.C.\nWe conducted this performance audit from January 2012 to February 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for this assessment based on our audit objectives.",
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"In addition to the contact named above, Alissa Czyz, Assistant Director; Marilyn Wasleski, Assistant Director; Hia Quach; Michael Shaughnessy; Yong Song; and Natasha Wilder made key contributions to this report. Richard Powelson and Amie Steele provided assistance in report preparation.",
"Operational Contract Support: Sustained DOD Leadership Needed to Better Prepare for Future Contingencies. GAO-12-1026T. Washington, D.C.: September 12, 2012.\nIraq and Afghanistan: Agencies Are Taking Steps to Improve Data on Contracting but Need to Standardize Reporting. GAO-12-977R. Washington, D.C.: September 12, 2012.\nIraq and Afghanistan: State and DOD Should Ensure Interagency Acquisitions Are Effectively Managed and Comply with Fiscal Law. GAO-12-750. Washington, D.C.: August 2, 2012.\nContingency Contracting: Agency Actions to Address Recommendations by the Commission on Wartime Contracting in Iraq and Afghanistan. GAO-12-854R. Washington, D.C.: August 1, 2012.\nDefense Acquisition Workforce: Improved Processes, Guidance, and Planning Needed to Enhance Use of Workforce Funds. GAO-12-747R. Washington, D.C.: June 20, 2012.\nOperational Contract Support: Management and Oversight Improvements Needed in Afghanistan. GAO-12-290. Washington, D.C.: March 29, 2012.\nAcquisition Workforce: DOD’s Efforts to Rebuild Capacity Have Shown Some Progress. GAO-12-232T. Washington, D.C.: November 16, 2011.\nDefense Contract Management Agency: Amid Ongoing Efforts to Rebuild Capacity, Several Factors Present Challenges in Meeting Its Missions. GAO-12-83. Washington, D.C.: November 3, 2011.\nDefense Acquisition Workforce: Better Identification, Development, and Oversight Needed for Personnel Involved in Acquiring Services. GAO-11-892. Washington, D.C.: September 28, 2011.\nContingency Contracting: Improved Planning and Management Oversight Needed to Address Challenges with Closing Contracts. GAO-11-891. Washington, D.C.: September 27, 2011.\nIraq Drawdown: Opportunities Exist to Improve Equipment Visibility, Contractor Demobilization, and Clarity of Post-2011 DOD Role. GAO-11-774. Washington, D.C.: September 16, 2011.\nWarfighter Support: DOD Needs to Improve Its Planning for Using Contractors to Support Future Military Operations. GAO-10-472. Washington, D.C.: March 30, 2010.\nContingency Contracting: DOD, State, and USAID Continue to Face Challenges in Tracking Contractor Personnel and Contracts in Iraq and Afghanistan. GAO-10-1. Washington, D.C.: October 1, 2009.\nContingency Contract Management: DOD Needs to Develop and Finalize Background Screening and Other Standards for Private Security Contractors. GAO-09-351. Washington, D.C.: July 31, 2009.\nContingency Contracting: DOD, State, and USAID Contracts and Contractor Personnel in Iraq and Afghanistan. GAO-09-19. Washington, D.C.: October 1, 2008.\nDefense Management: DOD Needs to Reexamine Its Extensive Reliance on Contractors and Continue to Improve Management and Oversight. GAO-08-572T. Washington, D.C.: March 11, 2008."
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{
"question": [
"How have the OSD, Joint Staff, and services tried to improve planning for contingency operations?",
"What steps have these stakeholders taken to accomplish this?",
"What action has DOD taken?",
"How has Army participated in this process?",
"Why haven't the Navy, Marine Corps, and Air Force have not issued comprehensive guidance ?",
"What risk are these organizations assuming by not issuing comprehensive guidance?",
"How fully have the combatant commands incorprated operational contract support into their contingency planning?",
"How are they falling short?",
"What did DOD do in response to this problem?",
"To what extent do officials receive training in this realm?",
"What is the risk of such haphazard training?",
"Why is the DOD relationship with contractors important?",
"How much did the DOD rely on contractors?",
"How did the OSD respond to DOD reliance on contractors?",
"How did the OSD propose to reduce the reliance on contractors?",
"What did GAO analyze?",
"How did GAO complete this review?"
],
"summary": [
"The Office of the Secretary of Defense (OSD), the Joint Staff, and the services have taken steps to integrate operational contract support into planning for contingency operations.",
"For example, in April 2011, the Under Secretary of Defense for Policy, working with the Joint Staff, revised the Guidance for the Employment of the Force to require planning for operational contract support in all phases of military operations.",
"Further, in December 2011, the Department of Defense (DOD) revised an instruction and issued corresponding regulations establishing policies and procedures for operational contract support.",
"The Army issued service-specific guidance that describes roles, responsibilities, and requirements to help integrate operational contract support into its planning efforts for contingency operations.",
"However, the Navy, Marine Corps, and Air Force have not issued similar comprehensive guidance for integrating operational contract support throughout each service. Instead, these services have taken actions such as developing training and other individual efforts to familiarize servicemembers with operational contract support. According to service officials, one reason that they have not issued comprehensive guidance similar to the Army's guidance is because the Navy, Marine Corps, and Air Force have not been the lead service for contracting in recent operations. However, these services combined spent over a billion dollars for contracted services in Afghanistan in fiscal year 2011.",
"Without specific, service-wide guidance, the other services' future planning efforts may not reflect the full extent of the use of contract support and the attendant cost and need for oversight.",
"The combatant commands and their components have begun to incorporate operational contract support into their planning for contingencies, but they have not fully integrated operational contract support in all functional areas.",
"We found that the combatant commands and components are not planning for the potential use of contractors in areas where they may be needed beyond logistics such as communications.",
"Recognizing the problem, DOD, in October 2012, issued guidance that calls on functional planners beyond the logistics area to identify major support functions planned for commercial support sourcing.",
"GAO also found that officials involved with logistics planning at the commands receive training from the Joint Staff and assistance from embedded operational contract support planners to help integrate operational contract support into logistics planning. However, officials involved in planning for other areas--such as intelligence--that have used contractors in past operations, do not receive such training. Further, the embedded operational contract support planners do not focus on areas beyond logistics. Moreover, while the combatant commands have embedded experts to assist with operational contract support planning, the military service components do not have such expertise.",
"Without training for all planners, a broader focus beyond logistics for embedded planners, and expertise offered at the military service components, DOD risks being unprepared to plan and manage deployed contractor personnel and may not be able to provide the necessary oversight during future contingencies.",
"DOD has relied extensively on contractors for operations in Iraq and Afghanistan over the past decade.",
"At the height of Operation Iraqi Freedom, the number of contractors exceeded the number of military personnel, and a similar situation is occurring in Afghanistan.",
"In January 2011, the Secretary of Defense issued a memorandum noting the risk of DOD's level of dependency on contractors and outlined actions to institutionalize changes necessary to influence how the department plans for contracted support in contingency operations.",
"The memorandum also called for leveraging the civilian expeditionary workforce to reduce DOD's reliance on contractors, but this workforce is not yet fully developed.",
"GAO was asked to examine DOD's progress in planning for operational contract support. Our review determined how DOD is integrating operational contract support into its planning through efforts of the (1) OSD, Joint Staff, and military services, and (2) combatant commands and their components.",
"To conduct its work, GAO evaluated DOD operational contract support guidance and documents and met with officials at various DOD offices."
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GAO_GAO-17-488
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{
"title": [
"Background",
"Overview of FMCSA’s IT Environment",
"FMCSA Modernization Efforts",
"FMCSA’s Plans to Modernize Existing Systems Are Not Complete",
"FMCSA Has Not Fully Implemented Key Elements of a Sound IT Governance and Oversight Process",
"FMCSA Did Not Fully Ensure That Selected IT Systems Are Effectively Meeting Agency Needs",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: Comments from the Department of Transportation",
"Appendix III: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"FMCSA was established within DOT in January 2000 and was tasked with promoting safe commercial motor vehicle operations and preventing large truck and bus crashes, injuries, and fatalities. The commercial motor carrier industry is a vital part of the U.S. economy and, as of December 2015, FMCSA estimated that there were 551,150 active carriers and approximately 6 million commercial drivers operating in the United States. The domestic commercial motor carrier industry covers a range of businesses, including private and for-hire freight transportation, passenger carriers, and specialized transporters of hazardous materials. These carriers also range from small carriers with only one vehicle that is owned and operated by a single individual, to large corporations that own thousands of vehicles.\nIn carrying out its mission, FMCSA is responsible for four key safety service areas.\nRegistration Services: Motor carriers are required to register with FMCSA; have insurance; and attest that they are fit, willing, and able to follow safety standards. Vehicles must be properly registered and insured with the state of domicile and are subject to random and scheduled inspections by both state and FMCSA agents. Drivers must have a valid commercial driver’s license issued by their state of residence and pass a physical examination as evidenced by a current valid medical card every 2 years. In calendar year 2015, there were 57,358 active interstate new entrant carriers that registered with FMCSA.\nInspection Services: Conducting roadside inspections is central to FMCSA’s mission. States and, to a lesser extent, FMCSA staff, perform roadside inspections of vehicles to check for driver and maintenance violations and then provide the data from those inspections to the agency for analysis and determinations about a carrier’s safety performance. FMCSA also obtains data from the reports filed by state and local law enforcement officers when investigating commercial motor vehicle accidents or regulatory violations. The agency provides grants to states that may be used to offset the costs of conducting roadside inspections and improve the quality of the crash data the states report to it. In addition, the field offices in each state, known as divisions, have investigators who conduct compliance reviews of carriers identified by state inspection and other data as unsafe or at risk of being unsafe. FMCSA and its state partners conduct about 3.4 million inspections a year.\nCompliance Services: FMCSA monitors and ensures compliance with regulations governing both safety and commerce. The compliance review process is performed by safety auditors and investigators who collect safety compliance data by visiting a motor carrier’s location to review safety and personnel records. In the instances of new carriers entering the commercial market, FMCSA audits these carriers within 12 months of service. In 2015, FMCSA conducted 14,656 investigations and 30,000 new entrant safety audits, and sent about 21,000 warning letters. FMCSA uses data collected from motor carriers, federal and state agencies, and other sources to monitor motor carrier compliance with the Federal Motor Carrier Safety Regulations and Hazardous Materials Regulations. These data are also used to evaluate the safety performance of motor carriers, drivers, and vehicle fleets. The agency uses the data to characterize and evaluate the safety experience of motor carrier operations to help federal safety investigators focus their enforcement resources by identifying the highest-risk carriers, drivers, and vehicles.\nEnforcement Services: FMCSA is responsible for bringing legal action against companies that are not in compliance with motor carrier safety policies. In fiscal year 2015, FMCSA closed 4,766 enforcement cases.\nFMCSA’s estimated budget for fiscal year 2017 is approximately $794.2 million. The agency employs more than 1,000 staff members who are located in its Washington, D.C., headquarters, 4 regional service centers, and 52 division offices.",
"FMCSA’s Chief Information Officer (CIO) oversees the development, implementation, and maintenance of the IT systems and infrastructure that serve as the key enabler in executing FMCSA’s mission. The CIO reports directly to the Chief Safety Officer within FMCSA’s Office of Information Technology. This office supports a highly mobile workforce by operating the agency’s field IT network of regional and state service centers, and ensuring that inspectors have the tools and mobile infrastructure necessary to perform their roadside duties. In addition, the office supports FMCSA headquarters, regional, and state service centers, which depend on the agency’s IT infrastructure including servers, laptops, desktops, printers, and mobile devices. Currently, the Office of Information Technology is undergoing a reorganization to establish an Office of the CIO. While a revised structure has been proposed, it has not yet been approved.\nOf its total budget, in fiscal year 2017, FMCSA’s expected IT budget is $58 million, of which approximately 60 percent ($34.4 million) is to be spent on the O&M of existing systems. In fiscal year 2013, the Office of Information Technology led an effort to establish a new IT portfolio that was intended to provide FMCSA with the ability to look across the investments in these portfolios and identify the linkages of business processes and strategic improvement opportunities to enhance mission effectiveness. To do so, the office implemented a product development team to integrate activities within and across the portfolio, interacting with business and program stakeholders. Specifically, it established four key safety process areas—registration, inspection, compliance, and enforcement—and two operations process areas—mission support systems and infrastructure.\nThe registration portfolio includes systems that process and review applications for operating authority.\nThe inspection portfolio includes systems that aid inspectors in conducting roadside inspections of large trucks and buses and ensure inspection data are available and useable.\nThe compliance portfolio includes systems that help investigators to identify and investigate carriers for safe operations and maintain high safety standards to remain in the industry.\nThe enforcement portfolio includes systems to assist the agency in ensuring that carriers and drivers are operating in compliance with regulations.\nThe mission support portfolio includes systems and services that crosscut multiple portfolios.\nThe infrastructure portfolio includes those systems that provide support services, hardware, software, licenses, and tools.\nAs of August 2016, FMCSA had identified and categorized 40 investments in its IT portfolio, as described in table 1.\nAccording to the Acting CIO, by creating the IT portfolio, the agency determined that the functionality of these investments was not redundant, but that the aging legacy systems were in need of modernization. Further, the Acting CIO stated that the agency is planning to consolidate many of the systems that are in O&M, which, as of fiscal year 2016, had a combined cost of $2.9 million.",
"FMCSA has acknowledged the need to upgrade its aging systems to improve data processing and data quality, and reduce system maintenance costs. Accordingly, in 2013, it began a modernization effort that includes both developing new systems and retiring legacy systems for each of its four key safety process areas—registration, inspection, compliance, and enforcement.\nTo modernize its registration systems, in 2013, the agency began developing the URS system to streamline and strengthen the registration process. When fully implemented, URS is intended to replace the current registration systems with a single, online federal system. Program officials stated that the Licensing and Insurance system, Operations Authority Management system, and the registration function in MCMIS are to be retired upon URS’s deployment. The Acting CIO stated that the agency has not determined when URS will be fully deployed.\nTo modernize its inspection systems, FMCSA began planning efforts in 2014 to develop Integrated Inspection Management System (IIMS), which is intended to provide inspectors with a single system to perform checks. As of May 2017, the agency was still in the planning stage of this effort, as it was assessing the current state of its inspection processes and data management systems, and planning to issue a report detailing actions the agency needs to take. According to officials from the Office of Information Technology, subsequent to this report, a detailed analysis will be conducted, including development of acquisition and development plans. According to agency officials, its six operational inspection systems—Query Central, Safety and Fitness Electronic Records, SAFETYNET, Aspen, Inspection Selection System, and Commercial Driver’s License Information System Access—are intended to be retired upon deployment of IIMS.\nTo modernize its compliance systems, FMCSA began developing Sentri 2.1. According to the Acting CIO, the agency’s three legacy compliance systems—ProVu, National Registry of Certified Medical Examiners, and Compliance Analysis and Performance Review Information—are to be retired upon deployment of Sentri 2.1. As of May 2017, agency officials from the Office of Information Technology stated they have stopped the development of Sentri 2.1.\nTo modernize its enforcement systems, FMCSA intends to migrate the functionality of its current enforcement systems into an existing mission support system. Specifically, the functionality of FMCSA’s three operational enforcement systems—CaseRite, Electronic Management Information System, and Uniform Fine Assessment—is to be migrated into its Portal system, which is a website that provides users a single sign-on to access applications. The agency did not provide a date for when this effort is expected to be completed.",
"A federal agency’s ability to effectively and efficiently maintain and modernize its existing IT environment depends, in large part, on how well it employs certain IT management controls, including strategic planning. Strategic planning is essential for an agency to define what it seeks to accomplish, identify strategies to efficiently achieve the desired results, and effectively guide modernization efforts. Key elements of IT strategic planning include establishing a plan with well-defined goals, strategies, measures, and timelines to guide these efforts. Our prior work stressed that an IT strategic plan should define the agency’s vision and provide a road map to help align information resources with business strategies and investment decisions.\nAdditionally, as we have previously reported, effective modernization planning is essential. Such planning includes defining the scope of the modernization effort, an implementation strategy, and a schedule, as well as establishing results-oriented goals and measures.\nHowever, FMCSA lacks complete plans to guide its systems modernization efforts. Specifically, the agency’s IT strategic plan lacks key elements. While the agency has an IT strategic plan that describes the technical strategy, vision, mission, and direction for managing its IT modernization programs, and defines the strategic goals and objectives to support its mission, the plan lacks timelines to guide its goals and strategies related to integrated project planning and execution, IT security, and innovative IT business solutions, among others. For example, there were no identified milestones for achieving efficient, consolidated, and reliable IT solutions for IT modernization that meet the changing business needs of users and improve safety.\nThe Acting CIO acknowledged that the strategic plan is not complete and that a date by which a revised plan will be completed has not been established. The official further acknowledged that updating the current strategic plan has not been a priority. However, until the agency establishes a complete strategic plan, it is likely to face challenges in aligning its information resources with its business strategies and investment decisions.\nIn addition, FMCSA has not yet developed an effective modernization plan that defines the overall scope, implementation strategy, and schedule for its efforts. According to the Acting CIO, the agency has recognized the need for such a plan and has recently awarded a contract to develop one by June 2017. If FMSCA develops an effective modernization plan and uses it to guide its efforts, it should be better positioned to successfully modernize its aging legacy systems.",
"GAO’s IT investment management framework is comprised of five progressive stages of maturity that mark an agency’s level of sophistication with regard to its IT investment management capabilities. Such capabilities are essential to the governance of an agency’s IT investments. At the Stage 2 level of maturity, an agency lays the foundation for sound IT investment management to help it attain successful, predictable, and repeatable investment governance processes at the project level. These processes focus on the agency’s ability to select, oversee, and review IT projects by defining and developing its IT governance board(s) and documented processes for directing the governance boards operations. According to the framework, Stage 2 includes the following three processes: Instituting the investment board: As part of this process, an agency is to establish an investment review board comprised of senior executives, including the agency’s head or a designee, the CIO or other senior executive representing the CIO’s interests, and heads of business units that are responsible for defining and implementing the department’s IT investment governance process. The agency’s IT investment process guidance should lay out the roles of investment review boards, working groups, and individuals involved in the agency’s IT investment processes.\nSelecting investments that meet business needs: As part of the process for selecting and reselecting investments, an agency is to establish and implement policies and procedures made by senior executives that meet the agency’s needs. This includes selecting projects by identifying and analyzing projects’ risks and returns before committing any significant funds to them and selecting those that will best support the agency’s mission needs.\nProviding investment oversight: This process includes establishing and implementing policies and procedures for overseeing IT projects by reviewing the performance of projects against expectations and taking corrective action when these expectations are not being met.\nFMCSA has partially addressed the three processes associated with having a sound governance structure to manage its modernization efforts. Table 2 provides a summary of the extent to which the agency’s IT investment management structure implemented the key processes.\nWith regard to establishing an IT investment review board, FMCSA recently restructured its governance boards. Specifically, in January 2017, FMCSA finalized its IT governance order to have three major governance boards that are to serve as the decision-making structure for how IT investment decisions are made and escalated—the Executive Management Team, the Technical Review Board, and the Change Control Board.\nAt the highest level, the Executive Management Team is to provide strategic direction and decision making for major IT investments. The team, which is to meet at least quarterly, is chaired by the FMCSA Deputy Administrator. Below this team, the Technical Review Board is to provide oversight for all IT investments and is chaired by the Director of the Office of Information Technology Policy, Plans, and Oversight. According to the governance order, this team is to meet monthly. Further, underneath the Technical Review Board is the Change Control Board that has responsibility for reviewing and approving system change requests associated with a new system, a major release or modification to an existing system, a change in contract funding, or a change in contract scope. This board, which also is to meet monthly, is chaired by the Enterprise Architect of the Office of Information Technology Policy, Plans, and Oversight. Figure 1 depicts the agency’s governance structure.\nNevertheless, FMCSA has not yet clearly defined roles and responsibilities of all working groups and individuals involved in the agency’s IT governance process. For example, FMCSA’s governance order calls for the Office of Information Technology Policy, Plans, and Oversight to adopt specific IT performance measures, but does not define the manner in which these measures should be tracked.\nMoreover, in August 2016, the agency finalized an order that established 10 integrated functional areas of IT management and the development of an Office of the CIO. However, FMCSA has not yet finalized a new structure for the Office of the CIO or clearly defined how this office and the CIO will manage, direct, and oversee the implementation of these areas as it relates to the agency’s IT governance process. Further, FMCSA officials have not identified time frames for doing so. Without clearly defined roles and responsibilities for the agency’s working groups and individuals involved in the governance process, FMCSA has less assurance that its modernization investments will be reviewed by those with the appropriate authority and aligned with agency goals.\nWith regard to selecting and reselecting IT investments, FMCSA’s January 2017 governance order requires participation and collaboration of the IT system owner, business owner, IT planning staff, and governance boards during the select phases for all investments. However, the agency lacks procedures for selecting new modernization investments and for reselecting investments that are already operational (which makes up the majority of the agency’s IT portfolio) for continued funding. For example, the order calls for the Executive Management Team, comprised of senior executives, to make decisions regarding the funding of the IT portfolio, among other things, and for the Technical Review Board to provide recommendations to the team on the prioritization of IT investments including the allocation of funds. However, the order does not specify the procedures for approving the movement of funds within the IT and capital planning and investment control portfolio.\nAccording to the Acting CIO, FMCSA is currently drafting procedures for selecting new investments and reselecting investments that are already operational and intends to finalize the procedures by the end of May 2017. Upon establishing and implementing such procedures, FMCSA’s decision makers should have a common understanding of the process and the cost, benefit, schedule, and risk criteria that will be used to reselect IT projects.\nWith regard to IT investment oversight, the agency’s order established policies and procedures to ensure that governance bodies review investments and track corrective actions to closure. However, the policies and procedures for reviewing and tracking actions have not yet been fully implemented by the three governance bodies. For example,\nThe boards have not met regularly to review the performance of IT investments, including those investments that are part of its modernization efforts, against expectations. In particular, in calendar year 2016, the Executive Management Team met once and the Technical Review Board met four times. The Change Control Board was not formally approved until January 2017 and, thus, has held no meetings.\nAlso, while the Technical Review Board met four times in calendar year 2016, none of the meetings discussed the cost, schedule, performance, and risks for FMCSA’s major IT modernization investment, systems in development, or existing systems. For example, in February 2016, the IT Director presented to the board members an overview of the statutory provisions commonly referred to as the Federal Information Technology Acquisition Reform Act and their implications for FMCSA. In April 2016, the board members were provided with an overview of OMB’s regulatory guidance for the budget process. In addition, in August 2016, the Technical Review Board met to discuss the planned fiscal year 2017 budget for its IT investments and, in November 2016, the Director of the Office of Information Technology discussed with board members the status of the planning efforts for the IIMS project. The Acting CIO did not attend any of the four meetings.\nFurther, neither the Executive Management Team nor the Technical Review Board discussed with its members the transition of FMCSA’s investments into the cloud environment, to include identifying any key risks. For example, in November 2016, over 70 issues regarding the migration effort were identified by the contractor and a FMCSA official, but none were discussed at the Technical Review Board or Executive Management Team board meetings. As a result, program officials stated that there were delays to program’s transition to the cloud environment because additional time was needed to securely migrate data from multiple legacy platforms into a new central database and conduct further testing.\nAction items have been noted in meeting minutes, but have not been fully addressed or updated to closure. For example, in August 2016, the Capital Planning and Investment Control Coordinator, within the Office of Information Technology, provided an overview of the fiscal year 2017 budget to the Technical Review board members. As part of this discussion, the Director of the Office of Information Technology stated that, during the next board meeting, additional details would be provided on the planned budget for fiscal year 2018. However, the meeting minutes from November 2016 did not include any evidence that this subject was discussed at the next meeting.\nThese weaknesses were due, in part, to the agency not adhering to its IT orders and governance board charters, which establish FMCSA’s governance structure, as described above. As a result, the agency lacks adequate visibility into and oversight of IT investment decisions and activities, and cannot ensure that its investments are meeting cost and schedule expectations and that appropriate actions are taken if these expectations are not being met.",
"According to OMB guidance, the O&M phase is often the longest phase of an investment and can consume more than 80 percent of the total lifecycle costs. Thus, it is essential that agencies effectively manage this phase to ensure that the investments continue to meet agency needs. As such, OMB and DOT direct agencies to monitor all O&M investments through operational analyses, which should be performed annually. These analyses should include assessments of four key factors: costs, schedules, investment performance (i.e., structured assessments of performance goals), and customer and business needs (i.e., whether the investment is still meeting customer and business needs, and identifies any areas for innovation in the area of customer satisfaction).\nFMCSA had not fully ensured that the selected systems—Aspen, MCMIS, Sentri 2.0, and URS—were effectively meeting the needs of the agency. Specifically, none of the program offices conducted the required operational analyses for the four systems. The program offices stated that, in lieu of conducting these analyses, they assessed the key factors of costs, schedules, investment performance, and customer and business needs as part of the capital planning and investment control process. Nonetheless, only one program office (URS) partially met the four key factors. Table 3 provides a summary of the extent to which the four selected systems implemented the key operational analysis factors.\nAspen: The Aspen program office had partially implemented one of the required operational analysis factors and had not implemented the three other factors. Specifically, as part of its plans to modernize this system, FMCSA had taken steps to assess customer and business needs. For example, it reached out to users and found that 33 states use Aspen and the remaining states use their own in-house developed programs or third-party vendor-based systems. However, while the agency collected feedback from users via phone calls and meetings, it had not yet assessed this feedback, including identifying any opportunities for innovation in the areas of customer satisfaction, strategic and business results, and financial performance. In addition, the program office did not assess current costs against life-cycle costs, perform a structured schedule assessment, or compare current performance against cost baseline and estimates developed when the investment was being planned.\nMCMIS: The MCMIS program office had not implemented any of the required operational analysis factors. Specifically, program officials did not assess current costs against life-cycle costs, perform structured assessments of schedule and performance goals, or identify whether the investment supports business and customer needs and is delivering the services it was designed to, including identifying whether the system overlaps with other systems. This is particularly concerning given that all seven users we interviewed stated that the system does not interact well with other systems and users have to access other systems to gather information that they cannot obtain in MCMIS.\nSentri 2.0: Sentri’s program office partially implemented one of the required operational analysis factors and did not implement the three other factors for the component that has been operational since May 2010, also known as Sentri 2.0. Specifically, the program had partially implemented assessments of customer and business needs by reviewing Sentri 2.0 user needs as it develops the business and user requirements for development of Sentri 2.1. However, while all five users we interviewed stated that their feedback regarding Sentri was provided to FMCSA, they were not sure whether the feedback was being implemented. Moreover, the program office had not identified whether the investment supports customer processes, as designed, and is delivering the goods and services it was intended to deliver. In addition, the program did not assess current costs against life-cycle costs or perform structured schedule and performance goal assessments.\nURS: The URS program office partially implemented four of the required operational analysis factors for functionality of the system that was delivered in December 2015. Specifically, the program office developed a business case that outlines costs, schedules, investment performance goals, and customer and business needs. Additionally, the program office communicated with stakeholders through meetings, conferences, webinars, and call centers. For example, it has hosted over 30 webinars to better understand how the system is working for the users. Nevertheless, the program office had not yet conducted an analysis to assess current costs against life-cycle costs, performed a structured assessment of the schedule or performance goals, or ensured the functionality delivered is operating as intended and is meeting user needs. The need for conducting an analysis is particularly pressing for this program since all four system users we interviewed stated that URS is difficult to use and does not work as intended: they stated that they are unable to complete filings, carrier registration, and request changes to DOT numbers.\nWith regard to the deficiencies we identified, the Acting CIO stated that the agency does not yet have FMCSA-specific guidance to assist programs to conduct operational analyses on an annual basis. The Acting CIO stated that FMCSA has drafted guidance, including templates, to assist programs in conducting these analyses and officials in the Office of Information Technology stated that the agency planned to have the guidance finalized by end of June 2017. While finalizing this guidance is a positive step to assist programs in conducting operational analyses, FMCSA does not adequately ensure its systems are effective at meeting user needs. Until FMCSA fully reviews its O&M investments as part of its annual operational analyses, the agency will lack assurance that these systems meet mission needs, and the associated spending could be wasteful.",
"While FMCSA has recognized the need to develop an effective modernization plan and has awarded a contract to do so, it has not completed an IT strategic plan needed for modernizing its existing legacy systems. In addition, while the agency has established governance boards for overseeing IT systems, these boards do not exhibit key processes of a sound governance approach, such as ensuring corrective actions are executed and tracked to closure. Further, FMCSA does not have the processes in place for ensuring that systems currently in use are meeting agency needs or for overseeing its IT portfolio. The four systems we reviewed did not have completed operational analyses that show if a system is, among other things, effective at meeting users’ needs. Until the agency addresses shortcomings in strategic planning, IT governance, and oversight, its progress in modernizing its systems will likely be limited and the agency will be unable to ensure that the systems are working effectively.",
"To help improve the modernization of FMCSA’s IT systems, we are recommending that the Secretary of Transportation direct the FMCSA Administrator to take the following five actions:\nUpdate FMCSA’s IT strategic plan to include well-defined goals, strategies, measures, and timelines for modernizing its systems.\nEnsure that the IT investment process guidance lays out the roles and responsibilities of all working groups and individuals involved in the agency’s governance process.\nFinalize the restructure of the Office of Information Technology, including fully defining the roles and responsibilities of the CIO.\nEnsure that appropriate governance bodies review all IT investments and track corrective actions to closure.\nEnsure that required operational analyses are performed for Aspen, MCMIS, Sentri 2.0, and URS on an annual basis.",
"We provided a draft of this report to the Department of Transportation for review and comment. In its written comments, reproduced in appendix II, the department concurred with our five recommendations.\nThe department also described actions that FMCSA has completed or is finalizing to improve its IT strategic planning and investment governance processes. These actions include updating the FMCSA IT strategic plan and finalizing investment review board charters to better define all stakeholders roles and responsibilities. Effective implementation of these actions should help FMCSA improve the modernization of its IT systems. In addition to the written comments, the department provided technical comments on the draft report, which we incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Transportation, the Administrator of FMCSA, and other interested parties. This report also is available at no charge on the GAO website at http://www.gao.gov.\nShould you or your staff have any questions on information discussed in this report, please contact me at (202) 512-4456 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.",
"The Fixing America’s Surface Transportation Act included a provision for us to conduct a comprehensive analysis of the information technology (IT) and data collection management systems of the Federal Motor Carrier Safety Administration (FMCSA) by June 4, 2017. Our objectives were to (1) assess the extent to which the agency has plans to modernize its existing systems, (2) assess the extent to which FMCSA has implemented an IT governance structure, and (3) determine the extent to which FMCSA has ensured selected IT systems are effective.\nTo address the first objective, we obtained and evaluated FMCSA IT systems modernization documentation that discuss future changes to ensure user needs are met, including its IT strategic plan for fiscal years 2014 to 2016 and systems modernization plans. We analyzed whether these plans complied with best practices that we have previously identified. These practices call for developing a strategic plan that includes defining the agency’s vision and providing a road map to help align information resources with business strategies and investment decisions. We also interviewed agency officials including those from the Office of Information Technology; Enforcement and Compliance, Information Security, and Privacy divisions to discuss the agency’s plans to modernize existing systems, including any actions the agency is taking to identify redundancies among the systems and explore the feasibility of consolidating data collection and processing systems.\nTo corroborate this information, we reviewed the FMCSA’s budgetary data (i.e., its fiscal year 2016 IT portfolio summary) submitted to the Office of Management and Budget (OMB) that identifies all of the agency’s IT investments to identify whether it included any potentially redundant systems. Specifically, we reviewed the name and narrative description of each investment’s purpose to identify any similarities among related investments and discussed any potential redundancies with the Acting Chief Information Officer (CIO).\nFor the second objective, we compared agency documentation, including executive board meeting minutes and briefings from fiscal years 2015 and 2016, FMCSA IT governance orders, and charters, against critical processes associated with Stage 2 of GAO’s IT investment management framework. In particular, Stage 2 of the framework includes the following key processes for effective governance: instituting the investment board; selecting and reselecting investments that meet business needs; and providing investment oversight.\nWe also interviewed agency officials to better understand FMCSA’s governance structure, which included identifying whether the agency is taking appropriate steps with respect to IT governance.\nTo address the third objective, we selected four existing IT systems to review. In selecting these investments, we analyzed FMCSA’s fiscal year 2016 IT portfolio summary submitted to OMB which included the agency’s existing IT, data collection, processing systems, data correction procedures, and data management systems and programs. To assess the reliability of the OMB budget data, we reviewed related documentation, such as OMB guidance on budget preparation and capital planning. In addition, we corroborated with FMCSA that the data was accurate and reflected the data it had reported to OMB. We determined that the budget data was reliable for our purposes of selecting these systems. Specifically, we used the following criteria to select four systems to review:\nAt least one investment must have been identified as a major IT investment, as defined by OMB. FMCSA had only identified one major IT investment in fiscal year 2016.\nThe remaining non-major systems must have had planned operations and maintenance (O&M) spending in fiscal year 2017.\nThe system is mission critical.\nThe program must not have been included in a recent GAO or inspector general review that examined the program’s effectiveness.\nUsing the above criteria, we selected the following four systems: 1. Aspen: A non-major desktop application that collects commercial driver/vehicle inspection details, performs some immediate data analysis, creates and prints a vehicle inspection report, and transfers inspection data into the FMCSA information systems. 2. Motor Carrier Management Information System (MCMIS): A non- major information system that captures FMCSA inspection, crash, compliance review, safety audit, and registration data. It is FMCSA’s authoritative source for the safety performance records for all commercial motor carriers and hazardous materials shippers. 3. Safety Enforcement Tracking and Investigation System (Sentri): A non-major application used to facilitate safety audits and interventions by FMCSA and state users. It is intended to combine roadside inspection, investigative, and enforcement functions into a single interface. 4. Unified Registration System (URS): A major system that is intended to replace the existing registration systems with a single comprehensive, online system and provide FMCSA-regulated entities a more efficient means of submission and management of data pertaining to registration applications.\nWe then assessed the agency’s efforts to determine the effectiveness of these systems in meeting the needs of the agency by reviewing documentation from the four selected systems and compared it to key factors identified in OMB’s guidance on conducting annual operational analysis, which are a key method for examining the performance of investments with O&M funding. More specifically, we assessed whether FMCSA had conducted an operational analysis on each of the systems. For those systems that did not have an analysis performed, we reviewed FMCSA’s IT documentation on the performance of these systems (i.e., business cases and performance management reviews) to determine whether key factors of an operational analysis were conducted. For example, we assessed whether the agency assessed cost, schedule, and investment performance, including its interaction with other systems; and customer and business needs, including adaptability of the system in order to make necessary future changes to ensure user needs are met and areas for innovation in the areas of customer satisfaction.\nWe also conducted interviews with 22 selected system users to obtain insight into whether the identified systems are meeting their needs and any challenges users face in using these systems, including whether the systems are adaptable to future needs and methods to improve user interface. We selected these users based on recommendations from FMCSA program officials and industry stakeholder representatives. Based on these recommendations, we then selected users based on the type of users, including FMCSA users, state agencies, law enforcement officials, and private sector individuals involved in the motor carrier industry. While these user interviews are illustrative, they cannot be used to make generalizable statements about users’ experience as a whole.\nBased on our work to determine selected programs’ effectiveness, we made recommendations regarding deficiencies identified in the report. We did not make recommendations regarding methods to improve user interfaces since two of the selected systems (Aspen and MCMIS) are planned to be modernized and the remaining two systems (Sentri and URS) have components still under development, as discussed in our report.\nWe conducted this performance audit from April 2016 to July 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
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"In addition to the contact name above, the following staff also made key contributions to this report: Eric Winter (Assistant Director), Niti Tandon (Analyst in Charge), Rebecca Eyler, Lisa Maine, and Tyler Mountjoy."
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"question": [
"What is the nature of FMCSA's modernization plan?",
"What else is the existing plan missing?",
"Why hasn't a comprehensive plan been created yet?",
"In what way is the lack of a comprehensive plan holding back FMCSA?",
"What characterizes FMCA's IT governance strategy?",
"How is the investment board lacking?",
"What is the current status of investment procedures?",
"How is FMCSA faring in the area of investment oversight?",
"What is the root of these weaknesses?",
"Why hasn't FMCSA ensured the reviewed programs were meeting their needs?",
"What factors did FMCSA decide were crucial for operational analysis?",
"How did the FMCSA programs perform against these standards?",
"Why didn't they meet all of the standards?",
"What is the risk of the status quo?",
"What was GAO's role in the Fixing America's Surface Transportation Act?",
"What was GAO specifically reviewing?",
"How was GAO to do this?"
],
"summary": [
"The Federal Motor Carrier Safety Administration (FMCSA) initiated a modernization effort in 2011 and developed an information technology (IT) strategic plan that describes the technical strategy, vision, mission, direction, and goals and objectives to support the agency's mission; however, the plan lacks timelines to guide FMCSA's goals and strategies.",
"In addition, the agency has not completed a modernization plan for its existing IT systems that includes scope, an implementation strategy, schedule, results-oriented goals, and measures, although it has recently awarded a contract to develop such a plan.",
"The Acting Chief Information Officer (CIO) said that updating FMCSA's IT strategic plan had not been a priority for the agency.",
"However, without a complete IT strategic plan, FMCSA will be less likely to move toward its ultimate goal of modernizing its aging legacy systems.",
"FMCSA has begun to address leading practices of IT governance, but its investment governance framework does not adequately establish an investment board, select and reselect investments, and provide investment oversight.",
"Specifically, regarding the practice of establishing an IT investment review board, FMCSA has not yet clearly defined roles and responsibilities for key working groups and individuals, including the Office of the CIO.",
"Regarding selecting and reselecting IT investments, FMCSA requires participation and collaboration during the select phases for all IT investments; however, it lacks procedures for selecting new investments and reselecting investments that are already operational for continued funding. According to the Acting CIO, the agency is currently drafting these procedures and intends to finalize them by the end of May 2017.",
"Regarding the practice of IT investment oversight, the agency has policies and procedures to ensure that corrective actions and related efforts are executed and tracked, but they have not yet been fully implemented by the three boards.",
"These weaknesses are due to the agency not adhering to its IT orders that establish its governance structure.",
"FMCSA had not fully ensured that the four systems GAO selected to review are effectively meeting the needs of the agency because none of the program offices completed operational analyses as required by the Office of Management and Budget (OMB).",
"However, as part of its capital planning and investment control process, FMCSA assessed the four key factors of an operational analysis—costs, schedules, investment performance, and customer and business needs.",
"One of the selected programs had partially implemented all four of these factors; two programs had partially implemented one factor, and one program had not addressed any of these factors.",
"This was due to FMCSA not having guidance for conducting operational analyses for investments in operations and maintenance.",
"Until FMCSA fully reviews its operational investments, the agency will lack assurance that these systems meet mission needs.",
"In December 2015, the Fixing America's Surface Transportation Act was enacted and required GAO to review the agency's IT, data collection, and management systems.",
"GAO's objectives were to (1) assess the extent to which the agency has plans to modernize its existing systems, (2) assess the extent to which FMCSA has implemented an IT governance structure, and (3) determine the extent to which FMCSA has ensured selected IT systems are effective.",
"To do so, GAO analyzed FMCSA's strategic plan and modernization plans; compared governance documentation to best practices; selected four investments based on operations and maintenance spending for fiscal year 2016, among other factors, and compared assessments for the investments against OMB criteria; and interviewed officials."
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GAO_GAO-17-677
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{
"title": [
"Background",
"Federal Minimum Wage",
"Poverty Measurement",
"Federally Funded Social Safety Net Programs",
"Characteristics of the Low-Wage Workforce Changed Little from 1995 through 2016",
"Low-Wage Workers Comprised About 40 Percent of the U.S. Workforce Ages 25 to 64",
"Limited Hours Compounded Low-Wage Workers’ Income Disadvantage",
"Low-Wage Workers Remained Highly Concentrated in Five Industries and Six Occupations",
"Increases in Educational Attainment Have Not Led to Higher Wages",
"Poverty Persisted among Working Families, Affecting Those with Minimum Wage Earners and Children the Most",
"Percentage of Working Families in Poverty Has Remained Relatively Constant",
"Poverty Was Most Prevalent among Families with Minimum Wage Earners and Children",
"Families of Low- Wage Workers Consistently Use Certain Federal Social Safety Net Programs, but Several Factors May Limit Eligible Families’ Use",
"Several Factors May Affect Eligible Families’ Participation in Social Safety Net Programs",
"Agency Comments and Our Evaluation",
"Appendix I: Objectives, Scope, and Methodology",
"Analysis of Current Population Survey Data",
"Analysis of Low-Wage Workers",
"Analysis of Families with a Low-Wage Worker",
"Analysis of Factors Affecting Program Participation Decisions of Families with a Low-Wage Worker",
"Appendix II: Select Data on the Percentage of Working Families in Poverty",
"Appendix III: Select Data on the Number of Working Families in Poverty",
"Appendix IV: GAO Contacts and Staff Acknowledgment",
"GAO Contacts",
"Staff Acknowledgment"
],
"paragraphs": [
"",
"The lowest wage that a worker can earn is generally the federal minimum wage. The Fair Labor Standards Act of 1938 first established a minimum wage of 25 cents per hour, which has been raised numerous times eventually reaching its current level of $7.25 per hour. Since 1980 the federal government has increased the federal minimum wage various times; however, the actual purchase power after adjusting for inflation (i.e., the real value) of the minimum wage has trended downward (see fig. 1).\nMany states have enacted their own minimum wage laws, and under the provisions of the Fair Labor Standards Act of 1938, an individual is generally covered by the higher of the state or federal minimum-wage rates. As of January 1, 2017, according to the Department of Labor, 29 states and the District of Columbia had minimum wage rates above the federal minimum rate, and 2 states had minimum wage rates below the federal minimum rate. State minimum wages ranged from $5.15 per hour in Georgia and Wyoming to $11.50 per hour in the District of Columbia (see fig. 2).\nAccording to BLS data, hourly workers earning at or below the federal minimum wage of $7.25 per hour made up 1.6 percent of total wage and salary workers.in 2016. The number of minimum wage workers since 1995 ranged from a low of 1.7 million in 2006 to a high of 4.8 million in 1997 (see fig. 3).\nAccording to BLS, more than one-half of hourly workers earning the federal minimum wage were employed part-time in 2016, in contrast to about one-quarter of all hourly workers. By working part-time—defined by BLS as 1 to 34 hours per week—these workers are less likely to receive health insurance and other benefits from their employers. Research has also shown that many contingent workers, including some part-time workers, experience fluctuations in their earnings and employment status, making them more likely to seek assistance from federally funded social safety net programs, if eligible.",
"As we previously reported, the official poverty measure used to provide information on how many people are “in poverty” in the United States was developed in the 1960s, based on the cost of food at that time. Each year Census updates its poverty thresholds—the income thresholds by which households are considered to be in poverty depending on family size. In 2016, the poverty thresholds ranged from $11,511 to $53,413, depending on family size and the age of the head of household (see table 1).\nThe Department of Health and Human Services (HHS) uses these poverty thresholds to update its poverty guidelines each year. These guidelines are used as an eligibility criterion of a number of federal programs, including certain low-income programs.\nWe also previously reported that the official poverty measure had not changed substantially since it was first developed, and concerns about its inadequacies had resulted in efforts to develop a new measure. For example, poverty threshold (the income level used to determine who is “in poverty” each year) is based on three times the cost of food and does not take into account the cost of other basic necessities, such as shelter and utilities. Additionally, the official poverty measure considers cash income in determining a household’s income, but does not include additions to income based on the value of noncash assistance (e.g., food assistance) or reductions based on other necessary living expenses (e.g., medical expenses or taxes paid). A National Academy of Sciences panel on poverty and an interagency technical working group suggested ways that a new poverty measure could address some of these concerns. Based on these suggestions, Census, with support from BLS, developed a new poverty measure—the Supplemental Poverty Measure (SPM)—in 2010. Unlike the official poverty measure, the SPM adds other forms of non- cash benefits, such as tax credits and SNAP benefits, and subtracts expenses, such as federal, state, and local income taxes, when calculating a household’s resources.",
"We have previously reported that federally funded social safety net programs generally provide targeted assistance to specific groups within the low-income population, such as people with disabilities and workers with children. In 2015, we identified more than 80 federal programs (including 6 tax expenditures) that provided aid to individuals and families who may earn too little to meet their basic needs, cannot support themselves through work, or are disadvantaged in other ways. According to the Congressional Research Service, five of these programs— Medicaid, SNAP, TANF, EITC, and ACTC—accounted for $551.2 billion in spending in fiscal year 2015, or two-thirds of total federal spending on low-income assistance programs in that year.\nEligibility criteria vary for these five federally funded programs and can include both financial and nonfinancial criteria. As we have previously reported, some programs are administered by states, which may apply their own eligibility criteria. Assistance may be provided to an individual, a family, or household. More recently, we reported that these programs’ eligibility criteria varied significantly in terms of the income limits used. In addition, we found that programs differed in the ways they measured applicants’ income, the standards and methods used to determine the income limit (i.e., the maximum income an applicant may have and still be eligible for the program), whether this limit is set nationwide or varies by state or locality, and the amount of the income limit itself. We also found that rules for determining the maximum allowable income that an applicant may have a recipient could earn and still be eligible, the amounts themselves, and whether they are set nationwide or vary by state or locality, also varied significantly. For example, in TANF, income limits are determined by states. We found that some states use HHS’s poverty guidelines, which are adjusted annually, while others had a limit set in state law, which is not adjusted. In addition to having income tests, we found that some programs limit assets that an eligible individual or family may hold, while others do not. Furthermore, we found that programs may have ongoing requirements that families must satisfy to remain enrolled and receiving assistance. For example, we found that some programs periodically require participants to recertify that their income remains below the income limit.",
"",
"About 40 percent of U.S. workers ages 25 to 64 earned hourly wages of $16 or less (in constant 2016 dollars) over the period 1995 through 2016, according to our analysis of CPS data (see fig. 4). In each of the 6 years we reviewed, an estimated 1 to 5 percent of these workers earned an hourly wage or less of that year’s federal minimum wage, about 17 percent earned above federal minimum wage to $12 per hour, and about 18 percent earned above $12 per hour to $16 per hour.\nThe stagnation of low-wage workers in the workforce as depicted in our analysis of CPS data is also consistent with the literature on income inequality. Recent studies have found that while average wages experienced little or no change from 1973 through 2011 (when held in constant 2011 dollars), income inequality increased as a result of income growth among high-wage workers.",
"Low-wage workers, on average, worked fewer hours per week from 1995 through 2016 than similar workers earning higher wages, according to our analysis of CPS data. In each of the years we reviewed, our estimates showed that workers who earned the federal minimum wage or less worked an average of about 30 hours per week, workers earning above the federal minimum wage to $12 per hour worked an average of about 33 hours per week, and those earning $12.01 to $16 per hour worked an average of about 37 hours per week (see fig. 5).\nOne option that a worker has to increase earnings is working multiple jobs. Our analysis of CPS data found that few low-wage workers held multiple jobs and low-wage workers tended to work multiple jobs at the same rate as workers earning higher wages. Specifically, our estimates showed that about 5 percent of low-wage workers in each low-wage category worked multiple jobs, or about the same percent as workers earning more than $16 per hour in each of the years we reviewed.\nThe combination of low wages and limited hours can affect a worker’s earnings and potential eligibility for federal social safety net programs. The reported growth of involuntary part-time workers—workers who would prefer to work more hours but are limited by economic conditions such as employers cutting hours or lack of full-time job opportunities—has likely reduced the average hours that low-wage workers can work. According to BLS, the number of these involuntary part-time workers peaked during the Great Recession and has yet to return to pre-recession levels. In 2016, BLS estimated that 5.6 million workers were involuntary part-time workers, of which about 61 percent said they were part-time because of business conditions and 34 percent said they could only find part-time employment. In previous reports, we found that low-wage workers employed on a contingent basis were more likely to earn low wages, less likely to have employer-sponsored benefits, and more likely to rely on social safety net programs. Low-wage workers who provide the sole income for a family may have income that is low enough to qualify them for federally funded social safety net programs. As shown in table 2, a hypothetical low-wage single parent who served as the sole income provider for a family of three would qualify for several programs of the five that we included in our analysis provided any other applicable eligibility requirements were also met.",
"The same five industries consistently employed the majority of low-wage workers from 1995 through 2016—leisure and hospitality, education and health, professional and business services, wholesale and retail trade, and manufacturing. Specifically, in each of the years we reviewed, these five industries employed approximately 70 percent of low-wage workers. Comparatively, these five industries also employed about 62 percent of workers earning more than $16. (See fig. 6). Our estimates showed the highest concentration of low-wage workers to be in the health and education industry with an estimated 22 to 25 percent of workers in each of our wage categories in this industry.\nOccupational Concentration of Low-Wage Workers The following six occupational categories employed the majority of low-wage workers: Food preparation and serving - fast food workers, cafeteria, and restaurant workers\nSales - cashiers, retail salespersons, and sales representatives\nOffice and administrative support - secretaries and administrative assistants, payroll and time-keeping clerks, and mail carriers\nBuilding grounds cleaning and maintenance - janitors and building keepers, maids and housekeeping workers, and grounds maintenance workers\nPersonal care and service - hairdressers and barbers, child care workers, and home care aides Transportation and materials moving - bus drivers, taxi drivers, ambulance drivers, and parking lot attendants Low-wage workers were also highly concentrated in six occupational categories in 2016—food preparation and serving, sales, office and administrative support, building and grounds cleaning and maintenance, personal care and service, and transportation and material moving. (See textbox above for more detailed descriptions of these occupational categories). Our estimates showed that half or more of low-wage workers were employed in one of these six occupational categories in 2016 whereas 26 percent of higher-wage workers were employed in these categories (see fig. 7).\nAlthough low-wage workers were concentrated in these six occupations, the amount of concentration varied by the amount of wages earned. For example, our estimates showed that workers earning hourly wages of federal minimum wage or below in 2016 were most concentrated in personal care and services, sales, and food service and preparation, with an estimated 11 to 12 percent of these workers participating in each occupation. In contrast, our estimates showed that workers earning $12.01 to $16 per hour were concentrated in office and administrative support occupations, with an estimated 18 percent of these workers participating in this occupation.",
"While low-wage workers had lower levels of education, on average, than workers earning higher wages, increases in their educational attainment from 1995 through 2016 generally did not lead to higher wages. Specifically, in each year we reviewed, about 68 percent of low-wage workers and about half of higher-wage workers had a high school diploma. However, the proportion of low-wage workers with college degrees also increased during this time. Our estimates showed that the percentage of workers earning $12.01 to $16 per hour with college degrees increased from 16 percent in 1995 to 22 percent in 2016. A similar trend occurred in the other low-wage categories. For example, the percentage of workers who had at least a high-school diploma yet earned the federal minimum wage or below increased from an estimated 70 percent in 1995 to 80 percent in 2016.",
"Families with a low-wage worker ages 25 to 64 shared several common characteristics, according to our estimates based on CPS data. For example, our estimates showed that the majority of these families were not in poverty, had just one low-wage worker, and derived 80 percent or more of their family income from wages and salaries. In addition, on average, married families had two workers (contributing to a family income that often exceeded the poverty threshold); families with children had two children; and between 5 and 9 percent of families included someone over age 65.",
"The majority of families with a low-wage worker were not in poverty, yet the percentage of families that were in poverty persisted in each of the years we reviewed and in each of the low-wage categories we examined. While higher wages were generally associated with a lower percentage of families in poverty in a given year, poverty levels among families of low-wage workers changed little in the past 2 decades across all three wage categories that we examined. (See fig. 8.)",
"In almost all of the years we reviewed, the presence of a child in a family with a low-wage worker was associated with higher rates of poverty regardless of the worker’s wage category or marital status. For example, across all low-wage categories we examined from 1995 through 2016, 4 to 20 percent of married families with children were in poverty compared to 7 percent or fewer of married families without children. However, in 1995 the higher rate of poverty was not statistically different based on children for unmarried households in all of the wage categories. In addition, while poverty was most prevalent among families with a worker earning the federal minimum wage or below, it was most prevalent among single-parent families earning this amount. (See fig. 9.)\nOur analysis of CPS data found sizeable percentages of families with a low-wage worker who had incomes just above the poverty threshold, potentially limiting their access to certain federal social safety net programs. The estimated percentage of families with incomes placing them just beyond the poverty thresholds remained relatively unchanged across the years we reviewed (see table 3).",
"Families with a low-wage worker may be eligible for and use one or more federal social safety net programs. The largest of these programs is Medicaid, which HHS reported had 69 million individuals enrolled in April 2017. Our estimates based on CPS data found that the percentage of families with a low-wage worker enrolled in Medicaid rose significantly over the past 2 decades, almost tripling for families with a worker earning more than the federal minimum wage between 1995 and 2016 (see fig. 10). In 2016, about 29 percent of families with a worker earning federal minimum wage or below, 31 percent of families with a worker earning above federal minimum wage to $12 per hour, and 21 percent of families with a worker earning $12.01 to $16 per hour were enrolled in Medicaid. This growth in enrollment coincided with a rise in overall Medicaid enrollment (i.e., not just families with a low-wage worker), which according to HHS, doubled during this time frame. Researchers have noted that key factors affecting the growth in Medicaid enrollment in the past decade were the 2008 recession and the expansion of Medicaid in some states under the Patient Protection and Affordable Care Act.\nFamilies with a low-wage worker may also be eligible for and use other federal social safety net programs (e.g., TANF, SNAP, EITC, and ACTC). Our estimates showed that 5 percent or less of families with a low-wage worker received TANF cash assistance at least once in the prior calendar year from 1995 through 2016. In previous work, we reported that as of July 2015, TANF income eligibility thresholds for a family of three ranged from $0 to $1,660 per month, depending on the state, with a median income threshold of $817. Given these thresholds, most low-wage workers, including workers earning federal minimum wage or below, would generally earn too much to qualify for TANF cash assistance in most states. In this report, our estimates showed that the percentage of families with a worker earning more than the federal minimum wage receiving SNAP benefits at least once in a calendar year doubled from 1995 to 2016. In 2016, about 16 percent of families with a worker earning federal minimum wage or below, 15 percent of families with a worker earning above federal minimum wage to $12 per hour, and 8 percent of families with a worker earning $12.01 to $16 per hour received SNAP benefits. The U.S. Department of Agriculture (USDA), which administers SNAP, has reported that the overall increase in SNAP enrollment from 1995 to 2014 was influenced by economic conditions, such as higher poverty rates during recessionary periods, and policy changes, such as increases the value of a vehicle that could be excluded when calculating a family’s income. Finally, our estimates showed that EITC eligibility generally increased among families with a worker earning above federal minimum wage over this time frame, with an estimated 23 to 35 percent of those families eligible in 2016; whereas eligibility for the ACTC generally remained unchanged among families with a low-wage worker.\nA low-wage worker’s family type also influenced the extent that families used social safety net programs. When comparing program usage across different family types, we generally found that regardless of the low-wage workers’ wages, a greater percentage of single-parent families used selected programs than the other family types we examined. For example, among families with a worker earning federal minimum wage or below in 2016, our estimates showed that two-thirds of married families without children and about half of married families with children used none of the aforementioned programs. In contrast, more than half of single-parent families used three or more of the programs (see fig. 11).",
"Agencies that administer the selected social safety net programs indicated that eligible working families participate in these programs at a lower rate than the total eligible population for reasons that are not well known. For example, IRS reported that in 2013, 80 percent of eligible filers—all of whom had earnings—claimed the EITC, with state rates ranging from 72 percent in the District of Columbia to 85 percent in Hawaii. Additionally, USDA estimates show that a significantly smaller percentage of eligible households with a wage earner participated in SNAP than other eligible households—70 percent compared to 83 percent in fiscal year 2014. Although some research has examined the reasons why eligible people choose not to participate in social safety net programs, our literature review found few studies that focused specifically on working families rather than the general eligible population, none of which had findings that were generalizable to the experiences of working families nationwide.\nOur interviews with state and local officials for the selected social safety net programs, representatives from nonprofit organizations, and researchers helped provide additional context for the experiences of working families. Specifically, the officials we interviewed identified several reasons why families with a low-wage worker may decline to participate in assistance programs for which they are eligible.\nAssumed ineligibility. Some workers may assume that earning income at a job automatically makes them ineligible for benefits, even if their earnings are low enough to qualify for assistance. A program official in Atlanta told us that eligible families are generally aware of the existence of a program, but assume they have to hit “rock bottom” before they can qualify for assistance. A researcher also told us that families that had exceeded the eligibility threshold in the past may assume they remain ineligible, even if their income has decreased.\nLack of time. Some workers may find it difficult to take time off from work to apply for benefits in person at a program office, if required. Some states have implemented online or phone application processes to make programs more accessible to working families. However, as a nonprofit director in Santa Fe cautioned, not all families have Internet access and the proficiency required to complete an application online.\nComplex program requirements. Some families may find program documentation requirements complex and difficult to fulfill. For example, the state TANF application in one city we reviewed requires applicants to provide information verifying their earned and unearned income, money in the bank, immigration status, identity, vehicle registration, and immunizations of children under 7 years of age. Other program documents state that beneficiaries must also resubmit financial information, along with verification of their children’s school attendance, semi-annually or whenever changes occur that would affect their eligibility. Researchers have found that recent changes in the SNAP income documentation requirements, such as requiring less frequent recertification of income and eligibility, increased participation and retention of SNAP benefits. In addition, some states have combined applications for TANF, SNAP, and/or Medicaid into a single form, reducing the amount of paperwork that applicants must submit.\nStigma. Some working families may be especially sensitive to the stigma associated with some social safety net programs, because their earnings did not make them as self-sufficient as they hoped. To avoid this stigma, according to several officials we interviewed, eligible working families may choose not to participate in a program if their income is sufficient for them to survive without assistance. For example, a 2007 study of 115 EITC recipients in the Boston area found that respondents who had received TANF benefits desired to leave the program as soon as possible. In contrast, according to a caseworker in San Francisco, while unemployed families face the same stigma, they cannot afford to refuse any benefits for which they qualify.\nMinimal benefit amounts. SNAP, TANF, EITC, and ACTC have means-tested structures that may reduce benefit levels as recipients’ incomes increase. Several officials told us that at some point the benefits may become too small to be worth the effort of obtaining them. For example, a study of low-income customers of a large tax preparation service in two counties in California during the 2007 tax season found that 16 percent of those who had previously applied for SNAP had stopped pursuing the benefits because the “hassle was not worth it.”\nConfusing tax rules. Some families may find the process of claiming the EITC and ACTC on their tax returns to be confusing. For example, a nonprofit director in the District of Columbia told us that applying for these tax credits can be complex, especially the requirements for qualifying children and filing status, and families claiming the credits may need high quality and costly assistance to prepare their taxes. To help mitigate this complexity, IRS encourages individuals who may qualify for the tax credits to visit one of the more than 12,000 free tax help locations across the country, but this task may also interfere with some individuals’ working hours.",
"We provided a draft of this report to the Secretary of Labor and the Secretary of Commerce for comment. Each agency provided technical comments, which we incorporated in the report, as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Department of Labor, the Department of Commerce, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact Cindy Brown-Barnes at (202) 512-7215 or Oliver Richard at (202) 512- 8424.You may also reach us by e-mail at [email protected] or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who contributed to this report are listed in appendix IV.",
"Our review focused on the following questions: (1) what are the characteristics of the low-wage workforce and how have they changed over time, (2) to what extent are families with low-wage workers in poverty, and (3) to what extent do families with low-wage workers participate in selected social safety net programs and what factors affect their participation.",
"After discussions with agency officials, we identified the Current Population Survey (CPS) as the data source best suited to answer our research questions. The CPS is a national survey designed and administered jointly by the Census Bureau (Census) and the Department of Labor’s Bureau of Labor Statistics (BLS) and it contains data on individual earnings, as well as poverty rates of families and individuals. CPS is a key source of official government statistics on employment and unemployment in the United States and is the data source for several BLS and Census reports addressing issues similar to those in our objectives. For example, it is used to produce a BLS report on the characteristics of minimum wage workers and a Census report on the supplemental poverty rate.\nThe CPS is conducted on a monthly basis, but different questions are asked in different months during the year. Respondents are surveyed over two separate 4-month periods. Information on hourly wages and other labor force topics are collected on a monthly basis of a sub-sample of respondents. Information on poverty, program participation and income over the prior calendar year is collected annually in the Annual Social and Economic Supplement (ASEC), conducted in March. In consultation with Census officials, we combined information on hourly wages and poverty and program participation, by linking respondents of the ASEC to the months those respondents answered questions about hourly wages (March, April, May, and June). We used the CPS years 1995, 2000, 2005, 2010, 2015 and 2016.\nEstimates produced from CPS data are subject to sampling error. For all of our estimates we weighted observations based on the monthly weight and generated standard errors under the assumption of with replacement sampling using state as a stratification variable. To the extent possible, we compared our estimates of values published by Census derived from our weighting procedures and standard errors to reported values for that year and found them to be consistent. In addition to estimates, we generated standard errors or the margin of error for the 95 percent confidence interval, and report them with estimates in figures and tables. Based on our data checks, review of documentation and interviews with agency officials, we found the CPS data to be sufficiently reliable for our purposes. However, our method of estimating variance results in standard errors that are relatively conservative; that is, the 95 percent confidence intervals are wider than those resulting from the use of replicate weights.",
"We relied on the monthly CPS information to obtain information about individual hourly wages to determine whether an individual was a low- wage worker. We relied on estimated hourly wages to determine the wage rate of salaried individuals, though in some cases we used reported hourly wages; to estimate hourly wages we used a method provided by BLS economists. This method included observations of (1) workers who reported an hourly wage and (2) salaried workers who reported weekly wages. We included both types of workers in our sample to obtain a broader spectrum of low-wage workers. This method also takes into account potential overtime hours worked and individuals working multiple jobs. We identified three mutually exclusive categories of low-wage workers earning:\n110 percent of the federal minimum wage or below (salaried and hourly). This group consisted of workers that earned 110 percent of the federal minimum wage or below (based on the federal minimum wage in each of the years that we reviewed).\nAbove 110 percent of the federal minimum wage to $12.00. This group consisted of workers that earned above110 percent of the federal minimum wage in that year but not more than $12.00 (in constant 2016 dollars). $12.01 to $16.00. This group consisted of workers that earned between $12.01 and $16.00 (in constant 2016 dollars).\nTo define these groups, we only included workers ages 25 to 64—a definition used in prior GAO work on the low-wage workforce. We used this definition to ensure that our sample included workers who were more likely to be independent, out of school, and less likely to be earning a retirement pension.\nFor the groups described above, we reported the following statistics: occupation, industry, whether an individual worked multiple jobs, education level, and total number of hours worked at all jobs.",
"As stated above, we relied on the ASEC to obtain information about the poverty rate and program participation of families.\nFamily type: The unit of analysis within the CPS data was the “family record.” We examined four different family types: (1) married couple families with children; (2) married couple families without children; (3) single-parent families with children; and (4) other families. The “other families” category covers a wide variety of living situations, such as single adults living alone, but does not include married couples or a single-parent living with children.\nPoverty: We relied on Census’ determination within the ASEC survey to determine whether a family was in poverty. We used two different poverty measures. The official poverty measure measures a family’s resources against a poverty threshold that varies by the number of supported adults and children. However, it excludes certain types of resources, such as in-kind assistance (such as Supplemental Nutrition Assistance Program benefits). We also used the Supplemental Poverty Measure, which is also provided by Census. The Supplemental Poverty Measure includes some in-kind assistance, but also deducts certain expenses such as child care from family resources. In 2016, Census reported that overall, the national rates of poverty are similar based on the two measures.\nProgram participation: We relied on Census’ determination within the ASEC survey to determine whether a family participated in the following federal social safety net programs: EITC, ACTC, Medicaid, SNAP, and TANF cash assistance. Specifically, we measured the use of programs in the following ways:\nMedicaid enrollment: Anyone in the family enrolled in Medicaid, based on self-report.\nSNAP participation: The family received SNAP benefits during the prior calendar year, based on self-report.\nTANF participation: Anyone in the family received TANF cash assistance during the prior calendar year, based on self-report.\nEITC eligibility: Anyone in the family eligible for EITC receipt during the prior calendar year. Census determines EITC eligibility based on income and family structure.\nACTC eligibility: Anyone in the family eligible for ACTC receipt during the prior calendar year. Census determines ACTC eligibility based on income and family structure.\nAn important limitation to our analysis on program participation is that the use of the programs reported by CPS has been noted by researchers to be imprecise. The sources of imprecision are not fully known, and likely depend on the program. In the cases of Medicaid, SNAP, and TANF cash assistance, where benefit receipt is self-reported, CPS data are known to underreport program benefits, perhaps because a stigma is associated with its use. In addition, we reported that the Urban Institute staff found that CPS data captured about 61 percent of TANF cash assistance benefits received and 57 percent of SNAP benefits received in 2012. In the case of EITC and ACTC, Census imputes eligibility for the credits from reported income and other information about the family. According to researchers, in some cases the CPS will overstate usage of the EITC, by imputing the credit to those that do not claim it. In other cases, they will understate usage because they will fail to assign the credit to those that do claim it. However, as noted earlier, we used these data because they were the best available for the analysis we wished to conduct.",
"To examine what is known about the reasons eligible working families do not participate in the five selected federal programs, we conducted a literature review of academic, government, and think tank reports published from 2006 to 2016. We excluded reports that we determined did not have sufficient methodological rigor.\nTo gather examples and current information on factors influencing families’ decisions in a variety of settings, we interviewed researchers and industry groups as well as state and local officials at the selected social safety net programs and community nonprofit organizations that work with low-wage working families. We selected organizations from four metropolitan areas: Atlanta, San Francisco, Santa Fe, and Washington, D.C. The metropolitan areas represent a range of local minimum wage levels relative to the federal minimum wage, costs of living, and participation rates in the selected social safety net programs. We interviewed one to two state or local government or nonprofit agencies in each of these locations, but did not cover all five programs in each of the four locations.\nWe conducted a content analysis of the reports identified during our literature review and information gained in our interviews to identify factors that applied specifically to families with a low-wage worker. The information we gathered from the literature and interviews is not generalizable, but is used to provide examples of factors affecting working families who are eligible for, but not receiving, assistance from social safety net programs.",
"Margins of error for 95 percent confidence interval (+/-)\nMargins of error for 95 percent confidence interval (+/-)\nMargins of error for 95 percent confidence interval (+/-)\nMargins of error for 95 percent confidence interval (+/-)",
"The following table presents the estimated total number of families with a worker ages 25 to 64 and the estimated number of these families in poverty. The table provides estimates based on the type of the worker’s family type and hourly wage. As discussed in appendix I, to develop these estimates, we merged multiple months of Current Population Survey (CPS) survey data with data from the Annual Social and Economic Supplement (ASEC) survey to CPS to estimate poverty among families with low-wage workers. When we performed this procedure, the match rate between the datasets in each year was at least 90 percent, but varied by year. As a result, the estimates of the populations included in the table below may underestimate the actual number of families in poverty by as much as 10 percent. Because the extent of underestimation varied by year, conclusions based on comparisons of the estimates across years should be avoided.\nIn addition, the margin of error was larger than the estimated number in many cases, which limited what we could report. Specifically, we did not report the number of families with incomes less than 50 percent of the poverty threshold. We did report estimates of the percentage of families with incomes less than 50 percent, by family type. Table 5 provides the estimated numbers for this group, with the margins of error that were not included in the body of the report.",
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"In addition to those named above, Kimberley Granger and Benjamin Bolitzer, Assistant Directors; Andrea Dawson and Jonathan S. McMurray, Analysts-in-Charge; Brittni Milam, Michael Naretta, Anna Maria Ortiz, Rhiannon Patterson, and Amanda Pritchard made key contributions to this report. Also contributing to this report were Susan Aschoff, Rachel Frisk, Alexander Galuten, Grant Mallie, Joel Marus, Sheila McCoy, Jean McSween, Mimi Nguyen, Jessica Nierenberg, Michelle Rosenberg, and Almeta Spencer."
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"question": [
"What did GAO determine about low-wage workers?",
"How has their percentage of the U.S. workforce developed?",
"What is the percentage of low-wage workers in the U.S.?",
"What is the result of the combination of low wages and few hours?",
"What characterized families with a low-wage worker?",
"How has this phenomenon changed in the past two decades?",
"What is the relationship between these families and TANF?",
"How did family type influence these outcomes?",
"Why may families choose not to participate in such programs?",
"What did GAO analyze?",
"How does GAO define low-wage workers?",
"How did GAO conduct their study?"
],
"summary": [
"According to GAO's analysis of data in the Census Bureau's Current Population Survey (CPS), on average, low-wage workers worked fewer hours per week, were more highly concentrated in a few industries and occupations, and had lower educational attainment than workers earning hourly wages above $16 in each year GAO reviewed—1995, 2000, 2005, 2010, 2015 and 2016.",
"Their percentage of the U.S. workforce also stayed relatively constant over time.",
"About 40 percent of the U.S. workforce ages 25 to 64 earned hourly wages of $16 or less (in constant 2016 dollars) over the period 1995 through 2016.",
"The combination of low wages and few hours worked compounded the income disadvantage of low-wage workers and likely contributed to their potential eligibility for federal social safety net programs.",
"Families with a worker earning $16 or less per hour consistently used selected federally funded social safety net programs between 2005 and 2016, with varied factors affecting eligible families' participation.",
"GAO estimated that the percentage of these families enrolled in Medicaid rose significantly over the past 2 decades, almost tripling among families with a worker earning more than the federal minimum wage between 1995 and 2016.",
"In contrast, an estimated 5 percent or less of these families received cash assistance from the Temporary Assistance for Needy Families (TANF) program at least once in the prior calendar year from 1995 through 2016.",
"A low-wage worker's family type also influenced the extent that families used selected social safety net programs. For example, among families with minimum wage earners in 2016, GAO estimated that about half or more married families used none of the programs GAO examined—Medicaid, TANF, Supplemental Nutrition Assistance Program, Earned Income Tax Credit, and Additional Child Tax Credit—while more than half of single-parent families used three or more.",
"Program officials and others told GAO that eligible working families may not participate in programs for a variety of reasons, including time needed to apply for benefits, low benefit amounts, and assumed ineligibility.",
"GAO analyzed CPS data from 1995, 2000, 2005, 2010, 2015, and 2016 on worker characteristics, family poverty, and participation in social safety net programs.",
"GAO defined low-wage workers as those workers ages 25 to 64 earning $16 or less per hour.",
"In addition, GAO interviewed officials with state and local social safety net programs and other experts in four metropolitan areas—Atlanta, San Francisco, Santa Fe, and Washington, D.C.—representing a range of local minimum wage levels relative to the federal minimum wage, costs of living, and participation rates in five selected federally funded social safety net programs."
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CRS_RS21625
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{
"title": [
"",
"Introduction and Overview of the Currency Issue",
"Background on China's Currency Policy",
"2005: China Reforms the Peg",
"2008: RMB Appreciation Halted",
"2010: RMB Appreciation Resumes",
"Factoring in Inflation and Trade-Weighted Flows",
"Concerns in the United States over China's Currency Policy: Trade Deficits and Jobs",
"Legislative Proposals to Address Undervalued Currencies",
"Legislation in the 113th Congress",
"H.R. 1276: The Currency Reform for Fair Trade Act",
"S. 1114: The Currency Exchange Rate Oversight Reform Act of 2013",
"The Obama Administration's Position and Policies",
"An Economic Analysis of the Effects of China's Currency on the U.S. Economy",
"What Is the RMB's \"True Value\"? Can it Be Accurately Estimated?",
"The Debate over the Effects of Exchange Rate Appreciation on Trade Flows and the Deficit",
"The J Curve Effect",
"The Role of Exchange Rate Pass-Through",
"China's Role in the Global Supply Chain",
"Underlying Macroeconomic Imbalances Are Unlikely to Disappear",
"Differing Opinions on Making RMB Appreciation a Top U.S. Trade Priority",
"Winners and Losers of RMB Appreciation from an Economic Perspective",
"Effect on U.S Exporters and Import-Competitors",
"Effect on U.S. Consumers and Certain Producers",
"Effect on U.S. Borrowers",
"Net Effect on the U.S. Economy",
"China's Perspective and Concerns: Economic Growth and Stability",
"The Effects of an Undervalued RMB on China's Economy",
"Policy Options for the RMB and Potential Outcomes",
"Appendix. Indicators of U.S. and Chinese Economic Imbalances",
"Current Account Balances, Savings, and Investment",
"Chinese Investment and Consumption Relative to GDP",
"Sources of China's Economic Growth"
],
"paragraphs": [
"",
"China's policy of intervention to limit the appreciation of its currency, the renminbi (RMB) against the dollar and other currencies has become a major source of tension with many of its trading partners, especially the United States. Some analysts contend that China deliberately \"manipulates\" its currency in order to gain unfair trade advantages over its trading partners. They further argue that China's undervalued currency has been a major factor in the large annual U.S. trade deficits with China and has contributed to widespread job losses in the United States, especially in manufacturing. President Obama stated in February 2010 that China's undervalued currency puts U.S. firms at a \"huge competitive disadvantage,\" and he pledged to make addressing China's currency policy a top priority. At a news conference in November 2011, President Obama stated that China needed to \"go ahead and move towards a market-based system for their currency\" and that the United States and other countries felt that \"enough is enough.\"\nLegislation to address China's currency policy has been introduced in every session of Congress since 2003. The House passed currency legislation in 2010 and the Senate did so in 2011, although none became law. On March 20, 2013, Representative Sander Levin introduced H.R. 1276 to \"clarify that U.S. countervailing duties may be imposed to address subsidies relating to a fundamentally undervalued currency of any foreign country.\" On June 7, 2013, Senator Sherrod Brown introduced S. 1114 , which would require action against certain misaligned currencies. In recent years, congressional concerns over misaligned (or undervalued currencies) have extended to other countries as well, leading some Members to propose that currency provisions be included in future U.S. trade agreements.\nChina began to gradually reform its currency policy in July 2005, and between then and the end of June 2013, the RMB has appreciated by 34% on a nominal basis (and 42% on an inflation-adjusted basis) against the U.S. dollar. In addition, China's trade surpluses have fallen sharply in recent years and its accumulation of foreign exchange reserves has slowed. These factors have led some analysts to conclude that the RMB exchange rate with the dollar may be approaching market levels, or is, at best, only modestly undervalued. However, other analysts contend that the RMB remains significantly undervalued against the dollar and complain that the RMB has appreciated little against the dollar since the end of 2011. Thus, they argue that continued pressure must be applied until the Chinese government adopts a market-based exchange rate.\nAlthough economists differ as to the economic effects an undervalued RMB might have on the United States (many cite both positive and negative effects), most agree that greater currency flexibility by China would be one of several reforms that would help reduce global imbalances, which are believed to have been a major factor that sparked the global financial crisis and economic slowdown. They further contend that currency reform is in China's own long-term interests because it would boost economic efficiency. China's government has pledged to continue to make its currency policy more flexible, but has maintained that appreciating the RMB too quickly could cause significant job losses (especially in China's export sectors), which could disrupt the economy.\nSome economists question whether RMB appreciation would produce significant net benefits for the U.S. economy. They argue that prices for Chinese products would rise, which would hurt U.S. consumers and U.S. firms that use imported Chinese components in their production. In addition, an appreciating RMB might lessen the Chinese government's need to purchase U.S. Treasury securities, which could cause U.S. interest rates to rise. It is further argued that an appreciating currency would do little to shift manufacturing done by foreign-invested firms (including U.S. firms) in China to the United States; instead, such firms would likely shift production to other low-cost East Asian countries. Finally, it is argued that an appreciating RMB might boost some U.S. exports to China, but the effects of lower prices for U.S. products in China could be negated to a large extent by China's restrictive trade and investment barriers. Such analysts view currency reform as part of a broad set of goals that U.S. trade policy should pursue. These goals include inducing China to rebalance its economy by making consumer demand, rather than exports and fixed investment, the main sources of China's economic growth; eliminate industrial policies that seek to promote and protect Chinese firms (especially state-owned firms); reduce trade and investment barriers; and improve protection of U.S. intellectual property rights.\nThis report provides an overview of the economic issues surrounding the current debate over China's currency policy. It identifies the economic costs and benefits of China's currency policy for both China and the United States, and possible implications if China were to allow its currency to significantly appreciate or to float freely. It also examines legislative proposals that seek to address China's (and other countries') currency policy.",
"Prior to 1994, China maintained a dual exchange rate system. This consisted of an official fixed exchange rate system (which was used by the government), and a relatively market-based exchange rate system that was used by importers and exporters in \"swap markets,\" although access to foreign exchange was highly restricted in order to limit imports, resulting in a large black market for foreign exchange. The two exchange rates differed significantly. The official exchange rate with the dollar in 1993 was 5.77 yuan versus 8.70 yuan in the swap markets. China's dual exchange rate system was criticized by the United States because of the restrictions it (and other policies) placed on foreign imports.\nIn 1994, the Chinese government unified the two exchange rate systems at an initial rate of 8.70 yuan to the dollar, which eventually was allowed to rise to 8.28 by 1997 and was then kept relatively constant until July 2005. The RMB became largely convertible on a current account (trade) basis, but not on a capital account basis, meaning that foreign exchange in China is not regularly obtainable for investment purposes. From 1994 until July 2005, China maintained a policy of pegging the RMB to the U.S. dollar at an exchange rate of roughly 8.28 yuan to the dollar. The peg appears to have been largely intended to promote a relatively stable environment for foreign trade and investment in China (since such a policy prevents large swings in exchange rates)—a policy utilized by many developing countries in their early development stages. The Chinese central bank maintained this peg by buying (or selling) as many dollar-denominated assets in exchange for newly printed yuan as needed to eliminate excess demand (supply) for the yuan. As a result, the exchange rate between the RMB and the dollar varied little, despite changing economic factors which could have otherwise caused the yuan to appreciate (or depreciate) relative to the dollar. Under a floating exchange rate system, the relative demand for the two countries' goods and assets would determine the exchange rate of the RMB to the dollar.",
"The Chinese government modified its currency policy on July 21, 2005. It announced that the RMB's exchange rate would become \"adjustable, based on market supply and demand with reference to exchange rate movements of currencies in a basket,\" and that the exchange rate of the U.S. dollar against the RMB would be adjusted from 8.28 yuan to 8.11, an appreciation of 2.1%. Unlike a true floating exchange rate, the RMB would be allowed to fluctuate by up to 0.3% (later changed to 0.5%) on a daily basis against the basket.\nAfter July 2005, China allowed the RMB to appreciate steadily, but very slowly. From July 21, 2005, to July 21, 2008, the dollar-RMB exchange rate went from 8.11 to 6.83, an appreciation of 18.7% (or 20.8% if the initial 2.1% appreciation of the RMB to the dollar is included). The situation at this time might be best described as a \"managed float\"—market forces determined the general direction of the RMB's movement, but the government retarded its rate of appreciation through market intervention.",
"China halted its currency appreciation policy around mid-July 2008 (see Figure 1 ), mainly because of declining global demand for Chinese products that resulted from the effects of the global financial crisis. In 2009, Chinese exports fell by 15.9% over the previous year. The Chinese government reported that thousands of export-oriented factories were shut down and that over 20 million migrant workers lost their jobs in 2009 because of the direct effects of the global economic slowdown. In response, the Chinese government intervened to prevent any further appreciation of the RMB to the dollar. The RMB/dollar exchange rate was held relatively constant at 6.83 through around mid-June 2010.",
"On June 19, 2010, China's central bank, the People's Bank of China (PBC), stated that, based on current economic conditions, it had decided to \"proceed further with reform of the RMB exchange rate regime and to enhance the RMB exchange rate flexibility.\" It ruled out any large one-time revaluations, stating \"it is important to avoid any sharp and massive fluctuations of the RMB exchange rate,\" in part so that Chinese corporations could more easily adjust (such as through technology upgrading) to an appreciation of the currency. Many observers contend the timing of the RMB announcement was intended in part to prevent China's currency policy from being a central focus of the G-20 summit in Toronto in June 2010. As indicated in Figure 2 , the RMB's exchange rate with the dollar has gone up and down since RMB appreciation was resumed, but overall, it has appreciated. From June 19, 2010, (when appreciation was resumed) to July 10, 2013, the yuan/dollar exchange rate went from 6.83 to 6.17, an appreciation of 10.7%. Most of the appreciation occurred in 2010 and 2011. From January 1, 2012, to July 10, 2013, the RMB appreciated by only 2.1% against the dollar. Figure 3 shows the annual percentage change in the RMB's value against the dollar from 2001 to 2012 and indicates that the sharpest appreciation occurred in 2008 when it rose by 9.4%.",
"Some economists contend that a more accurate measurement of the yuan/dollar exchange rate involves accounting for differences in inflation between China and the United States—the real exchange rate. This approach is relevant because if prices are rising faster in China than in the United States, then the prices of Chinese tradable goods may be rising as well (even with no change in the nominal exchange rate). In effect, a higher Chinese inflation rate relative to the United States acts as a de facto appreciation of the RMB. From June 2005 to June 2013, China's consumer price inflation was about 31% higher than the U.S. level. Factoring in inflation into the RMB/dollar exchange rate indicates that the RMB appreciated in real terms by 42% during this period (as opposed to a 34% increase on a nominal basis).\nA broader measurement of the RMB's movement involves looking at exchange rates with China's major trading partners by using a trade-weighted index (i.e., a basket of currencies) that is adjusted for inflation, often referred to as the \"effective exchange rate.\" The Bank of International Settlements maintains such an index for major economies, based on their trade with 61 trading partners. Such an index is useful because it reflects overall changes in a country's exchange rate with its major trading partners as a whole—not just the United States. China's relative peg to the dollar has meant that as the dollar has depreciated or appreciated against a number of major currencies, the RMB has depreciated or appreciated against them as well. For example, from July 2008 to May 2010, when the RMB exchange rate to the dollar was kept constant (at 6.83 yuan per dollar), the real trade-weighted exchange rate index of China's currency (based on its trade with 61 major economies) appreciated by 8.2%. Between June 2010 (when appreciation of the RMB to the dollar was resumed) and May 2013, China's real trade-weighted exchange rate appreciated by 16.9%; and during the first five months of 2013, it rose by 4.6% (see Figure 4 ).",
"Many U.S. policymakers and certain business and labor representatives have charged that the Chinese government \"manipulates\" its currency in order to make it significantly undervalued vis-à-vis the U.S. dollar, thus making Chinese exports to the United States less expensive, and U.S. exports to China more expensive, than they would be if exchange rates were determined by market forces. They further contend that, while a pegged currency may have been appropriate during China's early stages of economic development, it can no longer be justified, given the size of China's economy and trade flows, and the impact these have on the global economy.\nCritics have further charged that the undervalued currency has been a major factor behind the burgeoning U.S. trade deficit with China, which grew from $84 billion in 2000 to $315 billion in 2012 and is projected to reach $325 billion in 2013 (based on data for January-May 2013). Other factors that have been cited as evidence of Chinese currency manipulation (and misalignment) have been China's massive accumulation of foreign exchange reserves and the size of its current account surpluses. China is by far the world's largest holder of foreign exchange reserves. These grew from $212 billion in 2001 to $3.3 trillion in 2012 (year-end values).\nMany analysts contend that large increases in China's foreign exchange reserves reflect the significance of Chinese intervention in currency markets to hold down the value of the RMB, which, they argue, has been a major factor behind China's large annual current account surpluses. According to one economist, a country's current account balance increases between 60 and 100 cents for each dollar spent on currency intervention. As can be seen in Figure 5 , China's foreign exchange holdings grew significantly from 2004 to 2011, averaging $363 billion in new reserves each year, but that growth slowed sharply in 2012 ($129 billion). As indicated in Figure 6 , the annual rate of increase (percent change) in China's foreign exchange reserves went from a 51.3% rise in 2004, to 27.2% in 2008, to 4.1% in 2012.\nChina's current account surplus rose from $69 billion in 2004 to a historical peak of $421 billion in 2008. It then declined over the next few years, dropping to $140 billion by 2011; it rose to $192 billion in 2012, according to the International Monetary Fund (IMF). More significantly, China's current account surplus as a percent of GDP fell as well. It dropped from a historical high of 10.1% in 2007 to 1.9% in 2011, but increased to 2.3% in 2012. In addition, China's exports of goods and services as a percent of GDP declined from a historical high of 38.3% in 2007 to 27.5% in 2012, as indicated in Figure 7 .\nMany analysts contend the sharp drop in China's current account surpluses may have had more to do with the effects of the global economic slowdown (which greatly diminished global demand for Chinese products and led to a fall in foreign direct investment in China) than a change in China currency policies (although other Chinese economic policies were a major factor in the decline of the current account surplus, such as government policies to boost fixed investment and consumption which were employed to maintain rapid economic growth in the face of the global economic crisis). In a July 2010 report, the IMF warned that, over the medium term, there was potential for China's sizable current account surpluses to return once its stimulus measures wound down and the global economy began to recover. In July 2012, the IMF stated that, although the fall of China's current account surplus was a welcome sign, the external rebalancing was achieved at the cost of rising internal imbalances—namely the high rate of investment spending, which, the IMF assessed, would be difficult to sustain.\nThe current high rate of unemployment in the United States appears to have intensified concerns over the perceived impact of China's currency policy on the U.S. economy, especially employment. Many have argued that RMB appreciation would boost the level of U.S. jobs. Some analysts contend that there is a direct correlation between the U.S. trade deficit and U.S. job losses. For example, a 2012 study by the Economic Policy Institute (EPI) claims that the U.S. trade deficit with China (which EPI claims is largely the result of China's currency policy) led to the loss or displacement of 2.7 million jobs (of which, 77% were in manufacturing) between 2001 and 2011. The EPI report states that, while U.S. exports to China support U.S. jobs, U.S. imports from China \"displace American workers who would have been employed making these products in the United States.\" Claims about the negative effect of China's exchange rate on U.S. employment and trade are often juxtaposed with the observation that China's economy has grown rapidly over the past five years (real GDP grew at an average annual rate of 9.2% from 2008 to 2012), while other countries have experienced slow or stagnant growth since the beginning of the global financial crisis. This has led some commentators to argue that China's exchange rate intervention represents a \"beggar thy neighbor\" policy (i.e., meant to promote Chinese economic development at the expense of other countries). (The validity of claims about the RMB's effect on the U.S. economy will be analyzed in the section below entitled \" An Economic Analysis of the Effects of China's Currency \") For example, U.S. economist Paul Krugman in 2009 argued that the undervalued RMB had become a significant drag on global economic recovery, estimating that it had lowered global GDP by 1.4%, and had especially hurt poor countries. Because of these factors, some Members have argued that China should be cited by the Department of the Treasury as a country that manipulates its currency in order to gain an unfair trade advantage (see text box).",
"Numerous bills have been introduced in Congress over the past several years that have sought to induce China (and other countries) to reform its currency policy or to address the perceived effects of that policy on the U.S. economy. For example, one bill introduced in the 108 th Congress by Senator Schumer ( S. 1586 ) sought to impose additional duties of 27.5% on imported Chinese products unless China appreciated its currency to market levels. The House approved a currency bill ( H.R. 2378 ) in the 111 th Congress and the Senate passed one ( S. 1619 ) in the 112th Congress, though neither became law.\nOver the past few years, some legislative proposals have sought to apply U.S. anti-dumping and countervailing duty measures to address the effects of China's undervalued currency, namely to treat it as an export subsidy (countervailing measures) or as a factor that is included in the determination of anti-dumping duties. This would likely increase U.S. countervailing and anti-dumping duties on certain imports from China. A major source of contention is whether such measures would be consistent with U.S. obligations in the World Trade Organization (WTO). Some contend that the WTO allows countries (under certain conditions) to administer their own trade remedy laws, and thus they argue that making currency undervaluation a factor in determining countervailing or anti-dumping duties would be consistent with WTO rules. Critics of such proposals counter that WTO rules do not specifically include currency undervaluation as a factor that can be used to implement trade remedy actions, and thus, such proposals, if enacted, might be challenged by China (and possibly other WTO members) as a violation of WTO rules.\nAnother major objective of various recent currency bills is to eliminate current provisions of U.S. trade laws that require the Treasury Department to identify countries that intentionally \"manipulate\" their currency. Treasury has not identified any country for manipulating its currency since 1994. Some bills have sought to create a process whereby Treasury would identify countries with currencies that were estimated to be fundamentally misaligned (based on certain criteria), regardless of intent. Such bills list a number of actions (some of which would be punitive) the U.S. government would be directed to take against certain \"priority\" countries.\nSome supporters of currency legislation aimed at China hope that the introduction of such bills will induce China to appreciate its currency more rapidly. Opponents of the bills contend that such legislation could antagonize China and induce it to slow the rate of RMB appreciation. Another concern of opponents is that China might also retaliate against U.S. exports to China and/or U.S.-invested firms in China if such legislation became law.",
"",
"H.R. 1276 was introduced by Representative Sander Levin on March 20, 2013. The bill is identical to the one he introduced in the 112th Congress ( H.R. 639 ) and nearly identical to H.R. 2378 , which passed the House during the 111 th Congress by a vote of 284 to 123.\nH.R. 1276 would seek to clarify certain provisions of U.S. countervailing duty laws (pertaining to foreign government export subsidies) that would allow the Commerce Department to consider a \"fundamentally misaligned currency\" as an actionable subsidy. For example, it would clarify that a fundamentally undervalued currency could be treated by the Commerce Department as a benefit conferred by a foreign government to its exports. In addition, the bill seeks to clarify that, in the case of a subsidy relating to a fundamentally undervalued currency, the fact that the subsidy (i.e., the undervalued currency) may have also benefitted non-exporting firms (in addition to exporting firms), would not, for that reason alone, mean that the undervalued currency was not an actionable subsidy under U.S. countervailing duty law. The bill would direct the Commerce Department to use, if possible, data and methodologies utilized by the International Monetary Fund (IMF) to estimate real effective exchange rate undervaluation.\nFactors that would be used by the Commerce Department to determine if a country's currency is fundamentally undervalued for the purposes of U.S. countervailing duty laws would include (over an 18-month period): (1) protracted and large-scale intervention in currency markets; (2) a real effective exchange rate estimated to be undervalued by at least 5%; and (3) foreign asset reserves held by the government that exceed: (A) the amount needed to repay its debt obligations over the next year; (B) 20% of the nation's money supply; and (C) the value of the country's imports over the previous four months.\nThe bill would direct the Commerce Department to estimate the \"subsidy\" relating to a fundamentally undervalued currency for the purpose of imposing countervailing duties, which would be defined as the difference between a currency's real effective exchange rate and its equilibrium real effective exchange rate. The bill further directs Commerce (when appropriate) to use the simple average of the methodologies used by the IMF's Consultative Group on Exchange Rates. If such data are not available from the IMF, Commerce would be directed to use generally accepted economic and econometric techniques and methodologies to measure the level of undervaluation.",
"S. 1114 was introduced by Senator Sherrod Brown on June 7, 2013. It is essentially the same bill ( S. 1619 ) that Senator Brown introduced in 2011 and was passed by the Senate on October 11, 2011. The bill would provide for the identification of fundamentally misaligned currencies and require action to correct the misalignment for certain \"priority\" countries. The bill would require the Treasury Department to issue a semiannual report to Congress on international monetary policy and currency exchange rates, which, in addition to several provisions under current law, would include:\na description of any currency intervention by the United States or other major economies or trading partners of the United States, or other actions undertaken to adjust the actual exchange rate relative to the U.S. dollar; an evaluation of the domestic and global factors that underlie the conditions in the currency markets; with respect to currencies of countries with significant trade flows with the United States and other major global currencies, a determination and designation by Treasury as to which of these are in fundamental misalignment; a list of currencies designated for \"priority action\"; an identification of the nominal value associated with the medium-term equilibrium exchange rate relative to the U.S. dollar for each currency listed for priority action; and a description of any consultations conducted, including any actions taken to eliminate the fundamental misalignment.\nTreasury would be required to seek negotiations with countries designated for priority action. Factors used to determine priority countries would include those that are (1) engaging in protracted large-scale intervention in currency markets, particularly if accompanied by monetary sterilization measures; (2) engaging in excessive and prolonged accumulation of foreign exchange reserves for balance of payment (BOP) purposes; (3) introducing or modifying restrictions or incentives (for balance of payment purposes) on capital inflows and outflows that are inconsistent with the goal of achieving full currency convertibility; and (4) pursuing any other policy or action that the Treasury Secretary views as warranting designation for priority action.\nIf a country that has a currency designated for priority action fails to eliminate the fundamental misalignment within 90 days, the following would occur:\nIn antidumping duty investigations, the Commerce Department would be required to factor in the estimated level of currency undervaluation when comparing the export price with the normal value (i.e., the exporter's home market value) when determining the level of dumping that may have taken place. This could raise the level of anti-dumping duties imposed on imports. The President would be required to prohibit the procurement by the federal government of products or services from the country unless it is a party to the World Trade Organization's Government Procurement Agreement (GPA). China is negotiating to join the GPA, but is currently not a member. The Overseas Private Investment Corporation (OPIC) would be prohibited from approving any new financing (including insurance, reinsurance, or guarantee) with respect to a project located within the country. This provision would not affect China because OPIC is already prohibited by U.S. law from operating in China. The U.S. Executive Director at each multilateral bank would be directed to oppose the approval of any new financing to the government of a country, or for a project located within that country. The United States would request the IMF to hold special consultations with the country on ways to eliminate the fundamental misalignment.\nIf a country that has a currency designated for priority action fails to take steps to eliminate the fundamental misalignment within 360 days after its designation by Treasury, the following would occur:\nThe U.S. Trade Representative (USTR) would be required to request consultations in the WTO (i.e., initiate a dispute settlement case) with the country regarding the consistency of the country's actions with its obligations in the WTO. The Treasury Secretary would be required to consult with the Board of Governors of the Federal Reserve System to consider undertaking remedial intervention in international currency markets in response to the fundamental misalignment of the designated currency and coordinating such intervention with other monetary authorities and the IMF. The Treasury Department would be required to oppose increasing the voting shares or representation in any international financial institution (such as the IMF) if the country in question would benefit from that change.\nS. 1114 would also amend U.S. countervailing duty law to require the Commerce Department to initiate an investigation to determine whether currency undervaluation is providing, directly or indirectly, a countervailing subsidy if a petition is filed by an interested party and is accompanied by information supporting those allegations. The bill also seeks to clarify that, in the case of a subsidy relating to a fundamentally undervalued currency, the fact that the subsidy (i.e., the undervalued currency) may have also benefitted non-exporting firms would not, for that reason alone, mean that the subsidy could not be considered to be a measure that is contingent upon export performance. The bill includes waiver provisions for actions taken toward priority countries and a process for Congress to disapprove the waivers. S. 1114 would also add a provision to U.S. antidumping law that would require the Commerce Department to include whether a country has been designated as having a currency for priority action as a factor to be considered during a review of whether to change the designation of a non-market economy country to one that is a market economy country.\nFor the purposes of measuring a benefit conferred by a misaligned currency in a regular countervailing duty case, Commerce would be directed to compare the simple average of the real exchange rates derived from the application of the IMF's equilibrium real exchange rate approach and the macroeconomic balance approach to the official daily exchange rate, relying on IMF or World Bank data, if available, or other international organizations or national governments if such data are not available. For a countervailing duty case involving a fundamentally misaligned currency for priority action, S. 1114 would direct Commerce to calculate the benefit of a misaligned currency by comparing the nominal value associated with the medium-term equilibrium exchange rate of the currency of the exporting country to the official daily exchange rate. For the purposes of antidumping duty cases involving a fundamentally misaligned currency for priority action, S. 1114 would require the Department of Commerce to adjust the price used to establish the export price or constructed export price to reflect the fundamental misalignment of the currency of the exporting country. Fundamental misalignment is defined as a significant and sustained undervaluation of the prevailing real effective exchange rate, adjusted for cyclical and transitory factors, from its medium-term equilibrium level. The term \"fundamental misalignment\" and measurements of misalignment in the bill appear to have been largely drawn from the IMF's 2007 Decision on Bilateral Surveillance over Members' Policies (see text box below).",
"President Obama stated in February 2010 that China's undervalued currency puts U.S. firms at a \"huge competitive disadvantage,\" and he pledged to make addressing China's currency policy a top priority. At a news conference in November 2011, President Obama stated that China needed to \"go ahead and move towards a market-based system for their currency\" and that the United States and other countries felt that \"enough is enough.\"\nAdministration officials have welcomed greater congressional involvement on the China currency issue as long as legislative proposals do not violate U.S. WTO obligations and do not complicate ongoing bilateral and multilateral negotiations with China on the issue. The Administration did not publicly indicate whether it supported or opposed the House-passed version of H.R. 2378 in the 111 th Congress. During considering of S. 1619 by the Senate in October 2011, an Administration official stated:\nWe share the goal of the legislation in taking action to ensure that our workers and companies have a more level playing field with China, including addressing the under-valuation of their currency, an issue that I've spoken about and certainly Secretary Geithner and others have spoken about. Aspects of the legislation do, as I've said, raise concerns about consistency with our international obligations, which is why we're in the process of discussing with Congress those issues. And if this legislation were to advance, we would expect those concerns to be addressed.\nThe Obama Administration has sought to directly engage China on the currency issue through the Strategic & Economic Dialogue (S&ED) and the Joint Commission on Commerce and Trade (JCCT). At the end of the May 2011 S&ED session, then Secretary of the Treasury Tim Geithner stated: \"We hope that China moves to allow the exchange rate to appreciate more rapidly and more broadly against the currencies of all its trading partners. And this adjustment, of course, is critical not just to China's ongoing efforts to contain inflationary pressures and to manage the risks that capital inflows bring to credit and asset markets, but also to encourage this broad shift to a growth strategy led by domestic demand.\" At the May 2012 S&ED talks, Geithner acknowledged that China had made progress, stating: \"China has acted to move toward a more flexible exchange rate system in which the market plays a greater role. It is intervening less in exchange markets. China is also moving to liberalize controls on the international use of its currency and on capital movements into and out of the country.\" At the July 2013 S&ED session, China reiterated its commitment to move to a market-determined exchange rate.\nIt addition, the Obama Administration has sought to use multilateral channels, such as the Group of 20 (G-20) of leading economies and the IMF, as a means to boost international cooperation on external balances and exchange rate policies and to bring more pressure on China to appreciate its currency. For example, on October 20, 2010, Secretary Geithner issued a proposal aimed at the G-20 meeting of finance ministers and central bank governors on October 23, 2010. The proposal contained three main points:\nG-20 countries should commit to taking steps to reduce external imbalances (both surpluses and deficits) below a specified share of GDP over the next few years. G-20 countries should commit to refrain from exchange rate policies designed to achieve competitive advantage by either weakening their currency or preventing appreciation of an undervalued currency. G-20 emerging market countries with significantly undervalued currencies (and adequate precautionary foreign exchange reserves) need to allow their exchange rates to adjust fully over time to levels consistent with economic fundamentals. G-20 advanced economies should work to ensure against excessive volatility and disorderly movements in exchange rates. The G-20 should call on the IMF to assume a special role in monitoring progress on these commitments and should publish a semiannual report assessing progress the G-20 countries have made to achieve these goals.\nChina and a number of other G-20 members, though supporting efforts to rebalance the global economy, opposed the idea of using numerical targets.\nIn February 2013, the G-7 finance ministers and central bank governors issued a statement reaffirming their \"longstanding commitment to market-determined exchange rates\" and that fiscal and monetary policies would remain oriented towards meeting domestic objectives, and that members would not target exchange rates. They noted that members agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability.",
"This section examines a number of issues pertaining to the effects of China's undervalued currency on the U.S. economy. The economic effects on the Chinese economy of an undervalued currency are examined later in the report.",
"A major question raised by U.S. policymakers is: what would the RMB's exchange rate with the dollar (and other currencies) be if China allowed its currency to float freely in international markets and did not intervene to affect the RMB's value and how does this compare to the current rate of exchange? Such a question attempts to ascertain to what degree the RMB is misaligned or undervalued against the dollar. Several economic studies have been issued over the years that have attempted to estimate the degree of the RMB's undervaluation against the dollar with varying results. For example, four separate studies issued in 2009 concluded that the RMB was undervalued against the dollar by rates of 12%, 25%, 40% , and 50%, respectively.\nA 2006 Department of the Treasury report describes a number of challenges that arise from attempting to use economic models to predict market exchange rates. It notes that there is no single model that accurately explains exchange rate movements, that such models rarely, if ever, incorporate financial market flows, and that their conclusions can vary considerably, based on the variables used. However, the report stated that examining such models can produce useful information in understanding exchange rate movements if they focus only on serious misalignments; use real effective, not bilateral, exchange rates; utilize several different models, recognizing that no one model will provide precise answers; focus only on protracted misalignments where currency adjustments are not taking place; supplement judgments about misalignment with analysis of empirical data, indicators, policies, and institutional factors; and verify whether there are any market-based reasons for a currency's misalignment.\nThe IMF appears to largely follow the approach outlined by the Treasury Department's report. The IMF's Consultative Group on Exchange Rates uses three different methodologies for its surveillance and assessment of the exchange rate regimes of its members, including an equilibrium real exchange rate (ERER) approach, an external sustainability (ES) approach, and the macroeconomic balance (MB) approach. In July 2011, the IMF stated that it believed \"that the renminbi remains substantially below the level consistent with medium-term fundaments.\" For the first time, the IMF made public its estimates of the RMB's undervaluation, which included 3% under the ERER approach, 17% under the ES approach, and 23% under the MB approach. However, an IMF report that described its three exchange rate methodologies cautioned:\nWhile adopting different empirical methodologies goes some way towards strengthening the robustness of exchange rate assessments, it should be recognized that such assessments are unavoidably subject to large margins of uncertainty. These relate to a number of factors, such as the potential instability of the underlying macroeconomic links, differences in these links across countries, significant measurement problems for some variables, as well as the imperfect \"fit\" of the models. Some of these problems may be more severe for emerging market economies, where structural change is more likely to play an important role and where limitations in terms of data availability and length of sample are more acute.\nIn July 2012, the IMF declared that: \"The renminbi is assessed to be moderately undervalued, reflecting a reassessment of the underlying current account, slower international reserves and in accumulation, and past real effective exchange rate appreciation.\" The IMF gave a range of the RMB's undervaluation (described as the difference between the real effective exchange rate and the rate that would be \"consistent with fundamentals and desirable policies\") of 5%-10%. In May 2013, the IMF repeated its assessment that the RMB remained moderately undervalued against a basket of currencies.\nMost studies of the RMB's projected market value against the dollar have involved one-time estimates made for a given period of time and thus may not reflect fundamental economic changes that may have subsequently occurred, which in turn would affect estimates of the RMB's equilibrium exchange rate with the dollar in other years. For example, a one-time study on China's exchange rate in 2009 will not reflect any change (appreciation or depreciation) in the currency that has occurred since the study was done. One exception to these limitations is partially addressed by work done by William R. Cline with the Peterson Institute for International economics, who has made estimates of the equilibrium exchange rates for a number of countries, including China, from 2008 to 2013 on a semiannual basis.\nCline uses the fundamental equilibrium exchange rate (FEER) method to estimate exchange rates. One of the assumptions that he uses is that current account balances around the world are temporarily out of line with their \"fundamental\" value. Once an estimate has been made of what the fundamental current account balance should be, one can calculate how much the exchange rate must change in value to achieve that current account adjustment. To calculate the level of misevaluation for one country under this method, estimates of how far exchange rates for every country are out of equilibrium, including countries with floating exchange rates, must be made.\nOne of the main sources of contention in FEER estimates is choosing an \"equilibrium\" current account balance for each country. Estimates of the RMB's undervaluation are typically defined as the appreciation that would be required for China to attain \"equilibrium\" in its current account balance. But there is no consensus based on theory or evidence to determine what equilibrium would be, so a judgmental approach is used. Cline determines his own current account targets for different countries—for China the target is a current account surplus of no more than 3% of GDP while the target for the United States is a current account deficit that is no greater than 3% of GDP. The estimates of the RMB's undervaluation made by Cline utilize actual and projected data (such as GDP growth and current account balances) from the IMF's World Economic Outlook in order to calculate an equilibrium exchange rate. For example, Cline's May 2013 study used the IMF's projection for China's current account surplus as a percent of GDP in 2018 (4.0%) and estimates how much the RMB would need to appreciate against the dollar to obtain a current account surplus target goal that is 3% of GDP. As indicated in Figure 8 , Cline's estimates of the amount of appreciation the RMB would need to obtain equilibrium (i.e., a current account surplus of 3% of GDP) has fallen from a peak of 40.7% in December 2009 to 5.9% in October 2012; it rose to 6.0% for April 2013.\nAs noted earlier, Cline made FEER estimates relative to the dollar for a number of currencies, not just the RMB. His May 2013 study estimates the equilibrium level of the currencies of 33 countries plus the euro area. The top 10 countries with the most undervalued currencies as of April 2013 are listed in Table 1 in ranking order. The top five countries with the most undervalued currencies were Singapore (undervalued by 25.7%), Taiwan (18.8%), Sweden (13.4%), Japan (13.1%), and Switzerland (10.8%); China ranked ninth.\nThere is no universally accepted methodology for precisely determining a country's real market exchange rate. The economic conditions and assumptions that are used to determine \"equilibrium\" exchange rates change continuously. As a result, many analysts question their usefulness to U.S. policymakers, such as providing a precise U.S. goal for an appreciation of the RMB vis-a-vis dollar or for use in trade remedy legislation that would seek to offset the benefit (\"subsidy\") conferred by the RMB's undervaluation, such as through the use of countervailing or antidumpting measures.",
"Many policymakers might expect that if China significantly appreciated its currency, U.S. exports to China would rise, imports from China would fall, and the U.S. trade deficit would decline within a relatively short period of time. For example, C. Fred Bergsten from the Peterson Institute for International Economics argued in 2010 that a market-based RMB would lower the annual U.S. current account deficit by $100 billion to $150 billion. But the issue of the possible effects of an RMB appreciation on the U.S. economy is complicated by the fact that there are short-term and long-term implications of RMB appreciation, and that exchange rates are but one of many factors that affect trade flows\nTo illustrate that exchange rates are only one factor that determine trade flows, one can look at the effect of the 21% RMB appreciation of the RMB to the dollar from July 2005 to July 2008 on U.S.-China trade flows. On the one hand, during this period U.S. imports from China increased by 39%, compared to a 92% increase from 2001 to 2004 (when the exchange rate remained constant). On the other hand, U.S. exports to China during the 2005-2008 period did not grow as fast as during the 2001-2004 period (71% versus 81%). Despite the RMB's appreciation from 2005 to 2008, the U.S. trade deficit with China still rose by 30.1% (although the overall U.S. current account deficit declined by nearly 6%). The appreciation of the RMB appears to have had little effect on China's overall trade balance from 2005 to 2008. During this time, China's merchandise trade surplus increased from $102 billion to $297 billion, an increase of 191%, and China's current account surplus and accumulation of foreign exchange reserves both increased by 165% over this period.",
"Part of the problem in attempting to evaluate the effects of the RMB's appreciation is that it can take time (perhaps a few years) before changes in exchange rates are reflected in changes to prices of tradable goods and services, and, hence, result in changes to imports, exports, and trade balances. An appreciated RMB could actually worsen the U.S. trade deficit in the short run if the volume (demand) of imports from China did not decline at the same rate that prices increased (the so-called J-Curve effect). It would take time for U.S. consumers of higher-priced Chinese products to find lower-priced (non-Chinese) products or other alternatives and thus reduce overall demand for Chinese imports. In addition, there would be a lag time in terms of the effects of an appreciated RMB on prices of Chinese products, since prices for many exports are set several months ahead of time in contracts. If an appreciated currency lowered prices for U.S. products, it could take time for increased Chinese demand to be signaled to U.S. producers and exporters and for them to boost production to meet the new demand. Over time, one would expect the effects of currency appreciation to affect the flow of bilateral trade and, possibly, produce a decrease in the bilateral trade imbalance (although the size of the overall U.S. trade deficit might not change because that is determined by a number of factors other than exchange rates).",
"Another factor to consider in evaluating the effects an RMB appreciation may have had on trade flows is to examine how price changes would be passed on or distributed. If the RMB appreciates against the dollar, not all of the price increase resulting from the appreciation may be passed on to the U.S. consumer. Some of it may be absorbed by Chinese laborers, producers, or exporters, and some by U.S. importers, wholesalers, or retailers. According to the U.S. Department of Labor, from 2003 to 2012 (year-end), the price index for U.S. imports from China rose by 6.1% (compared to a 19.2% rise in import prices for total U.S. imports of non-petroleum products) even the RMB appreciated in nominal terms by 33.7% over this period (see Figure 9 ). This would suggest that only a small part of the increase in prices for Chinese products that might have resulted from the RMB's appreciation was passed on to U.S. consumers. If prices are not completely passed through to consumers, then consumer demand for Chinese imports will fall less than if they were, all else equal.",
"The issue of exchange rate effects is further complicated by China's role as a major assembly center for multinational corporations. Many analysts contend that the sharp increase in U.S. imports from China over the past several years (and hence the growing bilateral trade imbalance) is largely the result of movement in production facilities from other (primarily Asian) countries to China. That is, various products that used to be assembled in such places as Japan, Taiwan, Hong Kong, etc., and then exported to the United States are now being made in China (in many cases, by U.S. and other foreign firms in China) and exported to the United States. According to Chinese data, foreign-invested firms in China account for over half of China's trade flows (both exports and imports). Such firms import raw materials, intermediate goods (such as components), and production machinery to China. One study of Apple Inc.'s iPod found that the product itself was assembled in China in factories owned by a Taiwanese company from components that were produced by numerous multinational corporations. The level of value added by Chinese workers who assembled the iPod in China was estimated to be small relative to the total cost of producing each unit (about 3%), and much smaller relative to the retail price of the unit sold in the United States. Some analysts contend that, because of the high level of imported inputs that comprise a large share of China's exports, an appreciated RMB would have little effect on the prices of Chinese exports, and hence have little effect on bilateral trade flows. Others contend that, even if foreign-invested firms in China faced significantly higher costs because of an appreciated RMB, they would move production to another low-cost country, and thus, while the U.S trade deficit with China decreased, the U.S. trade deficit with other countries would increase.",
"By accounting identity, the overall trade deficit is equal to the shortfall between domestic saving and investment, while an overall trade surplus is equal to a surplus of domestic saving relative to investment. For many years, China has been a high-saving country that has run overall trade surpluses and the United States has been a low-saving country that has run overall trade deficits (for more discussion on this issue, see Appendix ). China's use of an exchange rate peg and capital controls may have contributed to its high saving rate, but it is unlikely that movement to a floating exchange rate would eliminate the large disparity between U.S. and Chinese saving rates. Thus, it is likely that the United States would continue to be a net debtor and China would continue to be a net creditor if the RMB rose in value. If so, economic theory predicts the countries' bilateral trade imbalance would either persist or possibly be replaced by new bilateral imbalances with third countries.",
"As noted earlier, a number of U.S. economists have argued that China's undervalued currency has negatively affected the U.S. and global economies. However, other economists contend that, while an undervalued RMB may have distorted trade flows to some extent, it is not the most significant challenge to U.S. economic interests vis-à-vis China, and therefore, they argue, an appreciation of the currency by itself would do little to boost the U.S. economy. For example,\nDerek Scissors at the Heritage Foundation contends that appreciation of the RMB would have little impact on U.S. employment, stating it would create \"a few thousand jobs at best.\" He argues that the Chinese government's extensive use of industrial policies, namely subsidies and regulatory protection (such as state-sponsored monopolies), sharply limits imports of goods and services that compete with the state sector, which would remain unaffected even if the RMB were appreciated. He notes: \"Guaranteed revenue and economies of scale make state firms modestly competitive as exporters when they would otherwise be uncompetitive. The real harm, however, is to imports of goods and services from the U.S. The degree of state predominance caps the total share available to all domestic private and foreign companies, leaving American producers in a vicious battle for permanently minor market segments. This is a far more stringent limitation than an undervalued currency.\" Michael Pettis with the Carnegie Endowment for International Peace makes a similar argument except that he contends that Chinese government \"financial repression\" policies have kept real returns to deposits low (and sometimes negative) in China in order to keep real lending rates artificially low (since they are set by the government, not market conditions) for Chinese firms (especially state-owned firms). He states that this constitutes a forced transfer of income from Chinese households to Chinese producers, which has led to over-investment and over-capacity by Chinese firms, with much of that excess capacity being exported. Pettis concludes that \"as long as China continues to subsidize its production growth at the expense of household income, it will have difficulty increasing domestic demand and cutting its reliance on exports.\" A study by the Federal Reserve Bank of San Francisco contends that, although the United States is running record trade deficits with China, the level of imports from China relative to U.S. GDP and U.S. personal consumption expenditures is relatively small. According to the study, U.S. imports of goods and services from China accounted for 2.5% of GDP in 2010, and these imports accounted for only 2.7% of U.S. personal expenditures for goods and services in 2010. The study estimated that on average for every one dollar that is spent in the United States on a product that is labeled \"made in China,\" 55 cents goes for services supplied in the United States, such as transportation, wholesale, and retail. As a result, according to the study, the actual value of goods and services originating in China totaled only 1.2% of U.S. personal expenditures in 2010; accounting for the level of imported intermediate inputs from China that are used to manufacture goods that are labeled \"made in the USA\" would raise this level to 1.9%. Some argue that the Federal Reserve Bank study illustrates that U.S. imports from China do not necessarily displace U.S. workers (and in fact, support U.S. jobs in a number of sectors) and that RMB appreciation would likely have little effect on the U.S. economy.",
"Economists generally oppose the use of policies (such as subsidies and trade protection) that interrupt market forces and distort the most efficient distribution of resources. A fixed or managed float exchange rate whose level is not adjusted when economic conditions change might be viewed as such a distortion. Thus, from an economist's perspective, adopting a more market-based currency would likely be a win-win situation for China, the United States, and the global economy as a whole, in the sense that it would lead to a more efficient allocation of resources in both countries (though not necessarily any effect on overall employment levels, as discussed below). From a policy perspective, it could be argued that China's current undervalued currency produces economic \"winners and losers\" in both countries, and therefore, an adjustment to that policy would produce a new set of economic \"winners and losers.\" Although numerous factors affect global economic growth and trade flows, let us assume that an appreciation of the RMB produces a significant change in trade. What would the effects be for the U.S. economy?",
"When exchange rate policy causes the RMB to be less expensive than it would be if it were determined by supply and demand, it causes Chinese exports to be relatively inexpensive and U.S. exports to China to be relatively expensive. As a result, U.S. exports and the production of U.S. goods and services that compete with Chinese imports fall, in the short run. Many of the affected firms are in the manufacturing sector. This causes the trade deficit to rise and reduces aggregate demand in the short run, all else equal. A market-based exchange rate could boost U.S. exports and provide some relief to U.S. firms that directly compete with Chinese firms.",
"According to economic theory, a society's economic well-being is usually measured not by how much it can produce, but how much it can consume. An undervalued RMB that lowers the price of imports from China allows the United States to increase its consumption through an improvement in the terms-of-trade. Since changes in aggregate spending are only temporary, from a long-term perspective, the lasting effect of an undervalued RMB is to increase the purchasing power of U.S. consumers. Imports from China are not limited to consumption goods. U.S. firms also import capital equipment and inputs from China to produce finished goods. An undervalued RMB lowers the price of these U.S. products, increasing their output, and thus making such firms more internationally competitive. An appreciation of China's currency could raise prices for U.S. consumers, lowering their economic welfare, meaning they have less money to spend on other goods and services. In addition, firms that use imported Chinese parts could face higher costs, making them relatively less competitive.",
"An undervalued RMB also has an effect on U.S. borrowers. When the United States runs a current account deficit with China, an equivalent amount of capital flows from China to the United States, as can be seen in the U.S. balance of payments accounts. This occurs because the Chinese central bank or private Chinese citizens are investing in U.S. assets, which allows more U.S. capital investment in plant and equipment to take place than would otherwise occur. Capital investment increases because the greater demand for U.S. assets puts downward pressure on U.S. interest rates, and firms are now willing to make investments that were previously unprofitable. This increases aggregate spending in the short run, all else equal, and also increases the size of the economy in the long run by increasing the capital stock. The effect on interest rates is likely to be greater during periods of robust economic growth, when investment demand is strong, than when the economy is weak.\nPrivate firms are not the only beneficiaries of the lower interest rates caused by the capital inflow (trade deficit) from China. Interest-sensitive household spending, on goods such as consumer durables and housing, is also higher than it would be if capital from China did not flow into the United States. In addition, a large proportion of the U.S. assets bought by the Chinese, particularly by the central bank, are U.S. Treasury securities, which fund U.S. federal budget deficits. According to the U.S. Treasury Department, China held about $1.3 trillion in U.S. Treasury securities as of May 2013, making it the largest foreign holder of such securities.\nThe U.S. federal budget deficit increased sharply in FY2008 and FY2009, causing a sharp increase in the amount of Treasury securities that had to be sold. During this period, while the Obama Administration pushed China to appreciate its currency, it also encouraged China to continue to purchase U.S. securities, which China did.\nSome analysts contend that, although an appreciation of China's currency could help boost U.S. exports to China, it could also lessen China's need to buy U.S. Treasury securities, which could push up U.S. interest rates. In the unlikely worst case scenario, if China stopped buying Treasury securities at a time when the U.S. budget deficit is unusually high, it could make private investors reevaluate their views on the sustainability of current fiscal policy.",
"In the medium run, according to economic theory, an undervalued RMB neither increases nor decreases aggregate demand in the United States. Rather, it leads to a compositional shift in U.S. production, away from U.S. exporters and import-competing firms toward the firms that benefit from Chinese capital flows. Thus, it might be expected to have no medium- or long-run effect on aggregate U.S. employment or unemployment. As evidence, one can consider that since the 1980s, the U.S. trade deficit has tended to rise when unemployment was falling (and the economy was growing) and fall when unemployment was rising (and the economy was slowing). For example, the U.S. current account deficit peaked at 6.0% of GDP in 2006, when the unemployment rate was 4.6%, and fell to 2.7% of GDP in 2009, when the unemployment rate was 9.3%.\nHowever, the gains and losses in employment and production caused by the trade deficit will not be dispersed evenly across regions and sectors of the economy: on balance, some areas will gain while others will lose. And by shifting the composition of U.S. output to a higher capital base, the size of the economy would be larger in the long run as a result of the capital inflow/trade deficit (although the returns from foreign-financed capital wpuld not flow to Americans).\nAlthough the compositional shift in output has no negative effect on aggregate U.S. output and employment in the long run, there may be adverse short-run consequences. If U.S. output in the trade sector falls more quickly than the increases in output of U.S. recipients of Chinese capital, aggregate U.S. spending and employment could temporarily fall. This is more likely to be a concern if the economy is already sluggish than if it is at full employment. Otherwise, it is likely that government macroeconomic policy adjustment and market forces can compensate for any decline of output in the trade sector by expanding other elements of aggregate demand. The U.S. trade deficit with China (or with the world as a whole) has not prevented the U.S. economy from registering high rates of growth in the past.\nA Yale University study estimated that a 25% appreciation of the RMB would initially decrease U.S. imports from China and lead to greater domestic production in the United States and increased exports to China. However, the study estimated that benefits to the U.S. economy would be offset by lower Chinese economic growth (because of falling exports), which would diminish its demand for imports, including those from the United States. In addition, the RMB appreciation would increase U.S. costs for imported products from China (decreasing real wealth and real wages), and cause higher U.S. short-term interest rates. As a result, the sum effect of the 25% RMB appreciation was estimated to a negative effect on U.S. aggregate demand and output and result in a loss of 57,100 U.S. jobs—less than one-tenth of 1% of total U.S. employment.\nAnalysis by the IMF suggests that currency appreciation alone by China would yield limited benefits to the global economy (including the U.S. economy) unless it was accompanied by greater Chinese consumption and an expansion of the services sector. It estimated that a 20% RMB appreciation would boost U.S. economic growth by 0.05% to 0.07%, while a 20% RMB appreciation plus other reforms for rebalancing the Chinese economy would boost U.S. growth by over 0.15%. The same study also estimated that a 20% RMB appreciation alone could reduce Chinese economic growth by a range of 2.0% to 8.8%, while combining RMB appreciation with reforms for rebalancing could have a range of outcomes from boosting growth by 1% to reducing it by 2%.",
"Chinese officials argue that their currency policy is not meant to favor exports over imports, but instead to foster economic stability through currency stability. The policy reflects the government's goals of using exports as a way of providing jobs to Chinese workers and to attract FDI in order to gain access to technology and know-how. The Chinese government has stated on a number of occasions that currency reform is a long-term goal which will be implemented gradually. Officials have strongly condemned international pressure to induce China to appreciate the currency, arguing that it interferes with China's \"sovereignty\" to implement its own domestic economic policies. In 2009, (then) Chinese Premier Wen Jiabao was reported by Chinese media as complaining that \"some countries demand the yuan's appreciation, while practicing various trade protectionism against China. It's unfair and actually limits China's development.\"\nDespite the Chinese government's numerous pledges on currency reform, it has moved somewhat cautiously. Chinese officials view economic growth as critical to sustaining political stability, and thus appear very reluctant to implement policies that might disrupt the economy and cause widespread unemployment, which could cause worker unrest. In addition, Chinese officials reject assertions by some economists that China's currency policy undermines the global economy or that a sharp appreciation of the RMB is needed to boost global economic recovery. Instead, they contend, promoting rapid domestic growth is the most significant policy China can undertake to promote global economic recovery. They note that Chinese imports rose by 38.8% in 2010 (over the previous year) and by 23.9% in 2011, which contributed to global economic recovery in those years. They further note that export growth in 2012 and the first half of 2013 was significantly below historic rates (see Figure 10 ). In addition, they note, China's merchandise trade surplus fell each year from 2009 to 2011. In June 2013, Xinhua claimed that the yuan was nearing equilibrium against the dollar.",
"If the RMB is undervalued vis-à-vis the dollar, then Chinese exports to the United States are likely less expensive than they would be if the currency were freely traded, providing a boost to China's export industries. Eliminating exchange rate risk through a managed peg also increases the attractiveness of China as a destination for foreign investment in export-oriented production facilities. However, there are a number of potentially negative aspects to China's export growth strategy and currency policy.\nOverdependence on exporting (and fixed investment relating to exports) and FDI inflows made China particularly vulnerable to the effects of the global economic slowdown. Analysis by the IMF estimated that fixed investment related to tradable goods plus net exports together accounted for over 60% of China's GDP growth from 2001 to 2008 (up from 40% from 1990 to 2000), which was significantly higher than in the G-7 countries (16%), the euro area (30%) and the rest of Asia (35%). An undervalued currency makes imports more expensive, hurting Chinese firms that import parts, machinery, and raw materials. Such a policy, in effect, benefits Chinese exporting firms (many of which are owned by foreign multinational corporations) at the expense of non-exporting Chinese firms. This may impede the most efficient allocation of resources in the Chinese economy. Resources that might go to other sectors, such as the service sector, are diverted to the export sector. If one considers an undervalued currency as a form of export subsidy, then China, in effect, is subsidizing American living standards by selling products that are less expensive than they would be under market conditions. This in effect lowers China's terms of trade—the level of imports that can be obtained through exports. Chinese citizens, on the other hand, pay more for tradable goods, not only because imported goods are more expensive because of the de facto tariff an undervalued currency entails, but also because domestic competition is restricted as well. Rather than use its trade surpluses to purchase goods and services from abroad, China is forced, because of its need to maintain its peg to the dollar, to put a large share of its foreign exchange holdings into U.S. debt securities, which earn a relatively low return. The use of a pegged system greatly limits the ability of the central government to use monetary policy to control inflation. If Chinese banks raised interest rates in an effort to control inflation, overseas investors might to try to shift funds to China (through illegal means) to take advantage of the higher Chinese rates. The Chinese government has had difficulty blocking such inflows of \"hot money.\" Such inflows force the government to boost the money supply to buy up the foreign currency necessary to maintain the targeted peg. Expanding the money supply contributes to easy credit policies by the banks, which has contributed to overcapacity in a number of sectors, such as steel, and speculative asset bubbles, such as in real estate. In the past, the Chinese government has tried to use administrative controls, with limited results, to limit bank loans to sectors where overcapacity is believed to exist. In effect, a pegged currency induces the Chinese government to utilize inefficient and non-market financial policies for credit allocation, rather than a market-based system that would promote an efficient allocation of capital.\nAlthough a rebalancing of China's economy, including the adoption of a market-based currency, would likely entail significant adjustment costs, it also would likely produce long-term benefits to the Chinese economy. For example, it could:\nBoost China's term of trade by increasing the level of imports that can be purchased by its exports; Increase economic efficiency (and hence economic growth), by re-directing resources away from inefficient (and often subsidized) sectors of the economy to those that are more efficient and competitive; Lower prices for imported goods and services and expose more of the domestic economy to greater global competition, thus lowering prices for consumers and improving Chinese living standards; Improve the efficiency and competiveness of many Chinese domestic firms (including those that produce only for the domestic market) by lowering prices for imported inputs, raw materials, and machinery, thus boosting their output; Expand the ability of the government to use monetary policies to control inflation and to allocate capital according to its most efficient use through a market-based credit system; Help alleviate the large disparities of economic development between the coastal regions of China (as well as growing income disparities throughout China) that have been driven in part by China's export growth strategy and are viewed by many analysts as posing a potential risk to stability; Reduce or eliminate a major source of tension between China and many of its trading partners, some of whom view China's undervalued currency and its use of subsidies as beggar-thy-neighbor policies that promote economic development in China at the expense of growth in other countries.\nThe great challenge for Chinese leaders, assuming that they are committed to greater economic reform and rebalancing the economy, would be to quickly generate new sources of economic growth and job opportunities in order to offset the decline of those sectors that would no longer be able to compete once preferential government policies (such as subsidies and an undervalued currency) are eliminated. However, some analysts contend that this rebalancing could prove difficult for China politically and could take several years to achieve. For example, according to Michael Pettis, reforming China's economic policies would have to involve political reforms because \"eliminating the mechanisms by which Chinese policymakers can transfer income from households to manufacturers will reduce their control over the commanding heights of the economy, and it will sharply reduce the power and leverage the ruling party has over business and local governments.\" On the other hand, China's economy has consistently generated annual growth rates near 10% in recent decades, making adjustment much easier.",
"If the Chinese were to allow their currency to float, it would be determined by private actors in the market based on the supply and demand for Chinese goods and assets relative to U.S. goods and assets. If the RMB appreciated as a result, this would boost U.S. exports and the output of U.S. producers who compete with the Chinese. The U.S. bilateral trade deficit would likely decline (but not necessarily disappear). At the same time, the Chinese central bank would no longer purchase U.S. assets to maintain the peg. U.S. borrowers, including the federal government, would now need to find new lenders to finance their borrowing, and interest rates in the United States would rise. This would reduce spending on interest-sensitive purchases, such as capital investment, housing (residential investment), and consumer durables. The reduction in investment spending would reduce the long-run size of the U.S. capital stock, and thereby the U.S. economy. In the present context of a large U.S. budget deficit, some analysts fear that a sudden decline in Chinese demand for U.S. assets (because China was no longer purchasing assets to influence the exchange rate) could lead to a drop in the value of the dollar that could potentially destabilize the U.S. economy.\nIf the relative demand for Chinese goods and assets were to fall at some point in the future, the floating exchange rate would depreciate, and the effects would be reversed. Floating exchange rates fluctuate in value frequently and significantly.\nA move to a floating exchange rate is typically accompanied by the elimination of capital controls that limit a country's private citizens from freely purchasing and selling foreign currency. The Chinese government maintains capital controls (and arguably one of the major reasons China opposes a floating exchange rate) because it fears a large private capital outflow would result if such controls were removed. This might occur because Chinese citizens fear that their deposits in the potentially insolvent state banking system are unsafe. If the capital outflow were large enough, a banking crisis in China could result and could cause the floating exchange rate to depreciate rather than appreciate. If this occurred, the output of U.S. exporters and import-competing firms would be reduced below the prevailing level, and the U.S. bilateral trade deficit would likely expand. In other words, the United States would still borrow heavily from China, but it would now be private citizens buying U.S. assets instead of the Chinese central bank. China could attempt to float its exchange rate while maintaining its capital controls, at least temporarily. This solution would eliminate the possibility that the currency would depreciate because of a private capital outflow. While this would be unusual, it might be possible. It would likely make it more difficult to impose effective capital controls, however, since the fluctuating currency would offer a much greater profit incentive for evasion.\nAnother possibility is for China to maintain the status quo. Even without adjustment to the nominal exchange rate, over time the real rate would adjust as inflation rates in the two countries diverged. The Chinese central bank acquires foreign reserves by printing yuan to finance its trade surplus. As the central bank exchanged newly printed yuan for U.S. assets, prices in China would rise along with the money supply until the real exchange rate was brought back into line with the market rate. This would cause the U.S. bilateral trade deficit to decline and expand the output of U.S. exporters and import-competing firms. This real exchange rate adjustment would only occur over time, however, and pressures on the U.S. trade sector would persist in the meantime.\nNone of the solutions guarantee that the bilateral trade deficit would be eliminated. China is a country with a high saving rate, and the United States is a country with a low saving rate; it is not surprising that their overall trade balances would be in surplus and deficit, respectively. As the Appendix discusses, many economists believe that these trade imbalances will persist as long as underlying macroeconomic imbalances persist. At the bilateral level, it is not unusual for two countries to run persistently imbalanced trade, even with a floating exchange rate. If China can continue its combination of low-cost labor and rapid productivity gains, which have been reducing export prices in yuan terms, its exports to the United States are likely to continue to grow regardless of the exchange rate regime, as evidenced by the 21% appreciation of the RMB from 2005 to 2008, which did not lead to any reduction in the trade deficit over that period.\nConclusion\nCongressional concerns over China's currency policy date back to at least 2003. Since that time, the RMB has appreciated significantly against the dollar: 34% on a nominal basis and 42% on a real basis through June 2013. China's current account surplus as a percent of GDP, in dollar terms and as a percent of GDP, has sharply declined significantly in recent years. In 2011, the IMF evaluated the RMB to be substantially undervalued, but in 2012 and 2013, the RMB was estimated to be moderately undervalued. These factors appear to have somewhat diminished the importance of China's currency policy as a priority trade issue for some in Congress. In addition, China has become viewed by some Members as one of several countries that are intervening to hold down the value of their currencies. For example, recent Japanese monetary policies to boost the economy have led some Members and U.S. business groups to accuse Japan of manipulating its currency. Finally in recent years, a number of other Chinese economic policies and practices have been identified by some Members as posing significant threats to U.S. economic interests. These include Chinese cyber-enabled theft of U.S. trade secrets and business confidential information, extensive economic losses incurred by U.S. intellectual property-intensive firms from Chinese infringement of U.S. intellectual property rights, and China's widespread use of industrial policies to subsidize priority domestic firms, while imposing trade and investment barriers to limit foreign market access in China.\nThe lingering effects of the global economic slowdown (especially in Europe and the United States) have suppressed global demand for Chinese products. The World Bank, IMF, and other global economic institutions have warned China that the policies it has employed to promote high levels of gross fixed investment, financed largely by easy credit policies, are not sustainable and may ultimately seriously weaken China's financial sector by significantly increasing the level of non-performing loans. They have urged China to implement policies to make private consumption the main source of China's economic growth and to eliminate policies that prevent markets from determining the most efficient allocation of resources (such as capital) in the economy in order to ensure that healthy economic growth is sustained over the long term. Reform of the financial sector, including the adoption of a market-determined exchange rate system, would likely play a critical role in this process. Chinese officials have acknowledged the need to make such reforms and have announced a number of policies to that end. For example, during the July 2013 S&ED, Chinese officials stated that that they would continue to implement policies to boost private consumption, such as raising social security and employment spending by two percentage points of total fiscal spending by the end of 2015. The implementation of comprehensive economic reforms and a rebalancing of the Chinese economy, if achieved, would likely lead to a significant improvement in U.S.-China commercial relations. For example, as long as the Chinese government continues to maintain a managed currency peg, then the RMB would be assumed by many analysts to be undervalued, regardless of current economic conditions. If the RMB were allowed to be traded freely, without intervention by the Chinese government, then the exchange rate of the RMB against the dollar and other currencies would more likely be viewed as being determined by market forces and hence not undervalued.",
"The issue of rebalancing economic growth by both the United States and China has been a central focus of the U.S.-China Strategic and Economic Dialogue (S&ED) talks over the past two years. A joint statement issued at the May 2011 S&ED meeting noted that\nSince the second meeting of the Strategic and Economic Dialogue in May 2010, the economic recoveries in the United States and China have strengthened due to continued forceful stimulus measures undertaken by both countries, contributing to an improving outlook for the global economy. The two countries have also made progress on their commitments to promote more sustainable and balanced growth. To secure these gains and address potential challenges to the global outlook, we pledge to enhance macroeconomic cooperation to ensure that the global recovery is durable and promotes steady job growth, and to firmly establish strong, sustainable, and balanced growth.\nThe global financial crisis and subsequent GDP decline among many countries have resulted in new scrutiny by many economists of \"global imbalances,\" namely the disparities in savings and investment levels among various countries (i.e., some countries save too little and some too much relative to their investment needs), and subsequent current account imbalances that have resulted (i.e., countries where domestic savings exceed investment run trade surpluses, and countries where domestic investment exceeds saving run current account deficits). China and the United States are not unique in having these imbalances—Japan, Germany, and other East Asian countries are other examples of high savers, while southern and eastern European countries are other examples of high borrowers. Nevertheless, the United States and China have come under particular scrutiny because of their relative overall size (they are the world's two largest economies) and the relative size of their saving, investment, and trade imbalances. Some analysts also claim that China's exchange rate policy is preventing other East Asian countries from adjusting, because those countries are unwilling to allow their currencies to appreciate and lose export market share to China unless the RMB appreciates too.\nMany economists contend such imbalances were a major cause of the current global economic slowdown. For example, high savers, such as China, loaned their money to low savers, such as the United States, which helped keep real U.S. interest rates low and contributed to the bubble in the U.S. housing market and subsequent financial crisis. Many of the high savings countries (especially those in Asia) heavily relied on exporting as a source of their economic growth and thus were significantly impacted when global demand for imports sharply fell. As a result, many economists have called for economic restructuring among many of the world's major economies, especially the United States and China. Fundamental restructuring of this sort would take time, and if not well coordinated, could deepen the global output gap in the short run. For example, if low saving countries attempt to increase their saving rate (e.g., by reducing their government budget deficits) at a time of high unemployment, and high saving countries do not simultaneously increase their consumption, then worldwide demand could decline and cause unemployment to rise further in the short run.\nThis section provides an overview of some of the unique differences between the economies of the United States and China that have played a role in global imbalances and examines if there has been any rebalancing by the U.S. and Chinese economies in recent years.",
"The level of U.S. gross savings is far below total U.S. investment, indicating that the United States must borrow capital abroad to meet its investment needs. By definition, domestic savings minus gross investment (from domestic and foreign sources) equals the current account balance. Nations that do not save enough to meet domestic investment needs run current account deficits and those that save more than they need for domestic investment run current account surpluses. In 2012, the ratio of U.S. gross domestic savings to gross investment was 77.3%, the lowest among the world's major economies. On the other hand, the ratio for China was 105.7% (see Table A-1 ).\nIn nominal dollar terms, the United States had the world's largest current account deficit in 2012 at $475 billion, while China had the largest current account surplus at $192 billion (see Figure A-1 ). These balances were also significant as a share of GDP: -3.0% for the United States and 2.3% for China (see Figure A-2 ). Some \"rebalancing\" has taken place during and after the global recession. The U.S. current account deficit has declined from its peak 6.0% in 2006 because domestic investment spending has fallen and the private savings has risen. In addition, the U.S. federal budget deficit as a percent of GDP fell from 10.1% in FY2009 to 7.0% in FY2012, and is projected to decline to 4.0% in FY2013, according to the Congressional Budget Office (CBO). What remains to be seen is how much of this rebalancing is cyclical, and will be reversed when the U.S. economy returns to full employment, and how much of it is permanent. The IMF projects China's current account balance as a percent of GDP will increase over the next six years to 4.3% in 2018, but still significantly lower than its historical high of 10.1% in 2007. The U.S. current account deficit as a percent of GDP is projected by the IMF to grow to 3.5% of GDP in 2018, also much lower than its historic peak of 6.0% in 2006.\nDespite the rebalancing that has already taken place, some economists would not consider either country to have reached a position that is sustainable in the long run. Before the late 1990s, the United States had never had a current account deficit of 3% of GDP. And even with China's reduced current account surplus and the diminished U.S. current account deficit over the past few years, China's net holdings of foreign assets and the U.S. net foreign debt continue to grow. Likewise, the decline in China's current account surplus was caused by a more rapid decline in China's exports than imports during the worldwide economic downturn—when worldwide growth picks up again and reaches pre-crisis levels, that trend could reverse.\nGross saving is the total level of domestic saving, including private, corporate, and government. Saving represents income that is not consumed. Physical investment spending on plant and equipment can be financed from domestic or foreign saving. Over the past several years, the United States has maintained one of the lowest gross saving rates (i.e., total national saving as a percent of GDP) among developed countries, while China has maintained one of the world's highest national saving rates. From 1990 to 2009, U.S. gross national saving as a percent of GDP declined from 13.5% to 8.4%, while China's rose from 37.8% to 52.3% (see Figure A-3 ). U.S. gross saving as a percent of GDP increased over the next three years, reaching 10.4% in 2012. Chinese gross savings levels have declined over the next three years, reaching 50.4% in 2012.",
"As indicated in Figure A-4 , China's gross investment as a percent of GDP rose from 25.0% in 1990 to 44.9% in 2009—the highest of any major economy (in comparison, the U.S. rate was 12.2%—the lowest among the major economies). China's investment as a percent of GDP rose to 46.1% in 2012. China's private consumption as a percent of GDP dropped from 48.8% in 1990 to 35.4% in 2009—the lowest among any major economy (while the U.S. rate in 2009 was 70.5%, which was the highest among the major economies). Chinese private consumption as a percent of GDP was 35.7% in 2012 .\nAlthough private consumption has been a much smaller share of China's GDP than other countries, the growth rate of China's private consumption has been significant. From 2001 to 2012, Chinese private consumption grew at an average annual rate of 8.4%, which was much faster than the growth in real U.S. private consumption, but slower than the overall growth rate of the Chinese economy (see Figure A-5 ).\nMany analysts contend that, although Chinese labor productivity has risen rapidly over the past several years, workers' wages have not kept pace with those productivity gains, largely due to the lack of worker rights in China, especially for migrant workers who tend to seek work in labor-intensive, export oriented, manufacturing. Rather, it is argued, the gains from productivity have largely accrued to Chinese firms. In addition, because the Chinese government maintains tight controls on capital outflows, Chinese households are limited in terms of where they can invest their savings. Most choose to deposit their savings in a Chinese bank. However, bank interest rates are set by the central government, and oftentimes, the rates of return on savings deposits are below the rate of inflation (see Figure A-7 ). Chinese depositors faced negative real interest rates in 2004, 2007, 2008, 2010, and 2011. Many economists contend that this policy represents an effort by the central government to keep the cost of credit low for Chinese firms (in order to boost fixed investment), but that this comes at the expense of Chinese households whose savings deposits can actually lose value, thus forcing them to save more of their income to cover the costs of health care, retirement, and other large expenses.\nSome have concluded that Chinese controls on bank interest rates have dampened the level of household spending/consumption that would have been expected, given the rapid rate of China's economic growth. As indicated in Figure A-6 , China's personal disposable income as a percent of GDP declined from 56.5% in 2002 to 48.9% in 2009, indicating that Chinese households did not benefit as much from China's economic growth as other sectors of the economy. That rate fell to 48.5% in 2010, but increased to 49.4% in 2011 and to 51.6% in 2012.\nMany economists contend that the goal of rebalancing the Chinese economy toward greater reliance on personal consumption cannot be achieved until the central government eliminates distortive economic policies that favor firms over households. Once such policy relates to the government's control over much of the country's banking system.",
"The sources of China's real GDP growth from 2006-2012 are shown in Figure A-8 . Gross fixed investment (some of which is linked to tradable sectors) was the largest contributor to its real GDP growth over much of this period. The sharp growth in fixed investment in 2009 appears to reflect the results of the Chinese government's $586 billion stimulus package and its monetary easing policy that encouraged banks to expand lending—a significant amount of which is believed to have gone to infrastructure projects. In 2009, changes to net exports in China were a drag on the Chinese economy, while in 2010 they provided a modest contribution to GDP growth. In 2012, private consumption was the largest contributor to China's GDP growth.\nThe next few years could be a critical period for China's economic policymakers. A number of economists have questioned the quality of China's massive investment efforts over the past two years and the ability of local government to repay the loans they took out to fund major investment projects. Thus, the importance of fixed investment to China's economic growth over the next few years could decline. The Chinese government's 12 th Five Year Plan (2011-2015) states that rebalancing the economy, promoting consumer demand, boosting rural incomes, addressing income disparity (such as boosting wages), promoting the development of the services sector, and expanding social welfare programs (such as education, social security, and health care) will be major priorities. Such policies, if implemented, could provide a significant boost to consumer spending. Based on China's historical economic model, it will likely take several years for a significant rebalancing of the Chinese economy to occur. In addition, many economists have raised concerns that, as China's major trading partners, such as the United States and Europe, begin to experience more rapid economic growth, their demand for Chinese products will increase, which could discourage China's government from following through on economic reforms necessary to promote a rebalancing of the economy."
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"question": [
"What is the attitude of Congresspeople toward China's tendency to intervene in currency markets?",
"What are their concerns about imports and exports?",
"How does this affect the U.S.?",
"How has China's RMB policy changed?",
"How did RMB appreciation change after the 2008 economic crisis?",
"How has China's account surplus changed in the past few years?",
"What characterizes the relationship between China's currency policy and the U.S. economy?",
"What are the possible effects of undervaluing the RMB?",
"How would this affect the U.S. economy?",
"How else does China affect the U.S. economy?",
"What are the effects of such purchases?",
"What broad conclusions can be drawn from these factors?",
"What are some takeaways of the recent financial crisis?",
"How should China rebalance its economy?",
"What currency policy would help achieve this?",
"How has Congress addressed China's currency policy?",
"How else has Congress addressed concerns about undervalued currencies?"
],
"summary": [
"China's policy of intervening in currency markets to limit or halt the appreciation of its currency, the renminbi (RMB), against the U.S. dollar and other currencies has been an issue of concern for many in Congress over the past decade who view it as one of several distortive economic and trade policies that are used to convey an unfair competitive advantage to Chinese producers and exporters.",
"They charge that China's currency policy is intended to make its exports significantly less expensive, and its imports more expensive, than would occur if the RMB were a freely-traded currency.",
"They argue that the RMB is significantly undervalued against the dollar and that this has been a major contributor to the large annual U.S. trade deficits with China and a significant decline in U.S. manufacturing jobs in recent years.",
"China began to peg the RMB to the dollar in 1994 at about 8.28 yuan (the base unit of the RMB) per dollar and kept the rate constant through July 2005, when, under pressure from its major trading partners, it moved to a managed peg system and began to allow the RMB to gradually appreciate over the next three years.",
"In July 2008, China halted RMB appreciation because of the effects of the global economic crisis on China's exporters. It resumed RMB appreciation in June 2010. From July 2005 through June 2013, the RMB appreciated by 34% on a nominal basis against the dollar and by 42% on a real (inflation-adjusted) basis.",
"Over the past few years, China's current account surplus has declined, and its accumulation of foreign exchange reserves has slowed—factors that have led some analysts to contend the RMB is not as undervalued against the dollar as it once was.",
"The effects of China's currency policy on the U.S. economy are complex.",
"If the RMB is undervalued (as some contend), then it might be viewed as an indirect export subsidy which artificially lowers the prices of Chinese products imported into the United States.",
"Under this view, this benefits U.S. consumers and U.S. firms that use Chinese-made parts and components, but could negatively affect certain U.S. import-competing firms and their workers. An undervalued RMB might also have the effect of limiting the level of U.S. exports to China than might occur under a floating exchange rate system.",
"The United States is also affected by China's large purchases of U.S. Treasury securities. China's intervention in currency markets causes it to accumulate large levels of foreign exchange reserves, especially U.S. dollars, which it then uses to purchase U.S. debt.",
"Such purchases help the U.S. government fund its budget deficits and help keep U.S. interest rates low.",
"These factors suggest that an appreciation of the RMB to the dollar benefits some U.S. economic sectors, but negatively affects others.",
"The effects of the recent global financial crisis have refocused attention on the need to reduce global imbalances in savings, investment, and trade, especially with regard to China and the United States, in order to avoid future crises.",
"Many economists contend that China should take greater steps to rebalance its economy by lessening its dependence on exports and fixed investment as the main drivers of its economic growth, while boosting the level of domestic consumer demand (which would increase Chinese imports).",
"A market-based currency policy is seen as an important factor in achieving this goal.",
"Currency bills aimed at addressing China's currency policy have been introduced in every session of Congress since 2003. The House approved a currency bill in the 111th Congress and the Senate passed one in the 112th Congress. Currency legislation has been proposed in the 113th Congress, including H.R. 1276 and S. 1114.",
"In recent years, congressional concerns about undervalued currencies have moved beyond China to include those of several other countries as well."
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CRS_R45595
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{
"title": [
"",
"Introduction",
"Laws Protecting Students with Disabilities",
"Section 504 of the Rehabilitation Act of 1973",
"The Individuals with Disabilities Education Act",
"The Americans with Disabilities Act of 1990",
"Defining \"Disability\"",
"The IDEA's Categorical Definition of \"Disability\"",
"Section 504 and the ADA's Functional Definition of \"Disability\"",
"Preschool Through Secondary Education Versus Postsecondary Education",
"Evaluation and Placement",
"Evaluations in Preschool, Elementary, and Secondary Education",
"Child Find",
"Evaluation",
"Reevaluations",
"Evaluations and Reevaluations in Postsecondary Education",
"Placements in Preschool, Elementary and Secondary Education",
"Public School Placements",
"Private School Placements",
"Postsecondary Education: Access and Admissions",
"Free Appropriate Public Education",
"FAPE in Preschool, Elementary and Secondary Education",
"Postsecondary Education and a FAPE",
"Adaptations, Accommodations, and Services",
"Preschool, Elementary, and Secondary Education",
"Postsecondary Education: Adaptations and Accommodations"
],
"paragraphs": [
"",
"Several federal laws address the services and protections received by students with disabilities. The application of these laws may change depending upon the student's situation, and most common ly at times of transition—whether the student moves to a new school district or state, or between preschool and kindergarten, elementary school and junior high, junior high and high school, or high school and postsecondary education. Often the biggest transition for students with disabilities and their families is from the supports and services provided in the preschool-12th grade (P-12) public education system to a college or university.\nAt the P-12 level, three main federal laws impact students with disabilities: the Individuals with Disabilities Education Act (IDEA), Section 504 of the Rehabilitation Act of 1973 (Section 504), and the Americans with Disabilities Act (ADA). For students receiving special education under the IDEA or receiving accommodations and services under Section 504, transitioning from the P-12 public education system to an institution of higher education (IHE) may affect how the school assesses their disability, their eligibility for receiving accommodations or services, and the supports, services, and accommodations available to them. This report examines those laws' impact on students with disabilities in three key respects: how they define disability; how they determine eligibility for services and protections; and how they ensure students with disabilities receive the accommodations and services they need to participate in all levels of education.",
"",
"In 1973, following two major federal district court decisions concluding that children with disabilities have the same right of access to public education as other children, Congress enacted the first of a series of civil rights statutes protecting individuals with disabilities: Section 504 of the Rehabilitation Act of 1973. The Rehabilitation Act of 1973 provided a statutory basis for the Rehabilitation Services Administration and funding for projects and studies supporting the employment of people with disabilities. Section 504 was the last section of the Act and the only section concerned with the civil rights of people with disabilities. That provision accordingly provides broad antidiscrimination protections for the disabled, prohibiting any \"program or activity\" that receives federal financial assistance from excluding \"otherwise qualified individual[s] with a disability\" from participating in, or benefiting from, those programs. Given the reach of federal funding, Section 504's guarantee of nondiscrimination stretches quite far, covering not just the P-12 public schools but also postsecondary education, employment, and access to public facilities as well. And because of that breadth, the act remains a key legal protection for students with disabilities today.\nStudents who receive accommodations under Section 504 in high school may have an easier time transitioning to a postsecondary educational environment because the basic protections under Section 504 remain the same regardless of the age or education level of the person with a disability. As explained later in this report, the U.S. Department of Education (ED) has developed separate Section 504 regulations covering these different levels of education, including Preschool, Elementary, and Secondary Education (Subpart D) and Postsecondary Education (Subpart E).\nED's Office of Civil Rights (OCR) has a primary role in enforcing Section 504 in the education context, affecting a significant number of students. In the 2013-2014 school year (SY), OCR reported that nearly 1 million public school students received some sort of service under Section 504. And at the postsecondary level, where students with disabilities receive protection under both Section 504 and the ADA, in SY 2015-2016, approximately 19.5% of undergraduates and 12.0% of post-baccalaureate students reported having a disability.",
"Two years after enactment of the Rehabilitation Act, Congress passed the Education for All Handicapped Children Act, later renamed the IDEA, which focused directly on children with disabilities' access to education. At the time of the IDEA's adoption, Congress found that more than half of all children with disabilities were not receiving appropriate educational services and that 1 million children with disabilities were excluded entirely from the public school system. Congress determined, in addition, that many children participating in public school programs had undiagnosed disabilities that harmed their educational progress. To address these findings, Congress laid down a clear mandate to any state seeking funds under the act: in order to receive those funds, the state must \"identify and evaluate\" all children with disabilities residing \"within [their] borders\" to ensure those children receive a free appropriate public education.\nThe IDEA has been comprehensively reauthorized five times since its original enactment in 1975, most recently in 2004. ED's Office of Special Education Programs in the Office of Special Education and Rehabilitative Services administers the act, and it remains the main federal statute governing special education for children from birth through age 21. The IDEA does so by supplementing state and local funding to pay for some of the additional or excess costs of educating children with disabilities. Of particular importance is Part B of the act, which protects the right of individuals with disabilities, from age 3 through 21, to a \"free appropriate public education\" (FAPE). In SY2017-2018, approximately 7 million children ages 3 through 21 received special education and related services under Part B of the IDEA . Students served under Part B of the IDEA represent about 13.6% of all P-12 public school students.",
"The ADA, as amended, has been described as \"the most sweeping anti-discrimination measure since the Civil Rights Act of 1964.\" Its purpose, as explained in the act itself, is \"to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities.\" The ADA therefore provides broad nondiscrimination protection for individuals with disabilities, applicable across many settings. Title II of the act, in particular, prohibits any \"public entity,\" such as a public school, from discriminating based on disability, while Title III similarly forbids discrimination by \"public accommodations,\" including nonparochial private schools.\nThe ADA Amendments Act adopted in 2008 and made effective January 1, 2009, broadened the scope of the ADA's definition of disabilities, and, through conforming amendments, Section 504's definition as well. The ADA Amendments Act extends the ADA and Section 504 coverage to more clearly encompass all public, and some private, P-12 schools and nearly all postsecondary IHEs. According to the U.S. Census Bureau, 12.7% of the civilian noninstitutionalized population were reported to have a disability in 2017 (about 40.7 million people), including 4.2% of all children under age 18 (roughly 3.1 million) and 6.4% of all adults ages 18 to 34 (about 4.7 million). These individuals are covered by the broad protections of the ADA when accessing most services and facilities, including secondary and postsecondary educational institutions.",
"",
"The IDEA incorporates a categorical definition of \"disability,\" identifying a covered \"child with a disability\" as any \"child\" having at least one of 13 conditions specifically categorized in the act. Thus, to qualify for services under the IDEA a student of qualifying age must satisfy two requirements. First, the student must have a documented disability that falls in one of the categories enumerated in the IDEA, as further specified by ED's implementing regulation. And second, as a result of that disability the student must require \"special education and related services\" in order to benefit from public education. Only if the student meets both criteria will he or she be eligible to receive the principal benefit of the act: specially designed instruction or special education in which the content or the delivery of the instruction is adapted to the child's individual needs, detailed in a plan known as an individualized education program (IEP). Consequently, a child who has a disability not recognized under the act, or has a disability that may require related services but not special education, has no right under the IDEA to the special education and related services provided through an IEP.\nEach IDEA disability category is broadly defined in ED's regulations implementing the act. And that breadth has given states some room to adopt more specific requirements for these categories, so long as those further requirements do not exclude children otherwise eligible for services under the act. Thus, for example, while the IDEA expressly covers a child suffering from some \"other health impairments\" (OHI), the act itself does not specify the sort of disorders that might count as such. In its IDEA regulations, ED has provided a complex definition of that statutory OHI category, listing a series of examples of disorders that may qualify under it. And some states, in their own implementing regulations, have further elaborated on ED's definition, particularly its condition that, to qualify under the IDEA, an OHI must \"adversely affect[] a child's educational performance.\" Delaware, for instance, lists five broad requirements under \"Eligibility Criteria for Other Health Impairment,\" one of which specifically outlines criteria for determining whether children with attention deficit disorder (ADD) and attention deficit hyperactivity disorder (ADHD) have an OHI. When a child's eligibility under the IDEA is due to ADD or ADHD, Delaware's regulation requires evaluators to examine the child according to an additional six factors, and within those six factors 18 symptoms, to determine whether the child's ADD or ADHD qualifies as an OHI. Other states, meanwhile, impose no criteria beyond those found in ED's IDEA regulations for assessing whether a child has an OHI.",
"Sections 504 and the ADA draw on a common definition of \"disability,\" one that is substantially broader than the categorical definition found in the IDEA. Under both laws, an \"individual with a disability\" includes \"any person who (i) has a physical or mental impairment which substantially limits one or more major life activities, (ii) has a record of such an impairment, or (iii) is regarded as having such an impairment.\" This definition, unlike the IDEA's, is not restricted to the educational context. And also unlike the definition used in IDEA, the definition found in Section 504 and the ADA is broadly functional, protecting individuals with any \"impairment\" affecting a bodily or intellectual function—like seeing, hearing, walking, or thinking. The conditions covered by Section 504 and the ADA are therefore not confined to a particular list of \"disability\" categories—\"autism,\" for example, or \"specific learning disability\"—as they are under the IDEA. As a result, an impairment qualifying as a \"disability\" under the IDEA will generally also be covered by Section 504 and the ADA, though not the reverse.\nAlthough the ADA Amendments Act maintains essentially the same statutory language as the original ADA, the subsequent act introduced several new \"rules of construction\" clarifying Congress's intent for the ADA's crucial term—\"disability\" —to be construed broadly. These rules of construction regarding the definition of disability—applicable to both the ADA and Section 504—provide that:\nthe definition of disability shall be construed in favor of broad coverage to the maximum extent permitted by the terms of the act;\nthe term \"substantially limits\" shall be interpreted consistently with the findings and purposes of the Amendments Act;\nan impairment that substantially limits one major life activity need not limit other major life activities to be considered a disability;\nan impairment that is episodic or in remission is a disability if it would have substantially limited a major life activity when active; and\nthe determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures, except that the ameliorative effects of ordinary eyeglasses or contact lenses shall be considered.\nThe ADA Amendments Act also included a conforming amendment to the Rehabilitation Act of 1973, applying these more generous rules of construction to Section 504. ED's OCR consequently enforces the regulations implementing both Section 504 and Title II of the ADA consistently with the ADA Amendments Act.",
"The IDEA covers all children with disabilities residing in states that receive financial assistance under the act. It does not extend, however, to students with disabilities in college or other postsecondary education and training programs. But Section 504 does, and ED has issued separate regulations specifically elaborating that provision's application to preschool, elementary, and secondary education, as well as to postsecondary education. The ADA also does not directly address the provisions of educational services; it instead prohibits discrimination against individuals with disabilities across many contexts, including by a \"public entity\" like a public school. The following sections of this report identify key provisions in the IDEA, Section 504, and the ADA, explain how they apply in particular situations, and analyze how they differ between students in P-12 and postsecondary education settings when more than one law applies. Table 1 also summarizes and compares key characteristics of the IDEA, Section 504, and the ADA.",
"",
"",
"The IDEA requires each state that receives funds under the act to have in place policies and procedures to identify, locate, and evaluate all children residing in the state who may have a disability requiring special education and related services. These policies and procedures—known as \"Child Find\" —have broad application, covering all children ages 3 to 21 through their time in high school, including those who are homeless or wards of the state, attend private schools, or, according to IDEA's regulations, are highly mobile, like migrant children.\nThe regulations implementing Section 504 contain similar provisions requiring recipients of federal money operating public elementary and secondary schools \"to identify and locate every qualified handicapped person residing in the recipient's jurisdiction who is not receiving a public education.\" Section 504's regulations also require LEAs to evaluate students individually before classifying them as having a disability or providing them with accommodations, special education, or related services. But these responsibilities apply only to students in public elementary or secondary schools. Students protected by Section 504 in colleges and universities are responsible for providing their IHEs with documentation of their disabilities and for working with the IHE's disability support services personnel to arrange any accommodations they may need. And the same is true under the ADA.",
"A child who has been identified as having (or possibly having) a disability must be evaluated by his or her LEA before receiving special education and related services under the IDEA or Section 504. The ADA, by contrast, contains no such requirement. Under the IDEA, individuals may qualify for an IEP only if they have been determined to have a qualifying disability for which they need special education and/or related services to benefit from public education. But a child who has a disability that does not adversely affect his or her educational performance—as required to be eligible for an IEP under several IDEA disability categories —may still qualify for a plan under Section 504.\nUnder the IDEA, either a child's parent or the LEA may request an initial evaluation. In general, the LEA must obtain informed consent from a child's parent before conducting an initial evaluation. That consent, however, does not transfer—parental consent to an evaluation, that is, does not imply consent to special education and related services. In addition, the initial evaluation must take place within 60 days of receiving parental consent or within an alternative time frame established by the state.\nSection 504, unlike the IDEA, does not explicitly call either for parental consent to an evaluation or for an evaluation to take place within a specific period after being requested. ED's OCR has nevertheless interpreted Section 504 to require LEAs to obtain parental consent to an initial evaluation. But under Section 504, like under the IDEA, a parent's refusal of an evaluation may not be the final word. OCR has construed Section 504 to allow an LEA, whenever it \"suspects a student needs or is believed to need special instruction and parental consent is withheld,\" to \"use due process hearing procedures to seek to override the parents' denial of consent for an initial evaluation.\"\nIn conducting an initial evaluation of a child suspected of having a disability, both the IDEA and Section 504 regulations require LEAs to use valid and reliable assessment tools tailored to assess a child's specific areas of educational need. The IDEA emphasizes the importance of using multiple measures of assessing whether children are eligible for services under the statute, requiring LEAs to \"use a variety of assessment tools and strategies to gather relevant functional, developmental, and academic information, including information provided by the parent.\" The IDEA also requires that LEAs use multiple measures or assessments to determine whether a child is \"a child with a disability\" under the act, as well as to determine whether an educational program is appropriate. The Section 504 regulations, for their part, also require LEAs \"to draw upon information from a variety of sources\" when interpreting evaluation data, \"including aptitude and achievement tests, teacher recommendations, and adaptive behavior.\" And the Section 504 regulations likewise \"establish procedures to ensure that information obtained from all relevant sources is documented and carefully considered.\"\nAssessments and other evaluation materials used to assess a child under the IDEA must be selected and administered to avoid discriminating on a racial or cultural basis. They must also be provided and administered in the language and form most likely to yield accurate information about what the child knows and can do academically, developmentally, and functionally. Section 504's regulations do not address children's native language or the possibility of racially or culturally discriminatory evaluation materials. However, they do include \"social or cultural background\" information as one of several sources LEAs should draw upon in interpreting evaluation data and in making placement decisions.\nAfter completing an evaluation for an IEP under the IDEA, the LEA must determine whether the child is a \"child with a disability\" under the act, and, if so, what his or her educational needs are, including the participation of qualified professionals and the child's parents. Section 504, by contrast, does not expressly require that a child's parents participate in placement decisions. Section 504 regulations instead provide only that placement decisions be made \"by a group of persons, including those knowledgeable about the child, the meaning of the evaluation data, and the placement options.\" ED's regulations under Section 504 do mandate, however, that LEAs have in place \"a system of procedural safeguards that includes notice, an opportunity for the parents or guardian of the person to examine relevant records, an impartial hearing with opportunity for participation by the person's parents or guardian and representation by counsel, and a review procedure.\"",
"Under IDEA regulation, reevaluations are required if a child's teacher or parent makes a request or if the LEA determines that a child's educational and service needs, or functional performance warrant reevaluation. For example, a reevaluation might be warranted if a child's performance in school significantly improves, suggesting that the child no longer requires special education and related services, or if a child is not making progress toward the goals in his or her IEP, suggesting that changes are needed in the special education or related services the LEA is providing. A reevaluation may not be done more than once a year unless the parents and LEA agree, and must be done at least once every three years unless the parent and the LEA agree that a reevaluation is unnecessary. In general, the child's parent(s) must consent to a reevaluation, as well as to the initial evaluation. Before any such reevaluation, an LEA may not change a child's eligibility for educational services under the IDEA, unless the child graduates from high school with a regular diploma or reaches the age at which state law no longer provides a FAPE.\nThe briefer Section 504 regulations simply require LEAs to establish procedures for \"the periodic reevaluation of students who have been provided special education and related services.\" Reevaluation procedures consistent with the IDEA also satisfy this regulatory requirement.",
"As noted, at the postsecondary level educational institutions have no responsibility for evaluating students for a disability. However, if a student requests modifications, accommodations, or auxiliary aids or services because of a disability, IHEs are allowed, though not required, to request that the student provide \"reasonable\" documentation of his or her disability and need for the requested accommodations or services.\nBefore the ADA Amendments Act in 2008, which clarified Congress's intent that \"disability\" under the ADA and Section 504 be construed broadly, there had been significant confusion among IHEs about what a student could be required to use to document a disability. Different IHEs developed their own requirements for the evaluation/reevaluation materials students needed to submit to establish a disability warranting accommodations and services. Some universities required students to produce \"recent\" documentation of an evaluation or reevaluation for a disability, while other schools, looking to the IDEA as a guide, instead required comprehensive evaluations that were no more than three years old. Requirements for \"recent\" documentation may apply to returning postsecondary students; students who had been served under Section 504 in high school; students who attended private schools that did not require or provide evaluations to determine students' disability status; and any postsecondary student with a disability whose disability had last been comprehensively evaluated in the ninth grade or earlier. Such students would need to be reevaluated at their own expense to prove that they were still a student with a disability, if they wanted to receive accommodations or supports at the postsecondary level.\nPrior to the passage of the ADA Amendments Act, several courts struck down triennial evaluation requirements used by colleges and universities, as well as requirements that students be regularly reevaluated for the presence of a disability even when they were permanently disabled and had sufficient (but not recent) proof of their disability status. And the ADA Amendments Act only reinforced the breadth of the ADA's and Section 504's protection, with its implementing regulations explaining that:\nThe primary purpose of the ADA Amendments Act is to make it easier for people with disabilities to obtain protection under the ADA. Consistent with the ADA Amendments Act's purpose of reinstating a broad scope of protection under the ADA, the definition of \"disability\" in this part shall be construed broadly in favor of expansive coverage to the maximum extent permitted by the terms of the ADA. The primary object of attention in cases brought under the ADA should be whether entities covered under the ADA have complied with their obligations and whether discrimination has occurred, not whether the individual meets the definition of \"disability.\" The question of whether an individual meets the definition of \"disability\" under this part should not demand extensive analysis.\nAlso since the passage of the ADA Amendments Act, IHEs and professional organizations have prepared their own informal guidance for disability support services staff, professors, and anyone else responsible for confirming a student's disability and request for accommodations. Current guidance for IHEs tends to support the use of postsecondary students' past evaluations for special education services or accommodations under Section 504, or other information from external or third parties, as potentially useful supporting documentation but not necessarily required for determining a disability.",
"",
"Determining an appropriate public school placement for a child with a disability calls for similar considerations under both the IDEA and Section 504. However, as with many other aspects of P-12 education for children with disabilities discussed in this report, there are more specific provisions on placement decisions in the IDEA than in Section 504. For example, the IDEA requires that a placement decision for a child with a disability be determined at least annually; be based on the child's IEP; and be made by a group of people who are knowledgeable about the child, the meaning of the evaluation data, and the placement options, including the child's parents. In comparison, Section 504 does not require placement decisions to be determined at any particular time interval. Nor does it require those decisions to be based on a child's educational plan under Section 504 or include specific persons as a part of the deliberations—parents included.\nIn other aspects of their placement provisions, the IDEA and Section 504 are more alike. For example, like the IDEA, Section 504 regulation requires that a child with a disability be placed in the regular educational environment to the maximum extent appropriate to the needs of the child. Under the IDEA and its implementing regulations, when determining a child's placement, states must have in effect policies and procedures to ensure that LEAs are providing a free appropriate public education in the least restrictive environment (LRE)—that children with disabilities, in other words, receive their education alongside children who do not have disabilities, to the maximum extent appropriate. Section 504's regulations do not use the same terminology as the IDEA—there is no express mention of an LRE, for instance—but both require, in academic and nonacademic settings (e.g., lunch, recess), that children with disabilities be educated with their nondisabled peers \"to the maximum extent appropriate to [their] needs.\"\nUnder the IDEA, LEAs \"must ensure that a continuum of alternative placements [are] available to meet children's needs for special education and related services.\" This includes \"instruction in regular classes,\" with the provision of supplementary services when appropriate, as well as \"special classes, special schools, home instruction, and instruction in hospitals and institutions.\" In contrast to IDEA's focus on a continuum of services to enable an appropriate placement for each child with a disability, Section 504's main concern, as a civil-rights law, is to ensure that children with disabilities are not discriminated against in their placements, so that children with disabilities can participate whenever possible in academic and nonacademic activities alongside their peers without disabilities. In cases where a child with a disability does need to attend a facility specifically for children with disabilities, the LEA must ensure that the facility and the services and activities it provides are \"comparable to the LEA's other facilities, services, and activities.\"\nUnlike the IDEA, the Section 504 regulations do not mandate the use of an IEP, though an IEP that satisfies the IDEA will also satisfy Section 504. And the regulations implementing Section 504, unlike those under the IDEA, do not detail how a student's educational plan developed under Section 504—often called a \"504 plan\"—must be created. Thus, for example, while the IDEA specifies the members who must be invited to participate in a child's IEP team including the child's parents, no similar requirement appears in Section 504 or its regulations.\nIn addition, any accommodations, special education, and related services described in a student's IEP or 504 plan must be implemented in all of the student's classes, whether they are special education classes, regular education classes, or accelerated classes. For example, ED has determined that denying students with disabilities access to accelerated programs such as Advanced Placement and International Baccalaureate classes violates Section 504 regulations as well as the regulations implementing the IDEA. Even though schools may have eligibility requirements for such courses, ED has concluded that both sets of regulations make it \"unlawful to deny a student with a disability admission to an accelerated class or program solely because of that student's need for special education or related aids and services.\"",
"Because the IDEA is designed to improve the education of all children with qualifying disabilities, the act also provides benefits and services to eligible children enrolled by their parents in private school. As a result, the IDEA as well as ED's implementing regulations each have extensive provisions addressing children with disabilities who attend private schools. Those provisions range from funding conditions to LEAs' and State Education Agencies' (SEAs') responsibilities under Child Find to the procedural safeguards protecting families of children with disabilities in private schools. Most of the IDEA's provisions on private school placements, however, fall into two broad categories: those related to children placed in or referred to private schools by public agencies, and those related to children enrolled in private schools by their parents. Together, these provisions outline the various procedural, financial, and educational responsibilities of SEAs, LEAs, private schools, and parents of children with disabilities in private schools, depending on who decided to place the child in private school.\nIn contrast, the Section 504 regulations addressing students with disabilities in private schools do not address SEAs, LEAs, or parents of children with disabilities. They instead outline general responsibilities toward students with disabilities that are incumbent on any private educational institution receiving federal financial assistance. Thus, under Section 504 regulations, a private elementary or secondary school that receives federal funds \"may not exclude a student with a disability if the student can, with minor adjustments, be provided an appropriate education within that institution's program or activity.\" Nor may a recipient of federal funds charge more to educate students with disabilities than those without disabilities, according to ED's Section 504 regulations, \"except to the extent that any additional charge is justified by a substantial increase in cost to the federal funding recipient.\"",
"The IDEA requires IEP teams to include postsecondary transition goals and services in each student's IEP beginning no later than when students are 16 years old. Transition goals and services are individualized. For a student planning to pursue postsecondary education, transition services could include helping the student select colleges to apply to or complete applications; obtain accommodations, such as extended time on standardized college placement tests; practice self-advocacy skills; or any other services that the IEP team agrees would help the student prepare for postsecondary education. However, no matter what transition services students with disabilities receive in high school, those transition services will end once they exit the P-12 public school system and enter an IHE.\nAt the postsecondary level, Section 504 and the ADA require IHEs to provide broad nondiscrimination protection to students who have a disability or who are regarded as having one. However, Section 504 and the ADA do not require IHEs to seek out students with disabilities to provide them with these protections, to evaluate students who are suspected of having a disability, or to arrange proactively for accommodations for students who had been evaluated and found eligible for services under IDEA, Section 504, or the ADA. At the postsecondary level, students must self-identify as having a disability, provide appropriate documentation of their disability, and arrange with campus disability support services for any accommodations and services to which they may be entitled.\nSection 504 and the ADA protect students applying for postsecondary education from discrimination in two basic ways: (1) in the eligibility requirements and admissions policies and procedures adopted by those institutions, and (2) following admission, in any activities, programs, aid, benefits, or services offered to students. ADA regulations also prohibit public accommodations, including IHEs, from imposing or applying eligibility criteria that screen out individuals with disabilities from fully and equally enjoying any goods, services, facilities, privileges, advantages, or accommodations they offer. Section 504 regulations likewise prohibit discrimination in admissions policies, including admissions testing. And the ADA regulations extend those prohibitions to private entities that \"offer[] examinations or courses related to applications, licensing, certification, or credentialing for secondary or postsecondary education, professional, or trade purposes,\" requiring them to provide those examinations or courses \"in a place and manner accessible to persons with disabilities or offer alternative accessible arrangements.\"",
"",
"At the P-12 level, the IDEA, Section 504, and the ADA all guarantee students with disabilities a free appropriate public education. Those provisions, while similar, are not identical. Their differences largely have to do with details, but they generally can be traced to a more basic difference in statutory design: \"the IDEA guarantees individually tailored educational services, while Title II [of the ADA] and [Section] 504 promise nondiscriminatory access to public institutions.\" The IDEA's provisions addressing a FAPE are consequently much more detailed than their counterparts in Section 504, the same that apply, according to ED, under Title II of the ADA.\nThese differences among the three statutory schemes have also led to some judicial disagreement about how to relate their violations: specifically, whether denying an eligible child the IDEA's procedural or substantive guarantees also amounts to disability discrimination, in violation of Section 504 (and, by extension, Title II of the ADA). At least some of the lower courts have found these violations to overlap, so that a valid claim under the IDEA will \"almost always\" support one under Section 504. Other courts, however, have taken the opposite view: for them, \"something more than a mere failure to provide the 'free appropriate education' required by [IDEA] must be shown\" before those courts will draw the discriminatory inference required for a violation of Section 504. What that something is also appears to vary somewhat by court, but several have insisted on a showing of at least \"bad faith or gross misjudgment . . . before a [Section] 504 violation [will] be made out\" in this context.\nWhatever its differences with Section 504, Part B of the IDEA nevertheless mandates that every recipient state provide a FAPE to all disabled children between the ages of 3 and 21 residing \"within its borders.\" \"An eligible child [therefore] acquires a 'substantive right' to such an education once a State accepts the IDEA's financial assistance,\" and the state's denial of that education therefore entitles eligible students to legal relief, whether in the form of an injunction for the improperly denied services or money damages.\nWhat a FAPE entails, and what demands it puts on a school district, will therefore vary from student to student. At a minimum, however, a FAPE consists of \"special education and related services\"—\"specially designed instruction,\" in other words, that \"meets the unique needs of a child with a disability. And for that instruction to qualify as a FAPE, it must also be \"provided at public expense, under public supervision, and without charge; meet[] the standards of the [SEA];\" encompass preschool through secondary school; and conform to the student's IEP. A child's IEP accordingly \"serves as the 'primary vehicle' for providing [him or her] with the promised FAPE,\" by specifying the particular special education and related services that the LEA will provide to meet the child's needs.\nApart from these procedural minimums, the substantive guarantee of a FAPE remains highly general. And that generality has provoked one of the most commonly litigated questions under the act: What does an \"appropriate\" public education require of an IEP? In an early decision under the act— Board of Education v. Rowley —the U.S. Supreme Court appeared to set the bar fairly low. There the Court concluded that a school district could satisfy its responsibility of providing a FAPE so long as it had met two basic conditions. The school district had to have observed all of the IDEA's procedural rules, and it had to have provided an IEP \"reasonably calculated\" to \"confer some educational benefit\" on the child.\nBut that latter condition—requiring an IEP that conferred \"some educational benefit\"—did little to resolve the basic ambiguity in the IDEA's guarantee of a FAPE: How much benefit would make an IEP \"appropriate\"? The lower federal courts were therefore left to fashion for themselves a more concrete standard for deciding whether an IEP had provided an eligible child with enough of a benefit to satisfy Rowley . On this point some courts took a minimalist view, requiring an IEP to provide at least some educational benefit —a benefit, in other words, that is \"barely more than de minimis .\" Other courts, however, read Rowley as calling for much more, demanding evidence that an IEP had provided \"meaningful benefit to the child.\"\nFaced with this circuit split, in 2017, the Supreme Court took the opportunity in Endrew F. v. Douglas County School District to clarify just how much of a benefit an eligible child must receive through an IEP. The Court did so by returning to its Rowley standard: to provide an eligible child a FAPE under the IDEA, the Court explained, a school must \"offer an IEP reasonably calculated to enable a child to make progress appropriate in light of the child's circumstance.\" Thus, \"for a child fully integrated in the regular classroom, an IEP typically should . . . be 'reasonably calculated to enable the child to achieve passing marks and advance from grade to grade.'\" The Court cautioned, however, that an appropriate measure of \"progress\" would depend on the child's circumstances—and especially on the child's integration into the regular classroom. For children with disabilities not integrated into the regular classroom, an \"appropriate\" IEP therefore \"need not aim for grade-level advancement.\"\nEndrew F. clearly rejected, then, the more minimalist view of a FAPE. \"[T]he IDEA demands more\" from an IEP than the \"barely more than de minimis progress\" that the lower court upheld there. A child's IEP must instead be \"appropriately ambitious in light of his circumstances,\" so that that child, like every other, \"ha[s] the chance to meet challenging objectives\" despite his differing goals. Although the Court did not explicitly compare its refined standard in Endrew F. with the view from the other side of the circuit split—that an appropriate IEP needed to confer a meaningful benefit on a child—several lower courts have taken Endrew F. to vindicate that meaningful-benefit standard nonetheless. As the U.S. Court of Appeals for the First Circuit explained, Endrew F. appears to call for an IEP of exactly the same quality that that circuit had expected all along under Rowley . Thus, \"[a]t a bare minimum,\" that standard demands an IEP that includes \"the child's present level of educational attainment, the short-and long-term goals for his or her education, objective criteria with which to measure progress toward these goals, and the specific services to be offered.\" Whether the other circuits will also agree on that \"bare minimum\" remains to be seen.",
"The right of students with disabilities to a FAPE under the IDEA has a still more definite limit: it does not extend to students in colleges, universities, or any other postsecondary education or training programs. Instead, the IDEA requires only that LEAs provide qualifying students with disabilities a FAPE until they exit high school—whether by graduating, dropping out—or until they surpass the maximum age for IDEA services, 21 years old. Section 504 and the ADA, on the other hand, have no such limit. They instead protect students of all ages from discrimination based on their disability, both during the admissions process and while enrolled as a student. Like the IDEA, however, Section 504's regulations ensure a FAPE only to students in P-12 public schools, a guarantee that ED has read to be \"incorporated in the general nondiscrimination provisions of the Title II regulation\" under the ADA as well.",
"",
"To receive services under the IDEA, a child must be evaluated and found eligible for an IEP under one of the IDEA disability categories and must because of that disability require special education and related services to benefit from public education. In the IDEA, \"special education\" means instruction designed to meet the unique needs of a child with a disability, provided at no cost to the child's parents. It may include instruction conducted in both academic and nonacademic settings, including in the classroom, in the home, and in hospitals and institutions, as well as instruction in physical education. In comparison, \"related services\" are intended to assist a child with a disability to benefit from special education—such as nursing services during the school day for a student who relies on a ventilator. Among the related services provided by the IDEA are speech-language pathology and audiology services; interpreting services, psychological services; physical and occupational therapy; recreation, including therapeutic recreation; social work services; counseling services; and, certain medical and school nurse services.\nBesides special education and related services, under the IDEA and implementing regulations children with disabilities may receive supplementary aids and services and other supports in regular education classes, and in extracurricular and nonacademic settings, to enable them to be educated with nondisabled children to the maximum extent appropriate. The combination of special education, related services, and other supplementary aids and services a child receives is determined by the child's IEP team, taking into consideration the child's academic, developmental, and functional needs.\nAs discussed, the IDEA defines a FAPE as special education and related services that are provided at public expense, meet the standards of the SEA, and conform to the student's IEP. As part of their right to a FAPE, each child receiving services under the IDEA must have an IEP stating the specific special education and related services the LEA will provide to meet his or her needs. Unlike the IDEA, an \"appropriate education\" under Section 504 regulation is defined as the provision of regular or special education and related aids and services designed to meet individual educational needs of children with disabilities as adequately as the needs of children without disabilities are met and that comply with procedural requirements. Note, however, that the IDEA specifically requires the provision of special education and related services, while Section 504 requires the provision of regular or special education and related aids and services. Thus, a child with a Section 504 plan may be served by a \"regular\" education with related aids and services, while under the IDEA a qualifying child must be provided \"special education.\"",
"To receive accommodations or services under the ADA or Section 504 at the postsecondary level, students with disabilities must seek out the person or office at their IHEs responsible for arranging accommodations for students with disabilities, request the accommodations they need, and provide the documentation and/or personal history necessary to support their request. ED's regulations implementing Title II of the ADA include specific requirements to guide disability and accommodation services personnel at IHEs when considering such requests. Thus, for example, the regulations instruct IHEs,\n[w]hen considering requests for modifications, accommodations, or auxiliary aids or services, [to] give[] considerable weight to documentation of past modifications, accommodations, or auxiliary aids or services received in similar testing situations, as well as such modifications, accommodations, or related aids and services provided in response to an [IEP] provided under the [IDEA] or a . . . Section 504 Plan.\nOnce students have provided adequate documentation of their disabilities to the appropriate person or office, Section 504 and Title II of the ADA protect them from discrimination based on their disabilities. Section 504's regulations on postsecondary education programs and activities elaborate on IHEs' responsibilities for adopting and maintaining nondiscriminatory practices toward students with disabilities, including through accommodations, modifications, or adaptations across many contexts, from course examinations to housing and counseling services to financial and employment assistance."
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{
"question": [
"What federal efforts exist to support individuals with disabilities?",
"What is the implication of the differences between these frameworks?",
"What different populations do the frameworks address?",
"What factors determine the application of the three frameworks?",
"What does the IDEA authorize?",
"What does the act require in order to receive funds?",
"What specific steps must states and LEAs take?",
"What is IDEA's focus as opposed to other legal frameworks?",
"What population does IDEA serve?",
"What is Section 504?",
"What kinds of programs and settings does Section 504 affect?",
"What characterizes Section 504 regulations?",
"What is one example of a Section 504 regulation?",
"What protections does the ADA provide?",
"How does the ADA affect schools?",
"What are some examples of modifications that must be made for individuals with disabilities?"
],
"summary": [
"The Individuals with Disabilities Education Act (IDEA), Section 504 of the Rehabilitation Act (Section 504), and the Americans with Disabilities Act (ADA) each play a significant part in federal efforts to support the education of individuals with disabilities. These statutory frameworks, while overlapping, differ in scope and in their application to students with disabilities.",
"As a result, when students with disabilities transition between levels of schooling, the accommodations and services they must be provided under federal law may change.",
"For example, while the IDEA, the ADA, and Section 504 potentially apply to children with disabilities from preschool through 12th grade (P-12), only the ADA and Section 504 apply to students in an institution of higher education.",
"More generally, application of the IDEA, Section 504, and the ADA to students with disabilities is determined by (1) the definition of \"disability\" employed by each framework; (2) the mechanisms employed under each law to determine whether a student has a qualifying disability; and (3) the adaptations, accommodations, and services that must be provided to students with disabilities under each law.",
"The IDEA, as amended, authorizes federal grants to states to support the education of children with disabilities.",
"The act requires that states, as a condition for receiving funds, provide students with disabilities a range of substantive and procedural protections.",
"For example, states and local education agencies (LEAs) must (1) identify, locate, and evaluate all children with disabilities residing in the state, regardless of the severity of their disability, to determine which children are eligible for special education and related services; (2) convene a team, which includes the parents of each eligible child with a disability, to develop an individual education program (IEP) spelling out the specific special education and related services to be provided to that child to ensure a \"free appropriate public education\" (FAPE); and (3) provide procedural safeguards to children with disabilities and their parents, including a right to an administrative hearing to challenge determinations and placements, with the ability to appeal the ruling to federal district court.",
"Of the three legal frameworks discussed in this report, only the IDEA is focused squarely on educational matters, and its statutory provisions and implementing regulations specifically detail the rights of children with disabilities and their families in U.S. public schools.",
"Of the three laws examined here, the IDEA is also the only one that fixes an age limit, with its substantive and procedural guarantees applying to persons with disabilities from birth until they reach 21 years or exit high school, if earlier.",
"Section 504 is an antidiscrimination provision within a broader federal law providing rehabilitation services to people with disabilities.",
"Section 504 protects individuals from disability discrimination in programs and activities that receive federal financial assistance, including elementary and secondary schools, as well as many colleges and universities.",
"While Section 504 is terse in describing covered entities' obligations, the statute's implementing regulations, including those promulgated by the U.S. Department of Education (ED) applicable in the educational context, are extensive.",
"For example, Section 504 and its implementing regulations require all schools receiving federal funds to make their application forms and course materials accessible to people with disabilities.",
"Enacted in 1990, the ADA provides broad nondiscrimination protection for individuals with disabilities across a range of institutional contexts, both public and private, including employment, public services, transportation, telecommunications, public accommodations, and services operated by private entities.",
"In an educational context, the ADA and implementing regulations effectively require both public schools and many P-12 private schools to ensure that students with disabilities are not excluded, denied services, segregated, or otherwise treated differently than other individuals because of their disability, unless the school can demonstrate that taking those steps would fundamentally alter the nature of the school's program or cause an undue financial burden.",
"The ADA's statutory provisions and implementing regulations outline the types of modifications that must be made for individuals with disabilities, including the removal of barriers, alterations to new and existing buildings, accessible seating in assembly areas, and accessible examinations and course materials."
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CRS_RL33325
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{
"title": [
"",
"Introduction",
"Structural Trends",
"Beef Production",
"Pork Production",
"Poultry Production",
"Vertical Coordination and Contracting",
"Contracts",
"Other Livestock Marketing Arrangements",
"Relevant Authorities and Agencies",
"Historical Context",
"Packers and Stockyards (P&S) Act of 1921",
"General Antitrust Laws",
"Agricultural Cooperative Protections",
"Selected Issues and Legislation",
"Research on Competition and Price Impacts",
"Studies in the 1990s",
"GIPSA Livestock and Meat Marketing Study",
"USDA Office of Inspector General Report and GAO Study",
"Legal Action: Pickett v. Tyson Fresh Meats, Inc.",
"Congressional Action",
"Proposed Farm Bill \"Competition Title\"",
"House and Senate Farm Bills",
"Enacted Farm Bill",
"Packer Ownership/Captive Supply",
"House and Senate Farm Bills",
"Enacted Farm Bill",
"Changes to the Agricultural Fair Practices Act",
"House and Senate Farm Bills",
"Enacted Farm Bill",
"USDA Enforcement and Management",
"House and Senate Farm Bills",
"Enacted Farm Bill",
"Livestock Mandatory Price Reporting (LMPR)",
"House and Senate Farm Bills",
"Enacted Farm Bill"
],
"paragraphs": [
"",
"Farmers and ranchers have had to adjust to significant changes in the structure and business methods of the livestock and meat sectors in recent decades. At the farm level, animal production in general and hog production in particular have undergone significant consolidation since 1980. Beef and pork packing (slaughtering) and processing have consolidated rapidly since 1980 into fewer and larger plants. As an industry consolidates, it can become highly concentrated, with a relatively small number of firms accounting for most production or sales.\nThe successive stages of cattle and hog production, processing, and marketing also are becoming more carefully managed and aligned, often referred to as vertical coordination or, in its most advanced form, vertical integration, where most stages are owned or financially controlled by a single entity.\nSome farm constituencies assert that these structural changes have undermined the more \"traditional\" U.S. system of smaller-scale, independent, family-based farms and ranches; created closed markets with less price transparency; eroded farmers' negotiating power; and contributed to lower prices paid to farmers. These groups believe that federal officials have not enforced existing laws designed to prevent anti-competitive behavior, and that the laws themselves should be strengthened to better address today's market realities.\nOthers assert that present competition and antitrust policies remain adequate and effective. They believe that the sector's structural changes are a desirable outgrowth of other factors such as technological and managerial improvements, changing consumer demand, and more international competition. Many of the changes in business relationships along the livestock and meat marketing chain have brought U.S. consumers the ample variety of high-quality, low-priced products they now enjoy, it is argued. New laws or more aggressive interpretation of existing laws will stifle private investment and innovation, and make the industries less competitive, defenders of current policies argue.\nThe 2008 omnibus farm bill (Food, Conservation, and Energy Act of 2008, P.L. 110-246 ) contains a number of animal-related provisions as part of its new Livestock title (Title XI) that may affect how USDA is to regulate livestock and poultry markets. These include provisions that change Agricultural Fair Practices Act (AFPA ) definitions of associations and handlers and require USDA to issue rules and specify requirements regarding breach of contract and the venue for any litigation. The farm bill also requires USDA to issue an annual report detailing investigations into possible violations under the Packers and Stockyards (P&S) Act. The 2008 farm bill, however, did not include other provisions that were part of the Senate-passed version of the farm bill, such as provisions prohibiting ownership among large meat packers, provisions strengthening enforcement authorities over live poultry dealers, and certain changes to the Mandatory Livestock Price Reporting Program. These types of competition and marketing issues could continue to be of interest to some Members of Congress.\nOther livestock title provisions in the enacted 2008 farm bill include permitting some state-inspected meat and poultry products to enter interstate commerce, just like USDA-inspected products; bringing catfish under mandatory USDA inspection; and modifying the mandatory country-of-origin labeling (COOL) law to ease compliance requirements affecting meats and other covered commodities. The enacted bill also contains amendments aimed at further protecting primarily companion animals, which are regulated under the Animal Welfare Act (AWA). For information on these other livestock provisions adopted in the 2008 farm bill, see CRS Report RL33958, Animal Agriculture: 2008 Farm Bill Issues .",
"Market concentration in the cattle and hog sectors has increased sharply in the last two decades, with a few firms now dominating each sector. The \"four-firm concentration ratio,\" which measures the four largest firms' share of total shipment values, is commonly cited as a summary indicator of concentration and overall structural change in the industry. As shown Figure 1 , the four-firm concentration ratio for cattle and hog slaughter indicates that, over time, the top four firms are accounting for a growing share of the overall market (based on slaughter volumes). Four-firm concentration ratios from 1963 to 2004 rose from 26% to 72% of the cattle slaughtered, and from 33% to 66% of all hogs slaughtered. Continued consolidation and recent mergers could raise these concentration ratios even more, particularly in the beef sector.\nAlthough observations about concentration and vertical integration are often ascribed to the meat and poultry sectors as a whole, individual production and marketing segments within these sectors do differ in how they are structured and function. The following discussion focuses primarily on the beef and pork industries, with some limited information for poultry production focused mostly on broiler meat.",
"Most U.S. beef cattle are born, bred, and pastured on a large number of widely dispersed, often small-sized farms and ranches, called cow-calf operators. These operators keep some heifer calves from each year's crop for breeding herd replacement; the rest generally are sold at from 6 to 12 months of age to feedlots (or sometimes to an intermediary known as a backgrounder who readies them for feedlots). These lots fatten them to slaughter weight and sell them to the packing houses.\nOverall, the trend in U.S. agriculture is toward fewer, larger farms. This is also true in the beef industry: the number of beef operations has declined dramatically over the past few decades, and the largest operations now account for a growing share of total marketings. Still, operations with small herd sizes continue to provide calves to feedlots and backgrounding operations, and despite concentration in larger operations, the cattle sector remains structurally diverse.\nCattle feeding has also become more concentrated into larger feedlots, fewer facilities, and fewer states. A relatively small number of feedlots now fatten and market a significant portion of fed cattle (those ready for slaughter). In 2008, the top 10 companies had the capacity to feed more than 3.2 million cattle in 58 feedlots, representing about one-fourth of all cattle on feed on January 1, 2008 (at facilities with 1,000+ capacity feedlots). At these larger facilities, the top 30 operations account for nearly one-half of all cattle on feed. There were 2,170 feedlots with 1,000+ capacity in 2006. Feedlots with a one-time capacity of less than 1,000 head still account for a large share (about 95%) of all U.S. feedlots, but these facilities account for a small share (less that 10%) of annual marketings. Cattle feeding is now concentrated in the middle part of the country, where five states marketed 80% of all fed cattle: Texas, Kansas, Nebraska, Colorado, and California. Beef cow facilities are more widely dispersed, but also tend to be located in the central states.\nMeatpacking is more concentrated than the production phase. Since the 1970s, the number of meatpacking plants has decreased from nearly 2,500 plant to 1,400 plants in 1992. In meat processing, the number of facilities remained more or less unchanged. Concentration in meatpacking has increased: In 1985, the then-top four firms claimed 50% of all steer/heifer slaughter and 39% of all cattle slaughter; by 2007, four firms slaughtered 84% of all young cattle (steers and heifers), and 72% of U.S. cattle of all types. Recent concentration numbers approach those of the early 1900s, when 50% to 75% of the market was dominated by five firms that slaughtered several species.\nAnother way the federal government weighs concentration is the so-called Herfindahl-Hirschman Index (HHI), which is considered to be a more comprehensive measurement than the four-firm percentage cited above. An industry with an HHI below 1,000 is considered to be unconcentrated. An industry with an HHI between 1,000 and 1,800 is considered to be moderately concentrated; an HHI above 1,800 is highly concentrated. The beef packing industry reached the highly concentrated level by the mid 1990s; its 2004 HHI was 1,900.\nTable 1 shows the market shares and related information for the top U.S. packers and feeding companies based on available data.\nMarket concentration in the U.S. beef sector could increase considerably following a series of mergers and acquisitions starting in 2007. In July 2007, JBS—a Brazilian company regarded as the world's largest meat processor—purchased the U.S. beef processor Swift & Co., then the third-largest U.S. beef processing company. In February and March 2008, JBS signed agreements to acquire the fourth- and fifth-largest U.S. beef packers, National Beef Packing Company and the Smithfield Beef Group, respectively. These planned acquisitions have undergone customary regulatory review by the U.S. Department of Justice's (DOJ's) Antitrust Division. In October 2008, DOJ and 13 states filed a complaint in U.S. District Court to block the JBS buyout of National Beef Packing Company, citing concerns that it could contribute to higher consumer prices and also to lower producer prices. That same day DOJ announced it would not challenge the JBS acquisition of Smithfield Beef Group, which was later purchased by JBS.\nSome in Congress publicly applauded DOJ's lawsuit; opinion within the U.S. meat industry is mixed. If the DOJ lawsuit is not successful and JBS acquires National Beef in addition to Smithfield, this could raise the JBS combined share of the U.S. commercial cattle slaughter market to about 30%, assuming it does not divest some facilities. JBS's acquisition of Five Rivers Ranch Cattle Feeding, which was part of the Smithfield deal, made JBS the largest cattle feeder in the United States. For more information on the JBS merger, see CRS Report RS22980, Recent Acquisitions of U.S. Meat Companies .",
"Hog production has experienced perhaps the most sweeping changes over the past 25 years. The number of U.S. farms with hogs declined from 667,000 in 1980 to 67,000 in 2005; those remaining have become much larger and less diversified. The average 1980 farm with hogs had less than 100 head and likely raised them from birth to slaughter weight as part of a more diversified crop-livestock operation. In 2005, the average hog farm had more than 900 head and might typically specialize in a single stage of hog production, such as finishing, according to USDA. Operations with at least 10,000 head now represent less than 1% of all producers but more than half of total U.S. production, USDA reports.\nIn fact, the hog production segment of the industry now has about 30 key firms, plus several hundred additional \"significant\" operators. Rapid adoption of vertical coordination methods (see below) drove much of the consolidation in the hog industry, particularly during the 1990s, when farm prices declined to historic lows, causing tens of thousands of small operators to cease raising hogs. From 1993 to 1998 alone, U.S. farms with one or more hogs declined by nearly half, from 218,060 to 114,380, according to USDA. Six large producers—Smithfield, Premium Standard Farms, Seaboard, Prestage, Cargill, and Iowa Select—together accounted for nearly 30% of U.S. hog production in 2003.\nIn hog packing in 2007, four firms slaughtered 64% of all U.S. hogs, compared with 32% in 1985 ( Table 2 ). The HHI for the hog slaughter industry climbed above 1,000, the numerical threshold for moderately concentrated (see above) during the 1990s.",
"The poultry meat sectors have long been highly concentrated, owing in part to vertically integrated production, processing, and distribution systems, where a large share of production is organized and grown under contract between farmers and their poultry processors and handlers. In the U.S. broiler industry, processing firms called \"integrators\" own hatcheries, processing plants, and feed mills. These integrators contract with independent farmers to \"grow out\" broiler chicks to market weight, and to produce replacement breeder hens for hatcheries. This relationship is formalized under a production contract, whereby the integrator provides the farmer/grower with chicks, feed, and veterinary and transportation services, while the farmer provides labor, capital in the form of housing and equipment, and utilities. Typically, the birds are sent to slaughter after five to nine weeks on the farm, and the farmer is paid for its growing services.\nAmong broiler processors, market shares for the top four U.S. companies accounted for nearly three-fourths of all broiler meat processed in 2007 ( Table 2 ). Broiler production is more highly concentrated within the area between Delaware, Georgia, and Alabama, Mississippi and Arkansas. The top producing states include Georgia, Arkansas, Alabama, Mississippi, North Carolina, Texas, Kentucky, and Maryland. In the turkey meat sector, a few of the larger companies also account for a large share of the industry.",
"Also apparent in the red meat industry in recent decades is the trend toward vertical coordination of production with processing and marketing. The Barkema article has characterized this trend as \"supply chains—tightly orchestrated production, processing, and marketing arrangements stretching from genetics to grocery. Supply chains bypass traditional commodity markets and rely on contractual arrangements among the chain participants to manage the transformation of livestock on the farm to meat in the cooler.\"\nThis business model was pioneered in agriculture by the poultry industry, which began to integrate shortly after World War II. Poultry producers were \"the clear leader\" in delivering nutritional and convenient products to consumers while at the same time sharply controlling costs, according to Barkema. The hog industry has been closely following in poultry's footsteps. Now typical are contract production arrangements with large integrators who may provide the genetics, pigs and other inputs, and a contracting producer (farmer) who provides facilities and labor. These arrangements take the form of agricultural contracts or agreements between farmers and their commodity buyers that are reached before harvest or the completion of a livestock production stage. Other alternative marketing arrangements also are used.",
"Contracts can govern the terms for a promised transaction such as date of delivery, the expected price, and other specifications. Contracts enable a farmer to shift some financial risk to the buyer, cushion widely fluctuating price swings, and guarantee an outlet for production. In return, buyers gain a reliable and uniform supply of raw material. Consumers also benefit through lower prices, consistently higher quality, and a wider array of convenient products, it is argued. \"The growth in contracting has come largely at the expense of spot (or cash) markets, where farmers retain full autonomy and receive prices based on prevailing market conditions and product attributes at the time of sale,\" USDA observes. It distinguishes two types:\nProduction contracts are when the farmer provides a service to the contractor who usually owns the commodity. The farmer's payment may resemble a fee for service rather than a payment for the commodity's value. For example, in poultry production, processing companies provide the chicks, feed, veterinary services, transportation and production specifications to farmers who raise the chicks for the companies, usually in facilities the farmers own. Marketing contracts emphasize the value of the commodity rather the farmer's services. They can specify in advance the basis for the price that will be paid, the quantity to be delivered and where, and product attributes, but the farmer retains major management control and ownership of the commodity until delivery.\nIn 2005, contracts (production or marketing) covered 50% of all livestock production value, up from 33% in 1991-1993. This compares with 30% of all crop production in 2005 and 25% in 1991-1993, according to USDA (see Table 3 for breakout by selected commodity).\nUse of production (as opposed to marketing) contracts in the hog industry grew sharply from 34% of production value in 1996-1997 (1991-1993 data not available) to 76% in 2005, according to USDA. Use of contracts in cattle production has been more or less constant at about 20%. Poultry and eggs have long been raised by farmers under contract with a processing firm; today the value of production under contract is approximately 95% under contract. Marketing contracts are the prevalent type in dairy, with more than 50% produced under contract in 2005. Regardless of commodity type, larger farms tend to use contracts much more than smaller farms, studies have found.",
"A comprehensive study of livestock transaction methods by USDA's Grain Inspection, Packers and Stockyards Administration (GIPSA) describes a number of other \"alternative marketing arrangements\" (AMAs). The study defines AMAs as all alternatives to the cash market, including forward contracts, marketing agreements, procurement or marketing contracts, production contracts, packer ownership, custom feeding, and custom slaughter. (Cash transactions are those that occur immediately or \"on the spot.\")\nThe study, conducted by a private contracting firm, determined that all types of AMAs accounted for an estimated 38% of fed (slaughter-ready) beef cattle volume, 89% of finished hog volume, and 44% of lamb volume sold to packers between October 2002 and March 2005, the period studied. Within the beef sector, the 29 largest beef packing plants had obtained 62% of their cattle on the cash or spot market; 29% through marketing agreements; 4.5% through forward contracts; and 5% through packer ownership or other unknown methods. The use of one type of AMA—that is, packer ownership of the livestock they intend to slaughter—accounted for 5% or less of all beef and lamb transactions, but 20% to 30% of all pork transactions, the study found.",
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"Concerns about the growing market power of large corporations in general, and of meat packers in particular, were widespread by the late 1800s and culminated, by the early 1900s, with the passage of several major antitrust laws, including the Sherman and Clayton Acts (see below).\nThese laws notwithstanding, five large meat packers were continuing to make agreements that set prices and divided their territory and business, effectively barring others from entering the market. The so-called Big Five—Armour, Morris, Swift, Cudahy and Wilson—had exercised monopolistic control over the livestock industry by owning and/or controlling public stockyards, transportation and distribution, slaughter plants, and even retail outlets, according to a 1917-1918 investigation by the Federal Trade Commission (FTC). The Commission reportedly found that the Big Five's share of interstate slaughter was 75%-82% of the cattle market, 77% of calves, 61% of hogs, and 86% of sheep and lambs.\nThreatened with government legal action, the Big Five in 1920 agreed to a consent decree whereby they would refrain from: owning any interest in a stockyard; owning retail meat markets or cold storage facilities except for their own products; or entering other food processing and marketing sectors (like fruits and vegetables, fish, grain products, and so forth). Still, there was continuing dissatisfaction in Congress with the performance of the markets.",
"Passage of the P&S Act in 1921 was \"in response to concerns that, among other things, the marketing of livestock presented special problems that could not be adequately addressed by existing antitrust laws.\" Parts of the act, as amended (7 USC §181 et seq. ) prohibit unjustified discriminatory practices, as well as certain, specific activities that might adversely affect competition. As stated in 7 USC §192 of the act, it is unlawful for a packer or poultry dealer to: \"engage in or use any unfair, unjustly discriminatory, or deceptive practice or device; give undue/unreasonable preference/advantage to [persons or localities]\"; apportion supply among packers in restraint of commerce or create a monopoly; trade in articles to manipulate or control prices, if such apportionment tends to restrain commerce or to create a monopoly; or conspire to apportion territory, or sales, or to manipulate or control prices.\nThe Secretary of Agriculture has assigned regulatory responsibility for the act to the Department's Grain Inspection, Packers and Stockyards Administration (GIPSA). GIPSA does not have a direct antitrust authority, and the P&S Act does not provide the agency with premerger review authority. The agency's role, however, is to maintain fair competition regulations. GIPSA is authorized to initiate and conduct investigations of alleged violations in the livestock industry, but generally not in the poultry industry. A violator of GIPSA regulations may, after a hearing before a USDA administrative law judge, be served a \"cease and desist\"order, and civil fines may be imposed.\nIf a packer disregards an order or refuses to pay fines, GIPSA may refer the case to DOJ, which can enforce the order/fine through court action. According to GIPSA, most violations are corrected voluntarily by the individuals or firms when a violation is brought to their attention. Except for serious violations, disciplinary action tends to be the last resort, and is imposed only after substantial efforts to obtain compliance have failed.",
"Several laws, which cover but are not specific to agriculture, prohibit certain activities, such as mergers and acquisitions that may restrict market access or suppress competition. These laws are the Sherman Act (15 USC §§1-8) and Clayton Act (15 USC §12 et seq. ) . In addition, Title II of the Hart-Scott-Rodino (HSR) Act (15 USC §18) requires parties to file notification of proposed mergers or acquisitions if the action will trigger certain size and/or ownership criteria set forth by HSR.\nSuch notifications must be made to the agencies that administer these laws [the Department of Justice (DOJ) and the Federal Trade Commission (FTC)], which have 30 days to review them and to determine the need for any further information. (USDA's role here is advisory.) Mergers or acquisitions likely to substantially lessen market competition are a violation of Section 7 of the Clayton Act. DOJ or FTC merger review is intended to prevent anti-competitive conduct before it occurs. The principal focus during merger review is not on the merging parties, but on whether the merger would change the market structure to such a degree that competition likely would be substantially lessened. The pre-merger remedies DOJ/FTC might seek with respect to a proposed merger that would violate Section 7 of the Clayton Act are either filing legal action to stop the merger, or else conditioning federal approval on modifications to remove perceived antitrust concerns [e.g., divestiture by one or another party of assets/operations that duplicate or overlap those of the other part(ies)]. Negotiating such changes often is seen as in the interests of all parties, because going to court can be expensive, time-consuming, and risky.\nTwo other classes of anti-competitive behavior may be subject to findings of antitrust unlawfulness. First, a violation of Section 1 of the Sherman Act (collusion) can occur when separate firms agree among themselves not to compete with each other; this would include such matters as the prices to be paid for product resources or prices charged to consumers. Second, a violation of Section 2 of the Sherman Act (monopolization or attempt to monopolize) can occur in several ways, including the use of predatory practices and/or exclusionary conduct. (See CRS Report RL31026, General Overview of United States Antitrust Law .)",
"The Capper-Volstead Act (7 USC §§291-292) confers limited exemption from antitrust liability to farmer cooperatives, both for their existence and their joint processing and marketing of their commodities. The act specifically states, in part: \"Persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers may act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling, and marketing in interstate and foreign commerce, such products of persons so engaged.\" USDA may, but has never utilized its power to, file complaints against cooperatives that monopolize or restrain competition to the extent that the price of any agricultural product is \"unduly enhanced.\"\nThis law and farmer antitrust immunity was among the topics reviewed by the Antitrust Modernization Commission, an expert panel established by Congress in 2002 ( P.L. 107-273 ; §§11051-60). The commission reported its findings to Congress in April 2007. Among its findings, the commission concluded that the state of U.S. antitrust laws is \"sound,\" although there are ways in which antitrust enforcement can be improved. It also stated that no new or different rules are needed to address so-called \"new economy\" issues; however, the commission did provide a list of recommendations for changes to certain laws and policies.\nThe Agricultural Fair Practices Act (AFPA; 7 U.S.C. 2301 et seq .) was enacted in 1967 to protect farmers from retaliation by handlers (buyers of their products) because the farmers are members of a cooperative. The act permits farmers to file complaints with USDA, which can then institute court proceedings, if they believe their rights under the law have been violated.",
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"Have increased market concentration and vertical integration, including production contracts, made livestock markets less competitive and depressed farm prices? Answering this question might help lawmakers in deciding future competition policy.",
"After Congress in 1991 provided funding for one of the most extensive recent examinations of meatpacking concentration, GIPSA contracted six projects to five universities. It also helped researchers collect, organize and analyze livestock transaction data over several years, according to an Oklahoma State University fact sheet.\nAmong the consistent findings from the six projects were that:\nA few major cattle feeding states including Texas, Nebraska and Kansas represent the core geographic market for fed cattle and price discovery; All other areas are linked to this market center, although the strength of the linkage diminishes as plants are located farther from the core (where the highest cattle prices are paid by packers); Larger and more efficient packers appeared to be passing back some of their efficiency gains to the feeders, with higher prices paid for larger sale lots of cattle and to the largest feedlots; Higher prices were paid by larger packers with larger slaughter capacities and high plant utilization, and higher prices were paid for cattle purchased closer to their plants; Higher prices were paid for marketing agreement cattle relative to cash market cattle, but lower prices were paid for contract cattle relative to cash market cattle.\nA related Oklahoma fact sheet also summarizes the price impact research:\nConcentration in meatpacking is high, especially for fed cattle slaughtering and fabricating. We must not lose sight of the fact that concentration has increased in part as meatpacking firms increased industry efficiency. Research to date suggests price impacts from packer concentration have been negative in general, but small. Also, research shows that efficiency gains from moving to fewer and larger meatpackers have more than offset any market power impacts. Use of captive supply methods remained reasonably stable from 1988 to the mid-1990s. Captive supply usage has a seasonal component and can vary widely from plant to plant and week to week. Evidence suggests captive supplies increased in the last half of the 1990s. Buyers and sellers use captive supplies for various reasons but most believe they are beneficial or they would not be used. Research suggests that larger plants make greater use of captive supply procurement methods to keep plant utilization high. Evidence suggests larger plants use captive supplies strategically, i.e., increasing the use of captive supplies as cash market prices and price variability increased. Price impacts from captive supplies have been negative in general but small.\nOther research has documented either negative or positive price impacts, with each study's outcome dependent upon what assumptions were used and what particular aspect of livestock marketing was examined. Noting the particular controversy over whether contracts and other marketing arrangements besides open cash transactions could lead to abuse of market power, a USDA official commented:\nTypically, contract prices for cattle and hogs are tied to the spot market price. As a result, as more animals are sold through contracts or other arrangements and fewer through the spot market, the actual number of transactions on which contract payments are based becomes smaller. This \"thinning of the market\" is often alleged to increase the ability of large buyers to manipulate prices. Research on this issue has been mixed.",
"Congress provided $4.5 million, via the consolidated appropriations measure for FY2003 ( P.L. 108-7 ), to GIPSA for a \"study on the issues surrounding a ban on packer ownership,\" according to the measure's accompanying conference report language. Results of the study were to be reported within 24 months of enactment (i.e., by February 20, 2005), but this deadline was not met. GIPSA contracted with a private firm, RTI International of North Carolina, to conduct what it now calls the GIPSA Livestock and Meat Marketing Study, making it \"a broad study of marketing practices in the entire livestock and red meat industries from farmers to retailers, food service firms, and exporters.\"\nRTI had delivered an interim report in July 2005 describing \"alternative marketing arrangements\" (AMAs) and why they are used. GIPSA released the final RTI report in February 2007, which contains a more quantitative analysis of these AMAs, including the extent of their use and possible price effects on industry participants.\nThe final RTI report asserted that many packers and livestock producers prefer AMAs, because they provide such benefits as cost and risk management, and better product quality assurance. Given the current marketing environment and recent trends, use of AMAs can be expected to increase moderately for lamb but very little or not at all for the beef and pork industries, the report predicted. However, the report observed: \"Cash market transactions serve an important purpose in the industry, particularly for small producers and small packers.\" Reported cash prices also are frequently used as the base for formula pricing for cash market and AMA purchases of livestock and meat, RTI reported.\nRTI reported that 85% of small producers surveyed said they relied only on the cash market when selling to packers, compared with 24% of large producers. Likewise, 10% of large beef packers surveyed reported using only the cash/spot market to purchase cattle, compared with 78% of small packers. With regard to price impacts, the RTI study concluded that \"[t]he use of AMAs is associated with lower cash market prices, with a much larger effect occurring for finished hogs than for fed cattle.\" However, in aggregate, \"restrictions on the use of AMAs for sale of livestock to meat packers would have negative economic effects on livestock producers, meat packers, and consumers.\" The RTI report did caution that U.S. meat industry market conditions during the period it studied were \"unusual.\" These conditions included record high cattle prices and the discovery of BSE in North America.",
"In January 2006, USDA's Office of Inspector General (OIG) reported that GIPSA was not able to adequately oversee and manage its investigative activities. GIPSA had difficulties defining and tracking investigations, planning and conducting complex investigations, and making agency policy, OIG found. For example, databases were incomplete, and investigations often broadly defined to count even routine letters to companies and monitoring of publicly available records, OIG said. USDA's general counsel had not filed an administrative complaint on anti-competitive practices since 1999, due to GIPSA's failure to refer cases—although agency staff were considering dozens of investigations at the time, OIG concluded.\nThe OIG report was discussed at a hearing on GIPSA's management of the P&S Act, which was convened on March 9, 2006, by the Senate Agriculture Committee. At the hearing, GAO also testified that in 2000 it had \"identified two critical factors that detracted from the agency's ability to investigate anticompetitive practices in livestock markets\": (1) investigations were being planned and conducted by economists without formal involvement of attorneys from USDA's Office of General Counsel (OGC), resulting in a lack of legal perspective on potential violations; and (2) the agency's investigative practices were not suited for the more complex competition-related concerns recently being raised. Moreover, USDA had not fulfilled promises to implement the 2000 GAO recommendations—such as integrating OGC attorneys into GIPSA investigations, and improving more effective management procedures for approving and reviewing investigations.\nAt the Senate hearing, GIPSA's then-incoming administrator said that USDA generally agreed with and was implementing the OIG recommendations, such as the development of a management structure for receiving, reviewing, and acting on policy issues and internal requests for guidance; clarification of agency policy directives on investigations versus routine regulatory activities; and encouragement of GIPSA legal specialists to work more directly with OGC.",
"The U.S. Supreme Court in 2006 declined to hear what many analysts considered to be a landmark legal case under the P&S Act. In Pickett v. Tyson Fresh Meats, Inc. , a group of cattle feeders in 1996 sued Iowa Beef Packers (IBP), now part of Tyson, for violating the P&S Act, reportedly the first class action certified for producers against a packer in the act's long history. Following eight years of litigation, a jury in early 2004 agreed with producer arguments that the packer had used captive supplies to control the supply of cattle available on the market, thereby causing lower cattle prices. The jury set damages at more than $1.2 billion. However, the federal judge in the case set aside the verdict on the grounds that the jury had insufficient evidence to find that Tyson had no legitimate business reason for using captive supplies.\nThe plaintiffs appealed, but a U.S. Court of Appeals in August 2005 upheld the lower judge's decision. The appeals court rejected the plaintiffs' argument that there was a violation of the P&S Act. \"If a packer's course of business promotes efficiency and aids competition in the cattle market, the challenged practice cannot, by definition, adversely affect competition,\" the court declared. The plaintiffs and their supporters had asked the U.S. Supreme Court to review the case, but the Court declined to do so in early 2006.",
"Early in the 110 th Congress, a number of bills were introduced to address one or more of these perceived \"competition issues\" in livestock markets. Both the House- and Senate-passed versions of the farm bill ( H.R. 2419 ) contained a number of animal-related provisions, many related to market competition (especially in the Senate version of the bill). The enacted 2008 farm bill (Food, Conservation, and Energy Act of 2008, P.L. 110-246 ) contains a new Livestock title (Title XI) and includes provisions affecting how USDA is to regulate livestock and poultry markets. These provisions change Agricultural Fair Practices Act (AFPA ) definitions of associations and handlers and require USDA to issue rules and specify requirements regarding breach of contract and the venue for any litigation. The farm bill also requires USDA to issue an annual report detailing investigations into possible violations under the Packers and Stockyards (P&S) Act.\nThe 2008 farm bill, however, did not include other provisions that were part of the Senate-passed version of the farm bill, and scaled back much of the language in the Senate-passed version aimed at more closely regulating livestock and poultry markets. Not included were Senate-passed provisions that would prohibit ownership among large meat packers, strengthen enforcement authorities over live poultry dealers, and make certain changes to the Mandatory Livestock Price Reporting Program. These types of competition and marketing issues could continue to be of interest to some Members of Congress, and may likely resurface during the 111 th Congress. This report will be updated as warranted.",
"The Pickett case, along with several other federal court rulings under the P&S Act, including against state restrictions on \"corporate\" farming, added impetus to the efforts of a number of producer and allied groups that wanted a so-called competition title to be included in an omnibus farm bill. Advocates urged lawmakers to strengthen existing antitrust authorities, to impose more mandates on the executive branch to enforce these authorities, and to provide new contract protections for farmers, among other options.\nEarly in the 110 th Congress, Senate Agriculture Chairman Harkin had introduced a wide-ranging bill ( S. 622 ) that, he said, would be \"the basis for developing a proposed competition title in the new farm bill this year,\" replacing the 2002 farm bill (Farm Security and Rural Investment Act of 2002, P.L. 107-171 ). S. 622 included many of the provisions not retained in the final version. Also introduced and considered during the farm bill debate were bills by Senator Grassley that would have prohibited meat packers from owning or feeding livestock, with some noted exceptions ( S. 305 ); and that would have established a USDA Special Counsel for Competition Matters, a Deputy Attorney General for Agricultural Antitrust Matters in the Department of Justice, and an Agriculture Competition Task Force to examine agricultural competition matters, among other funding and programmatic changes ( S. 1759 ). Several provisions from these bills were in the Senate-passed farm bill.\nSome of these options had been considered previously. In legislative activity leading to enactment of the 2002 farm bill, the Senate Agriculture Committee voted in November 2001 to delete a competition title from the omnibus farm bill ( S. 1628 ), also proposed by Chairman Harkin. During subsequent floor action on the bill, the Senate did approve a number of individual \"competition\" amendments. Two such amendments were retained by House-Senate conferees in early 2002 in the final version of the bill ( H.Rept. 107-424 ). One gives producers the right to discuss their contracts with family members and advisors. The other extends some new P&S Act protections to swine producers with production contracts. Conferees also included in the final farm bill a new program requiring many retailers to provide country-of-origin labeling (COOL) for red meat and several other commodities. Since then, Congress twice postponed mandatory meat COOL, but it is now being implemented by USDA.\nIn the House, Representative Boswell, chairman of the House Agriculture Subcommittee on Dairy, Livestock, and Poultry, had introduced the House version of S. 622 as H.R. 2135 . However, with the exception of a provision on arbitration clauses in livestock and poultry contracts, other elements of H.R. 2135 were not included in the draft bill forwarded to the full committee. The Boswell arbitration provision was further altered during committee markup. The arbitration provision in the House-passed bill directed USDA to establish regulatory standards for arbitration provisions in livestock and poultry contracts. Among other things, such regulations are intended to permit a producer to seek relief in a small claims court, if within the court's jurisdiction, regardless of a contract's arbitration clause. The House-passed bill contained no other major \"competition\" language.",
"The Senate-passed version of the farm bill also contained a new title on Livestock, Marketing, Regulatory, and Related Programs (Title X) that was based in part on Chairman Harkin's wide-ranging bill ( S. 622 ), among other Senate provisions. In the House, although Representative Boswell had introduced the House version of S. 622 as H.R. 2135 , few elements of H.R. 2135 were included in the draft bill forwarded to the full committee and passed off the House floor. In fact, a major organizational difference between the House- and Senate-passed farm bills is that the Senate bill contained a separate livestock competition title, whereas the House bill instead contained a separate title on Horticulture and Organic Agriculture (Title X).",
"The enacted bill included both new titles, but renamed the livestock title as \"Livestock.\"",
"Producers facing fewer buyers for their livestock frequently express concerns about \"captive supply,\" meaning animals that are either owned by, or committed to, a meat packer except for a short period directly before slaughter. When packers buy fewer animals on the spot (open cash) market, reported prices may no longer accurately reflect the preponderance of prices paid, it is argued. Reduced transparency (i.e., prices and terms that all market players can view equally) works to the disadvantage of the far larger number of producers trying to sell their livestock to the relatively few packers who buy them, it is argued.\nIn the 110 th Congress, a bill introduced by Senator Grassley ( S. 305 ) would have amended the P&S Act to prohibit meat packers from owning or feeding livestock \"directly, through a subsidiary, or through an arrangement that gives the packer operational, managerial, or supervisory control over the livestock, or over the farming operation that produces the livestock, to such an extent that the producer is no longer materially participating in the management of the operation ... \" Exceptions would be for arrangements made within seven days before slaughter; for producer-owned cooperatives that also slaughter their livestock; and for packers that either slaughter only at one plant or are too small to be covered by Livestock Mandatory Price Reporting (see below).\nOpponents of a packer ownership ban countered that evidence of price manipulation is lacking, and that a ban could reverse many of the efficiency gains made by the livestock industry in recent years through closer packer-producer alliances. They also cited the results of the recently released RTI study of marketing practices (see discussion in the section titled \" GIPSA Livestock and Meat Marketing Study \").",
"The Senate-passed version of the farm bill included a new provision similar in intent to the Grassley bill. It would have prohibited most major packers from owning or controlling livestock more than 14 days prior to slaughter, allowing for some exceptions. The packer ban would only have applied to packers who are already required to report their prices through the mandatory price reporting law, or packers who slaughter over 120,000 head of cattle each year. The ban would not have applied to ownership arrangements entered into within 14 days of slaughter of the livestock by a packer; or to any cooperative or entity owned by a cooperative where the majority of ownership interest is held by active cooperative members; or to packers not required to report to USDA under Section 212 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635a); or to a packer that only owns one livestock processing plant. The provision would have allowed for certain transition rules for packers who already own, feed, or control livestock intended for slaughter on the date of enactment of the act. The Senate would have required that USDA promulgate regulations that \"prevent discrimination against producers with a smaller volume of business.\" The House version of the farm bill did not include a comparable provision prohibiting packer ownership or control prior to slaughter.",
"For the enacted 2008 farm bill, the conferees decided to delete Senate language that would have prohibited most major packers from owning, feeding, or controlling livestock except within 14 days of slaughter.",
"Several bills in the 110 th Congress sought to amend the AFPA to address what their sponsors view as inequities in contracting between agricultural producers and those who buy their commodities. The Harkin bill ( S. 622 ) would have prohibited the use of confidentiality clauses in contracts; required them to more clearly spell out producer obligations; given the producer three days to review or cancel a contract; and limited a processor's right to terminate a contract where the producer had made a capital investment of $100,000 or more to satisfy contract requirements. Both S. 622 and a separate Grassley bill ( S. 221 ) would have allowed the use of arbitration to settle contract disputes only if both parties consented to it in writing. Sponsors argued that such amendments to the AFPA are needed because agricultural consolidation has left producers with so few processor-buyers that some of these processor-buyers can and do impose unfavorable contract terms on the producers, forcing them to either accept or exit the industry entirely.\nIn the 109 th Congress, identical bills by Senator Enzi ( S. 960 ) and Representative Pomeroy ( H.R. 4257 ) would have made it unlawful under the P&S Act for packers to use forward contracts that are based on a formula price, or that do not contain a firm base price. The bills also would have limited the size of all contracts to no more than 40 cattle, 30 swine, or equivalent groups of other livestock, and would have required packers to offer contracts for public bidding open to all traders. Senator Enzi and other supporters argued that packers now can use formula pricing arrangements to avoid participating in a more transparent open market and to unfairly change the prices they pay producers after a sale is made.\nOpponents of the various P&S and AFPA proposals have asserted that buyers use these and other contracting arrangements to ensure a steady supply of animals (or other agricultural commodities) to keep high-capacity plants operating efficiently. Such arrangements also allow for necessary price adjustments for quality, grade, or other market-prescribed factors. These types of bills would hurt producers too, opponents have argued—again citing the result of the recent RTI study (see section titled \" GIPSA Livestock and Meat Marketing Study \")—because many of them use contracts or other marketing agreements with packers to limit their own exposure to price volatility and to obtain capital.\nChairman Harkin's bill ( S. 622 ) also would have significantly altered the AFPA to cover crops in much the same way livestock is covered under the P&S Act. More specifically, it would be unlawful under the AFPA for any covered person (i.e., a dealer, handler, contractor, processor or commission merchant) to engage in \"[a]ny unfair, unjustly discriminatory, or deceptive act, device, or anti-competitive practice in or affecting the marketing, receiving, purchasing, sale, or contracting for the production of any agricultural commodity.\" Many of the same types of individual practices now cited under the P&S Act as unlawful for livestock buyers would also have been explicitly cited as unlawful for crop buyers, under the proposed new AFPA.",
"The Senate-passed farm bill proposed certain changes to AFPA, including expanding the definition of \"association of producers\" to also include general livestock, poultry, and farm groups; broadening the types of prohibited practices; and changing the current enforcement provisions to make the law consistent with amendments to create a Special Counsel for Agricultural Competition. The Senate version also removed aspects of the law that some producer groups believe have made the AFPA less effective—for example, by clarifying civil actions against handlers, including providing for preventive relief, damage, and attorneys fees, and related issues, among other changes; and requiring USDA to promulgate new rules and regulations. The House bill did not provide for amendments to the Agricultural Fair Practices Act.",
"The enacted 2008 farm bill amends AFPA to modify the previous definition of \"association of producers\" to include organizations with membership exclusively limited to agricultural producers and dedicated to promoting their products. It also modifies the definition of \"handler\" (Sec. 11003). The farm bill conferees narrowed Senate language governing contractual arrangements between producers and integrators. Under the conference compromise, a poultry or swine grower—a more limited definition of a contract producer than in the Senate-passed bill—has the right to cancel a contract within three business days of execution, unless a later date is specified in the contract. In lieu of Senate language limiting the conditions under which a contractor could require a producer to make additional capital investments, the conference language stipulates that the possibility of such an investment be conspicuously stated in the contract.",
"Chairman Harkin's bill, S. 622 (similarly to S. 2307 in the 109 th Congress), would have required a new USDA Office of Special Counsel for Competition Matters to investigate and prosecute violations of the AFPA and of the P&S Act. This proposal was also adapted from language in a bill introduced by Senator Grassley ( S. 1759 ) that proposed to establish a USDA Special Counsel for Competition Matters, a Deputy Attorney General for Agricultural Antitrust Matters in the Department of Justice, and an Agriculture Competition Task Force to examine agricultural competition matters, among other funding and programmatic changes.\nS. 622 also contained language intended to make it easier for producers to prove in a court of law that they were treated unfairly by packers. Sponsors of this proposal said that stronger enforcement authorities were needed in part because GIPSA officials have largely failed to enforce existing laws, and pointed to a report by the Department's Office of Inspector General (OIG), which concluded that GIPSA had not been able to adequately oversee and manage its investigative activities. (See section titled \" USDA Office of Inspector General Report and GAO Study .\")",
"In addition to amending the P&S Act to include a packer ownership ban, the Senate-passed bill would have made other changes to the P&S Act to broaden producer rights and protections and strengthen USDA enforcement under the act. Among the principal changes was the creation of a new Special Counsel for Agricultural Competition at USDA to investigate and prosecute violations of competition laws, including the AFPA and the P&S Act. The special counsel would also \"serve as a liaison between, and act in consultation with, the Department of Agriculture, the Department of Justice, and the Federal Trade Commission with respect to competition and trade practices in the food and agricultural sector.\"\nOther proposed Senate provisions sought to amend the P&S Act to establish new requirements for contracts between producers and processors: for example, strengthening USDA enforcement authorities over live poultry dealers, including pullet and breeder hens; allowing contract growers to discuss contract terms with business associates, neighbors, and other producers; allowing producers to receive remedy for violations, including litigation costs and attorneys' fees; and allowing USDA to seek outside counsel to aid in investigations and civil cases.\nThe Senate provisions regarding production contracts sought to allow contract producers to cancel a production contract and also would protect contract producers from contract termination or from being required to make business investments, under certain circumstances. Contract producers would be able to cancel a contract within three business days after the contract execution date. Contract producers who have made an investment of $100,000 or more for purposes of securing the production contract with a packer, live poultry dealer, or swine contractor would be given at least 90 days to correct an alleged breach before a contractor can terminate a contract, except under certain circumstances. A packer, live poultry dealer, or swine contractor would also be prohibited from requiring additional investments of the contract producer during the term of the contract unless the additional investments are offset or agreed to by the contract producer. The Senate bill also provided for producer choice of jurisdiction and venue, and allowed for arbitration to settle disputes, if both parties were to consent in writing.\nSome proposals that might have made it easier for producers to prove unfair treatment under the P&S Act were not ultimately included in the Senate-passed bill, although several amendments were submitted and some were debated on the Senate floor. For example, S. 622 included language that would have limited judges deciding court cases under the P&S Act from requiring producers to show both individual harm and \"competitive harm\" to the entire industry; an amendment to H.R. 2419 was submitted (Harkin, S.Amdt. 3667 ) to include this language in the Senate farm bill, but was not adopted. Another amendment (Tester, S.Amdt. 3666 ) also would have limited P&S Act court cases from allowing certain pricing mechanisms in cases where the packer may have a \"legitimate business justification\"; S.Amdt. 3666 was debated, but voted against when it was brought up during the Senate floor debate. Other submitted Senate amendments included a proposal to require all forward contracts to have a fixed base price (Enzi, S.Amdt. 3691 ). A series of amendments (Roberts, S.Amdt. 3546 , S.Amdt. 3547 , S.Amdt. 3548 , and S.Amdt. 3549 ) would have changed AFPA and P&S Act definitions and AFPA enforcement requirements, and packer ban requirements in Senate-passed version of the farm bill. These Senate amendments were not adopted.\nInitially, the House farm bill had included a provision on arbitration clauses in livestock and poultry contracts, which evolved from part of the House companion bill to S. 622 ( H.R. 2135 ), introduced by Representative Boswell, chairman of the House Agriculture Subcommittee on Dairy, Livestock, and Poultry. However, the arbitration provision was further altered during committee markup; other elements of H.R. 2135 were not included in the draft bill forwarded to the full committee and passed off the House floor. Another related proposal that was not adopted in the House farm bill was H.R. 2213 , introduced by Representative Herseth Sandlin, which would have amended the P&S Act with respect to livestock producer-packer forward contracts. The arbitration provision in the House bill directed USDA to establish regulatory standards for arbitration provisions in livestock and poultry contracts. Among other things, such regulations are intended to permit a producer to seek relief in a small claims court, if within the court's jurisdiction, regardless of a contract's arbitration clause. The House bill contained no other provisions amending the P&S Act.",
"Several of these provisions were retained in the enacted 2008 farm bill in somewhat modified form, and are intended to give producers additional protections when disputing contract terms. However, certain Senate provisions intended to strengthen USDA's oversight and enforcement of the act were deleted, as were Senate provisions to give USDA stronger enforcement authorities over live poultry dealers under the P&S Act, among other changes. Also deleted was a Senate provision to establish at USDA a new Special Counsel for Agricultural Competition to investigate and prosecute violations of competition laws. In their place, conferees added language requiring an annual report detailing investigations into possible P&S Act violations.\nThe enacted 2008 farm bill amends the P&S Act as follows. The enacted bill requires an annual report from USDA on detailed investigations into possible violations of the P&S Act (Sec. 11004); permits poultry and swine producers to cancel their contracts up to three business days after signing, unless a later date is specified in the contract; requires clear disclosure in contracts of cancellation terms; requires poultry/swine contracts to contain a conspicuous statement that additional large capital investments may be required during the term of the contract; contains provisions intended to assist producers deal with contract disputes, including arbitration terms and venue for any litigation (Sec. 11005); and requires USDA to issue rules on such criteria as, for example, the reasonable period of time a producer should be given to remedy a breach of contract before it is cancelled (Sec. 11006).\nOne issue that is likely to be of interest to some during the 111 th Congress is the provision requiring USDA rulemaking under the P&S Act (Sec. 11006) related to alleged practices in the poultry and hog sectors. Per the 2008 farm bill provision, USDA must publish regulations within two years to establish criteria in determining (1) whether an \"undue or unreasonable preference or advantage\" has occurred in violation of the act; (2) whether a live poultry dealer has provided \"reasonable notice\" to poultry growers of any suspension of the delivery of birds under a poultry growing arrangement; (3) when a requirement of additional capital investments over the life of a poultry growing arrangement or swine production contract constitutes a violation of such act; and (4) if a live poultry dealer or swine contractor has provided a reasonable period of time for a poultry grower or a swine production contract grower to remedy a breach of contract that could lead to termination of the poultry growing arrangement or swine production contract. Sponsors of this provision claim USDA's rulemaking is relevant because they claim that many poultry growers have had their deliveries suspended for reasons that might constitute an undue or unreasonable preference, if other growers are not experiencing the same suspension.",
"LMPR was first passed in 1999 to address some producers' concerns about low livestock prices, industry concentration, and the availability of accurate market information. The original authority, Title IX of P.L. 106-78 , USDA's FY2000 appropriations, lapsed briefly on October 22, 2004, but President Bush signed legislation ( P.L. 108-444 ) extending the program through September 30, 2005, when it again expired. The program then operated on a voluntary basis, as the 109 th Congress considered whether to reauthorize LMPR, for how long, and what if any changes should be made. Taking differing approaches in September 2005, the House had approved a bill ( H.R. 3408 ) to extend LMPR for five years and to amend hog reporting provisions, while the Senate had approved a simple one-year extension ( S. 1613 ). In September 2006, the Senate cleared the House-passed version, sending the measure to the President, who signed it into law ( P.L. 109-296 ) on October 5, 2006. During the 110 th Congress, some Members indicated the need for further changes in LMPR.",
"The Senate-passed version of the farm bill would have established a new program for mandatory daily product information reporting for manufactured dairy products, and amended the current program for swine to authorize, after an economic study, the mandatory packer reporting of wholesale pork product sales (such as pork cuts and retail-ready pork products), along with changes to the reporting times of the afternoon swine report. The House-passed version did not include any changes or additions to the current mandatory price reporting program.",
"The enacted 2008 farm bill requires USDA to conduct a study of the economic impacts of requiring plants to report pork product sales, focusing on wholesale pork cuts. It also directs USDA to improve electronic reporting and publishing under the program (Sec. 11001)."
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{
"question": [
"What is the relationship between Congress and the meat industry?",
"What role have top firms played in the industry?",
"What has characterized the beef sector?",
"What has characterized the pork sector?",
"What accounts for these changes?",
"What preciptated major antitrust laws?",
"What laws targeted the meatpacking sector?",
"What laws protected producers?"
],
"summary": [
"Changes in the structure and business methods of livestock and meat production and marketing—sometimes referred to as consolidation, concentration and/or vertical integration—have long generated interest and controversy in Congress.",
"The top four firms slaughtered 69% of all U.S. cattle in 2006. In 1985, the then-top four packers accounted for 39% of all cattle slaughter, according to industry and USDA statistics. Since 2007, however, some approved and planned acquisitions in the beef packing sector could further alter these statistics.",
"In the beef sector, one company now accounts for a large and growing share of the market and may push the four-firm concentration ratio in this sector to as much as 75%.",
"Live hog production has seen sweeping changes over the past 25 years. Four firms slaughtered 64% of all U.S. hogs in 2006, compared with 32% in 1985.",
"The number of U.S. farms with hogs has declined sharply, and those remaining have become much larger and less diversified. Many hogs today are sold through production contracts, where a pork processor might provide the pigs and other inputs, and a contracting producer (farmer) provides facilities and labor.",
"Concerns about the growing market power of large corporations in general, and of meat packers in particular, date back to the late 1800s and culminated, by the early 1900s, in the passage of several major antitrust laws, including the Sherman and Clayton Acts and other general antitrust laws.",
"Laws such as the Packers and Stockyards (P&S) Act of 1921 were enacted specifically to address concerns in the livestock and poultry sectors. Congress has also continued to introduce legislation intended to address various perceived problems in livestock markets, which sponsors often broadly refer to as \"competition issues.\"",
"Other laws, such as the 1967 Agricultural Fair Practices Act (AFPA), were enacted to provide protection to producers from buyers of their products."
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GAO_GAO-19-219
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{
"title": [
"Background",
"Most Centers Reported that the Cost Share Adjustment Has Helped Them Better Serve Manufacturers, but Some Officials Noted that the Impact Is Hard to Measure",
"Most Centers Reported that the Cost Share Adjustment Has Increased Financial Stability and Enhanced Their Ability to Serve Very Small and Rural Manufacturers",
"Centers Run by Nonprofit Organizations Reported Experiencing Impacts to a Greater Extent than Centers Run by States or Universities",
"Center Officials Noted that Other Factors Have Impacted Their Ability to Serve Manufacturers, Making It Hard to Measure the Impact of the Cost Share Adjustment",
"NIST Data Show Some Changes in Centers’ Finances and Activities, but the Changes Generally Predate the Cost Share Adjustment",
"Agency Comments",
"Appendix I: Objectives, Scope, and Methodology",
"MEP Centers’ Views",
"GAO Analysis of NIST Data",
"Other Efforts",
"Appendix II: GAO Contact and Staff Acknowledgements",
"GAO Contact",
"Staff Acknowledgements"
],
"paragraphs": [
"According to its strategic plan for 2017 through 2022, the MEP program aims to strengthen and empower U.S. manufacturers by providing them with the information and tools to improve productivity, assure consistent quality, and accelerate the transfer of manufacturing technology into production processes and new products. MEP centers do not all offer the same services; however, across the network, their services span areas such as the following:\nLean services. These services help manufacturers implement tools and practices to incorporate “lean” manufacturing principles, which involve producing more with existing resources through eliminating and reducing incidental work or non-value-added activities.\nQuality services. These services help manufacturers implement management systems to achieve a defined industry-specific or general quality certification or standard.\nGrowth services. These services provide manufacturers with the tools and methods to identify and target opportunities to develop new products, markets, services, or customers.\nTechnology/product development services. These services help manufacturers identify, develop, and diffuse technology and new products.\nWorkforce services. These services help manufacturers recruit, retain, or develop human resources.\nSome centers provide services directly to manufacturers, and others, to varying extents, use external consultants to provide services. In fiscal year 2018, the 51 MEP centers served 8,425 manufacturers encompassing a variety of manufacturing subsectors (see fig. 1).\nTo receive federal financial assistance from NIST, MEP centers must match the federal contribution with a nonfederal contribution. MEP centers provide their nonfederal contributions through various means, such as fees collected from manufacturers for services provided or in the form of cash or in-kind contributions from other sources, such as state or local governments, trade associations, or community colleges. MEP centers may receive nonfederal resources in any of those forms in excess of the amount needed to match the federal contribution.\nPrior to the 2017 AICA cost share adjustment, we, NIST, and others reported on issues associated with the cost share structure for the MEP program. For example: In April 2011, we reported that MEP centers identified positive and negative effects of the cost share structure in place at the time. Positive effects of the cost share structure included encouraging MEP centers to leverage resources and emphasize services relevant to manufacturers, and negative effects included MEP centers spending more time and effort seeking cost share matching funds and focusing more on larger clients that could pay higher fees and less on rural clients.\nIn July 2013, NIST analyzed the cost share structure and found that it provided MEP centers with incentives to make strategic and operational decisions based largely on which services generated revenue rather than on which services manufacturers needed to be competitive. NIST recommended several criteria upon which to base the MEP program’s cost share, such as encouraging delivery of innovative services, providing financial stability, and enabling the program to adapt quickly to changing economic conditions and the needs of small and medium-sized manufacturers. NIST requested that the MEP Advisory Board review this analysis and provide recommendations on how best to structure the cost share requirement to provide for the long-term sustainability of the program.\nIn October 2013, the MEP Advisory Board responded to a request in NIST’s July 2013 report with a letter to the NIST Director largely echoing the findings of the earlier reports—for example, that the cost share structure in place at the time made it more difficult to serve smaller and rural clients and drove centers to focus on larger manufacturers that could pay fees. The MEP Advisory Board recommended, among other things, adjusting the cost share ratio to 1:1.\nIn 2014, we reported on NIST’s spending on the MEP program and found that NIST’s financial assistance to MEP centers did not take into account variations across service areas in the demand for program services and the cost of providing services. We recommended that the Secretary of Commerce revise the program’s cooperative agreements to account for such variations. Subsequently, from 2014 through 2017, NIST undertook a system-wide recompetition of MEP centers’ cooperative agreements to better align center funding levels with the national distribution of manufacturing activity and cost of providing services. As a result, NIST recompeted most MEP centers’ cooperative agreements and reduced the number of centers to 51, with a single center in each state and Puerto Rico. Additionally, the recompetition provided for a new minimum annual funding level of $500,000 per center (previously eight centers were below this mark) and nearly $20 million more in federal financial assistance for 34 of the centers. According to NIST’s 2017 congressional budget request, recompetition would increase the capacity and capability of the MEP centers to help small and medium-sized manufacturers, including very small manufacturers—those with fewer than 20 employees—and rural manufacturers.",
"In response to our survey, most MEP centers reported that the AICA cost share adjustment has helped them serve manufacturers, but some center officials indicated that the impact is hard to measure. Specifically, most MEP centers we surveyed reported that the AICA’s adjustment of the cost share to 1:1 for the life of a center’s cooperative agreement has increased their financial stability and helped them serve very small and rural manufacturers. According to the survey results, centers run by nonprofit organizations reported greater impacts of the cost share adjustment than those run by states or universities. In follow-up interviews, some MEP center officials indicated that the impact is difficult to measure because of other recent changes that have also impacted their ability to serve manufacturers.",
"In response to our survey, most of the 51 MEP centers reported that the cost share adjustment has had a positive impact on their finances, particularly by increasing their financial stability. Specifically, in their responses to an open-ended question on the effect of the cost share adjustment on the overall financial resources to support center operations, 44 centers provided examples of how the adjustment has generally helped them in areas such as improving center services (23 centers), better serving underserved manufacturers (17 centers), improving collaboration with partners (10 centers), improving planning and financial stability (10 centers), and improving ability to secure funding (10 centers).\nIn responses to a separate question about the impact of the cost share adjustment, 41 centers indicated that the adjustment has provided a more stable financial outlook. Centers noted that in the past, meeting the 2:1 cost share often meant diverting their focus from serving manufacturers to generating and documenting revenue. Some centers provided the following examples of how the financial stability provided by the 1:1 cost share has helped them:\nOne center stated that its staff now spend less time accounting for the hundreds of small transactions used to count toward the 2:1 cost share and can now focus their time on managing the program.\nOne center stated that its budget is now less complicated and center staff are now less distracted by having to generate matching funds.\nOne center stated that before the cost share adjustment, it could not plan on growing its capabilities after the third year of the cooperative agreement because of the anticipated impact of increased cost share requirements. The center noted that since the cost share adjustment, it can continue to plan for growth and has modified its strategic plan to reflect this shift.\nWith a decreased focus on generating revenue, some MEP centers reported that they are now better able to serve manufacturers, particularly very small and rural manufacturers. Overall, 47 of the 51 MEP centers (92 percent) reported that the cost share adjustment has helped them serve manufacturers to a moderate or greater extent. In particular, in response to a question asking if MEP centers experienced certain changes as a result of the cost share adjustment, 43 (84 percent) reported conducting more work with very small manufacturers, and 39 (76 percent) reported conducting more work in rural areas. MEP centers reported that the cost share adjustment has allowed them to take a number of specific actions to serve manufacturers, such as conducting additional outreach (46 of 51), providing new services (45 of 51), offering a greater quantity of existing services (40 of 51), offering training events (39 of 51), and providing services at reduced cost (28 of 51). In follow-up interviews, officials from eight of the nine MEP centers we contacted stated that the cost share change has either already helped or should help them serve underserved manufacturers. These MEP center officials provided the following examples:\nOne center official said that the cost share adjustment has allowed the center to donate time to help manufacturers that could not afford to pay the fees for the services provided.\nOne center official said that the cost share adjustment could provide the financial stability to hire an additional staff person to serve rural parts of the state that were underserved before the adjustment.\nOne center official said that the cost share adjustment has allowed the center to provide new services that it was not able to provide prior to the adjustment because the center struggled to meet its cost share requirement. For example, the center expanded its work to help manufacturers with Food and Drug Administration requirements pursuant to the FDA Food Safety Modernization Act.\nOne center official stated that the cost share adjustment provided the center a strong financial basis upon which to begin offering Manufacturing 4.0 services throughout the state.",
"Our analysis of survey results indicates that MEP centers run by nonprofit organizations reported impacts from the AICA cost share adjustment to a greater extent than centers run by states or universities. For instance, 22 of 26 centers (85 percent) run by nonprofits reported that the cost share adjustment has to a great or very great extent helped them serve manufacturers, compared to 14 of 25 centers (56 percent) run by states and universities. As table 1 shows, a greater percentage of nonprofit centers reported experiencing certain changes, such as an increase in center staff and the development of stronger partnerships, as a result of the cost share adjustment compared to centers run by states and universities.\nOfficials from MEP centers run by states and universities stated that their centers are often directly funded by a state agency or educational institution and already enjoyed some degree of financial stability, which is why they generally reported fewer changes from the cost share adjustment compared to centers run by nonprofits. In a follow-up interview with the operations director of a MEP center run by a state agency, the operations director told us that one advantage of being funded by the state is that, even prior to the adjustment, the center had a steady source of income to help meet its cost share. In response to an open-ended survey question, one university-run MEP center noted that being part of a university provided access to professional services, support systems, and a network of resources that would not otherwise be available at an affordable rate. In responding to another open-ended question on the effect of the cost share adjustment on financial resources to support center operations, another university-run MEP center noted that the AICA adjustment has not resulted in significant changes to the center’s financial resources but could put some of its university funding at risk in the future. In a follow-up interview with the director of this MEP center, she told us that in a university setting her center competes against other university priorities for grant funding and being on a 1:1 cost share puts the center on a less competitive footing against other candidates because the center will no longer need additional university grant funding to meet a higher cost share ratio in the later years of its cooperative agreement.",
"In survey responses and follow-up interviews, MEP center officials noted that a number of factors have impacted their ability to serve manufacturers in recent years. For example, in response to an open- ended survey question, centers provided the following as possible factors other than the cost share adjustment that could have impacted their operations: the strength of the overall economy of the nation or of the state in which they are located (19 centers), budgetary or political stability in their state (e.g., stability of state funding) (19 centers), and\nNIST’s recompetition of nearly all MEP centers’ cooperative agreements between 2014 and 2017 (10 centers).\nAccording to several MEP centers we surveyed or officials we interviewed, it is difficult to identify the impacts of the cost share adjustment because of the other factors that have also impacted MEP center operations. For example, in its survey response, one MEP center noted that it would not be easy to isolate the impact of the cost share adjustment from the impact of factors such as the recent recompetition that doubled the center’s federal financial assistance, new leadership at the center, and an improving economy and a tighter labor market that may have resulted in more companies needing the center’s services. In our follow-up interviews, some MEP center officials said that the recompetition, in particular, makes it difficult to isolate the effect of the cost share adjustment. Officials from several MEP centers we contacted cited effects of the recompetition, such as increased baseline funding, resetting of the cost share to 1:1, center leadership changes, and consolidation of centers within states, as reasons why it would be hard to separate the effects of the recompetition from those of the cost share adjustment.\nFor certain centers, the impact of the cost share adjustment was clearer because they did not undergo recompetition, which meant that their cost share had not been reset to 1:1 through that process. Seven MEP centers were not included in the recompetition process that NIST began in 2014 because their cooperative agreements had recently been recompeted (i.e., within 2 years before 2014). Four of these seven “legacy” MEP centers were at or past the third year of their cooperative agreements and, as a result, were at a greater than 1:1 cost share ratio when the AICA was enacted in 2017. These four centers reported that the AICA’s cost share adjustment was helpful in the following ways:\nOne center wrote that having to generate more matching contributions during its fourth year in operation coincided with a drop in its performance that continued until the 2017 cost share adjustment. This center said the cost share adjustment allowed it to devote additional resources to maintaining its services to manufacturers.\nOne center wrote that it was already scaling back its plans to expand manufacturer engagement by the second and third years of its cooperative agreement in anticipation of the higher cost share ratios that would start in the fourth year of operation. This center noted that following the 2017 cost share adjustment, it revised its strategic plan to focus on growing its capabilities instead of scaling them back.\nOne center wrote that moving to the 1:1 cost share helped it increase its focus on service delivery to clients with less concern for cost matching.\nOne center wrote that the 2:1 cost share incentivized a focus on larger manufacturers to meet the cost share requirement. Following the cost share adjustment, the center is now able to develop new services for small and very small manufacturers.\nShould the cost share structure revert to what it was before the 2017 adjustment, most of the 51 MEP centers that we surveyed stated that they likely would be less able to serve manufacturers, particularly very small and rural manufacturers. In response to an open-ended survey question on the effect of changing the cost share requirement back to what it was before enactment of the AICA, 45 of the 47 MEP centers that responded to this question wrote that such a change would generally reduce their ability to serve manufacturers by causing them to do one or more of the following: shift to higher-revenue clients and services (23 centers), reduce center services and staff (21 centers), seek new revenue sources (11 centers), reduce staff (10 centers), reduce ability to collaborate with partners (7 centers), and increase fees (7 centers).",
"Our analysis of NIST data indicates that there have been some changes in MEP centers’ finances and activities since the 2017 AICA cost share adjustment. However, these changes generally began around the time NIST recompeted the centers’ cooperative agreements, before the enactment of the AICA, and cannot necessarily be linked to the cost share adjustment.\nNIST data on funding for the MEP centers show that, from fiscal year 2017 to fiscal year 2018, the amount of federal assistance to the MEP centers increased and funds reported by MEP centers to meet cost share requirements decreased. However, these changes generally began around fiscal year 2013. As figure 2 shows, during the period from fiscal year 2013 through fiscal year 2018, federal assistance to MEP centers increased from about $81 million to $116 million while MEP centers’ reported nonfederal contributions decreased from approximately $195 million to $135 million. The centers’ reported nonfederal contributions generally decreased across all three of their primary sources of revenue—program income, cash contributions, and in-kind contributions. Specifically, the amount of program income centers reported to meet their cost share requirement decreased from approximately $95 million in fiscal year 2013 to $71 million in fiscal year 2018. Reported cash and in-kind contributions decreased from approximately $100 million in fiscal year 2013 to $65 million in fiscal year 2018. In particular, the MEP centers reported a substantial decrease in in-kind contributions over this time period, from approximately $25 million in fiscal year 2013 to $5 million in fiscal year 2018.\nBased on our analysis of NIST data, the overall changes in center financing—that is, the changes in both federal assistance and reported nonfederal contributions—were influenced by NIST’s recompetition of nearly all MEP centers’ cooperative agreements. When NIST recompeted the MEP centers’ agreements, it increased the level of federal assistance for 34 of the 51 MEP centers, constituting an overall increase in base funding amounts for federal assistance from about $90 million before recompetition began in fiscal year 2014 to about $110 million after the recompetition process was complete. Additionally, as MEP centers’ cooperative agreements were recompeted, the centers’ cost share was reset to 1:1, and the centers’ reported nonfederal contributions began to decrease. As figure 3 shows, in fiscal years 2013 and 2014, before the new cooperative agreements began taking effect, most MEP centers operated under a 2:1 cost share. After fiscal year 2014, the number of MEP centers operating under a 1:1 cost share began to increase. With enactment of the AICA, all MEP centers operated under a 1:1 cost share in fiscal year 2017.\nNIST data show that there also may have been some changes in MEP centers’ activities since the 2017 cost share adjustment. Our analysis of NIST data indicated that from fiscal year 2017 to fiscal year 2018, the total number of manufacturers MEP centers reported serving increased from approximately 8,000 to 8,400, very small manufacturers MEP centers reported serving increased from approximately 2,600 to 2,700, and rural manufacturers MEP centers reported serving increased from approximately 1,500 to 1,600.\nAs with the changes in MEP centers’ finances, the changes in the numbers of total manufacturers and very small manufacturers these centers reported serving generally began before the cost share adjustment. When we analyzed NIST’s data, we found that the total number of manufacturers and the number of very small manufacturers served began increasing around fiscal year 2014, when NIST started recompeting centers’ cooperative agreements, and this increase continued through fiscal year 2018. The overall direction of the change in the number of rural manufacturers served during this period was mixed. Specifically, the number of rural manufacturers centers reported serving increased from fiscal year 2014 to fiscal year 2015, then decreased through fiscal year 2017, and then increased in fiscal year 2018.\nNIST officials, like MEP center officials, said that it may not be possible to separate the effects of the AICA cost share adjustment from the effects of the recompetition. NIST officials stated that a longer time span would be needed to identify trends in the manufacturers served by MEP centers; however, even then, confounding factors, such as overall economic conditions, could continue to make it difficult to analyze and isolate the effect of the AICA’s cost share adjustment. Looking forward, NIST officials said one impact of the 2017 cost share adjustment is that it will help sustain recent increases in the number of very small and rural manufacturers served by MEP centers.\nIn addition, establishing a link between changes in MEP centers’ finances and activities and the cost share adjustment is difficult not only because the changes generally predated the cost share adjustment, but also because MEP centers likely underreport certain data to NIST. Specifically:\nFinancial data underreporting. NIST officials stated that because MEP centers are not required to report all of their nonfederal resources in excess of the nonfederal contributions required to meet their cost share, the amount of resources available to centers is likely underreported. According to NIST officials, NIST’s Grants Management Division policy provides that centers will generally be held accountable for any amounts that they opt to pledge in excess of the 1:1 cost share. According to NIST officials, centers are thus operating rationally and legally in pledging and reporting only the amount needed to meet their nonfederal contribution for their cost share match.\nActivity data underreporting. NIST officials said that because MEP centers are not required to report activity data on manufacturers served if the services provided used nonfederal resources that were not directly related to meeting the MEP centers’ cost share, certain activity data, such as the number of rural manufacturers served, is likely underreported. During their discussions with some MEP centers leading up to the 2017 AICA cost share adjustment, the NIST officials learned that some centers were not reporting activity data on manufacturers served if the services provided used nonfederal resources that were not directly related to meeting the MEP centers’ cost share. An official with one such center provided us with information indicating that the number of rural manufacturers served in fiscal year 2016 was about 36 percent more than the number the center reported to NIST. According to NIST officials, centers are not obligated to report activity data on manufacturers served if those activities are not directly related to funds used to meet the MEP centers’ cost share requirements.\nBecause of this underreporting, NIST officials stated that the amount of nonfederal resources in excess of the nonfederal contributions required to meet the cost share, as well as the total number of manufacturers served and the number of very small and rural manufacturers served, are likely higher that what centers reported to NIST. Moreover, the officials noted that, because of the recompetition and the 2017 AICA cost share adjustment, they believe that the extent of MEP centers’ underreporting may have increased in recent years as more centers began operating under a 1:1 cost share ratio.",
"We provided a draft of this report for review and comment to the Secretary of Commerce. NIST provided technical comments, which we incorporated as appropriate. NIST’s comments also included some comments of a more general nature. For example, NIST highlighted the impact that the recompetition had on MEP centers. NIST also noted that while it cannot directly attribute recent increases in the number of manufacturers served to the AICA cost share adjustment, it believes the AICA cost share adjustment has fundamentally allowed MEP centers to deliver more value to clients rather than tie up resources in fundraising.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Commerce, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.",
"The objectives of our review were to describe (1) Manufacturing Extension Partnership (MEP) centers’ views regarding the extent to which the recent cost share adjustment has helped them serve manufacturers and (2) the extent to which National Institute of Standards and Technology (NIST) data show impacts of the cost share adjustment on centers’ finances and activities.",
"To describe MEP centers’ views regarding the extent to which the 2017 American Innovation and Competitiveness Act (AICA) cost share adjustment has helped them serve manufacturers, we sent a survey to all 51 MEP centers and received a response from every center. We administered this survey in July and August 2018. Because this survey was not a sample survey, there are no sampling errors. As part of developing this survey, we conducted pretests over the telephone with four MEP centers to ensure that the questions were understandable, that the data collected are uniform and usable, and that the survey would place minimal burden on center officials. We pretested our survey with the MEP centers for California, Kentucky, Virginia, and Washington. Using data on MEP center characteristics provided by NIST, we selected these centers to reflect a range of characteristics in the following categories, among others: the number of manufacturers in the state, the type of MEP organization (i.e., whether the center is run by a nonprofit, state agency, or university), and NIST’s classification of the state as urban or rural. We made changes to the content and format of the survey based on the feedback we received.\nIn the survey, we asked the MEP centers about the effects of the cost share adjustment, both experienced and anticipated, using several different types of questions. For example:\nWe asked the MEP centers whether the cost share adjustment has resulted in or will likely result in changes such as an increase in center staff; an increased use of contractors; an increase in overall financial resources to support the centers’ operations; a more stable financial outlook; or the ability to develop stronger partnerships, conduct more work in rural areas, or conduct more work with very small manufacturers (fewer than 20 employees). If centers responded in the affirmative, we asked whether those changes have already allowed the center to take specific actions such as conducting additional outreach to manufacturers, providing new services to manufacturers, offering manufacturers a greater quantity of existing services, providing services to manufacturers at reduced cost, or offering training events to manufacturers.\nWe asked questions that allowed the MEP centers to identify the extent to which they had experienced a change. For example, we asked, “Whether or not there were any specific types of manufacturers that may have previously underutilized the center’s services, to what extent has changing the federal/nonfederal cost share to 1:1 for future years for all centers regardless of when they began operating helped the center serve manufacturers overall?” The centers could select one of the following responses: very great extent, great extent, moderate extent, some extent, little or no extent, don’t know.\nWe asked open-ended questions to gain additional understanding about the effect of the cost share adjustment, including the following:\nWhat, if any, other factors might contribute to the changes or lack of changes identified in ? Please consider factors such as general economic conditions in the center’s state, the recompetition of the center’s cooperative agreement with NIST, or other factors.\nWhat has been the effect of changing the federal/nonfederal cost share to 1:1 for future years for all centers regardless of when they began operating on the overall financial resources to support the center’s operations?\nWhat, if anything, would the center change about how it provides services to manufacturers in that state if the federal/nonfederal cost share were to change back to the way it was prior to enactment of the AICA in January 2017?\nWe analyzed the survey responses using content analysis and descriptive statistics. Using content analysis, we analyzed the responses to the three open-ended questions listed above by identifying common themes in centers’ open-ended survey responses to establish categories. Two analysts independently reviewed and coded the survey responses to the categories. Then the analysts compared their coding and if there was disagreement, they discussed their assessment and reached a final determination on the categorization. We also used descriptive statistics to analyze centers’ survey responses to evaluate the impact of the cost share adjustment on different types of MEP centers. For example, we compared the number of centers responding to certain survey questions by center type (i.e., nonprofit institutions, state agencies, or universities) as well as centers whose cooperative agreements were or were not recompeted.\nTo further understand the impacts of the AICA cost share adjustment on different types of MEP centers, we conducted follow-up interviews with officials from nine MEP centers using a standard set of questions. We selected these MEP centers based on our analysis of centers’ survey responses. Furthermore, we selected these centers to include the perspectives of a variety of MEP centers, accounting for factors such as when the center’s agreement was recompeted, number of manufacturers in the state, and whether the center is operated by a nonprofit institution, state agency, or university. During these follow-up interviews, we asked the centers questions such as the following:\nTo what extent did the cost share change affect the center and why?\nPlease explain.\nPlease explain how the center meets the cost share requirement.\nWhat has changed since the AICA set the cost share at 1:1?\nTo what extent will the cost share change help or hinder the center’s ability to reach underserved manufacturers?\nIs there any way that the center can isolate the changes in the cost share from the recompetition?",
"To describe the extent to which NIST data show impacts from the AICA cost share adjustment, we obtained NIST data on MEP centers’ finances and activities for fiscal years 2013 through 2018. We selected this period to encompass the year prior to when NIST began recompeting MEP centers’ cooperative agreements. NIST collects financial information from each MEP center, including the amount of financial assistance received from NIST, program income received from manufacturers for services provided, cash received from other sources (such as grants), and in-kind contributions. We analyzed these data to identify any changes in centers’ finances for fiscal years 2013 through 2018. We also obtained NIST data detailing the cost share under which each center was operating for fiscal years 2013 through 2017. We assessed the reliability of centers’ financial data by reviewing agency documentation, verifying some data against another data source, and interviewing NIST officials and officials from selected centers. We determined that NIST’s data on MEP centers’ federal assistance and nonfederal contributions are the best available data and are sufficiently reliable to describe general changes in these aspects of centers’ finances during this time period. However, as noted in the report, we found that some centers underreport their nonfederal resources in excess of the nonfederal contributions required to meet their cost share. As a result, we expect that centers’ total available resources—including their federal assistance, nonfederal contributions, and nonfederal resources in excess of their nonfederal contributions—are higher than what we present in the report. We determined this because the underreporting we identified with centers’ nonfederal resources in excess of their nonfederal contributions would tend to understate the amount of these resources over time and because we did not find evidence of overreporting that would contradict this pattern. In addition, we did not independently verify the nonfederal contributions reported by the MEP centers because it was outside the scope of our work.\nWe also obtained and analyzed NIST data on MEP centers’ activities, such as data on the size, location, and number of manufacturers the centers reported serving in fiscal years 2013 through 2018. NIST guidance for MEP centers calls for centers to report various information about the manufacturers that they serve, including company name, Dun and Bradstreet number, and the North American Industry Classification System code. NIST uses the Dun and Bradstreet number to compile other information about each manufacturer, including location and number of staff. We analyzed the data to identify any changes in centers’ activities and to determine the extent to which any changes might be associated with the AICA cost share adjustment. We also reviewed NIST guidance for the MEP program and interviewed NIST and MEP center officials to gain an understanding of the MEP center activity data NIST collects. We assessed the reliability of the activity data by reviewing agency documentation and interviewing NIST officials and selected centers. As noted in the report, these efforts indicated that cost share changes caused some centers’ activity data to be underreported. While we were not able to precisely determine the extent of underreporting or precise changes in centers’ activities over time, as noted in the report, we believe the data are the best available data and are sufficiently reliable to describe general changes in centers’ activities during this time period. We determined this because the underreporting we identified would tend to understate the increases in the total number of manufacturers and the number of very small manufacturers served over time and because we did not find evidence of overreporting that would contradict this pattern. Since the number of rural manufacturers served fluctuated during this time period, however, we were unable to determine whether complete data would indicate a general increase in the number of rural manufacturers served similar to the increases in the total number of manufacturers and the number of very small manufacturers served.",
"To help us understand the legal framework for the cost share adjustment, we reviewed the AICA. We reviewed other documents to provide additional context regarding MEP centers’ cost share requirements, including past GAO reports and reports from the Congressional Research Service and National Academies of Sciences, Engineering, and Medicine. We also reviewed reports on the MEP program’s cost share structure from NIST and the MEP Advisory Board. To gain additional insight on the impact of the cost share adjustment, we also interviewed NIST officials, members of the MEP Advisory Board, and the head of an association representing the MEP centers. Further, we visited a MEP Center in Bothell, Washington, and a manufacturer in Woodinville, Washington, to obtain a more in-depth perspective on the services MEP centers provide to manufacturers.\nWe conducted this performance audit from March 2018 to March 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"",
"",
"In addition to the contact named above, Chris Murray (Assistant Director), Arvin Wu (Analyst in Charge), Stephen Betsock, Kevin Bray, Mark Braza, TC Corless, Ellen Fried, Jill Lacey, John Mingus, Calaera Powroznik, Sara Sullivan, David Wishard, and John Yee made key contributions to this report."
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{
"question": [
"How has the AICA impacted MEP centers?",
"How did the AICA adjust the cost share ratio?",
"What improvements resulted from the adjustment?",
"What was the financial influence of the adjustment?",
"What other factors may have influenced the centers?",
"How did the recomposition change the level of federal financial assistance?",
"What did center officials maintain about the AICA?",
"What do NIST data suggest?",
"What is one example of this process?",
"What is another example of the data?",
"What conclusions can be drawn about the AICA cost share adjustment from this data?",
"What is the role of smaller manufacturers in the U.S. economy?",
"What is the MEP program?",
"What is the role of MEP centers?",
"How does NIST parter with the nonfederal organization?",
"Why did GAO conduct this review?",
"What does this report describe?",
"How did GAO conduct their research?"
],
"summary": [
"Most Manufacturing Extension Partnership (MEP) centers reported that the January 2017 American Innovation and Competitiveness Act (AICA) cost share adjustment has helped them serve manufacturers, especially very small (i.e., less than 20 employees) and rural ones.",
"The AICA adjusted the cost share ratio to remain at 1:1, that is, $1 of nonfederal contributions for each $1 of federal assistance. Before the adjustment, MEP centers' cost share requirement increased over the course of their cooperative agreements from 1:1 to 2:1, requiring centers to obtain a greater proportion of revenue from nonfederal sources.",
"In GAO's survey of all 51 MEP centers, 44 centers cited positive effects of the adjustment on center operations, such as helping to improve center services or better reach underserved manufacturers.",
"Also, 41 centers indicated the adjustment increased their financial stability, which some centers stated has allowed them to focus less on revenue generation and to serve very small and rural manufacturers.",
"However, some MEP center officials observed that the AICA cost share adjustment impact is hard to distinguish from other factors, such as the National Institute of Standards and Technology's (NIST) recompetition of nearly all centers' cooperative agreements between fiscal years 2014 and 2017.",
"The recompetition increased the level of federal financial assistance for most centers and reset many centers' cost share ratio from 2:1 to 1:1 prior to the 2017 adjustment.",
"Still, center officials said that if the cost share requirement reverted to what it was prior to the 2017 adjustment, centers would be less able to serve manufacturers, particularly very small and rural ones.",
"NIST data show that there have been some changes in MEP centers' finances and activities since the AICA cost share adjustment; however, these changes generally began prior to the adjustment.",
"For example, NIST data on centers' finances show an increase in federal assistance and a decrease in reported nonfederal contributions from fiscal year 2017 to 2018, but these changes generally began around fiscal year 2014, when NIST began the recompetition process.",
"Similarly, NIST data on centers' activities show an overall increase in the numbers of very small and rural manufacturers served from fiscal year 2017 to 2018. While the change in the number of very small manufacturers served began around fiscal year 2014, the number of rural manufacturers served fluctuated from fiscal years 2014 through 2018.",
"Like MEP center officials, NIST officials said the impact of the AICA cost share adjustment is intertwined with the recompetition impacts and, going forward, the AICA adjustment may help sustain recent increases in the number of very small and rural manufacturers served.",
"Small and medium-sized manufacturers are an important part of the U.S. economy.",
"In 1988, to enhance the competitiveness, productivity, and technological performance of U.S. manufacturing, NIST established what is now called the MEP program.",
"The program supports manufacturers through services provided by MEP centers. The centers, located in all 50 states and Puerto Rico, are operated by nonfederal organizations. The MEP centers provide assistance, either directly or through third parties, to help improve manufacturing firms' processes and productivity; expand their capacity; and help them adopt new technologies, utilize best management practices, and accelerate company growth.",
"NIST enters into a cooperative agreement with the nonfederal organization that runs each center to provide federal financial assistance conditional upon the center contributing nonfederal matching funds—known as a cost share.",
"The AICA included a provision for GAO to review the effect of the 2017 cost share adjustment.",
"This report describes (1) the MEP centers' views regarding the extent to which the recent cost share adjustment has helped them serve manufacturers and (2) the extent to which NIST data show impacts of the cost share adjustment on centers' finances and activities.",
"GAO surveyed all 51 MEP centers, analyzed NIST data on the MEP program, and interviewed NIST and MEP center officials."
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CRS_R43778
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{
"title": [
"",
"Executive Summary",
"Medicaid Prescription Drug Reimbursement",
"Drug Expenditures and Trends",
"Medicaid Prescription Drug Issues",
"Conclusion",
"Overview",
"Medicaid Program Basics",
"Medicaid Prescription Drug Benefits",
"Fee-for-Service Coverage",
"Medicaid Managed Care Drug Coverage",
"OTC Drugs",
"Medicaid Prescription Drug Reimbursement",
"Medicaid FFS Payments to Pharmacies for Prescription Drugs",
"Multiple Source Drug Federal Upper Limits",
"Upper Limits for All Other Drugs",
"Maximum Allowable Cost",
"State Payment Formulas",
"Ingredient Costs",
"Dispensing Fees",
"Medicaid Drug Rebates",
"Manufacturer Rebates for Single Source and Innovator Multiple Source Drugs",
"Manufacturer Rebates for Non-innovator Multiple Source Drugs",
"Supplemental Rebates and State Purchasing Pools91",
"Managed Care Rebates",
"National and State FY2013 FFS Drug Expenditures and Rebates",
"National FFS Drug Expenditure Trends",
"FFS Drug Expenditures by Eligibility Group",
"Number and Cost of Medicaid FFS Prescriptions",
"Policies to Control Program Drug Expenditures and Utilization",
"Drug Use Review",
"Medicaid Prescription Drug Beneficiary Cost-Sharing Requirements",
"Other Cost-Containment Strategies",
"Selected Medicaid Prescription Drug Laws",
"Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care Act of 1992",
"Medicare Prescription Drug Improvement and Modernization Act of 2003",
"Deficit Reduction Act of 2005",
"Medicare Improvements for Patients and Providers Act of 2010",
"American Recovery and Reinvestment Act of 2009",
"Patient Protection and Affordable Care Act",
"Education, Jobs, and Medicaid Assistance Act",
"Selected Medicaid Prescription Drug Issues",
"New Drug Prices",
"Medicaid Rebates for Sovaldi",
"Hypothetical New Drug Pricing Scenario",
"ACA Implementation: Pending Final Rule",
"Conclusion"
],
"paragraphs": [
"",
"Medicaid is a federal-state entitlement program that pays for health care and related services on behalf of certain low-income individuals. All states participate in Medicaid, but participation is not required. If states participate, then under federal Medicaid law they are required to provide health service benefits to certain individuals—mandatory eligibility groups—but states have the option of covering other groups too. Similarly, states must cover certain services for mandatory eligibility groups, but they have the option to cover fewer services for other eligibility groups. In general, Medicaid health benefits are broad for mandatory eligibility groups, but more restricted for other eligibility groups. Prescription drugs are an optional Medicaid benefit, but all states cover outpatient drugs. States may create formularies, lists of preferred drugs, but federal rules tend to result in comprehensive coverage, even for beneficiaries enrolled in Medicaid managed care plans.\nSince 1990, pharmaceutical manufacturers who voluntarily agree to participate in Medicaid are required to rebate a portion of drug payments back to states. When a manufacturer participates in Medicaid, states must make most of their drugs available to Medicaid beneficiaries. States share the rebates they receive from drug manufacturers with the federal government. The drug rebates required under federal law help the state and federal Medicaid program receive manufacturers' lowest or best price . Beginning in 2010, drug manufacturers also were required to pay rebates on drugs provided to Medicaid beneficiaries enrolled in managed care.",
"For the purpose of determining rebates, Medicaid distinguishes between two drug types: (1) single source drugs (generally, those still under patent) and innovator multiple source drugs (drugs originally marketed under a patent or original new drug application but for which there now are generic equivalents); and (2) all other, non-innovator, multiple source drugs. Rebates for the first category of drugs—drugs still under patent or those once covered by patents—have two components: a basic rebate and an additional rebate. Medicaid's basic rebate for single source and innovator multiple source drugs is the larger of either the difference between a drug's quarterly average manufacturer price (AMP) and the best price for the same period, or a flat percentage (23.1%) of the drug's quarterly AMP. Drug manufacturers owe an additional rebate when their unit prices for individual products increased faster than inflation. For all other drugs, the rebate is a flat percentage (13%) of a drug's quarterly AMP. States separately negotiate additional, supplemental, rebates with drug manufacturers in exchange for listing manufacturer products on the state's preferred drug list.\nState Medicaid agencies reimburse retail pharmacies for covered outpatient prescription drugs dispensed to Medicaid beneficiaries. Medicaid FFS payments to pharmacies for outpatient prescription drugs have two components: a payment to cover the cost of the pharmacy buying the drug (the ingredient cost) and a payment for the pharmacist's professional services in filling and dispensing the prescription (the dispensing fee). States, subject to the Centers for Medicare & Medicaid Services (CMS) approval, set reimbursement amounts for both ingredient costs and dispensing fees. Dispensing fees usually are a fixed amount, intended to cover the procuring and storing drugs, consultation, and dispensing drugs. The ingredient cost component of the pharmacy payment is an approximation of a drug's market price which is intended to reimburse the pharmacy for the cost of acquiring the drug. To encourage substitution of lower-cost generic equivalent drugs for more expensive sole source drugs, federal law requires CMS to set a maximum on what it will pay for certain multiple source drug ingredients. The maximum multiple drug ingredient payments are called federal upper limits (FULs).",
"Based on state FY2013 Medicaid financial reports, Medicaid FFS outpatient prescription drug expenditures, net of federal and state rebates, were $16.2 billion, down from $30.7 billion in FY2005 ( Figure 1 ). However, decreases in Medicaid FFS drug expenditures do not represent an overall decrease in Medicaid prescription drug expenditures, because there have been prescription drug industry trends as well as a number of statutory changes that have shifted Medicaid drug expenditures to other spending accounts. For instance, beginning January 1, 2006, prescription drug coverage of disabled and elderly Medicaid beneficiaries—those covered by both Medicare and Medicaid (dual eligibles)—was moved from Medicaid to Medicare Part D. Dual eligibles accounted for a considerable portion of Medicaid drug expenditures, and as a result, when they were moved to Medicare Part D, Medicaid drug expenditures decreased. A maintenance of effort (MOE) provision in federal Medicare law required states to continue to pay the vast majority of dual eligible drug costs.\nAnother factor that contributed to the decline in FFS drug expenditures is the recent escalation in the movement of Medicaid beneficiary drug coverage from FFS to managed care contracts that include drug coverage. One indicator of the movement to managed care coverage of drugs was the growth in managed care rebates, which were required beginning in FY2010. In FY2011, states collected $932 million (national and state supplemental rebates) in managed care rebates, which increased to $4.7 billion in FY2013 ( Table 5 ). Another indicator of the migration to managed care is the change in the number of FFS drug claims, which declined by almost 25% between FY2011-FY2012 ( Table C-1 ). Decreased drug claims for five states accounted for over 90% of the decrease. The statutory changes helped to increase overall rebate collections, which had the effect of reducing net drug expenditures. States reported collecting a total of $11.7 billion in federally required FFS rebates and an additional $726 million in state FFS supplemental drug rebates, and $4.7 billion in managed care rebates for a total of $17.2 billion in FY2013 ( Table 7 and Table 6 ). Other factors that contributed to the decline in FFS drug expenditures were drug industry trends and changes in Medicaid laws applicable to prescription drugs. The drug industry patent cliff, where a number of blockbuster drugs came off patent over a few years, reduced Medicaid FFS drug costs as these drugs became available as cheaper generic products.\nSelected other Medicaid FFS prescription drug data show that average FY2013 per-person Medicaid prescription drug expenditures were just over $926 ( Table 11 ), down from $1,509 in FY2005. In FY2012, Medicaid on average paid approximately $282 for single source prescription drug claims, $149 for innovator multiple source claims, and $18 for non-innovator multiple source drug claims ( Table 12 ). Medicaid's generic prescribing rate for all states varies; the national average in FY2012 was 76% ( Table D-1 ).",
"The Patient Protection and Affordable Care Act (ACA, P.L. 111-148 ) made a number of modifications to federal Medicaid law. The CMS published a proposed rule that provided guidance on implementation of the ACA changes in February 2012. A final rule that would codify many of the new Medicaid drug requirements is pending as of the date of this report. In December 2013, Sovaldi ® a new brand name drug was approved by the Food and Drug Administration for treatment of hepatitis virus C (HVC) infections.\nSovaldi was estimated to cost $1,000 per pill and total treatment cost estimates can range from $84,000 to more than $168,000. Through federal health programs, including Medicaid's prescription drug benefit, federal and state governments may pay the majority of HVC treatment costs. Sovaldi has raised an issue because of its high price and that many individuals with HCV infections are covered by Medicaid. For Medicaid, states and the federal government will receive rebates for Sovaldi that will help reduce the drug's cost, but until other equivalent drugs are available to increase competition, states may have limited leverage to negotiate additional manufacturer price concessions. Medicaid rebates, while buffering the cost of prescription drugs somewhat, might also contribute to drug manufacturers setting increasingly higher launch prices.",
"Medicaid's drug pricing and policy have been effective in helping to control Medicaid FFS drug expenditures. Outpatient drug expenditures have decreased and Medicaid is able to buy drugs for lower prices than Medicare Part D plans, the other major federal outpatient prescription drug purchaser. Congress has been instrumental in establishing state and federal authority to ensure Medicaid receives manufacturers' lowest prescription drug prices. Congress authorized creation of Medicaid program infrastructure to manage, monitor, and enforce prescription drug pricing. However, if the pace in the movement of Medicaid enrollees to managed care that includes prescription drug benefits continues, then prescription drug oversight may be more difficult. The current Medicaid drug pricing and policy infrastructure was designed for FFS, and may not work as well with significant managed care enrollment. States have authority to collect rebates under managed care arrangements, although how state supplemental rebates will align with managed care plan drug discount negotiations is unclear. Under managed care contracts, states generally delegate some or all of drug utilization review and individual drug claim oversight to plans, including program integrity. When managed care and PBMs are responsible for these activities, states have responsibility for ensuring plans uphold their contract obligations. States' prescription drug monitoring is tailored to FFS drug claims, and it is unclear how much oversight of managed care claims states will be able to provide. If states and the federal government currently procure drugs for Medicaid beneficiaries at some of the lowest prices, will it be possible for managed care plans and PBMs to further reduce costs without imposing barriers to Medicaid beneficiaries in obtain covered drugs?",
"Medicaid drug pricing and policy is complex, in part because prescription drug markets are dynamic. Drug manufacturers and wholesalers adapt to policy and statutory changes by creating new products and new marketing approaches that sometimes circumvent Medicaid pricing rules. Drug companies and health insurers operate in private markets in which they are seeking private advantages to earn revenue and profits. Medicaid pricing policies are, in part, based on competitive market transactions. Even though Medicaid buys drugs through the same markets as other payers, federal law requires drug companies, operating through wholesalers and distributors, to sell drugs to Medicaid at discounted prices. Medicaid's drug discounts vary depending on whether drugs are available from one manufacturer—single source—or are available from two or more manufacturers—multiple source. Single source drug discounts are greater than multiple source drug discounts. In 2010, the Congressional Budget Office (CBO) estimated that total single source Medicaid drug rebates averaged approximately 57% of manufacturers' average prices.\nThis report discusses how Medicaid pays for drugs, including statutory requirements on manufacturers and states as well as a number of regulations and policies that help to administer the program. Medicaid beneficiaries are dispensed drugs at retail pharmacies, but states pay most of the cost of those drugs. States then receive discounts from drug manufacturers in the form of rebate payments, which states share with the federal government through a credit against states' future Medicaid payments. Since 2006, the amount states and the federal government have spent on drugs for beneficiaries enrolled in fee-for-service (FFS) Medicaid has decreased whereas the amount states have collected from rebates has increased.\nThe focus of this report is on FFS prescription drug pricing and policy. FFS drug spending accounted for the vast majority of Medicaid drug purchases in 2010, with CBO estimating that prescription drug purchases on behalf of Medicaid beneficiaries enrolled in managed care contracts represented approximately 10% of Medicaid drug expenditures. However, Medicaid managed care contracts including prescription drug coverage have grown very rapidly since FY2010. Data for Medicaid managed care drug expenditures are not as readily available as those for FFS drug spending because those expenditures are not separately reported on Medicaid financial reporting forms. Nonetheless, when possible or appropriate, information on managed care prescription drug spending and utilization is included in the discussion in this report, but in general managed care drug expenditures and utilization are outside its scope. There is considerable Medicaid and related health expenditure data present throughout this report. These data are nominal and have not been inflation adjusted. This report will be revised as new data and information become available.\nA number of Medicaid drug pricing terms are commonly abbreviated. Table 1 displays many of the Medicaid drug-related acronyms and abbreviations that appear in this report. In addition, Table 2 displays a list of public laws referenced throughout the report, and Table E-1 in Appendix E is a glossary of selected Medicaid drug terms.",
"Medicaid is a federal-state entitlement program that pays for medical services on behalf of certain low-income individuals. The Centers for Medicare & Medicaid Services (CMS) administers the Medicaid program under authority delegated by the Secretary of the Department of Health and Human Services (the Secretary). Estimated FY2013 federal expenditures for Medicaid benefits and administration were approximately $262 billion; state expenditures were estimated to be an additional $192 billion, for a total program cost of approximately $454 billion.\nState Medicaid programs are administered and designed by the states under broad federal guidelines. All states elect to participate in Medicaid, so they are required to provide benefits to certain low-income individuals and optionally may cover other individuals. Similarly, states must cover certain basic services, but may also cover additional services. States set their provider payment rates for medical and related services, subject to limitations and federal approval. There is considerable variation across states, with some programs being relatively limited and others more generous in terms of eligible populations, covered benefits, and service payments.\nMedicaid is a means-tested program. Enrollees' income and other resources must be within program financial standards. These standards vary among states and among different population groups within a state. With some exceptions, Medicaid is available only to very low income individuals—most Medicaid enrollees have incomes below the federal poverty level (FPL). Until recently, Medicaid was primarily available only to children, adult members of families with children, pregnant women, and aged, blind, or disabled individuals. People outside those categories—such as single adults and childless couples—generally did not qualify for Medicaid regardless of their income level. ACA permitted states to expand Medicaid coverage to single adults up to age 65 provided their income did not exceed 133% of FPL and required states to cover mandatory eligibility groups up to 133% of FPL.\nHistorically, Medicaid eligibility groups were divided into two basic classes, the categorically needy and the medically needy. These classes differentiated between beneficiaries who were eligible for Medicaid because their income was low (categorically needy) and those who were eligible because they had high medical expenses (medically needy). Categorically needy Medicaid beneficiaries received cash-assistance payments (welfare), so their eligibility was considered welfare-related. Categorically needy beneficiaries represent the majority of Medicaid beneficiaries.\nAlthough their income may have exceeded states' Medicaid income eligibility threshold, medically needy beneficiaries were eligible for Medicaid because a high percentage of that income was used to pay medical expenses, which left only a small amount of income for other living expenses. In 2009, 33 states covered medically needy individuals and these individuals accounted for approximately 5% of national Medicaid enrollment, and 11% of Medicaid expenditures (about $37 billion).\nOver time, more categorically needy eligibility groups were added. As a result, distinctions between categorically and medically needy eligibility became less useful in identifying which groups qualified for mandatory or optional benefits. Nonetheless, the distinctions are useful when considering certain benefits. Most benefits are considered mandatory only for categorically needy individuals; that is, states must cover those benefits for the categorically needy but they are an option for medically needy individuals. Other benefits, including outpatient prescription drugs, are optional for both groups of beneficiaries. Some states provide those optional benefits only to categorically needy individuals whereas other states provide optional benefits to one or more medically needy groups as well.",
"Coverage of outpatient prescription drugs is optional for state Medicaid programs. All states cover outpatient prescription drugs for mandatory (categorically needy) eligibility groups, but they may not cover drugs for optional groups (including medically needy) and drug coverage for expansion populations may be limited to either benchmark plan coverage or a particular set of drugs. , Most states cover outpatient drugs because these drugs are considered a lower-cost alternative to other medical care. Prescription drugs may help keep enrollees healthier and potentially prevent more serious and more costly medical interventions.\nIn general, Medicaid FFS and managed care outpatient drug benefits are broad, encompassing most prescription drugs and many non-prescription, over-the-counter (OTC), drugs. Medicaid prescription drug coverage is broad because Medicaid law requires states to cover most drugs offered by manufacturers that have rebate agreements in effect. In addition, federal law permits states to use formularies to direct beneficiaries to equivalent lower-cost drugs, but there also must be a process by which health care providers may request covered drugs not on the formulary if the provider determines those drugs are medically necessary. When states contract with managed care plans and drug coverage is included, the plans may use their own formularies but also must have a process by which health care providers can prescribe non-formulary drugs that they determine are medically necessary.",
"For Medicaid beneficiaries enrolled in FFS Medicaid, federal statute allows states to establish formularies. Formularies are lists of drugs that payers prefer to have prescribed to beneficiaries, generally because these drugs cost less and are considered by experts to be as safe and effective as other drug choices. When private health care insurers or providers cover only those drugs on the list and deny payment for others, the list is referred to as a closed formulary . Medicaid formularies are seldom as restrictive as the closed formularies found in the private insurance market because of two statutory requirements. The first requirement is that states must cover any non-formulary drug (with the exception of certain drugs) that is specifically requested and approved through a prior authorization process. The second requirement is that states cover all drugs offered by manufacturers that entered into rebate agreements with the Secretary. States may use formularies to exclude drugs for which there are no significant therapeutic advantages over other drugs that are included in the formularies, as long as there is a publicly available explanation for a drug's exclusion.\nAlthough federal law ensures Medicaid formularies are not too restrictive, it also allows states to exclude certain drugs, drug classes, or drug uses from Medicaid coverage. States may still cover excluded drugs and receive federal financial participation (FFP) for them. Medicaid-excluded drugs are not subject to the requirement that states must cover all of a manufacturer's products if the manufacturer entered into a Medicaid rebate agreement with the Secretary. Federal Medicaid law also requires states to cover three additional drugs, drug classes, or their medical uses.",
"Many Medicaid managed care arrangements are limited risk-based contracts that rely on primary care case management (PCCM). Under PCCM and similar limited-risk contracts, Medicaid programs pay providers a small fixed fee to manage patients' care. Further, in PCCM and other non-risk bearing managed care arrangements, prescription drug benefits generally are delivered and reimbursed as FFS Medicaid benefits.\nFor Medicaid beneficiaries enrolled in managed care plans, or plans to which states pay a fixed monthly capitation payment in exchange for the provision of all or some subset of covered services, Medicaid statute permits those managed care plans an exception from the FFS drug coverage rules described above. When state Medicaid programs cover drugs or other services, such as mental health or long-term care services and supports, through managed care contracts, the services covered are considered carved in to the managed care contracts. When states do not cover drug benefits or other services, those services are considered carved out of the managed care contracts. Medicaid law allows managed care plans to develop and administer drug formularies. In practice, however, when prescription drugs are covered under capitated managed care contracts, states sometimes require managed care plans to have the same coverage and formulary limits as FFS Medicaid coverage. Only some managed care contracts include prescription drug benefits, although increasingly more include drug coverage. Since 2010, as states have moved to carve-in prescription drug coverage, more states now permit managed care plans to use their own formularies. Even if states delegate formulary decisions to managed care plans, the plans must still provide access to all Medicaid covered drugs, just as required under FFS Medicaid. Medicaid managed care plans may reimburse the retail pharmacy, similar to FFS Medicaid, or they can provide outpatient drugs directly to beneficiaries.\nAs shown in Table 3 , even though the Medicaid managed care enrollment percentage was over 70% in 2011 (for any managed care) these arrangements accounted for only about 25% of Medicaid benefit expenditures, which include drug expenditures.\nSimilarly, 2011 Medicaid benefit expenditures for comprehensive risk-based managed care contracts accounted for about 50% of enrollment but constituted only slightly less than 24% of benefit expenditures, including drug expenditures. Table 3 also displays the Medicaid managed care enrollment increase between FY2008 and FY2011, with rising percentages going to both any managed care and comprehensive risk-based arrangements. Managed care was estimated to account for about 10% of Medicaid prescription drug expenditures in 2010, a figure that was estimated to have increased to approximately 50% in 2013.",
"Many state Medicaid programs also cover OTC drugs, those medications that can be purchased without a prescription. In 2007, all states covered some OTC drugs, although no state covered all OTC drugs and most states limited coverage or imposed coverage restrictions on OTC drugs. All states covered at least some OTC drugs in the following categories: allergy, asthma, and sinus; analgesics; cough and cold; smoking cessation; digestive products; H2 antagonists; feminine products; and topical products.",
"State Medicaid agencies do not purchase drugs directly from manufacturers. Instead, they most commonly reimburse retail pharmacies for covered drugs dispensed to Medicaid beneficiaries. This section discusses FFS Medicaid pharmacy reimbursement issues.",
"Medicaid payments to pharmacies for outpatient prescription drugs have two components: a payment for what it cost pharmacists to purchase a drug ( ingredient cost ) and a payment for pharmacists' professional services in filling and dispensing prescriptions ( dispensing fee ). States, subject to CMS approval, set separate reimbursement amounts for both ingredient costs and dispensing fees. The pharmacy payment for acquiring the drug, the ingredient cost, is either an approximation of a drug's market price or the amount the pharmacy paid to buy the drug. The dispensing fee is usually a fixed amount, intended to cover drug procurement, storage, and other costs. States set their own pharmacy payments but are subject to some federal limitations. To encourage substitution of lower-cost drugs, federal Medicaid law requires the Secretary to establish a maximum payment amount for the federal share of certain multiple source drug ingredient costs—the federal upper limit (FUL). The FUL program limits the federal share of Medicaid reimbursement for certain multiple source drugs and seeks to ensure that the federal government acts as a prudent buyer by taking advantage of lower market prices for these drugs.\nUnder Medicaid, there are two types of multiple source drugs, innovator multiple source and non-innovator multiple source drugs. Innovator multiple source drugs were initially brand-name drugs that have lost patent protection. Non-innovator multiple source drugs are (1) multiple source drugs that were not initially single source products, (2) multiple source drugs that were marketed as generic products, or (3) drugs that entered the market before 1962 that were never marketed as generic drugs. Brand-name drugs can be single source or innovator multiple source drugs. Generally, CMS must set an FUL amount for drugs when generic versions are available, although states must set upper limits for certain other drugs .",
"Federal FUL policy requires the Secretary to establish a per drug maximum for its share of Medicaid outpatient drug payments. FULs are applied in aggregate to each state's spending for drugs subject to FUL limits rather than to individual prescription drug claims. Thus, a state may reimburse pharmacies at amounts above the FUL for certain drugs and not exceed the sum of FULs in aggregate if it also reimburses pharmacies at amounts below the FUL for other drugs. The FUL aggregate is determined by first multiplying the FUL by the number of units dispensed of each drug. Those amounts are summed for all drugs subject to FULs, and that total represents the maximum amount eligible for FFP. Drugs subject to FULs are those the FDA has rated as having three or more therapeutically and pharmaceutically equivalent products. CMS identifies drugs that are subject to FULs and then calculates the maximum payment amount for those products.\nThe methodology for calculating FULs is to apply a percentage adjustment to the average manufacturer price (AMP) of the least costly therapeutic equivalent. Under an ACA provision, the FUL percentage was decreased from the Deficit Reduction Act of 2005 (DRA, P.L. 109-171 ) rate of 250% of AMP to at least 175% of AMP. Drug manufacturers are required under Medicaid law to report AMP. AMP is defined in statute as the average price paid to the manufacturer by wholesalers for drugs distributed to retail community pharmacies (RCPs). CMS has calculated and publically displayed draft FULs using the current law methodology since September 2011 but has not implemented the ACA FUL policy. Thus, current FULs were based on prices in effect in 2009. CMS announced in November 2013 that it would implement the ACA FUL policy July 1, 2014. However, CMS announced in June 2014 that it would delay implementation of the ACA FUL policy, but it did not indicate the length of the delay.",
"Federal Medicaid law also sets upper limits for other drugs a category that includes drugs for which CMS has not established a specific FUL and brand-name drugs that were certified . Drugs that are certified include drugs for which a generic alternative is available, but the beneficiary's physician has specified that a brand name is medically necessary. The FUL for other drugs is determined by the following:\nActual acquisition cost (AAC) plus a professional dispensing fee established by the state Medicaid agency; or the pharmacies' usual and customary charges to the general public.\nStates may use any method to set the other drug payment as long as, in the aggregate, state payments for these other drugs are below the levels that would be determined by applying the other drug FUL. The estimated acquisition cost (EAC) is the Medicaid agency's best estimate of the price generally paid by pharmacies and other providers to acquire the drug. CMS allows states flexibility in determining EAC, although many states rely on average wholesale price (AWP) or wholesale acquisition cost (WAC), published prices available from industry compendia. Compendia are reference books or data published by private companies based on data provided by drug manufacturers. Neither AWP nor WAC are necessarily based on actual sales transactions or defined in statute. Thus, both are subject to manufacturers' decisions on what to include or exclude. The AWP is often considered a price for wholesalers to charge retailers.",
"Most states also often develop their own maximum allowable costs (MACs) for drug pricing. States may select the drugs, including multiple source drugs covered by FULs and other drugs, as well as set the reimbursement amount for drugs subject to MACs. MAC programs enable states to achieve additional drug savings by setting lower reimbursement amounts for more multiple source drugs than for those drugs with FUL prices and using a MAC formula that sets prices lower than FUL amounts. In June 2014, CMS identified 45 states with MACs.",
"",
"States are not required to use FULs as the basis for reimbursing pharmacies for outpatient drugs dispensed to Medicaid beneficiaries. States must only ensure that federal matching funds are not used to pay drug prices that exceed FULs; there are no other federal rules on how states set drug reimbursement, although payment methodologies are approved by CMS through the state plan amendment (SPA) process. In determining what to pay pharmacies for ingredient costs, states estimate current market prices by using one or several benchmarks to approximate pharmacies' acquisition costs. Historically, AWP was the primary drug pricing benchmark used by state Medicaid to set ingredient reimbursement.\nThere has been considerable disagreement about the appropriate basis for setting Medicaid multisource drug ingredient reimbursement since statutory changes were passed in DRA. In FY2009, state Medicaid pharmacy directors issued a white paper on AWP alternatives. One of the white paper's suggestions was that CMS develop a single national pricing benchmark based on average drug ingredient acquisition costs. The state pharmacy directors' AWP alternative white paper argued that a single national benchmark would provide better estimates of pharmacy acquisition costs if it were based on actual drug purchases. This approach to drug ingredient price determination, the Medicaid pharmacy directors argued, also would provide greater accuracy and transparency in how drug prices were established. In their AWP alternative white paper, the Medicaid agencies requested that CMS coordinate, develop, and support a national pricing benchmark that could replace AWP. The Department of Health and Human Services Office of Inspector General (OIG) found that AWPs were artificially inflated, which overstated drug EACs and resulted in Medicaid overpayments.\nTo help states determine ingredient cost reimbursement, the Secretary is required to disclose to states and the general public via a website certain pricing data reported by manufacturers on a monthly basis. The Secretary also is required to disclose the weighted average AMP and an average retail survey price for each multiple source drug. DRA permitted the Secretary to conduct a retail price survey and disclose the survey results to states and the public. CMS initiated a National Average Drug Acquisition Cost (NADAC) survey to identify retail community pharmacy (RCP) drug acquisition costs, or the estimated prices RCPs paid to purchase all Medicaid-covered outpatient drugs. CMS began publishing draft drug acquisition cost data on its website in October 2012 and updates NADAC survey data weekly. CMS also initiated a survey of average retail consumer prices but suspended this retail survey due to funding considerations.\nState Medicaid directors issued an update on the status of state use of AAC, actual acquisition cost, in setting FFS ingredient reimbursement rates. The Medicaid directors indicated that seven states were using an ACC-based rate in 2014, although only one state was using CMS's NADAC survey data. The other states conducted their own AAC surveys. States that used an AAC-based methodology generally had increased dispensing fees to offset the potentially lower ingredient payments to pharmacies. Although many states continue to base their Medicaid drug reimbursement on published retail prices, such as AWPs less some percentage or WACs plus some percentage, more states are beginning to transition to AAC (as discussed in the Medicaid director update). Under Medicaid law, states have discretion to use different formulas or percentages to adjust published prices depending on the drug or drug category (i.e., generic versus brand, physician administered, and blood clotting factors).",
"In addition to a drug ingredient acquisition cost payment, states also pay pharmacies a dispensing fee when they fill a FFS prescription. States determine their dispensing fees, which are limited only insofar as they must be \"reasonable.\" Most dispensing fees generally range from around $1.00 to $3.00 per prescription, but some dispensing fees may reach $10.00 and even more depending on the state methodology and other factors. Dispensing fees may range higher in states that do not use a flat fee. Dispensing fees also often are higher for generics than for single source drugs, and fees can vary by such characteristics as urban or rural location, for profit or non-profit status, and for federally qualified health centers. Some states use tiered dispensing fees, where the rate decreases as a pharmacy's historical annual prescription volume increases. In general, states may set higher dispensing fees to help offset a pharmacy's higher costs for filling certain types of prescriptions or lower profit on reimbursement for ingredients and to encourage generic substitution, where possible.",
"In 1990, Congress amended the Social Security Act (SSA) to add the Medicaid Drug Rebate (MDR) program to Medicaid law. Under the MDR program, drug manufacturers that want to sell their drugs to state Medicaid agencies must enter into rebate agreements with the Secretary on behalf of states. The MDR agreements require drug manufacturers to provide state Medicaid programs with rebates on drugs purchased for Medicaid beneficiaries to ensure that Medicaid receives the lowest or best price for which the manufacturer sold the drug during the previous quarter. In exchange for receiving the best price, Medicaid programs must cover all drugs marketed by those manufacturers with certain exceptions. For instance, drugs provided in hospitals and sometimes in physicians' or dentists' offices, or similar settings are exempt from rebates. Drug manufacturers must pay rebates on prescription drugs provided to Medicaid beneficiaries who receive their care through FFS as well as managed care plans. Drug manufacturers also must pay rebates on some nonprescription, OTC items, such as aspirin, when they are dispensed to a Medicaid beneficiary and covered under the state's Medicaid plan. In 2014, CMS reported there were approximately 610 drug manufacturers participating in the Medicaid drug rebate program. In FY2013, the Medicaid (state and federal) FFS rebates—basic, inflation, and supplemental—were approximately $12.4 billion (see Table 6 ).\nMedicaid rebates are shared between the states and the federal government according to state federal medical assistance percentage (FMAP). A state's FMAP determines the rate at which the federal government matches states' Medicaid expenditures. Drug manufacturers compute the drug rebate amount owed each quarter based on utilization information supplied by states. States collect manufacturers' rebates and then subtract (offset) the federal share from the federal matching funds they would receive for Medicaid medical benefits.\nFor rebates purposes, federal law distinguishes between two major drug categories, single source drugs and multiple source drugs. Multiple source drugs include innovator multiple source drugs—drugs once covered by patents—and non-innovator multiple source drugs—generic drugs and all other drugs, including drugs developed before FDA approval was required and OTC drugs. In addition to the two major drug types, ACA added several additional single source and innovator multiple source drug types that are treated differently for rebates. These drug types include line extensions, clotting (blood) factors, and drugs approved by the FDA for pediatric indications. The basic and additional rebate formulas for these new ACA drug types as well as single source, innovator multiple source, and non-innovator multiple source are summarized in Table 4 .",
"For single source and innovator multiple source drugs, manufacturers are required to pay state Medicaid programs a basic rebate and, when they raise a drug's price faster than inflation, an additional rebate. As shown in Table 4 , the basic rebate is determined by comparing each drug's per unit AMP to that drug's per unit best price. The basic rebate is the greater of a specified percentage of AMP or the difference between the AMP and the best price. ACA increased the specified percentage of AMP from 15.1% to 23.1%. Manufacturers owe the additional rebate when a single source or innovator multiple source drugs' per unit AMP is raised faster than the inflation rate. The per unit additional rebate is the amount a drug's quarterly reported AMP exceeds the inflation-adjusted base period AMP. If the per unit quarterly AMP does not exceed the inflation-adjusted base period AMP, then no additional rebate is owed.\nTo determine the total rebate, a unit rebate amount for each drug—the sum of the basic and additional rebate—is multiplied by the number of units of the drug that were purchased during the quarter, as determined by the Medicaid agency. For line extension products, any version of the original product's base AMP can be used to determine the additional rebate. As displayed in Table 4 , single source and innovator multiple source pediatric and clotting factor drugs use 17.1% as the percentage to determine the basic rebate amount, but otherwise the rebate calculation, including potential additional rebates, follows the same methodology.\nMedicaid law limits manufacturers' total rebate obligation for single source and innovator multiple source drugs for each dosage form and strength to no more than the current period AMP.",
"Basic rebates for non-innovator multiple source drugs are equal to 13% of the drug's AMP. Prices offered to other payers are not considered, nor is there an additional rebate for price increases that exceed the inflation rate.",
"In addition to the basic and additional FFS rebates required under federal law, most states negotiate supplemental rebate agreements (SRAs) with prescription drug manufacturers. Although almost all Medicaid SRAs have been for FFS outpatient drugs, in March 2014, three states (Florida, New Hampshire, and Oregon) had submitted SPAs to establish supplemental rebate programs for Medicaid beneficiaries enrolled in managed care plans.\nStates can negotiate SRAs on their own or by joining with other states to form purchasing pools. In March 2014, 45 states participated in Medicaid outpatient drug SRAs through single- or multiple-state purchasing pools. States that participate in multi-state purchasing pools are able to combine their purchasing power with that of other states to negotiate greater supplemental rebates and other price concessions from manufacturers. Some states also have established intra-state pools that negotiate drug prices for Medicaid drugs as well as for drugs dispensed through other state agencies such as employee health and local government programs. Generally, states must submit SPAs to CMS outlining their SRA arrangements.",
"Prior to ACA, drug manufacturers were not required to pay rebates on drugs purchased for Medicaid beneficiaries by managed care plans. To collect rebates for managed care beneficiaries, states excluded or carved out drug benefits from capitation agreements, then provided drug benefits under FFS or contracted with other entities, such as PBM companies, to provide drug benefits. Beginning in January 2010, prescription drug manufacturers were required under ACA to pay the same rebates that were required under FFS on drugs provided to Medicaid beneficiaries enrolled in managed care plans. Since ACA became law, some states have carved in prescription drug benefits to their managed care contracts, so that drugs are covered under these contracts. Managed care rebates are paid to states and shared with the federal government following the same formulas as FFS rebates. As shown in Table 5 , Medicaid managed care rebates increased substantially since 2011.",
"Table 6 displays FY2013 Medicaid FFS outpatient drug expenditures and total rebates for each state and all states. In FY2013, total Medicaid FFS outpatient prescription drug expenditures, before rebates, were about $19.8 billion (federal and state shares, Table 6 ). Also in FY2013, states reported collecting approximately $12.4 billion in FFS drug rebates from drug manufacturers which includes approximately $726 million in supplemental rebates not required under federal Medicaid law ( Table 6 ) and $11.7 billion in required rebates. Net FY2013 Medicaid drug expenditures (after all rebates) were approximately $7.4 billion ( Table 7 ).\nThe Table 6 data may overstate Medicaid FFS rebates. ACA increased the basic rebate percentage and extended manufacturers' additional rebate obligations to line extensions. These ACA changes were retroactive to January 1, 2010. Implementation and accounting for the ACA rebate changes may have lagged behind so that states reported rebates attributable to FY2010-FY2012 utilization in the FY2013 CMS financial reports. In addition, beginning in 2010 with the added authority for states to collect rebates on drugs purchased for full-risk Medicaid managed care beneficiaries, there may have been delays in identifying transactions that were subject to the managed care rebate.\nTable 7 displays the total amount of SRA rebates collected by states for FY1997-FY2013. In FY2013, 42 states collected a total of $726 million in supplemental FFS rebates ($403 million federal share). In FY2013, California accounted for 23% of the reported supplemental rebates (federal and state shares).",
"Some data seem to suggest that Medicaid FFS drug expenditures have decreased dramatically since FY2006, but net spending changes are attributable at least in part to policy changes that have shifted drug spending from Medicaid to Medicare, increased rebates, and shifted drug coverage from FFS to managed care plans. This section discusses recent Medicaid FFS drug expenditures and patterns.\nIn FY1997, states reported total FFS outpatient prescription drug expenditures, net of all rebates—federal and state shares—of about $10.2 billion, or 6.3% of total program spending. In FY2005, total FFS outpatient prescription drug expenditures, net of all rebates—federal and state shares—were $30.7 billion, accounting for about 10.2% of Medicaid benefit expenditures. By FY2013, net Medicaid FFS outpatient drug expenditures had decreased to about $16.2 billion and accounted for less than 4% of benefit expenditures. Table 8 displays a summary of Medicaid benefit and outpatient prescription drug expenditures for FY1997-FY2013.\nThe variation in prescription drug expenditures and year-to-year percentage changes shown in Table 8 were attributable to a number of factors. Some of these factors are trends affecting the prescription drug industry and health care markets in general, such as the expiration of prescription drug patents sometimes called the patent-cliff and increasing managed care enrollment. Other policy changes attributable to federal law may be more important than industry trends in explaining Medicaid prescription drug expenditure changes. The amendments to Medicaid drug law helped to reduce outpatient Medicaid prescription drug expenditures. Figure 1 displays the recent history of Medicaid FFS outpatient prescription drug expenditures.\nThere are several changes shown in Figure 1 that coincide with implementation of major legislative changes. Prior to MMA, drug expenditures were steadily increasing, rising from approximately $10.2 billion in 1997 to about $30.7 billion in 2005, even though federal and state (but particularly state) rebates also were increasing. In 2006, there was a substantial decrease (of approximately $7.6 billion) in Medicaid drug expenditures to $23.1 billion when dual eligible drug expenditures were moved to Medicare Part D.\nIn 2010, adjusted Medicaid drug expenditures dipped again to $19.7 billion. This change was in part attributable to the fiscal relief provided to states in the form of ARRA's temporary FMAP increase, which reduced state drug expenditures because it was applied to states' phased-down state contribution (PSC) payments. , PSC payments declined from $7.8 billion in FY2009 to $3.8 billion in FY2010. The PSC decrease shifted a portion of prescription drug costs from state and federal Medicaid matching funds to federal economic recovery funding, thus reducing federal and state Medicaid drug expenditures. Although this also increased federal funding, it shifted that funding from Medicaid to another source. Net FFS drug expenditures returned to approximately the FY2009 level in FY2011 after deducting all rebates but adding in the PSC amount that states would have paid for dual eligible drug expenditures to make comparison with earlier periods consistent.\nIn FY2011, the increased rebate percentages and other ACA changes were just beginning to take effect. These changes boosted federal and state rebates, but drug expenditures increased considerably to $23.1 billion from $19.7 billion in FY2010. The FY2011 increase was probably attributable to reporting delays of the ACA's rebate increases. In FY2012 and FY2013, Medicaid outpatient drug expenditures (after rebates and other adjustments) were substantially reduced, falling from about $23.1 billion in FY2011 to about $18.4 billion in FY2012 and $16.2 billion in FY2013. The FY2012 and FY2013 decreases were somewhat due to modest ACA rebate increases and the rapid movement of Medicaid beneficiaries to managed care coverage that included prescription drugs. As previously discussed, these changes did not reduce prescription drug expenditures, but shifted drug expenditures to other reports.\nHowever, looking at state Medicaid drug utilization reports, as shown in Table 9 , estimated (unadjusted, before all rebates and PSC) total Medicaid expenditures for FFS and managed care were higher and consistent with historic drug spending patterns.\nAlthough Medicaid drug expenditures for both managed care and FFS appear to be close to their historic levels, expenditures did decline between FY2012 and FY2013 in similar ways for both managed care and FFS drug spending. The decrease could be attributable to different data sources as well as the previously mentioned reporting lags and the patent cliff.\nAdditional data from Medicaid financial reports can provide insight into how Medicaid FFS drug expenditures only have changed over time (not managed care). It is possible to estimate a new FFS drug expenditure by aggregating drug expenditures and rebates and by adjusting for the Medicaid drug expenditures that were moved to Medicare Part D. The net FFS drug expenditure data can then be compared with earlier periods (before 2006) to help identify changes. As shown in Table 10 , the net FFS drug spending decrease between FY2012 and FY2013 was primarily due to decreased prescription drug expenditures, rather than increased rebate collections.\nFY2012 and FY2013 FFS drug expenditures fell by 20% and 12% respectively from the previous year. The FY2012 and FY2013 decreases in Medicaid FFS drug expenditures may have been caused by several factors, including the rapid growth of Medicaid managed care enrollment that included prescription drug coverage.\nIn FY2012 and FY2013, total Medicaid FFS drug rebate collections also decreased. The decrease in FFS drug rebates was due to reduced FFS drug expenditures—fewer drugs purchased translates to lower rebate collections.",
"This section reviews drug expenditure patterns among the major Medicaid eligibility groups in FY2005 and FY2010 (the latest year data were available). Traditionally, the majority of Medicaid expenditures have been concentrated among the elderly and disabled eligibility groups, which account for the fewest beneficiaries. In contrast, the children and family eligibility groups typically account for more individuals and lower expenditures. The drug expenditure data by basis of eligibility (BOE) show how drug utilization patterns have changed since FY2005 with more drug spending for children and adults and less for the aged and disabled eligibility groups. These changes were probably mostly due to the movement of drug coverage for beneficiaries who were dually eligible for both Medicare and Medicaid from Medicaid to Medicare Part D, the outpatient prescription drug benefit that began January 1, 2006. Table 11 displays FFS drug use and average payments by BOE.\nAs shown in Table 11 , in FY2005, about 71% of Medicaid beneficiaries who were eligible because they were elderly had drug expenditures and Medicaid paid on average about $2,943 annually for their drugs. By FY2010, about 45% of Medicaid beneficiaries who were eligible because they were elderly had prescription drug expenditures, but Medicaid paid only about $451 annually for their drugs. This dramatic decrease in the number of elderly using drugs and the amount of expenditures for those drugs is mostly attributable to the MMA change that shifted outpatient drug coverage for dual eligibles, a group that typically has high drug utilization and costs, to Medicare Part D. However, even though drug costs for dual eligibles were shifted to Medicare Part D, states continued to pay the vast majority of these costs through the phased-down state contribution. Thus, the data shown in Table 11 include dual eligibles' outpatient prescription drug costs in FY2005 but do not include these expenditures in FY2010. Table 11 also shows that children had the lowest average spending and that blind or disabled enrollees had the highest. Among blind or disabled enrollees with prescription drug spending, the average amount was about $3,793 in FY2005 but had declined to about $2,692 in FY2010. For children with prescription drug spending, the average annual amount paid for drugs was about $323 in FY2005 and $379 in FY2010.\nEven though these data exclude expenditures for dual eligible and Medicaid beneficiaries enrolled in Medicaid managed care plans, they provide a glimpse of the FFS spending among different eligibility groups. Among all Medicaid beneficiaries who were dispensed drugs in FY2005, the average annual Medicaid prescription drug spending was about $1,509. By FY2010, average per beneficiary annual expenditures had declined to about $926. Again, this decrease probably was due to the following combination of factors: the movement of dual eligible drug coverage from Medicaid to Medicare Part D, other Medicaid drug pricing changes, the increased availability of a number of commonly prescribed drugs as generic rather than brand-name drugs, and other trends affecting prescription drugs.",
"Table 12 displays a summary of the number of prescriptions filled for different drug types—single source, innovator, and non-innovator multiple source drugs—and the total amount states reported reimbursing providers for these drugs. The mix of drugs prescribed by state Medicaid programs affects FFS drug expenditures, with single source drugs representing a higher cost than both innovator and non-innovator multiple source drugs. As Table 12 shows, Medicaid agencies reported processing more than 323.5 million prescription claims in FY2012 and the national average Medicaid FFS payment was about $72. The national data shown in Table 12 are available for each state in Appendix A and Appendix B , which show that in FY2012 average state per prescription payment for all drug categories, before rebates, ranged from a high of about $131 in Colorado to a low of about $35 in Nevada. Table 12 shows that the FY2012 average payment for single source prescription claims was $282 and about $18 for each generic prescription.\nSimilar to Table 12 , Table 13 displays the number of Medicaid FFS drug claims for FY2011 and FY2012, but also shows the percentage of claims of the total that were attributable to each drug category. From FY2011 to FY2012 the percentage of claims attributable to single source products declined from about 19% to about 16% and the percentage of non-innovator multiple source prescription claims increased from about 72% to 75%. During that period (FY2011-FY2012), the overall total volume of FFS claims declined by approximately 17% from about 389 million to 324 million claims. The decline in the overall volume of FFS prescriptions is probably due to states rapidly shifting beneficiaries into managed care plans that provide prescription drug coverage under their capitated rates, rather than through carved out FFS arrangements. The increase in the percentage of claims for generic versus brand products is probably due to the patent cliff.\nAlso similar to Table 12 , Table 14 displays FY2011 and FY2012 Medicaid FFS drug expenditures by drug category drug expenditures, but also shows the percentage of total annual FFS drug expenditures attributable to the different drug categories. As shown in Table 14 , national total Medicaid FFS drug expenditures, before rebates, decreased by about 18% from $28.4 billion to about $23.2 billion from FY2011 to FY2012. However, expenditures for single source Medicaid FFS drugs declined, but expenditures for multiple source non-innovator drugs increased.\nTable 13 and Table 14 together show that single source drug expenditures represent the majority of Medicaid FFS drug expenditures, accounting for more than 60% of Medicaid FFS drug spending in both FY2011 and FY2012, even though single source drugs accounted for less than 20% of total drug claims in those years. These data are before rebates. If rebates were deducted, the differences between the percentage of expenditures for single source and multiple source drugs might be closer because single source drug rebates are considerably more than rebates for multiple source drugs. CBO estimated that Medicaid's 2010 basic and additional rebate on single source drugs averaged 57% of manufacturers' average prices.",
"Medicaid law permits states to use other techniques in addition to FULs and formularies to help monitor and control overall drug expenditures and utilization. Some techniques to control drug spending involve encouraging the use of lower cost, but generically or therapeutically equivalent products, and other techniques involve establishing limits that encourage appropriate utilization. The discussion in this section is primarily applicable to the administration of Medicaid FFS drug benefits, but policies to help control drug spending are widely used by all insurers that provide prescription drug coverage, including the private sector and managed care plans under contract to state Medicaid programs.\nAll states use all or most of these policies in some form, although there is considerable variation in the degree to which states use these policies. For instance, all states have prior authorization, but many states only require prior authorization for certain drugs. In addition, some states allow managed care plans to establish their own prior authorization procedures and policies.\nOne common cost and utilization process is prior authorization and the use of preferred drug lists (PDLs). PDLs identify pharmaceutical products that have been approved in advance by a committee because they were determined to be clinically effective, but lower cost than other alternative products. Providers may readily prescribe these products to Medicaid beneficiaries. Other non-PDL drugs also are covered but may only be available when they are specifically requested and approved or authorized by the Medicaid agency. Non-PDL drugs must be prior authorized or approved. When providers want to prescribe non-PDL drugs to beneficiaries, the providers (either the physician or the pharmacist) must request permission from the state Medicaid program or the program's contractor to dispense the drug.\nStates may establish prior authorization programs under Medicaid for all drugs or for certain classes of drugs, as long as these programs meet the following two criteria:\n1. they must respond within 24 hours to a request for approval, and 2. they must dispense at least a 72-hour supply of a covered drug in emergency situations without prior authorization.\nStates also may restrict the quantity of prescription drugs available to beneficiaries. Such prescribing and dispensing limits are common. The most prevalent constraint is on the drug quantity that may be dispensed for each prescription. A number of states routinely limit the amount of certain drugs dispensed to a 30-day to 34-day supply. In addition, states also sometimes limit the number of prescriptions a beneficiary can have without special approval, particularly for single source products. In 2010, 14 states limited the total number of prescriptions (single and multiple source) per beneficiary and four states capped the monthly number of prescriptions per beneficiary. The remaining 32 states, which accounted for about 40% of Medicaid's 2010 FFS drug expenditures, did not cap the number of monthly prescriptions.",
"All states use policies to control the use of outpatient prescription drugs, and all have programs in place to assess the quality of their pharmaceutical programs. OBRA1990 required states to establish drug use review (DUR) programs by January 1993 and provided temporary enhanced federal matching payment for DUR program start-up costs. In general, DUR programs are aimed at both improving the quality of pharmaceutical care and assisting in cost containment. Selected major DUR program design features include the following: pharmacists and physicians education in identification of fraud, abuse, gross overuse, or inappropriate or medically unnecessary care; enhanced communication between pharmacists and beneficiaries; educational outreach for pharmacists, physicians, and beneficiaries; and pharmacy counseling.\nStates are required to modify their Medicaid state plans to include both prospective and retrospective drug review. Prospective review is provided to beneficiaries before drugs are dispensed, whereas retrospective review is conducted after the sale on drug claims and other data using information technology.\nStates also are required to establish DUR boards that include appropriate health care professionals with knowledge and expertise in outpatient prescription drug prescribing, dispensing, monitoring, DUR, education, intervention, and medical quality assurance. DUR boards must include physicians and pharmacists. States are required to submit an annual DUR report to the Secretary that includes information on DUR board activity as well as on state outpatient prescription drug utilization. CMS is required to evaluate the effectiveness of each state's DUR program. Most state DUR programs are operated by vendors, and these vendors also often overlap with state fiscal agents. Based on state DUR reports, the national average generic prescribing rate was about 74% in FY2011 and about 76% in FY2012. Table D-1 displays a summary of state generic prescribing rates for FY2011 and FY2012.",
"In addition to prior authorization and utilization review, many state Medicaid programs impose beneficiary cost-sharing to help control drug use and spending. Federal Medicaid law permits states to require beneficiaries to pay out of pocket costs to encourage the most cost-effective prescription drug use. To encourage the use of lower-cost drugs, states may establish different generic versus brand-name copayments for drugs included on a PDL. For people with incomes above 150% of FPL, copayments for non-preferred drugs may be as high as 20% of what Medicaid paid for the drug's ingredients. For people with income at or below 150% of FPL, copayments are limited to nominal amounts. State Medicaid programs must specify which drugs are preferred or non-preferred. States also have the option to establish different copayments for mail-order drugs than for those sold in pharmacies.\nDRA amended the SSA to permit increased Medicaid prescription drug cost-sharing for Medicaid beneficiaries. Prior to DRA, most FFS cost-sharing was limited to \"nominal\" copayments. DRA established two additional cost-sharing options for states. The first option allows states to establish cost-sharing that exceeds nominal amounts and to vary the cost-sharing among beneficiary classes and groups or by service types. The second option, which applies specifically to outpatient prescription drugs, allows states to require beneficiaries to pay higher copayments for state-identified non-preferred drugs and no, or reduced, copayments for preferred drugs. Table 15 displays the maximum copayments states may charge for preferred and non-preferred drugs.\nThe two cost-sharing options come with additional limitations. Besides the specifically exempted groups, cost-sharing cannot exceed 10% of the cost of the item or service for individuals with income between 100% of FPL and 150% of FPL and 20% of the cost of the item or service for individuals with an income over 150% of FPL. Annual aggregate cost-sharing for all Medicaid benefits cannot exceed 5% of family income. Medicaid beneficiaries can be denied services for non-payment of alternative cost-sharing.",
"Some states manage drug costs through the use of PBMs. Many private insurers, including those that provide coverage to federal employees under the Federal Employees Health Benefits Program (FEHBP), contract with PBMs for drug benefits management and claims payment. PBMs enable insurers to obtain discounts for pharmaceuticals that would not otherwise be available to single insurers because the PBMs administer multiple insurers' covered populations. In addition, PBMs sometimes provide administrative services intended to improve quality and control costs, such as retail pharmacy network development, mail-order pharmacy operation, formulary development, manufacturer rebate negotiation, and prescription checks for adverse drug interactions. PBMs administer a substantial portion of private health insurance prescription drug benefits and are employed by some states to administer Medicaid drug benefits, often through managed care arrangements.",
"The Medicaid rebate program was authorized by Omnibus Budget Reconciliation Act of 1990 (OBRA90, P.L. 101-508 ), then amended in 1992 by the Veterans Health Care Act of 1992 ( P.L. 102-585 ). After 1992, there were few federal statutory changes to Medicaid prescription drug pricing until 2003, when the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA, P.L. 108-173 ) was passed. MMA was the first of five laws that reshaped Medicaid drug pricing policy. These changes had a number of goals, such as increasing the amount of rebates collected by states and the federal government and strengthening the ability of states and federal policy makers to monitor and enforce compliance. A number of recent changes were made to improve or revise earlier amendments that did not achieve the desired results.\nPrescription drug policies are complicated in part because it is hard to isolate the effects of changes in a dynamic market with many private purchasers and sellers. For Medicaid, prescription drug rebates and pricing changes are further complicated because each state has some discretion in how changes are implemented and enforced. This section provides a discussion of major legislative changes to Medicaid prescription drug pricing and rebates. Table 16 displays a summary of major laws with Medicaid drug pricing provisions.",
"Omnibus Budget Reconciliation Act of 1990 (OBRA90, P.L. 101-508 ) established the Medicaid drug rebate program, which assured Medicaid programs would receive the best price. OBRA90 required drug manufacturers that wanted to sell their drugs to Medicaid enrollees to enter into rebate agreements with the Secretary on behalf of the states. Under the agreements, pharmaceutical manufacturers must provide Medicaid programs with rebates on drugs purchased for Medicaid beneficiaries. Under the terms of the rebate agreements, manufacturers had to give state Medicaid agencies either their best price or a rebate.\nAfter OBRA90 was passed, federal law enabled Medicaid agencies and the federal government to purchase prescription drugs at the lowest market price (best price). An unintended consequence was that certain public health programs, the Department of Veteran's Health Affairs (VHA), the Department of Defense (DOD), and the Public Health Service (PHS) faced sharply higher drug prices. Because Medicaid best price requirements, if pharmaceutical companies gave the DOD, VHA, and PHS providers lower prices, then drug companies would be obligated to sell those products to Medicaid at that same lowest price. Although the percentages of drug manufacturer sales to DOD, PHS programs, and VHA were small, Medicaid accounted for about 12% overall drug sales. Thus, after 1990, when the Medicaid best price provision was implemented, drug manufacturers substantially increased prices to DOD, VHA, and PHS providers.\nCongress corrected the oversight by passing the Veterans Health Care Act of 1992 (VHCA, P.L. 102-585 ). VHCA amended the SSA to exclude certain sales at nominal prices from the Medicaid best price determination and the Medicaid rebate calculation.",
"Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA, P.L. 108-173 ) implemented many prescription drug and other Medicare program changes, but the most far-reaching was the addition of the voluntary outpatient prescription drug benefit for Medicare beneficiaries, Part D. MMA also had an important Medicaid provision that moved outpatient drug coverage for full benefit dual eligibles from Medicaid to Medicare Part D. Although Medicare Part D assumed coverage and payment for dual eligible beneficiaries, MMA contained a maintenance-of-effort provision that required states to continue to pay the majority of dual eligibles' prescription drug costs. In addition, MMA revised the AMP definition to exclude sales to Medicare Part D drug sponsors (Part D plans) in determining AMP.",
"DRA made a number of changes to Medicaid drug policies. One of these changes was modifying the formula for setting multiple source drug FULs. DRA Section 6001 required the Secretary to use a new formula for multiple source drug FULs beginning January 1, 2007. The new FUL formula was to equal 250% of the AMP of the least costly therapeutic equivalent. AMP was defined under DRA to be the average price paid to the manufacturer by wholesalers for drugs distributed to the retail pharmacy class of trade.\nBefore the new DRA FUL formula could be implemented, two national pharmacy associations filed a complaint challenging the DRA's FUL proposed rule on the ground that the new FULs would generally be below community pharmacies' drug acquisition costs. The court issued a preliminary injunction in December 2007 that prohibited CMS from setting FULs for Medicaid covered generic drugs based on AMP, and from disclosing AMP data except within HHS or to the Department of Justice. The court's 2007 injunction was for an indefinite period and was in place when ACA became law on March 23, 2010, but has since been lifted. CMS lacked authority to use the pre-DRA formula, which expired September 30, 2009, for setting FULs, and CMS also was unable to use the DRA authority because it was prohibited by the Medicare Improvements for Patients and Providers Act of 2010 (MIPPA, P.L. 110-275 ). Just before the MIPPA-authority for using pre-DRA FULs expired on September 30, 2009, CMS issued FULs. The FULs in place now were set in September 2009.\nIn addition, DRA made the following changes:\nreduced the required number of multiple source products rated by the FDA as therapeutic and pharmaceutically equivalent from three to two; required manufacturers to report AMP to HHS; permitted the Secretary to contract for a retail drug price survey that would allow estimation of a nationwide average consumer drug price, net of all discounts and rebates; disclosed AMP to states and the public; revised the AMP definition; and required states to collect and submit data on physician administered drugs.",
"MIPPA Section 203 required the Secretary to use the pre-DRA FUL formula for setting federal multiple source drug reimbursement through September 30, 2009. The pre-DRA FUL formula was in effect prior to December 31, 2006. Under this formula, FULs were set at 150% of published prices for the least costly therapeutic equivalent. In addition, the Secretary was prohibited from making AMP prices publicly available prior to September 30, 2009.",
"American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) Section 5001 temporarily protected states from FMAP decreases and increased federal matching rates for the recession period. ARRA defined the recession period for the FMAP increase as the period that began with the first quarter of FY2009 (October 1, 2008) and ended with the first quarter of FY2011 (December 31, 2010). During the recession period, states were held harmless from FMAP declines and all states received an across-the-board 6.2 percentage point increase. In addition, certain qualifying states received an additional unemployment-related increase. The Secretary determined that state MOE requirements under MMA for dual eligible drug expenditures were subject to the temporary FMAP increase. The ARRA temporary FMAP increase was extended for an additional two quarters (until June 30, 2011) by the Education, Jobs and Medicaid Assistance Act (EJMAA, P.L. 111-226 ).",
"Beginning January 1, 2010, with certain exceptions, ACA Section 2501 increased the flat rebate percentage used to calculate Medicaid's basic rebate for single source and innovator multiple source outpatient prescription drugs from 15.1% to 23.1% of AMP. The basic rebate percentage for multiple-source, non-innovator, and all other drugs was increased from 11% to 13% of AMP.\nACA also required the Secretary to recover the additional funds states received from drug manufacturers from increases in the basic Medicaid rebates. The Secretary is authorized to reduce Medicaid payments to states for the additional prescription drug rebates that resulted from increases in the minimum rebate percentages—the difference between 15.1% of AMP and 23.1% of AMP for single source products and the difference between 11% and 13% for generic products. ACA requires the Secretary to estimate the additional rebate amounts to recover from states based on utilization and other data. In addition, when it is determined that the recovered amount from a state for a previous quarter under-estimated the actual rebate amount (state share) the Secretary is required to make further adjustments to recover the additional rebates from states. These state payment reductions are considered overpayments to the state and offset against states' regular Medicaid draw, similar to other overpayments. They are not subject to reconsideration.\nMoreover, ACA required drug manufacturers to pay rebates to states on drugs dispensed to Medicaid beneficiaries who received care through Medicaid managed care plans, similar to the way rebates are required under previous law for FFS beneficiaries. Medicaid capitation rates paid by states to managed care plans were to be adjusted to include these rebates. Medicaid managed care plans are subject to additional reporting requirements such as submitting data to states on the total number of units of each dose, strength, and package size by National Drug Code (NDC) for each covered outpatient drug. Medicaid managed care plans can use formularies as long as there are exception processes so that excluded drugs are available through a prior authorization process.\nWith certain exceptions, ACA required that additional rebates for new formulations of single source or innovator multiple source drugs, which are referred to as line extensions . Essentially, the additional (inflation) rebates for line extensions products were to be calculated as if the product was the original product. In this way the additional (inflation) rebates is the greater of the basic rebate for new products or the AMP of the new drug multiplied by highest additional (inflation) rebate for any strength of the original product (calculated for each dose and strength of the product). However, ACA limited the total rebate liability for each dosage form and strength of an individual single source or innovator multiple source drug to no more than 100% of that drug's AMP. Other features of the drug rebate program, such as Medicaid's best price requirement, were unchanged by ACA. ACA was amended before it was enacted to clarify that the calculation of the additional rebate for new formulations of existing drugs (line extensions) applied to single source or innovator multiple source drugs only in oral solid dosage forms.\nACA Section 2502 required that smoking cessation drugs, barbiturates, and benzodiazepines be removed from Medicaid's excluded drug list. When this provision took effect beginning January 1, 2014, states that covered prescription drugs were required to cover barbiturates, benzodiazepines, and smoking cessation products for most Medicaid beneficiaries.\nACA Section 2503 amended Medicaid law to require the Secretary to establish multiple source drug FULs at 175% or more of the weighted average (determined on the basis of utilization) of the most recently reported monthly AMPs. ACA restored the pre-DRA definition of multiple source drugs as at least three therapeutic and pharmaceutically equivalent products. ACA also included technical changes to the FUL formula, such as a smoothing process to reduce short-term volatility, and clarified that AMP excludes the following:\ncustomary prompt pay discounts to wholesalers; bona fide service fees paid by manufacturers to wholesalers and RCPs, such as distribution service fees, inventory management fees, product stocking allowances, and administrative services agreements and patient care programs (medication compliance and patient education programs); reimbursement by manufacturers for recalled, damaged, expired, or unsaleable returned goods; and payments received from, and rebates or discounts to, large purchasers such as PBMs, managed care plans, health maintenance organizations, insurers, hospitals, clinics, mail-order pharmacies, long-term care providers, manufacturers, or any other entity that does not conduct business as a wholesaler or a RCP.\nACA Section 2503 modified the AMP definition further by replacing the retail class of trade terminology with RCPs. This change excluded from drug manufacturers' AMP calculation sales to many non-traditional retail outlets, such as mail order, nursing homes, LTC pharmacies, and PBMs. Excluding drug sales through these outlets from the AMP calculation had the effect of raising AMP, thus increasing Medicaid rebates. Moreover, ACA revised the definition of a multiple source drug from one marketed in a state during the rebate period to a product marketed or sold during the rebate period in the United States. ACA expanded drug pricing disclosure requirements to include monthly weighted average AMPs and retail survey prices. Manufacturers are required to report within 30 days of the end of each month of a rebate period the total number of units sold and used by the manufacturer to calculate the AMP for each covered outpatient drug.",
"EJMAA Section 202 amended ACA to include in AMP sales of 5i drugs that generally are not dispensed through retail community pharmacies. This amendment was a technical change to ACA that was made to ensure that AMPs could be calculated and Medicaid rebates could be collected from manufacturers for the 5i drugs even though these products are not typically sold by RCPs.",
"This section discusses the following two Medicaid prescription drug issues: (1) new drug prices and (2) the pending final rule implementing ACA changes.",
"The rising cost of new drugs has been an issue in the past and recently has re-emerged with many groups discussing why drug prices are so high and what can be done to control new drug prices. After a period of relatively few new drugs coming to market, drug manufacturers' pipelines are filling and there could be a surge in new drugs coming to market. Many of the new drugs will be biologic products and some or many of these products will be costly. As a result, concern about rising drugs prices might only be beginning. This section briefly discusses the process for setting new drug prices and then discusses Sovaldi, a new drug launched in 2014, and how Medicaid drug pricing will affect Sovaldi and possibly other new drugs.\nWhen drug manufacturers launch new single source drug products, they determine a product's price and generally are not subject to statutory or regulatory limits in setting drug prices. In 2013, FDA approved 27 new molecular entities; in 2012, it approved 39. A number of these newly introduced drugs are expensive, and potentially many more are anticipated. And higher initial prices do not preclude manufacturers from raising prices further after the drugs are launched.\nMany organizations, patient groups, Members of Congress, insurers, and individuals are concerned about prescription drug costs. Even going back to the 1990s, when costly antiviral drugs were introduced to treat human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS), there was considerable concern in Medicaid programs about states' ability to pay for these new drugs. In 2009, GAO published a report that found that drug manufacturers substantially increased prices for certain brand-name drugs from 2000 to 2008. GAO attributed the extraordinary price increases to a number of factors, including lack of good therapeutic alternatives, industry consolidation, and unusual events such as key ingredient supply and manufacturing disruptions. Recently, the topic of excessive new drug costs reemerged accompanying the launch of a new, more effective drug for treating hepatitis C virus (HCV), a liver infection. Pharmaceutical manufacturer Gilead Sciences, Inc. (Gilead) received FDA approval to market Sofobuvir under the brand-name Sovaldi in December 2013 for the treatment of chronic HCV infection. Sovaldi's reported list price is approximately $84,000 for a standard 12-week treatment. Patients can require up to 24 weeks of treatment, and it is usually taken in combination with other drugs, pushing the price above $160,000. In October 2014, the FDA approved a second Gilead drug for treating HCV infections, Ledipasvir/Sofosbuvir, marketed under the brand-name Harvoni ® . Gilead set Harvoni's price at approximately $1,125 per pill, which would result in a cost of about $95,000 for a 12-week treatment course.\nGilead's new HCV drugs, Sovaldi and Harvoni, are unquestionably expensive, but other.\nHowever, the Sovaldi product launch may differ from the launch of other drugs for the following reasons: shortage of good therapeutic alternatives, increased awareness of HCV prevalence, improved screening, and, in anticipation of Sovaldi's launch, a backlog of HCV positive individuals who needed treatment. Because many other new drugs, such as cancer drugs, replace an existing product, new cases are diagnosed gradually and a backlog of cases is unusual. With Sovaldi, many cases were already diagnosed, so there may have been considerable pent-up treatment demand. This surge for HCV treatment put added financial pressure on all payers but proved particularly heavy for Medicaid and Medicare, which cover many HCV positive individuals and differ from the more gradual financial effect of other expensive drugs that recently have come to market.\nIn addition, the timing of Sovaldi's FDA approval and introduction might have contributed to the financial hardship Sovaldi is creating for Medicaid. Sovaldi was approved by the FDA in early December 2013. Because Sovaldi was approved as a breakthrough drug it received fast-track review, which shortened the review time and left less time for payers to become aware of the drug and make contract adjustments or otherwise plan for increased costs. Although December is within the federal fiscal year's first quarter, it is very late in the planning cycle for most health insurance contracts, which follow a calendar year. Medicaid managed care plans, Medicare Part D drug plans, and Medicare Part C plans may have been caught off guard by Sovaldi's early December launch. Moreover, state budgets that would provide state Medicaid matching funds for drugs purchased for Medicaid FFS beneficiaries were well past the budget planning cycle for the current state fiscal year. Medicaid programs cover Sovaldi, and as an entitlement the program would need to find fiscal resources whether or not the state had considered the cost when preparing the state's Medicaid budget estimate.\nPublic health care programs, particularly Medicaid, might be more vulnerable to high prices for new drugs than private payers because cost-sharing generally is nominal and coverage is broad, but all payers experience additional costs. Members of Congress have raised concerns about the effect of these new drug treatments on federal and state budgets and the process drug makers use in setting new drug prices. Medicaid and other private organizations have raised similar concerns about Sovaldi's cost to both federal and state governments. In addition to concerns about Sovaldi, private insurers and professional associations have noted the financial impact of high drug prices in general.",
"Gilead participates in the Medicaid rebate program, so Sovaldi is a covered drug. Similar to established single source drugs, Medicaid agencies that purchase Sovaldi for covered FFS beneficiaries will receive the basic Medicaid rebate for their drug purchases, which is the greater of the drug's best price minus AMP or 23.1% of the product's AMP. The rebate is split between the federal government and states based on the FMAP rate for part of the rebate, and the remainder goes the federal government. As a new product, Gilead will report Sovaldi's base-period AMP on the basis of sales from the first full calendar quarter after the launch date. Also, Gilead will not owe additional Medicaid (inflation) rebates because Sovaldi is new and will not have had price increases greater than inflation until at least after the base-period AMP is established. If, or when, Sovaldi's price increases faster than its base-period AMP adjusted for inflation, then Gilead will owe an additional rebate. The additional rebate also is shared by federal and state governments. When Sovaldi is provided to Medicaid beneficiaries by managed care plans, Gilead would be obligated to pay the basic rebate for those purchases, and the additional Medicaid rebate would be applicable if or when Gilead raised prices faster the inflation adjusted base-period AMP.\nIn the short term, Medicaid rebates will help to offset some of the initial cost of treating HCV-positive Medicaid beneficiaries, but Medicaid programs anticipate substantial budget effects. In the longer-term, Medicaid's cost for Sovaldi may decrease through competition from other new therapeutically equivalent products. Other drug makers have new drugs in late-stage development that have shown promise in treating HCV. If some of these other new drugs are approved, Medicaid programs will be able to negotiate with all drug manufacturers that offer HCV products to get better deals on HCV drugs. In FFS Medicaid, when competing products come to market state programs may be able to negotiate SRAs for therapeutically comparable products by offering to list one company's drug on the state PDL, essentially guaranteeing that company most sales for HVC drugs. Medicaid managed care plans also may be able to negotiate discounts when competing products come to market, either individually or through PBMs. In addition, in some situations, individual and combined multi-state purchasing pools can further increase states' leverage in negotiating additional manufacturer price concessions. Once competition is available, even though other manufacturers may price their drugs comparably to Sovaldi, Medicaid programs will be able to use PDLs and other techniques to help reduce their Sovaldi expenditures. Even before competition from other products is available, states may limit access to Sovaldi by requiring that it be used only in limited situations, such as when a beneficiary is free from drug use or when they have advanced disease.",
"Gilead's process for determining the launch price for Sovaldi is not public information. In setting prices, drug manufacturers may consider the costs their new products would offset. Would a chemotherapy drug extend a patient's life a few months or potentially cure the cancer? Would the drug diminish the likelihood of the need for surgery or, in Sovaldi's case, the need for liver transplants in some cases? If the need for liver transplants were significantly reduced, an expensive, even very expensive, drug might save the health system considerable money. Some drug industry executives attribute high drug prices to how the health care industry pays for services and supplies rather than to drug companies attempting to maximize revenue and profit.\nMedicaid's drug pricing policies might also contribute to new drug price escalation, particularly for a drug such as Sovaldi that potentially will treat many Medicaid beneficiaries. Medicaid's two-tiered rebate, with a basic rebate and an additional inflation rebate, might indirectly encourage manufacturers to set higher launch prices to offset or recover the cost of Medicaid rebates by reducing the Medicaid inflation rebate. For a drug like Sovaldi, for which there is little therapeutic competition and there may be some or considerable pent up demand, a high launch price that builds in some future period price increases might reduce a manufacturer's additional rebate obligations. At launch, the manufacturer has the market to itself. If it did not raise prices, or raised prices modestly, the manufacturer would avoid most or all of Medicaid's additional inflation rebate. As the backlog of cases decreased and other new drugs came to market, competition would increase and Sovaldi might have to make price concessions to maintain its market position. At that point, Gilead might begin to raise prices much faster, which would provide negotiation room for making price concessions to states through supplemental rebates without reducing profit margins. If the drug manufacturer had not raised Sovaldi's price much while it did not have competition, when new substitute drugs came to market Gilead would have built up some room in its price for Sovaldi for inflation adjustments that it could use before triggering the inflation rebate. Whether or not drug makers are concerned about recovering Medicaid's inflation rebate or some of all Medicaid rebates is unclear, but a high launch price when there are few competing products may carry few risks for drug manufacturers.",
"CMS published an extensive Medicaid drug rebate (MDR) program proposed rule in February 2012 that offered regulatory guidance on the implementation of ACA's Medicaid prescription drug changes. A final rule is pending but anticipated in 2015. Overall, the proposed rule offers substantial guidance to manufacturers and Medicaid programs on how CMS planned to interpret ACA's statutory changes. CMS sought industry comment on a number of issues, so it is unclear how closely a final rule will follow the proposed rule's guidance. The rule proposed modifying the Code of Federal Regulations sections to implement the Medicaid drug changes required in ACA Sections 2501, 2503, 3301, 1101, and 1206. Table 17 identifies regulations that CMS proposed to modify or create in implementing the ACA changes.\nIn the proposed rule, CMS requested comments from industry on a number of issues. CMS proposed to clarify its existing guidance on a number of issues, such as the definitions section. Many of the proposed changes were intended to clarify existing rules to enhance consistency among drug manufacturers and Medicaid programs. Other proposed changes sought to more closely align CMS's policy with existing FDA drug guidance. CMS also proposed substantial changes to AMP and best price that were aimed at assisting manufacturers in computing and reporting these prices consistently. Although the proposed rule changes were extensive, only the following three new sections were added to the CFR subpart: Identification of 5i Drugs (42 CFR §§447.504(d) and 447.507), Medicaid Drug Rebate (42 CFR §447.509), and Requirements for States (42 CFR §447.511). A potential major change would be the inclusion of territories as states, which would require territory Medicaid programs to comply with all the state MDR program requirements. CMS estimated that states and the federal government would save $17.7 billion over five years from implementation of the proposed changes ($13.7 billion to the federal government and $4 billion to the states). CMS also estimated that drug manufacturers, states, and managed care plans would incur about $81.4 million in costs over the period FY2010-FY2012 in implementing the changes.",
"In general, FFS rebates have been effective in helping to control Medicaid FFS drug expenditures. Overall, FFS outpatient drug expenditures have decreased and Medicaid is able to buy drugs for lower prices than Medicare Part D plans and most other federal programs. Congress has been instrumental in establishing Medicaid drug authority to ensure Medicaid pays some of the lowest prescription drug prices. Congress authorized creation of the infrastructure to manage, monitor, and enforce prescription drug pricing. Congress also extended authority for Medicaid to receive rebates on drugs provided to beneficiaries in managed care, and this has resulted in the rapid movement of prescription drug coverage from FFS Medicaid to Medicaid managed care. The percentage of FFS prescription drug claims has fallen from approximately 10% in 2010 to less than 50% in 2013.\nThe movement of prescription drug coverage from FFS to managed care plans could make oversight of the Medicaid prescription drug benefit more difficult. States will be able to collect rebates under managed care contracts, although it is unclear how state supplemental rebates will align with managed care plan (or, more likely, PBM) negotiations with drug wholesalers and manufacturers. Under managed care contracts, states generally delegate some or all DUR and program integrity oversight to managed care plans. Will states be able to conduct DUR and appropriate monitoring comparable to FFS drug benefits? If states and the federal government already procure drugs at some of the best prices, will it be possible for managed care plans and their subcontractor PBMs to reduce costs further? Or will savings come from creating obstacles to beneficiaries receiving covered drugs through utilization controls?\nAppendix A. FY2012 State FFS Drug Claims\nAppendix B. FY2012 FFS Drug Paymemt\nAppendix C. Medicaid FFS Prescription Drug Claims\nAppendix D. State Generic Prescribing Rates\nAppendix E. Glossary: Medicaid Drug Terms"
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{
"question": [
"What is Medicaid?",
"How does Medicaid treat prescription drugs?",
"What is the relationship between federal rules and prescription drug coverage?",
"How does Medicaid interact with pharmaceutical manufacturers?",
"How does Medicaid law determine the rebate?",
"What comprises the rebate for the first category?",
"How do states negotiate supplemental rebates?",
"How have Medicaid FFS drug expenditures changed?",
"How did different types of rebates compare?",
"Why were these changes offset?",
"Why do state Medicaid programs pay the majority of dual eligible drug costs?",
"How did statutory changes affect rebate collections?",
"What else caused the decline in Medicate drug expenditures?",
"What is Sovaldi?",
"What is the cost of Solvaldi?",
"How will Medicaid deal with this high cost?",
"How will rebates affect the drug market?"
],
"summary": [
"Medicaid is a federal-state entitlement program that pays for health care and related services on behalf of certain low-income individuals.",
"Prescription drugs are an optional Medicaid benefit and all states cover outpatient drugs.",
"States can create formularies, or lists of preferred drugs, but federal rules tend to result in comprehensive coverage, even for beneficiaries enrolled in Medicaid managed care plans.",
"Pharmaceutical manufacturers that voluntarily participate in Medicaid are required to pay rebates to states on covered outpatient drugs, which help Medicaid receive manufacturers' lowest or best price. States then share the rebate they receive from pharmaceutical manufacturers with the federal government.",
"In determining the amount of rebate, Medicaid law distinguishes between the following two drug types: (1) single source drugs (brand-name drugs) and innovator multiple source drugs (brand-name drugs that now have generic competition); and (2) all other, non-innovator, multiple source (generic) drugs.",
"Rebates for the first category of drugs—drugs still under patent or those once covered by patents—have two components: a basic rebate and an additional rebate.",
"In addition to basic and additional rebates, most states negotiate supplemental rebates with drug manufacturers, by offering to encourage use of a manufacturer's product in exchange for a price concession (rebate).",
"In FY2005, Medicaid fee-for-service (FFS) drug expenditures were approximately $43.1 billion, but by FY2013 had decreased to $19.8 billion.",
"Over the same period, Medicaid FFS drug rebate collections were at about the same level ($12.4 billion), but managed care rebate collections increased substantially to about $4.8 billion in FY2013.",
"The decreases in Medicaid FFS drug expenditures and the increases in rebate collections were mostly offset by at least the following other factors or trends: (1) Beginning January 1, 2006, prescription drug coverage of individuals eligible for both Medicare and Medicaid (dual eligibles) was moved from Medicaid to Medicare Part D, which resulted in substantially reduced Medicaid FFS drug spending.",
"Due to maintenance of effort requirements, state Medicaid programs continue to pay the vast majority of dual eligible drug costs, even though those expenditures are not counted as drug spending.",
"(2) Statutory changes helped to increased rebate collections by extending rebates to Medicaid enrollees covered by managed care plans and increasing the amount of rebates owed by drug companies.",
"(3) The loss of patent protection for a number of commonly prescribed drugs further contributed to decreasing Medicaid drug expenditures. And (4) the rapid shift in enrollment of beneficiaries to managed care plans that cover prescription drugs.",
"In December 2013, Sovaldi®, a new brand-name drug, was approved by the Food and Drug Administration for treatment of hepatitis virus C (HVC) infections.",
"Sovaldi is estimated to cost $1,000 per pill, and total treatment cost estimates range from $84,000 to more than $168,000.",
"The rebates states and the federal government receive will help reduce Medicaid's Sovaldi expenditures, but until other equivalent drugs are available to increase competition, states may have limited leverage to negotiate additional manufacturer price concessions.",
"Medicaid rebates, however, while buffering the cost of prescription drugs, might also contribute to drug manufacturers setting increasingly higher launch prices."
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CRS_RL31630
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{
"title": [
"",
"Overview of Noncitizen Eligibility for Medicaid Benefits",
"Emergency Medicaid",
"Funding for Emergency Services Prior to P.L. 108-173",
"Balanced Budget Act (BBA) of 1997",
"Estimated Total Cost",
"GAO Study",
"Reimbursement of Certain Emergency Medical Expenses",
"Reimbursement for Emergency Ambulance Services",
"Disproportionate Share Hospital (DSH) Payments",
"Legislation in the 107th Congress",
"Legislation in the 108th Congress",
"Enacted Legislation",
"P.L. 108-173",
"CMS Policy Paper on Implementing Section 1011 of P.L. 108-173",
"H.Rept. 108-10",
"Other Legislation",
"S. 412/H.R. 819",
"H.R. 690",
"H.R. 1515",
"H.R. 3722",
"H.R. 4360",
"H.Amdt. 737",
"Issues",
"Appendix. Preliminary State Allocations Under Section 1011: Federal Reimbursement of Emergency Health Services Furnished to Unauthorized Aliens"
],
"paragraphs": [
"The growth of the unauthorized (also called illegal or undocumented) alien population during the 1990s coupled with changes in the distribution of the population within the United States has increased interest in funding of emergency medical treatment for this population. Although unauthorized aliens are ineligible for most federal means-tested programs, all aliens regardless of status are eligible for emergency Medicaid. Statute requires that all Medicare-participating hospitals with emergency departments treat all medically unstable patients and women in active labor.\nBetween FY2001 and FY2004, there were no other federal funds available for the specific purpose of reimbursing hospitals or states for emergency medical care provided to unauthorized aliens. On December 8, 2003 the President signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ( P.L. 108-173 ) which contains a provision to provide reimbursement to states for emergency care afforded to unauthorized aliens. Additionally it is extremely difficult to ascertain the amount of money spent for emergency medical care for unauthorized aliens since most hospitals do not ask patients their immigration status.",
"Currently, noncitizens' eligibility for federal Medicaid benefits largely depends on their immigration status and whether they arrived (or were on a program's rolls) before August 22, 1996, the enactment date of Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). Legal permanent residents (LPRs) entering after August 22, 1996, are barred from Medicaid for five years, after which coverage becomes a state option. States have the option to use state funds to provide medical coverage for LPRs within five years of their arrival in the United States. Refugees and asylees are eligible for Medicaid for seven years after arrival. After the seven years, they may be eligible for Medicaid at state option. LPRs with a substantial (10-year) work history or a military connection are eligible for Medicaid. LPRs receiving Supplemental Security Income (SSI) on or after August 22, 1996 are eligible for Medicaid since Medicaid coverage is required for all SSI recipients. Finally, in the case of LPRs sponsored for admission after 1997, the income and resources of their sponsor are \"deemed\" available to them when judging their eligibility. Nonetheless, all aliens regardless of status who otherwise meet the eligibility requirements for Medicaid are eligible for emergency Medicaid.",
"The Medicaid program is authorized by Title XIX of the Social Security Act, as amended. It is a federal/state matching program of medical assistance for low-income persons who are aged, blind, disabled or members of families with dependent children. Generally, as noted above, noncitizens face additional eligibility restrictions for Medicaid. In general, unauthorized aliens are ineligible for Medicaid with the exception of emergency Medicaid. Emergency Medicaid covers unauthorized aliens, nonimmigrants, and LPRs within the first five years of arrival for emergency conditions if they meet the other eligibility requirements of the program.\nUnauthorized aliens who are otherwise eligible for Medicaid except for their illegal status may receive \"medical assistance under Title XIX of the Social Security Act ... for care and emergency services that are necessary for the treatment of an emergency medical condition (as defined in Section 1903(v)(3) of such Act) of the alien involved and are not related to an organ transplant procedure.\" This language from the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 restates and carries forward a provision which had been enacted 10 years previously as an amendment to the Medicaid provisions of the Social Security Act.\nSection 1903(v)(3) defines \"emergency medical condition\" as:\na medical condition (including emergency labor and delivery) manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in—(A) placing the patient's health in serious jeopardy, (B) serious impairment to bodily functions, or (C) serious dysfunction of any bodily organ or part.\nLike other Medicaid recipients, unauthorized aliens must demonstrate that they are state residents, and many are not (or are unable or unwilling to prove that they are). This is particularly true of unauthorized aliens requiring emergency hospital care during attempted illegal entries. To be eligible for emergency Medicaid, unauthorized aliens must also be poor and either aged, disabled, or members of a family with children. Working age single males, for example, are generally not eligible for any form of Medicaid regardless of their financial status or residence.",
"",
"The reimbursement provision in P.L. 108-173 is similar to a provision in the Balanced Budget Act (BBA) of 1997 which appropriated $25 million each year, FY1998 through FY2001, for additional funding for state emergency health services for unauthorized aliens. The BBA specified that the funds should be divided among the 12 states with the highest number of unauthorized aliens, based on estimates provided by the former Immigration and Naturalization Service (INS). The money was allocated to each state based on the number of unauthorized aliens in the state as a percent of the unauthorized population of all 12 states.\nAccording to a notice published in the Federal Register by HHS's Centers for Medicare and Medicaid Services (CMS), the funds were available to eligible states for both \"emergency medical services furnished to unauthorized aliens who, except for their alien status, would otherwise qualify for Medicaid and for amounts paid for services furnished to aliens who do not meet the Medicaid eligibility requirements.\" The emergency medical services covered were those defined by the Social Security Act, §1903(v)(3), quoted above. The notice included a table designating the 12 eligible states and their designated yearly allotments based on INS's estimates of their unauthorized alien population ( Table 1 ).\nTable 1 shows that 45% of the money appropriated in the Balanced Budget Act of 1997 for emergency services for unauthorized aliens was allocated to California which had 45% of the total unauthorized population of the 12 states. In addition, 89% of the total funding was allocated to the five states with the highest number of unauthorized aliens.",
"The total cost incurred by the states for unauthorized aliens is often an issue since many contend that immigration, especially border control, is solely a federal issue. The federal government is wholly responsible for establishing immigration policy, and for policing the borders to keep out unauthorized aliens. Thus, some argue that the burden to pay for immigration related cost should be born by the federal government not the states. However, others note that the provisions in PRWORA which limited immigrant access to public benefits were the result of a desire that immigrants be self-sufficient and not rely on public resources to meet their needs. Additionally, proponents of the provisions in PRWORA did not want the availability of public benefits to constitute an incentive for immigrants to migrate to the United States.\nCMS collected data from the 12 states with the highest number of unauthorized aliens on their total expenditures on emergency medical expenses for unauthorized aliens. Table 2 shows total emergency health service costs for unauthorized aliens, including both emergency Medicaid and expenditures on emergency services for individuals who did not meet the Medicaid eligibility requirements. It is important to note that these costs are reported by the states, and different states use different accounting procedures. It is unlikely, for example, that New Jersey and Washington spent no money on emergency services for unauthorized aliens.\nThe data shown in Table 2 are the closest approximation available of the cost of emergency services for unauthorized aliens. With the caveats that the data reflect emergency services as defined by Medicaid and that differences in the percent paid by states may be the result of state differences in accounting procedures, the data show for those reporting both federal and state shares that the federal government pays more than half the cost of emergency services for unauthorized aliens. California, the most heavily impacted state, reported that 53% of its emergency costs for unauthorized aliens was reimbursed by the federal government. Maryland reported that 50.1% of its emergency cost was reimbursed, which is the smallest proportion of the states that reported both federal and state shares.",
"In May 2004, the Government Accountability Office (formerly General Accounting Office) (GAO) released a study entitled Undocumented Aliens: Questions Persist about Their Impact on Hospitals ' Uncompensated Care Costs . The study concluded that since hospitals do not generally collect information on patients' immigration status, an accurate assessment of the impact of unauthorized aliens on hospitals' uncompensated care costs \"remains elusive.\" GAO surveyed 503 hospitals, but as a result of the low response rate to the survey, was unable to determine the cost of uncompensated care provided to unauthorized aliens. In addition, over 95% of the hospitals which responded to the survey used the lack of a Social Security number as the only method to identify unauthorized aliens. It is unclear whether this method over or under estimates the amount of care provided to unauthorized aliens.\nThe GAO study also reviewed the reported Medicaid spending for the 10 states with the highest estimated unauthorized populations: Arizona, California, Florida, Georgia, Illinois, New Jersey, New Mexico, New York, North Carolina, and Texas. Although states are not required to report to CMS the amount of Medicaid expenditures for unauthorized aliens, several states provided data or suggested to GAO that most of their emergency Medicaid expenditures were for services provided to unauthorized aliens. In addition, five of the states reported that more than half of emergency Medicaid expenditures were for labor and delivery services.\nGAO found that emergency Medicaid expenditures for the 10 states have increased over the past several years but remain a small proportion, less than three percent, of each state's total Medicaid expenditures. Nonetheless, the study found that, between FY2000 and FY2002, in nine of the 10 states reviewed the state's emergency Medicaid expenditures grew faster than the total Medicaid expenditures.",
"In addition, the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996 authorized reimbursement of public hospitals and certain nonprofit hospitals for emergency medical assistance to unauthorized aliens. The provision, which is to be administered by the Attorney General in consultation with the Secretary of HHS, has not been implemented to date. The funding is subject to a number of restrictions, as follows:\nFunding is \"subject to such amounts as are provided in advance in appropriation Acts.\" To date no funds have been appropriated. Funds are available for reimbursement \"only to the extent that such costs are not otherwise reimbursed through any other Federal program.\" No payment can be made \"with respect to services furnished to an individual unless the immigration status of the individual has been verified through appropriate procedures\" established by the Secretary of HHS and the Attorney General.\nObviously, the lack of an appropriation has been the primary impediment to the implementation of this provision. However, according to HHS and former INS officials, the other restrictions would also pose difficulties. First, it is difficult to determine that no other federal funding exists, given the availability of other non-specific funding sources (e.g., Medicaid DSH payments, discussed below). Second and probably more seriously, there is no procedure for determining the immigration status of hospital patients.",
"IIRIRA also authorized reimbursement of state and local governments for emergency ambulance services provided aliens injured while crossing U.S. borders while in state custody. In 1997, the Conference Committee on the FY1998 Commerce, Justice, and State (CJS) Appropriations Act adopted the recommendation of the House Appropriations Committee for \"a pilot project for reimbursement for emergency ambulance services in Nogales, Arizona.\"\nThe Nogales pilot project began at the end of FY1998. A subsequent report to Congress on the feasibility of expanding the Nogales project, did not recommend expanding or continuing the project since the Border Patrol had to redirect enforcement resources to administer the reimbursement of ambulance costs. The report suggests that if Congress wants to create a program for reimbursement that it \"should develop a coordinated policy that includes the Department of Health and Human Services (HHS), State and local health services, and other authorities. We do not believe that under current law the HHS has the authority to reimburse States for this activity.\"",
"Although there is no Medicaid funding for the specific purpose of reimbursing hospitals for the cost of unauthorized aliens, the Medicaid statute requires that states make disproportionate share (DSH) adjustments to the payment rates of certain hospitals treating large numbers of low-income and Medicaid patients, including unauthorized aliens. These payments implicitly recognize the disadvantaged situation of hospitals treating large numbers of Medicaid patients and other patients with no insurance. States must define hospitals in their state Medicaid plans qualifying as DSH hospitals and the DSH payment formulas. However, the identification of unauthorized aliens among the Medicaid patients and uninsured as a component of either the DSH designation or payment formula is not required, and thus, there are no data on the amount of DSH payments used for unauthorized aliens.",
"There were several bills introduced in the 107 th Congress which would have created a grant program to provide additional funding to states for emergency health services for unauthorized aliens. These programs would have been similar to the one created in BBA97. Although none of the bills passed, the bills are similar to legislation that has been introduced in the 108 th Congress.\nS. 169 introduced by Senator Kyl on January 24, 2001, would have authorized $2 billion in each fiscal year FY2002-FY2005 to be divided among the 17 states with the highest number of unauthorized aliens. S. 2449 introduced by Senator Bingaman on May 2, 2002, would have appropriated $50 million in each fiscal year FY2003-FY2007 to be divided among the 15 states with the highest number of unauthorized aliens. The bill would have also amended PRWORA to allow states to use state funds to provide health benefits to all noncitizens regardless of immigration status. On June 24, 2002, during the Senate Finance Committee mark-up of the Work, Opportunity, and Responsibility for Kids (WORK) Act of 2002 (substitute H.R. 4737 ), Senator Kyl introduced an amendment that would have authorized additional funding to certain states to cover the emergency medical costs of treating unauthorized aliens. The measure was defeated.",
"",
"",
"Section 1011 of The Medicare Prescription Drug, Improvement and Modernization Act of 2003 ( P.L. 108-173 ) signed into law on December 8, 2003, provides reimbursement states for emergency care afforded to unauthorized aliens. For each fiscal year FY2005-FY2008 the provision appropriates $250 million of which:\n$167 million is allotted to states based on the percentage of unauthorized aliens residing in the state compared to the total number of unauthorized aliens in the United States; and $83 million is allocated to the six states with the highest percentage of unauthorized alien apprehensions for the fiscal year, based on the percentage of apprehensions in the state compared to the number of apprehensions for all such states.\nP.L. 108-173 directs the Secretary of Health and Human Services (HHS) to pay local governments, hospitals, or other providers located in the state (including providers of services rendered through an Indian Health Service facility) for the costs of furnishing emergency health care services to unauthorized aliens during that fiscal year. It also requires the Secretary of HHS to establish, no later than September 1, 2004, a process, including measures to protect against fraud and abuse, under which entities would apply for reimbursement for claims associated with emergency health care services provided to unauthorized aliens. Advanced payments will be made quarterly based on the applicants' projected expenditures. (See Appendix for the preliminary allocations under this provision.)",
"On July 21, 2004, CMS released a policy paper outlining the proposed implementation approach and general framework for submitting claims under Section 1011. The paper states that since the legal obligation to provide emergency treatment only applies to those hospitals participating in the Medicare program, that only Medicare participating hospitals can apply to receive funds under Section 1011. According to the CMS policy paper, the grant program would also cover ambulance transportation of an alien to a hospital to be treated for an emergency medical condition. CMS also requires that providers seek funds from all available funding sources before requesting payment under Section 1011. CMS proposes a single-payment pool for each state from which each provider in the state would receive payment on a quarterly or annual basis.\nThe CMS policy paper states that for payment under Section 1011, hospitals must collect and maintain information regarding the immigration status of the patients. CMS proposes that providers request information on a patient's citizenship or immigration status prior to discharge, but after the patient is identified as self-pay and not Medicaid eligible. Individual level immigration information would be maintained at the hospital and not routinely transmitted to CMS, as CMS would designate a contractor to review and determine the number of claims and the percentage of patients qualifying for reimbursement. CMS contends that this approach would minimally increase paperwork for hospitals, as much of the information can be gathered from existing Medicaid enrollment forms. Nothing in the paper suggests that the information should be transmitted to the Department of Homeland Security (DHS); however, some are concerned that DHS could use hospital records to locate unauthorized aliens, making aliens less likely to seek medical treatment. Reportedly, after receiving comments on the proposed implementation plan (i.e., the policy paper), CMS has revised the policy, and will not require providers to ask about a patient's immigration status to receive reimbursement under §1011.",
"In addition, the conference report for the Consolidated Appropriations Resolution, 2003 ( H.Rept. 108-10 ) instructs the former INS to provide a one-time payment to hospitals in Cochise, Pima, Santa Cruz, and Yuma Counties, Arizona for unreimbursed costs associated with treating unauthorized immigrants. The conferees directed the payment because they \"believe hospitals in Cochise, Pima, Santa Cruz and Yuma Counties, Arizona are bearing an unfair burden as a result of illegal immigrants injured as a result of interaction with the Border Patrol, ... [and that] this one-time funding infusion is appropriate until a nation-wide solution is developed in fiscal year 2003.\" The conferees also directed the former INS, in coordination with the Department of Health and Human Services, to provide a report by July 1, 2003 to the Committees on Appropriations with recommendations to address the issue of unreimbursed cost of treating unauthorized aliens.",
"",
"The \"Local Emergency Health Services Reimbursement Act of 2003\" ( S. 412 ) introduced by Senator Kyl on February 13, 2003, and its companion the companion bill ( H.R. 819 ) introduced by Representative Kolbe on February 26, 2003, are similar to Section 1011 in P.L. 108-173 . S. 412/H.R. 819 would appropriate $1.450 billion for each fiscal year FY2004 to FY2008 to reimburse states for emergency care to unauthorized aliens. Of the monies appropriated:\n$957,000,000 would be allotted to states based on the percentage of unauthorized aliens residing in the state compared to the total number of unauthorized aliens in the United States; $493,000,000 would be allocated to the six states with the highest percentage of unauthorized alien apprehensions for the fiscal year, based on the percentage of apprehensions in the state compared to the number of apprehensions for all such states.\nThe bills specify that monies paid to the states from this program may only be used to make payments for costs incurred by the provision of emergency health care to unauthorized aliens, and require the reallocation of unused funds.",
"H.R. 690 introduced by Representative Gutierrez on February 11, 2003 would extend medicaid coverage for organ transplants to aliens under the age of 18 who are residing in the United States on the date that the bill is enacted or who develop the medical condition necessitating the transplant while residing in the United States.",
"Representative Flake introduced H.R. 1515 on March 31, 2003. H.R. 1515 would provide reimbursement for the unreimbursed costs of emergency medical care to aliens paroled into the United States for medical reasons. The bill would direct the Secretary of the Department of Homeland Security to create a program to reimburse hospitals and other providers of emergency medical care (e.g., physicians and ambulance services) for care to aliens paroled into the country for medical reasons, and would authorized such sums as necessary for the program.",
"H.R. 3722 was brought to the floor under suspension of the rules on May 17, 2004. The vote to suspend the rules and pass H.R. 3722 occurred on May 18, 2004 at which time the motion was defeated 331 to 88. H.R. 3722 introduced by Representative Rohrabacher on January 21, 2004 would have amended §1011 of P.L. 108-173 to place certain conditions on the reimbursement to health care providers for emergency health services for unauthorized aliens. H.R. 3722 would have required as a condition of reimbursement that eligible providers obtain information on the alien's citizenship, immigration status, address in the United States, financial data which is required of non-indigent patients including health insurance status, and current employer in the United States (if applicable) as well as a biometric identifier. The bill would have also required that the health care provider submit the alien's information in an electronic format to the Secretary of Homeland Security. H.R. 3722 would have also made removable (deportable) aliens who do not provide payment for the provided health services, and do not give accurate information on the required questions or a biometric identifier.\nIn addition, H.R. 3722 would have made employers of unauthorized aliens for whom the hospital received financial reimbursement for medical services, liable to HHS for the amount of the payment with certain exceptions. Lastly, the bill would have required the Secretary of State to do a study on the appropriateness of negotiating treaties under which countries provide for the international medical evacuation of their nationals who require emergency health care in the United States and provide funding through visa surcharges to pay for the evacuation of nationals seeking emergency health care from countries without treaties.\nThose in favor of H.R. 3722 argued that the bill would not have forced hospitals to report unauthorized aliens as only those hospitals who wished to be reimbursed for medical expenses provided to unauthorized aliens would have had to send reports to DHS. Those opposed to the bill argued that the added paperwork would be burden to hospital staff, and would detract from their other duties.",
"Introduced on May 13, 2004 by Representative Jo Ann Davis, H.R. 4360 would make the grant program to provide reimbursement for emergency care afforded to unauthorized created in §1011 of The Prescription Drug Act ( P.L. 108-173 ) permanent in FY2009, and beginning in FY2009 would allocate $250 million from foreign aid funds to pay for the reimbursement.",
"This amendment was introduced by Representative Thomas Tancredo during floor debate on the FY2005 appropriations bill for the Departments of Labor, Health and Human Services, and Education, and Related Agencies ( H.R. 5006 ). The amendment would have prohibited CMS from using any appropriated funds to pay the salaries of personnel administering the grant program, created in Section 1011 of The Prescription Drug Act of 2003, which provides reimbursement for emergency care afforded to unauthorized aliens. The amendment failed by voice-vote.",
"There are several policy issues concerning the provision of federal funding for states with large populations of unauthorized aliens. As discussed above, the provisions in PRWORA which limited immigrant access to public benefits were the result of a desire that immigrants be self-sufficient and not rely on public resources to meet their needs. Additionally, proponents did not want the availability of public benefits to constitute an incentive for immigrants to migrate to the United States. Nonetheless, others argue that immigration is solely a federal issue. The federal government is wholly responsible for establishing immigration policy, and for policing the borders to keep out unauthorized aliens. Thus, they argue that the burden to pay for immigration-related cost should be born by the federal government, not the states. Additionally, some question the wisdom of only providing funding to help cover the costs of unauthorized aliens when no federal funds are provided to states to cover the emergency medical costs of nonimmigrants and legal permanent residents who have been in the country for less than five years.\nAnother issue concerns the lack of reliable data on the number and distribution of unauthorized aliens. As the 2000 census of the U.S. population is being released, preliminary data analyses offer competing population totals that, in turn, imply that illegal migration soared in the late 1990s and that estimates of unauthorized residents of the United States have been understated. The Department of Homeland Security estimates that there are about 7 million unauthorized aliens living in the United States. In testimony before the House Committee on the Judiciary Subcommittee on Immigration and Claims, Jeffrey Passel, a demographic researcher at the Urban Institute, offered an estimate of 8 to 9 million unauthorized residents. At the same hearing, economists from Northeastern University using employment data reported by business establishments as well as 2000 census totals concluded that the unauthorized population may be 11 million. These discrepancies suggest that assessments of the unauthorized population by state may be an inaccurate and problematic basis for distributing grant funds.\nNone of these estimates addresses the distribution among states of the unauthorized population; however, anecdotal reports suggest that unauthorized aliens may be dispersed among many states rather than concentrated in a few states as previously presumed. If this is true, a program which limits the number of states eligible for additional reimbursement for medical treatment of unauthorized immigrants may exclude smaller states that have proportionally high numbers of unauthorized aliens in relation to their population, but not high absolute numbers of unauthorized aliens.",
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"question": [
"What is the status of the discourse regarding unauthorized aliens and emergency care?",
"Why is it difficult to evaluate these numbers?",
"What role does the federal government play in emergency medical care for undocumented aliens?",
"How has Medicare included resources for unauthorized aliens?",
"How will Medicare distribute this funding?",
"What are the precedents for this program?",
"How has the federal government provided emergency medical assistance to unauthorized aliens?",
"To what extent have these programs been realized?",
"In what ways has ambulance service been addressed?",
"What did INS conclude from the pilot program?",
"What other programs would help address the issue of emergency medical care for unauthorized aliens?"
],
"summary": [
"There has been interest in the amount of money spent, as well as the amount of federal funds available to provide emergency medical care to unauthorized (illegal) aliens in the United States.",
"It is extremely difficult to ascertain the amount of money spent for emergency medical care for unauthorized aliens since most hospitals do not ask patients their immigration status.",
"Additionally, prior to the passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173) on December 8, 2003 there were no federal funds available for the specific purpose of reimbursing hospitals or states for emergency medical care provided to unauthorized aliens (undocumented immigrants).",
"The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173) signed into law on December 8, 2003 includes a provision, §1011, to provide reimbursement to states for emergency care afforded to unauthorized aliens.",
"For each fiscal year FY2005-FY2008 the provision appropriates $250 million to states to be distributed based on estimates of the number of undocumented aliens residing in the state and on the number of apprehensions for the six states with the highest number of apprehensions.",
"This program is similar to one created in the Balanced Budget Act of 1997 (BBA97) which had expired.",
"In addition, the Illegal Immigrant Reform and Immigrant Responsibility Act of 1996 (IIRIRA) authorized reimbursement of public hospitals and certain nonprofit hospitals for emergency medical assistance to unauthorized aliens, and reimbursement of state and local governments for emergency ambulance services provided aliens injured while crossing U.S. borders while in custody.",
"Neither program has been funded.",
"However, in FY1998 Congress appropriated money for a pilot program in Nogales, Arizona to attempt to reimburse state and local governments for ambulance services.",
"INS concluded from the pilot program that reimbursement for ambulance services was not a feasible program.",
"H.R. 1515 would provide reimbursement for the costs of emergency medical care and ambulance services furnished to aliens paroled for medical reasons."
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GAO_GAO-17-360
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{
"title": [
"Background",
"Avian Influenza Viruses",
"Avian Influenza Transmission",
"Poultry in the United States",
"Our Related Prior Work",
"Federal Agencies’ Roles in Avian Influenza Response, Research, Surveillance, and Other Related Activities",
"Avian Influenza Has Harmed Human Health, Animal Health, and the U.S. Economy",
"Avian Influenza Rarely Infects Humans, but the Mortality Rate for Those Infected Has Been Relatively High",
"Outbreaks of Avian Influenza Have Killed Millions of Poultry Worldwide but Caused Few Fatalities in Other Species",
"Cats Infected with Avian Influenza in New York City Animal Shelters",
"Recent Outbreaks Have Cost the Federal Government and the U.S. Economy Billions of Dollars",
"USDA Has Taken Corrective Actions to Address Lessons Learned but Does Not Have Plans to Evaluate Their Effectiveness",
"USDA Has Identified Lessons Learned from the 2014 and 2016 Outbreaks and Taken Numerous Corrective Actions",
"USDA Does Not Have Plans to Evaluate the Effectiveness of its Corrective Actions",
"Federal Agencies Face Ongoing Challenges and Associated Issues in Their Efforts to Mitigate the Potential Harmful Effects of Avian Influenza",
"Ongoing Challenges that Federal Agencies Face in Mitigating the Potential Harmful Effects of Avian Influenza",
"Protecting Domesticated Poultry from the Threat of Avian Influenza Carried by Wild Birds Is a Challenge",
"Reliance on Voluntary Actions by a Wide Range of Poultry Producers to Prevent Flocks from Avian Influenza Infections Is a Challenge",
"Federal Agencies Face Other Issues Associated with Mitigating the Potential Harmful Effects of Avian Influenza",
"Poultry Used to Produce Critical Human Vaccine Are Susceptible to Influenza Outbreaks",
"Funding for a Federal Effort to Monitor Swine for Influenza That Could Threaten Human Health Will Run Out in Fiscal Year 2017",
"Conclusions",
"Recommendation for Executive Action",
"Agency Comments",
"Appendix I: Selected Agencies with Responsibilities Related to Avian Influenza",
"Appendix II: Results of Surveillance of Wild Birds for Avian Influenza, December 2014 through March 2017",
"Appendix III: Comments from the U.S. Department of Agriculture",
"Appendix IV: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff acknowledgments",
"Related GAO Products"
],
"paragraphs": [
"This section provides information on avian influenza viruses; avian influenza transmission in and between humans and animals; commercial and noncommercial poultry production in the United States; our prior work on avian influenza; and the responsibilities that USDA, HHS, and Interior have with respect to avian influenza response, research, surveillance, and other related activities.",
"Avian influenza is caused by a “Type A” influenza virus (influenza A). Avian-origin influenza viruses are broadly categorized based on a combination of two groups of proteins on the surface of the influenza A virus: hemagglutinin or “H” proteins, of which there are 16 (H1-H16), and neuraminidase or “N” proteins, of which there are 9 (N1-N9). Many different combinations of “H” and “N” proteins are possible. Each H and N combination is considered a different subtype, and related viruses within a subtype may be referred to as a lineage. Avian influenza viruses can be divided into two groups based on the specific genetic features and severity of the disease they cause in 4- to 8-week old chickens in a laboratory setting: low pathogenic and the more severe highly pathogenic. Influenza A has the potential to cause human pandemics, regardless of its pathogenicity in poultry.",
"Wild aquatic birds—such as waterfowl, gulls, and shorebirds—are the natural hosts for influenza A viruses. Direct or indirect contact with infected wild birds can expose poultry to avian influenza viruses. Similarly, infected poultry may spread avian influenza into wild bird populations. Avian influenza viruses can also be moved from place to place—including between farms—by people, equipment, vehicles, feed, insects, rodents and other animals, water, and wind-blown dust as shown in figure 1. Poultry producers may implement biosecurity measures to reduce the risk that diseases such as avian influenza will be transmitted to their flocks. For example, producers may disinfect vehicles arriving at and leaving a farm or direct employees to disinfect boots and hands before entering a poultry barn. During an outbreak in poultry, additional biosecurity measures may be used to prevent the disease from further spreading. For example, USDA personnel and contractors working to control an outbreak would be expected to restrict their movements among locations to prevent carrying the virus to an uninfected site.\nOne form of highly pathogenic avian influenza has become endemic in several countries, including China, Indonesia, and Vietnam; this means that the virus has become entrenched in poultry populations in those countries. USDA considers highly pathogenic avian influenza a “foreign animal disease” in the United States, meaning U.S. poultry are normally free from the disease. The United States, as a member of the World Organisation for Animal Health, has agreed (through USDA), along with other member countries, to notify the organization and its members of any detection of highly pathogenic avian influenza. Member countries also agree to report cases of low pathogenic H5 or H7 avian influenza found in poultry or other birds because these viruses have the potential to mutate to a highly pathogenic form in poultry and may infect other species. When a country’s poultry tests positive for “notifiable” avian influenza, its international trading partners may restrict trade with that country until the partners believe the virus is eradicated—an outcome that can take many months to achieve. Therefore, when a flock is infected with notifiable H5 or H7 avian influenza, the goal of the poultry industry and government agencies is to control and eradicate the virus as rapidly as possible in order to prevent its spread and regain the confidence of trading partners that any future imports of poultry or poultry products will be virus free. To this end, USDA and other federal, state, and industry partners aim to act quickly in the affected area to, among other things: (1) quarantine susceptible animals; (2) implement biosecurity measures; (3) depopulate infected and exposed birds; (4) dispose of contaminated and potentially contaminated materials, including animal carcasses; and (5) clean and disinfect the infected premises. Once the virus is eradicated, USDA, states, and the poultry industry resume routine surveillance for notifiable avian influenza.",
"According to USDA’s Economic Research Service, the U.S. poultry industry is the world’s largest producer and second-largest exporter of poultry. The most recent Census of Agriculture reported 233,770 poultry farms in the United States in 2012, but the U.S. poultry industry consists, in large part, of a relatively small number of large companies that own all aspects of the production process—from the hatchery to the processing facility. The most common types of poultry raised commercially are chickens for consumption (broilers) and chickens that lay eggs (layers), as well as turkeys. There are also poultry that are genetic breeding stock and whose main function is to produce offspring that facilitate mass production and are economical to raise. Additionally, there are poultry raised specifically for producing eggs to make human vaccines. Commercial poultry operations typically raise tens of thousands of birds in confined poultry houses. Such operations can include multiple houses located close to each other. Because of the environment in which commercial birds are raised, if one bird becomes infected with a notifiable avian influenza, hundreds of thousands of birds can be exposed and will need to be depopulated.\nIn addition to poultry raised commercially, numerous types of birds are raised in backyards, with flocks of up to 1,000 birds. These “backyard birds” are typically chickens used for personal egg production and consumption; they also can include game birds, such as quail and pheasant. These birds may roam free or be confined to a poultry house. In addition, there are birds in live bird markets—facilities that sell live poultry, typically slaughtered on-site, to the general public—and some are sold at auctions and swap meets.",
"In a June 2007 report, we found that USDA had made important strides to prepare for highly pathogenic avian influenza outbreaks but that incomplete planning and other unresolved issues could slow a response. There were several unresolved issues at the time that, absent advance consideration, could hinder response. For example, we found that disposal of carcasses and materials infected with highly pathogenic avian influenza could be problematic because operators of landfills were reluctant to accept materials infected with even low pathogenic avian influenza because of the perceived human health risk. To increase the likelihood of rapidly containing a highly pathogenic avian influenza outbreak, we made seven recommendations to USDA, including that the agency develop a response plan that identifies critical tasks for responding to an outbreak and address concerns about antiviral medication for humans. USDA generally agreed with our recommendations and took action to implement all seven recommendations. (A list of prior related GAO work is included at the end of this report.)",
"Multiple organizations within USDA support its animal health mission. When notifiable avian influenza outbreaks occur, APHIS is the lead agency within USDA for preventing and responding to animal disease outbreaks. USDA derives its authority to carry out operations and measures to prevent, detect, control, and eradicate notifiable avian influenza, among other diseases, from the Animal Health Protection Act. The act authorizes the Secretary of Agriculture to hold, seize, quarantine, treat, destroy, or dispose of any animal, means of conveyance, or object that can harbor the disease, or to restrict their movement in interstate commerce. The act also authorizes the Secretary to transfer necessary funds from other USDA appropriations or available funds to manage an emergency in which a disease of livestock threatens any segment of agricultural production in the United States, in order to arrest, control, eradicate, or prevent the spread of the disease. USDA’s Wildlife Services, a program unit within APHIS, conducts research on wildlife diseases, such as avian influenza, that may affect agriculture and human health and safety. USDA’s Agricultural Research Service conducts research on, among other things, poultry diseases and vaccines for those diseases. For example, the agency published a report in 2014 on experts’ analyses of gaps in knowledge about influenzas in poultry and other animals and about effective countermeasures to control and mitigate outbreaks of disease.\nHHS is responsible for, among other things, research on human disease, disease surveillance, and vaccine production and distribution. Within HHS, the Influenza Division of CDC’s National Center for Immunization and Respiratory Diseases conducts surveillance of influenza in humans, including human infections caused by viruses with animal origins; the division also conducts laboratory studies on influenza viruses of concern to characterize them and assess their risks to humans. HHS’s Food and Drug Administration (FDA) is responsible for protecting the public health by ensuring the safety and efficacy of veterinary drugs and medical devices and by licensing biological products that are safe, pure, and potent, including vaccines for pandemic influenza. In addition, FDA is responsible for ensuring the safety and proper labeling of more than 80 percent of the U.S. food supply.\nIn cooperation with USDA’s Wildlife Services program and state agencies, Interior participates in the federal government’s surveillance of wild migratory birds for the presence of avian influenza and provides leadership and support in the area of wildlife disease research and diagnostics. Interior’s U.S. Geological Survey maintains the National Wildlife Health Center, which identifies, controls, and prevents wildlife losses from diseases; conducts research to understand the impact of diseases on wildlife populations; and devises methods to more effectively manage these disease threats. (See app. I for more detail on the roles of federal departments and their component agencies as related to avian influenza.)",
"Avian influenza viruses have harmed global human and animal health and the U.S. economy. These viruses rarely infect humans, but some viruses may have high rates of mortality when they do. Avian influenza outbreaks have led to the deaths of hundreds of millions of domesticated poultry in dozens of countries, either directly or through depopulation to prevent spread of the disease. The 2014 and 2016 outbreaks among U.S. poultry led to costs to the federal government of about $930 million and additional costs to the U.S. economy of an estimated $1 billion or more.",
"As of March 2017, two lineages of avian influenza—Asian H5N1, which emerged in 1997, and a new strain of H7N9, which emerged in 2013— have together infected more than 2,100 humans and killed more than 900, primarily in Asia and Africa. Neither lineage has developed the capacity to be easily transmissible from birds to humans or from person to person. However, there have been other instances in which influenza A viruses of avian origin have become more easily transmissible and have caused global pandemics that led to large numbers of fatalities in the United States and around the world. Table 1 summarizes occurrences of fatal influenza A infections in humans that are known to have or are suspected of having an avian origin. The likelihood that an influenza A virus of avian origin will evolve into a form easily transmissible among humans is small, according to officials from HHS, but if such a change occurs, it could lead to serious disease among humans and possibly another pandemic. For example, the World Health Organization has expressed concern that the Asian lineage H5N1 and H7N9 viruses that have sporadically infected humans in Asia, Northern Africa, and the Middle East could evolve to become more easily transmissible to or between humans and lead to serious disease or another pandemic. According to CDC’s website, of the novel influenza A viruses that are of special concern to public health, the agency rates the Asian lineage H7N9 virus as having the greatest potential to cause a pandemic, as well as potentially posing the greatest risk to severely impact public health.",
"Avian influenza outbreaks—both highly pathogenic and low pathogenic— have led to the deaths of hundreds of millions of domesticated poultry in dozens of countries, either directly or through depopulation to prevent spread of the disease. For example, the H5N1 highly pathogenic avian influenza outbreak that led to human fatalities in China in 1997 also led to the deaths of an estimated 220 million birds in China and Hong Kong. In the United States, outbreaks of highly pathogenic avian influenza have led to the deaths of more than 67 million birds since 1983, with the most recent outbreaks beginning in December 2014 and ending in June 2015 and, in unrelated incidents, in January 2016 and March 2017. (See table 2 for details of known outbreaks of highly pathogenic avian influenza in commercial U.S. poultry.)\nUSDA identified the first U.S. cases of the 2014 outbreak of highly pathogenic avian influenza H5 viruses in captive wild birds or backyard flocks in Washington and Oregon in December 2014 and in Idaho the following month. Also in December 2014, USDA identified another subtype, H5N8, in Washington and Oregon. By the time USDA and its state and industry partners eradicated the diseases in June 2015, the related H5N2 and H5N8 viruses had infected poultry flocks on 232 farms in 15 states, with the largest number of affected farms being in Minnesota (110 farms) and Iowa (77 farms). (See fig. 2 for a map showing the 15 states and the approximate number of birds killed or depopulated as a result of the outbreak that began in 2014.)\nAvian influenza is an extremely infectious and, in some circumstances, fatal disease in poultry, including chickens and turkeys. Avian influenza viruses are classified as either “low pathogenic” or “highly pathogenic” based on their genetic features and the severity of the disease they cause in poultry. Beginning in early December 2014, the Canadian Food Inspection Agency (CFIA), w hich leads responses to avian influenza outbreaks in Canada, learned of highly pathogenic avian influenza on 13 poultry farms in British Columbia; these included turkey and chicken farms. To eradicate the virus, CFIA depopulated 240,000 birds. Wild birds migrating along the Pacific Flyw ay were the most likely cause of the outbreak, according to CFIA. In April 2015, CFIA identified highly pathogenic avian influenza in 1 chicken farm and 2 turkey farms in Ontario. The agency controlled the virus by depopulating 79,700 birds. According to a CFIA official, two characteristics of the Canadian poultry industry that facilitate the adopting of biosecurity measures in poultry farms helped limit the size of the 2014 and 2015 Canadian outbreaks. First, poultry farms in Canada are relatively small compared w ith those in the United States, w hich reduces the number of birds infected and the chance that influenza w ill replicate and spread. Second, Canadian poultry companies are not heavily integrated; therefore there is little movement of birds, feed, equipment, and people that could carry the virus from one farm to another.\nState(s)\nReported number and type of birds depopulated 4.7 million turkeys, including breeders, and chicken broilers, breeders, and layers Layers Turkey breeders 100,000 layers 30,000 layers 84,000 broilers 328,000 broilers 51,000 breeder chickens 145,000 turkeys 54,000 turkeys 25,600 turkeys 30,300 game birds 16,000 breeder chickens 500,000 turkeys 20,000 broiler breeders 29,000 turkeys 3,000 turkeys 9,800 broiler breeders 95,000 quail and 21,000 Peking ducks 352,114 turkeys and layers 39,000 turkeys 84,000 turkeys held in quarantine 100,585 broiler breeders and backyard birds 24,700 broiler breeders and backyard birds The Indiana outbreak w as restricted in size and scope to a single county and 12 premises. This table reports on poultry at sites associated with low pathogenic avian influenza. In all, more than 414,000 birds w ere affected.",
"According to the Centers for Disease Control and Prevention (CDC), in November 2016, a low pathogenic avian influenza A (H7N2) virus infected cats in New York City animal shelters. Some affected cats showed mild flu- like symptoms such as sneezing or runny noses, and 450 w ere quarantined until they no longer show ed symptoms of infection. A veterinarian collecting respiratory samples from exposed cats contracted the virus and subsequently recovered. According to CDC’s w ebsite, known human infections with H7N2 are uncommon and have not led to deaths. How ever, the agency noted that finding avian influenza virus in an unexpected animal, such as a cat, is alw ays concerning because it means the virus has changed in a w ay that may pose a new health threat.\nThe effect of avian influenza on the health of other animal species varies. Avian influenza generally causes few signs of illness and is rarely fatal when it circulates in waterfowl and shorebirds. Because wild birds are rarely sickened by the virus, they are able to move it efficiently along migratory flyways. Interior officials told us, however, that incidents in which wild birds have been killed by highly pathogenic avian influenza have become more common; these officials noted in particular incidents in Asia involving the H7N9 virus. According to the World Health Organization, some mammal species, including swine, can be infected with avian influenza but may show few, if any, observable symptoms, and others, such as ferrets, may experience high morbidity and mortality. Infections in waterfowl and swine are of concern because they can spread the virus to poultry and humans, according to the World Organisation for Animal Health. Swine can also serve as “mixing vessels” in which different influenza viruses come into contact, exchange genetic material, and possibly produce a new virus that is more easily transmissible to or between humans. The H1N1 virus that emerged in 2009 contained gene segments from swine, avian, and human influenza viruses. According to the World Health Organization, the virus caused a global pandemic with up to 550,000 human deaths worldwide from April 2009 to April 2010; the CDC estimates that up to 18,000 of those human deaths occurred in the United States. In addition, a 1976 outbreak of H1N1 swine influenza at Fort Dix, New Jersey, infected up to 230 humans and killed 1 person. More recently, according to CDC documents, more than 360 people in the United States were infected with influenza A (H3N2) variant influenza from August 2011 through September 2016, with one fatality. Also according to CDC, these infections have mostly been associated with prolonged exposure to pigs at agricultural fairs.",
"Outbreaks of avian influenza in poultry in the United States in 2014 and 2016 cost the federal government about $930 million, according to USDA documents, and the 2014 outbreak cost the economy from $1 billion to $3.3 billion, according to two studies by USDA and a private firm. According to USDA budget documents for fiscal years 2015 and 2016, the agency obligated a total of about $869 million for the responses to the 2014 outbreak in 15 states, the January 2016 outbreak in Indiana, and a May 2016 outbreak of low pathogenic avian influenza in Missouri. As shown in table 4, the largest portion of these obligations was for response operations, including depopulation, disposal, composting, and cleaning and disinfection. Indemnity payments to poultry producers were another large category of obligations. Nearly all of the funds were transferred from the Commodity Credit Corporation.\nIn addition, USDA obligated about $60 million in funds transferred from the Commodity Credit Corporation in fiscal year 2015 on fixed costs— such as salaries, benefits, and supplies—and other activities related to preparing for the possible return of the virus in the fall of 2015, such as wild bird surveillance and vaccine research.\nWith respect to the U.S. economy, two separate analyses have examined and produced national estimates of the economic impacts from the highly pathogenic avian influenza outbreak that began in 2014. A national analysis conducted by USDA economists measured the 2014 outbreak’s impact to U.S. livestock and feed sectors, including poultry and poultry products, at $1 billion. The estimates in the analysis take into consideration producer and consumer behavior as prices and production changed in response to the reduction in production and the trade embargoes linked to the outbreak. The effects were measured throughout the course of the outbreak, allowing for estimates based on changes over time. According to this analysis, U.S. turkey producers lost an estimated $214 million in sales (a decline of 6.8 percent from 2014 levels), and broiler producers lost $276 million (a decline of 1.5 percent from 2014).\nWhile broilers were only negligibly affected by the virus, as separately reported by APHIS, the sector still suffered losses because of large decreases in demand from countries that extended full or partial bans on poultry and poultry products, including broilers, from the United States. In addition, because crops (e.g., corn and soybeans) are essential to the poultry sector, those commodities also experienced losses estimated at $373 million because of the reduction in number of birds fed. On the other hand, the reduced egg supply caused by the outbreak raised the price of eggs for consumers and, according to the analysis, led to an increase of $53 million in sales for U.S. egg and layer producers (an increase of 26.7 percent from 2015 levels).\nThe second national analysis contained a preliminary estimate of $3.3 billion in total economy-wide losses through June 29, 2015, from the 2014 outbreak of highly pathogenic avian influenza. This included direct losses to the turkey and egg processing sectors of $1.6 billion, with losses of $530 million for turkeys and $1.04 billion for laying hens. The $3.3 billion estimate included macroeconomic impacts due to losses to other indirect sectors, such as retail and foodservice, but did not include activities such as clean-up, restocking, or future lost production while the producer prepares to resume production at a pre-disease level. Also, unlike the first analysis noted above, this analysis did not include consumer or producer responses to changes in prices or production, such as increases in egg prices due to production losses.\nStarting from the beginning of the avian influenza outbreak in December 2014, 18 trading partner nations imposed bans on all shipments of U.S. poultry and products, and 38 trading partners imposed partial, or regional, bans on shipments from states or parts of states experiencing outbreaks. According to USDA officials, as of January 2017, China, Kyrgyzstan, Russia, and Thailand continued to impose national bans on U.S. poultry imports that were attributed to concerns about highly pathogenic avian influenza, and Jamaica had imposed a state ban on U.S. poultry imports from several Midwestern states. Total U.S. poultry and product exports declined in value from about $6.4 billion in 2014 to $4.9 billion in 2015. The largest of these declines was from the U.S. broiler meat industry, which fell from $4.1 billion to $3.0 billion over that period. While a USDA report attributed part of this decline in exports to a strong U.S. dollar, the report also noted that the avian influenza outbreak that began in 2014 caused the poultry industry to lose market share to other poultry exporters such as Brazil. According to a September 2016 USDA report, export levels of broiler chickens—the largest poultry export sector—were modestly rebounding in 2016 from the levels that followed the end of the highly pathogenic avian influenza outbreak in 2015, although these 2016 levels were still at their lowest since 2011. In addition, according to the USDA report, turkey exports remained weak compared to the pre-avian influenza trends, and egg exports in July 2016 were 6 percent lower than the previous year. USDA noted that some major importing countries had lifted trade bans since the 2014 outbreak and that other factors, such as the strength of the dollar, have also affected exports. USDA officials involved in the response also said that the negative effect on U.S. poultry exports was partially mitigated by the fact that some countries imposed regional, rather than national, bans on U.S. poultry products. In addition, the agency’s implementation of secure food supply plans allowed poultry producers to move non-infected products during the outbreaks. A goal of these plans is to continue business operations from locations that are not infected with disease.\nAfter the March 2017 detections of highly pathogenic H7N9 avian influenza in two commercial flocks in Lincoln County, Tennessee, numerous countries imposed trade restrictions on U.S. poultry exports. For example, the Republic of Congo (Brazzaville) imposed restrictions on poultry imports from the entire United States. Some countries, such as South Africa, Taiwan, and Uruguay, placed restrictions on poultry imports from the entire state of Tennessee while others, such as Jamaica and the European Union, imposed restrictions on certain geographic areas or counties. Similarly, after detections of low pathogenic avian influenza in March 2017, countries placed restrictions on imported poultry from all or parts of Alabama, Georgia, Kentucky, and Wisconsin.",
"USDA identified lessons learned from its responses to the 2014 and 2016 highly pathogenic avian influenza outbreaks and has taken numerous corrective actions to address them. However, USDA does not have plans for evaluating the extent to which the corrective actions have helped resolve the problems that they were intended to address.",
"After the outbreaks of highly pathogenic avian influenza in 2014 and 2016, USDA identified lessons learned related to its response activities and has taken numerous corrective actions to address those lessons learned. To identify the lessons learned from both the widespread outbreak that began in 2014 and the limited 2016 outbreak in Indiana, USDA proactively collected feedback about its performance during and after the outbreaks from federal and state animal health officials and from industry representatives involved in the responses. The agency then summarized this feedback into after action reports that included observations about strengths and weaknesses in the responses. The identified lessons learned covered a wide range of response areas, including the depopulation of infected birds, disposal of bird carcasses, and surveillance of flocks for infection. For example, according to USDA documents, rapid depopulation is critical to help prevent or mitigate the spread of the disease by eliminating infected, exposed, or potentially exposed animals. However, USDA noted that during the 2014 outbreak, there were substantial delays in completing depopulation, with producers reporting that it took as long as 11 days to begin depopulation on many premises.\nUSDA developed a corrective action program to identify, prioritize, and implement corrective actions that are intended to address the root causes of the lessons learned. The agency identified 308 corrective actions across 15 response areas and created a corrective action database to track the actions (see table 5 for the list of 15 response areas and examples of lessons learned and corrective actions associated with each area.)\nUSDA prioritized the corrective actions according to their implications for future outbreaks and, for the highest priority actions, their time frame for completion. Specifically, USDA defined priority 1 corrective actions as those that would have immediate, critical implications for a future outbreak and that could be completed in less than 1 year; priority 2 actions as those that would have positive implications for a future outbreak or would have immediate, important implications but that may not be completed within 1 year; and priority 3 actions as those that are under consideration or that would have less critical implications for a future outbreak.\nAccording to our review and summary of USDA’s corrective action database, the agency has marked as completed about 70 percent of its corrective actions, including about 86 percent of the priority 1 actions (see table 6). As of January 2017, USDA did not have time frames for completing about 82 percent of the uncompleted priority 2 and priority 3 corrective actions. For example, USDA has not established a time frame for completing a priority 2 corrective action related to depopulation that calls for the agency to develop training materials for contracted responders to help ensure there are enough skilled personnel available for depopulation. This action is marked as “in progress” in the database. When we raised this issue during the course of our review, USDA officials responsible for the database said they are working with the groups in charge of taking corrective actions to identify time frames for the remaining priority 2 and priority 3 actions, but they said that it is complex and difficult to do so in light of other agency disease response activities. For example, they said that responding to an outbreak of New World screwworm in Florida in fall 2016 had caused the agency to pause some of its efforts to address corrective actions from the highly pathogenic avian influenza outbreaks. Nonetheless, agency officials acknowledged that time frames are important and said they will continue to develop them.",
"USDA has taken steps to implement corrective actions, but it does not have plans to evaluate the extent to which completed corrective actions have effectively helped to resolve the problems the agency identified in its responses to the recent outbreaks. We have previously found that agencies may use evaluations to ascertain the success of corrective actions, and that a well-developed plan for conducting evaluations can help ensure that agencies obtain the information necessary to make effective program and policy decisions. An evaluation plan should include, among other things, evaluative criteria or comparisons, or how or on what basis program performance will be judged or evaluated. We also found that one approach agencies can use to evaluate changes in events that occur infrequently and unpredictably, such as disease outbreaks, is to conduct simulations or exercises to assess how well an agency’s plans anticipate the nature of its threats and vulnerabilities. Homeland Security Exercise and Evaluation Program guidance, which USDA officials told us they used in developing the corrective action program, states that agencies should put in place a system to test and validate corrective actions that have been implemented. This guidance states that agencies can identify the corrective actions that require validation and then conduct exercises to test whether those corrective actions have led to improvements.\nIn our review of a nongeneralizable sample of 10 completed corrective actions designated as priority 1, it was unclear to what extent such actions were effective because, while USDA marked in its database that it had completed the corrective actions, it had not evaluated the extent to which these actions achieved the desired outcome. For example, one lesson learned that USDA identified was that many producers lack a strong culture of biosecurity. However, although USDA completed corrective actions associated with that lesson—creating a joint biosecurity website with the U.S. Poultry and Egg Association and putting greater emphasis on biosecurity in conferences with producers—it did not evaluate to what extent taking these actions created a strong culture of biosecurity among producers. In another lesson learned, USDA identified that states and producers encountered impediments in transporting bird carcasses to landfills, such as federal and state rules restricting the movement of bird carcasses along transportation routes in close proximity to other producers. USDA completed corrective actions associated with that lesson—providing guidance, training, and encouragement to states and producers to develop disposal plans—but did not evaluate to what extent taking these actions helped overcome the impediments observed. In addition, depopulation experts we interviewed raised concerns about whether USDA’s planned and completed corrective actions will effectively address the challenges with depopulation experienced during the 2014 and 2016 outbreaks. For example, these experts questioned whether a sufficient number of federal employees and contracted responders have been trained in using depopulation equipment to address a lesson learned that there were not enough skilled personnel available for depopulation during recent outbreaks.\nUSDA documents state that the 2016 outbreak provided an opportunity to see that some of the corrective actions taken following the 2014 outbreak resulted in an improved response. For example, according to USDA’s after action report on the 2016 outbreak, the changes that USDA made to the process for compensating poultry producers for losses after the 2014 outbreak resulted in a faster and more efficient process during the 2016 outbreak. Nonetheless, USDA officials acknowledged that they are not certain whether completing other corrective actions will be sufficient to address the lessons learned from both outbreaks. They acknowledged the importance of evaluating corrective actions to determine whether additional steps are needed but said that the agency does not yet have plans to do so. Agency officials also told us that evaluating the effectiveness of these corrective actions will need to be a continuous process and should be considered within the broader context of USDA’s emergency preparedness for disease response. For example, USDA officials told us they intend to incorporate lessons learned and corrective actions from the agency’s response to the 2016 New World screwworm outbreak into the corrective action database for highly pathogenic avian influenza, so that the database becomes a broader tool that the agency can use to track corrective actions related to its overall disease response efforts. By developing a plan for evaluating completed corrective actions and, as part of this plan, considering whether any completed corrective actions require validation through simulations or exercises, USDA could better determine the effectiveness of these actions.",
"On the basis of stakeholders’ views and our analysis of federal efforts to respond to outbreaks, we identified ongoing challenges and associated issues that federal agencies face in mitigating the potential harmful effects of avian influenza. These challenges are in protecting domesticated poultry from the threat of avian influenza that circulates naturally in wild birds and in relying on voluntary actions by a wide range of poultry producers to prevent poultry flocks from becoming infected. Federal agencies also face other issues associated with mitigating the potential harmful effects of avian influenza: the virus could infect poultry needed to produce eggs used in manufacturing critical human vaccines against pandemic influenza, and federal funding will soon be exhausted for a voluntary surveillance program that gathers information about the presence of influenza viruses in swine that could pose a threat to human health.",
"We identified two ongoing challenges that federal agencies face in mitigating the potential harmful effects of avian influenza. First, federal agencies are challenged in protecting domesticated poultry from avian influenza because the disease naturally circulates in migratory birds, which may spread the disease. Second, federal efforts to prevent poultry flocks from infection are challenged because these efforts rely on voluntary biosecurity measures by poultry producers.",
"Federal agencies face an ongoing challenge in protecting domesticated poultry from avian influenza because the disease naturally circulates in migratory birds, such as ducks and geese, which are hard to control and which may come into contact with poultry. Because of their migratory behavior, wild birds infected with avian influenza can spread the disease across long distances, including from as far away as Asia. Federal agencies and others are authorized under the Migratory Bird Treaty Act to sample ducks, geese, and other migratory birds to confirm the presence of an infectious disease, including influenza. According to Interior officials, the Act also provides agencies the authority to control migratory birds infected with avian influenza, but the officials noted that experience has shown that such efforts are ineffective. As reported in a text on avian influenza, humans have had and will continue to have minimal impact on control of low pathogenic avian influenza viruses in wild bird populations.\nUse of Vaccines to Eradicate Avian Influenza According to the U.S. Department of Agriculture (USDA), poultry vaccination has been part of control or eradication programs for avian influenza viruses in a number of countries. Effective vaccination can decrease transmission betw een animals by decreasing their susceptibility to infection and reducing the amount of virus an infected animal may shed. Vaccination has been used in some successful eradication campaigns for low pathogenic avian influenza outbreaks in the United States but never for highly pathogenic avian influenza outbreaks such as those that occurred in 2014 and 2016, according to USDA. Stakeholders w e interviewed characterized the decision to use poultry vaccines to control and eradicate the 2014 and 2016 outbreaks as having both scientific and economic components. From a scientific perspective, a vaccine needs to be able to protect against a specific influenza virus to be effective and merit use. In June 2015, USDA announced that the vaccines available at the time w ere not w ell matched to the virus that w as infecting poultry in numerous states. As an example of the economic implications of vaccines, USDA also announced in June 2015 that significant trading partners had indicated that, if USDA began vaccinating, they w ould ban all U.S. poultry and egg exports until they could complete a risk assessment. For these and other reasons, USDA decided against using vaccines. USDA’s Agricultural Research Service continues to develop enhanced vaccines for use in poultry against avian influenza. A 2014 USDA report concluded the poultry industry needs highly effective vaccines that can prevent transmission and that can be mass- delivered in w ater, in eggs, or in feed.\nAlthough federal agencies are unlikely to control avian influenza viruses in wild birds, they can monitor the viruses circulating in this population. Specifically, USDA, Interior’s U.S. Geological Survey and U.S. Fish and Wildlife Service, and state and tribal agencies collaborated on a national program for wild bird surveillance that sampled more than 283,000 wild birds from April 2006 through March 2011, when the program ended. The federal effort resumed in December 2014 in response to the outbreaks of highly pathogenic avian influenza on the West Coast of North America. In response to the outbreaks, personnel from USDA and Interior re-convened the Interagency Wild Bird Avian Influenza Steering Committee in January 2015. The Steering Committee developed a wild bird surveillance plan for avian influenzas that may pose a threat to human health or domestic poultry. The plan encourages federal and state agencies and others to use a variety of sampling methods to test live and dead wild birds for avian influenza. According to data recorded as of March 24, 2017, the surveillance program had collected test results from more than 88,000 wild birds since December 2014. The data for that time period show that the program detected 102 cases (about 0.12 percent) of highly pathogenic avian influenza from the same lineage that caused the 2014 and 2016 outbreaks in the United States (see app. II for details on the results of this surveillance program). On the other hand, monthly detection rates for low pathogenic avian influenza A viruses in wild birds were often above 10 percent for those tested. According to USDA and Interior officials, continued monitoring of wild birds will help identify the presence of avian influenza subtypes and help agencies to mitigate the persistent challenge that wild birds pose to domesticated poultry. The state veterinarians we interviewed from California, Indiana, Iowa, Minnesota, North Carolina, and Ohio generally agreed with the need for wildlife surveillance.",
"Federal efforts to ensure routine biosecurity and prevent poultry flocks from becoming infected with avian influenza face an ongoing challenge because these efforts depend on voluntary actions by a wide range of poultry producers. While USDA’s approach to addressing this challenge varies for different types of poultry producers, such as those who manage large commercial operations and those who manage small backyard flocks, the approach primarily relies on using incentives and education to promote voluntary actions.\nAccording to USDA officials, state stakeholders, and poultry industry representatives we interviewed, sound biosecurity practices are important for all types of poultry facilities. This is also evident from the 2014 and 2016 outbreaks of highly pathogenic avian influenza, which affected large commercial and small backyard flocks, including turkeys, laying hens, and ducks. USDA found that lapses in routine preventative biosecurity allowed the initial introduction of disease and enabled it to spread from farm to farm. To gather information on biosecurity practices, USDA analyzed self- assessments completed by 850 poultry producers on the status of their biosecurity practices. While large producers generally indicated more frequently than small producers that they had certain practices in place, the nongeneralizable data showed that important practices were not consistently in place. For example, less than 60 percent of respondents had biosecurity officers or training in place. According to USDA’s self- assessment document, biosecurity officers and training could help reduce the threat of infection by improving biosecurity practices. Similarly, less than 60 percent of respondents had delineated lines of separation in their facilities to reduce the risk of contamination. Lines of separation are intended to reduce the risk that contaminated materials come into contact with poultry. In addition, less than 60 percent of respondents said that they had practices in place for personnel to shower or change into clean clothes immediately prior to arriving at a poultry site, or upon arrival, to reduce the risk of introducing an avian influenza virus.\nWhile USDA can impose biosecurity measures during its response to an emergency, the agency does not have the authority to require producers to routinely employ preventative biosecurity measures. Instead, USDA relies on producers to take voluntary action to prevent the introduction of avian influenza and other diseases. Toward that end, USDA recently initiated two interrelated efforts—independent of the corrective action program described above—that may help overcome this challenge among commercial farms. In addition, USDA has continued its efforts, through public education and outreach, to encourage backyard poultry farmers to practice biosecurity.\nUSDA’s first initiative to improve biosecurity involves linking producers’ eligibility for indemnity payments to a biosecurity plan. Specifically, USDA issued an interim rule in February 2016 requiring large poultry producers seeking indemnity payments in the future to provide a statement that, at the time highly pathogenic avian influenza was detected in their facilities, they had in place and were following a written biosecurity plan to address the potential spread of the virus. According to USDA officials, this regulatory change provides a strong incentive to members of the poultry industry to have a biosecurity plan in place. As of February 2017, USDA continues to operate under the interim rule issued in February 2016.\nThe second and related initiative concerns changes to the National Poultry Improvement Plan. According to USDA officials, poultry industry representatives who commented on the interim indemnity rulemaking suggested that the agency use the National Poultry Improvement Plan to promote biosecurity. The improvement plan is a voluntary program administered by USDA under which participating commercial poultry flocks are tested to ensure they are free from diseases, including H5 and H7 subtypes of avian influenza. If a flock tests negative for avian influenza, USDA certifies to trading partners and others that the flock is free of the disease. In September 2016, delegates to the program—who included poultry industry representatives—gave interim approval to add a set of 14 biosecurity principles to the plan’s national program standards. The biosecurity principles call for, among other things, training poultry producers about biosecurity; taking steps to protect against infection from wild birds, rodents, and insects; cleaning vehicles and equipment to reduce risk; and managing manure and litter to prevent the exposure of susceptible poultry to disease agents. Those principles would apply to the poultry producers who participate in the program; according to USDA officials, most commercial poultry producers participate. According to USDA officials, these initiatives will encourage commercial producers to adopt preventative biosecurity measures.\nCommercial poultry flocks may also be raised outdoors and thus are at greater risk of contact with wild birds infected with avian influenza. For example, turkeys and chickens must have access to outdoor space to be certified by USDA as organically raised. Organically raised poultry are a rapidly growing segment of the industry, according to USDA documents. Stakeholders told us that they were concerned that producers of organically raised poultry do not have to follow the same biosecurity principle—namely, keeping birds indoors—that producers of conventional poultry are encouraged to follow. USDA has acknowledged that organically raised birds are at a greater risk than birds raised indoors. USDA’s policy is that if it is determined that temporary confinement of birds is needed to protect the health, safety, and welfare of organic flocks, then producers and certifiers may work together to determine an appropriate method and duration of confinement of such flocks without a loss of organic certification.\nStakeholders we interviewed told us backyard poultry flocks are a concern for contracting and spreading avian influenzas to commercial poultry because these flocks are raised outdoors and are more likely to come into contact with wild birds. According to USDA’s website, raising backyard poultry is a growing trend across the United States. USDA manages the “Biosecurity for Birds” campaign to help raise awareness among backyard, hobby, and pet bird owners about the risks of avian influenza. The biosecurity principles that USDA promotes to backyard poultry producers include separating the domesticated flock from other birds, including game birds and wild waterfowl, because the latter can carry disease. According to an agency document, USDA works cooperatively with state animal health officials and the poultry industry to look for disease in breeding flocks, in backyard poultry, and at live bird markets, livestock auctions, poultry dealer locations, and small bird sales, fairs, and shows.",
"We identified two other issues that federal agencies face associated with mitigating the potential harmful effects of avian influenza. First, outbreaks of the disease threaten the poultry that produce the eggs used in the production of human pandemic influenza vaccine. Second, funding for a voluntary surveillance program that gathers data on influenza A viruses in swine that could pose a threat to human health will be exhausted in fiscal year 2017.",
"Protecting the chickens that lay the eggs needed to produce human pandemic influenza vaccines is an issue for federal agencies because these birds, like others, are susceptible to avian influenza. HHS has an obligation under the National Strategy for Pandemic Influenza to promote capabilities that assure a pandemic vaccine can be produced at a U.S.- licensed influenza vaccine facility at any time of the year, without limitations imposed by the availability of essential supplies. Pandemic influenza vaccines may be manufactured using several technologies. To date, the most commonly used technology has relied on fertilized eggs as a raw material. According to HHS officials, 90 to 95 percent of the current national stockpile of pandemic influenza vaccines is derived from eggs. According to an HHS official, the agency has a stockpile of egg- based and cell-based pre-pandemic influenza vaccines supplied by four companies. Of the four companies, however, only one has an egg-based vaccine manufacturing facility in the United States. If an influenza pandemic is declared, according to this official, the U.S. government may not be able to rely on foreign countries to allow exports of pandemic vaccine because each country will likely prioritize those vaccines for its own population. Therefore, the U.S. government considers the one U.S.- based company as the only dependable manufacturer for producing egg- based vaccine for rapid pandemic mitigation.\nThis company contracts with suppliers to provide it with the necessary egg supply. HHS officials and company representatives told us that the company has an egg production network that includes flocks located on numerous farms. According to company officials, protecting the company’s current network of egg suppliers is critical because the company cannot rely on other suppliers for eggs if its own network is compromised; the officials told us the company would not be able to make vaccine with eggs raised outside its control.\nAccording to HHS officials, the agency recognizes that avian influenza poses a risk to the production of pandemic influenza vaccines. To address that risk, HHS has contracted with the company to protect the egg supply chain and ensure a year-round supply of vaccine-quality fertilized eggs for the company to use in its vaccine manufacturing process. HHS awarded the current 3-year, $42 million contract for a year- round supply of eggs in September 2014. The contract requires that the company have a risk management plan; the company’s plan contains both a physical security program and a biosecurity program to provide protection against man-made and natural threats.\nHHS officials said they are confident that the company’s biosecurity program is sound. According to company representatives, the company mitigates risks by limiting the density of the birds on each farm and by using farms that are not in close proximity. In addition, company employees routinely audit the flocks and incubation facilities, and the company periodically tests the flocks of layer hens for avian influenza using USDA’s National Poultry Improvement Plan testing procedures. Furthermore, according to HHS officials, the agency conducts annual security audits of a portion of the facilities in the company’s network.\nAccording to company representatives, the company has standard operating procedures for biosecurity in its network of egg suppliers that are based on state department of agriculture guidelines. Company representatives said that because the company contracts with its suppliers and can require specific conditions, it has more control over what is done on the farms and in the incubation facilities than it does with farms that only comply with either USDA or state agriculture department requirements. While the 2014 and 2016 outbreaks did not affect this egg supply, a previous outbreak of highly pathogenic avian influenza caused the deaths of laying hens and reduced the supply of eggs used to produce human vaccines by about 50 percent.\nHHS has sought to diversify vaccine production through technologies that are not egg-based. Specifically, HHS has promoted technologies known as cell-based and recombinant technologies to produce vaccine. According to agency officials, these technologies will help offset the risk avian influenza poses to vaccine production. We have reported separately on federal efforts to diversify the pandemic vaccine supply. According to HHS’s website, three Centers for Innovation in Advanced Development and Manufacturing—in Maryland, North Carolina, and Texas—will provide a significant domestic infrastructure in the United States capable of producing medical countermeasures to protect Americans from the health impacts of bioterrorism as well as pandemic influenza and other diseases. However, the centers are not yet able to manufacture the contracted quantity of pandemic influenza vaccine. According to HHS’s Office of the Assistant Secretary for Preparedness and Response, as of February 2017, it was yet to be determined when the three CIADMs would be fully operational, but contractor officials indicated that one of the three is expected to become fully operational in 2017.",
"USDA and HHS have collaborated to monitor swine for influenza A viruses because swine may act as a “mixing vessel” in which influenza viruses recombine to pose new threats to human health. However, the agencies face the issue that funding for a voluntary surveillance program will be exhausted in fiscal year 2017. According to HHS officials, this surveillance program is the only federal source of data for understanding the types of influenza circulating in swine. Because influenza is endemic in swine worldwide, swine producers are not required to report the disease to USDA, and USDA is not required to report swine influenza to the World Organisation for Animal Health. However, since 2009, when H1N1 swine-origin influenza caused a global human pandemic, USDA has used funding from HHS to collect voluntary data from the U.S. swine industry on the incidence of swine influenza. As we reported in May 2013, there are limitations in the reliability of the data collected by this voluntary program; in particular, it may not accurately represent all of the conditions circulating across the country. Nevertheless, this program has provided useful data on the presence of various subtypes of influenza virus in swine herds, according to HHS and USDA officials. Moreover, representatives from the pork industry we interviewed stated the surveillance data are beneficial to both public and animal health. However, according to USDA officials, funding for the swine surveillance program is expected to be fully expended in fiscal year 2017. USDA officials said that the agency will once again seek additional funding for the program in fiscal year 2018 and beyond, through appropriated funding, but that funding beyond fiscal year 2017 is uncertain. In addition, the U.S. Animal Health Association provided support for the program’s continuation through a 2016 resolution asking Congress to appropriate funding for the swine surveillance program; furthermore, according to its representative, the National Pork Producers Council has advocated for continued funding for the program. According to HHS officials, the agency will continue to be supportive of USDA’s efforts to continue the program. It is too early to say whether USDA will continue to gather data on influenza in swine beyond fiscal year 2017.",
"The federal government has taken important steps to mitigate the significant risks posed by avian influenza to the health of humans, animals, and the economy. However, experience in the United States and around the world has shown that it is challenging to protect domesticated poultry from infection and control the disease when it does strike. USDA proactively identified numerous lessons learned, across a wide range of response areas, from the 2014 and 2016 outbreaks of avian influenza, and it identified more than 300 associated corrective actions. USDA has marked as completed about 70 percent of these actions, but it does not have plans for evaluating the extent to which its completed corrective actions have effectively helped to resolve the problems the agency identified in its responses to the 2014 and 2016 outbreaks. By developing a plan for evaluating completed corrective actions and, as part of this plan, considering whether any completed corrective actions require validation through simulations or exercises, USDA could better assess the effectiveness of these actions. This is particularly important in light of new outbreaks among commercial poultry in 2017 that continue to challenge the nation’s efforts to control this devastating disease.",
"We recommend that the Secretary of Agriculture direct the Administrator of the Animal and Plant Health Inspection Service to develop a plan for evaluating completed corrective actions to determine their effectiveness and, as appropriate, consider whether any completed corrective actions require validation through simulations or exercises.",
"We provided a draft of this report to USDA, HHS, and Interior for review and comment. USDA provided written comments on the draft, which are presented in appendix III, and provided technical comments, which we incorporated as appropriate. USDA agreed with our recommendation. HHS and Interior did not provide written comments but provided technical comments, which we incorporated as appropriate.\nIn its written comments, USDA said that APHIS agreed with our recommendation to develop a plan for evaluating completed corrective actions to determine their effectiveness. Further, USDA said that APHIS will incorporate simulations and exercises in its plan and that, in the event of an actual outbreak, APHIS will evaluate the effectiveness of the response through an after action report. Finally, USDA said that APHIS will continually review the criteria and hierarchy of corrective actions, both completed and ongoing, with respect to avian influenza policies, emergency management activities, and critical communications with states, tribes, poultry producers, and poultry industry partners.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees, the Secretary of Agriculture, the Secretary of Health and Human Services, the Secretary of the Interior, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.",
"Numerous federal agencies have responsibilities related to reducing the risks posed by avian influenza to human health, animal health, and the economy. Table 7 provides a summary of those responsibilities for agencies within the U.S. Department of Agriculture, the Department of Health and Human Services, and the Department of the Interior.",
"In response to the outbreak of highly pathogenic avian influenza in December 2014, personnel from the U.S. Department of Agriculture (USDA) and the Department of the Interior re-convened the Interagency Wild Bird Avian Influenza Steering Committee in January 2015. The steering committee developed a wild bird surveillance plan for avian influenzas that may pose a threat to human health or domestic poultry. The plan encourages federal and state agencies and others to use a variety of sampling methods to test live and dead wild birds to detect both low pathogenic and highly pathogenic avian influenza. According to data recorded as of March 24, 2017, the surveillance program had collected test results from more than 88,000 wild birds since December 2014. The number of monthly highly pathogenic avian influenza detections was highest during the period from December 2014 through June 2015 before declining during the period from July 2015 through March 24, 2017, despite an increase in testing over this period of time. In total, the program detected highly pathogenic avian influenza in 102 birds, or 0.12 percent of those tested. (See table 8 for a summary of the monitoring data.) The surveillance program also detected low pathogenic influenza A virus in some wild birds; program data show that the percentage of wild duck samples that tested positive for low pathogenic influenza A virus in each month ranged from about 7 percent to about 30 percent in 2015 and 2016 (data not shown in table 8). The state veterinarians we interviewed from six states (California, Indiana, Iowa, Minnesota, North Carolina, and Ohio) generally agreed with the need for wildlife surveillance. At the same time, while monitoring can serve as an early warning system to alert poultry owners and public health agencies, among others, of the presence of influenza A viruses in wild birds, it cannot eliminate wild birds as potential sources of the virus.",
"",
"",
"",
"In addition to the individual named above, Mary Denigan-Macauley (Assistant Director), Kevin Bray, Ross Campbell, Barbara El Osta, Kevin R. Fish, Katherine Killebrew, Erik Kjeldgaard, Cynthia Norris, and Amber Sinclair made key contributions to this report. Ashley Grant, Sara Sullivan, Kiki Theodoropoulos, and Rajneesh Kumar Verma also made important contributions to this report.",
"Biodefense: The Nation Faces Multiple Challenges in Building and Maintaining Biodefense and Biosurveillance. GAO-16-547T. Washington, D.C: April 14, 2016.\nEmerging Animal Diseases: Actions Needed to Better Position USDA to Address Future Risks. GAO-16-132. Washington, D.C.: December 15, 2015.\nBiosurveillance: Challenges and Options for the National Biosurveillance Integration Center. GAO-15-793. Washington, D.C: September 24, 2015.\nNational Preparedness: HHS Has Funded Flexible Manufacturing Activities for Medical Countermeasures, but It Is Too Soon to Assess Their Effect. GAO-14-329. Washington, D.C.: March 31, 2014.\nNational Preparedness: HHS is Monitoring the Progress of Its Medical Countermeasure Efforts but Has Not Provided Previously Recommended Spending Estimates. GAO-14-90. Washington, D.C.: December 27, 2013.\nHomeland Security: An Overall Strategy Is Needed to Strengthen Disease Surveillance in Livestock and Poultry. GAO-13-424. Washington, D.C.: May 21, 2013.\nInfluenza: Progress Made in Responding to Seasonal and Pandemic Outbreaks. GAO-13-374T. Washington, D.C.: February 13, 2013.\nNational Preparedness: Improvements Needed for Acquiring Medical Countermeasures to Threats from Terrorism and Other Sources. GAO-12-121. Washington, D.C.: October 26, 2011.\nInfluenza Pandemic: Lessons from the H1N1 Pandemic Should Be Incorporated into Future Planning. GAO-11-632. Washington, D.C.: June 27, 2011.\nInfluenza Vaccine: Federal Investments in Alternative Technologies and Challenges to Development and Licensure. GAO-11-435. Washington, D.C.: June 27, 2011.\nNational Preparedness: DHS and HHS Can Further Strengthen Coordination for Chemical, Biological, Radiological, and Nuclear Risk Assessments. GAO-11-606. Washington, D.C.: June 21, 2011.\nPublic Health Preparedness: Developing and Acquiring Medical Countermeasures Against Chemical, Biological, Radiological, and Nuclear Agents. GAO-11-567T. Washington, D.C.: April 13, 2011.\nInfluenza Pandemic: Monitoring and Assessing the Status of the National Pandemic Implementation Plan Needs Improvement. GAO-10-73. Washington, D.C.: November 24, 2009.\nInfluenza Pandemic: Sustaining Focus on the Nation’s Planning and Preparedness Efforts. GAO-09-334. Washington, D.C.: February 26, 2009.\nAvian Influenza: USDA Has Taken Important Steps to Prepare for Outbreaks, but Better Planning Could Improve Response. GAO-07-652. Washington, D.C.: June 11, 2007."
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"question": [
"What sectors are affected by avian influenza outbreaks?",
"What was the impact of the 2014 outbreak in the United States?",
"What regions have been affected by avian influenza in the last 20 years?",
"How does avian influenza affect animals?",
"How does avian influenza affect other species?",
"How has USDA learned from the most recent outbreaks?",
"What is one example of a lesson learned?",
"To what extent have these corrective actions been completed?",
"What is missing in this evaluation?",
"What has GAO found about corrective actions?",
"How would such a plan help USDA?",
"How does avian influenza affect poultry?",
"What were the effects of the 2014 and 2016 outbreaks?",
"How does avian influenza affect humans?",
"What is the most recent spike?",
"What was GAO asked to review?",
"What does this report examine?",
"How did GAO conduct its review?"
],
"summary": [
"When avian influenza outbreaks occur, they can have significant effects on human and animal health and the U.S. economy.",
"An outbreak can also have significant economic consequences; for example, the economic impacts of the 2014 outbreak in the United States have been estimated to range from $1.0 to $3.3 billion.",
"With regard to human health, avian influenza rarely affects humans, but the World Health Organization estimates that two particular types of the virus have caused more than 2,100 human infections and more than 800 deaths since 1997, primarily in Asia and the Middle East.",
"With regard to animal health, avian influenza outbreaks can lead to large numbers of poultry deaths as a result of efforts to control and prevent the spread of the disease. For example, from December 2014 to June 2015, more than 50 million birds were destroyed in the largest outbreak in U.S. history.",
"The effect of avian influenza on the health of other animal species varies. Swine are susceptible to both avian and human influenza viruses that, if mixed, could create a new virus to which humans are vulnerable.",
"USDA identified 15 areas with lessons learned from its responses to the 2014 and 2016 outbreaks of avian influenza and 308 associated corrective actions.",
"For example, one lesson learned in the area of depopulation (mass culling of flocks) is that there were not enough skilled personnel available for depopulating infected poultry, leading to delays and possibly increasing the spread of disease.",
"USDA has identified as completed about 70 percent of the 308 corrective actions to address all of the lessons learned.",
"However, the agency has not evaluated the extent to which completed corrective actions—such as encouraging states to form depopulation teams—have helped resolve the problems identified, and it does not have plans for doing so.",
"GAO has previously found that agencies may use evaluations to ascertain the success of corrective actions, and that a well-developed plan for conducting evaluations can help ensure that agencies obtain the information necessary to make effective program and policy decisions.",
"Such a plan would help USDA ascertain the effectiveness of the actions it took to resolve problems identified during recent outbreaks.",
"Avian influenza is an extremely infectious and potentially fatal disease in poultry.",
"In 2014 and 2016, two outbreaks of avian influenza led to the deaths of millions of poultry in 15 states and prompted emergency spending to control the disease.",
"While the health risk to humans is low, humans have been infected with these viruses, sometimes fatally.",
"A spike in fatal human infections in Asia began in late 2016.",
"GAO was asked to review several issues related to avian influenza.",
"This report examines (1) how outbreaks of avian influenza have affected human health, animal health, and the U.S. economy, (2) the extent to which USDA has taken actions to address any lessons learned from its responses to the outbreaks in 2014 and 2016, and how it plans to evaluate the actions' effectiveness, and (3) ongoing challenges and associated issues, if any, federal agencies face in their efforts to mitigate the potential harmful effects of avian influenza.",
"GAO reviewed global and domestic data on the effects of avian influenza and USDA reports and corrective action data associated with its responses to the recent outbreaks, and interviewed federal officials and stakeholders from state agencies and the poultry industry."
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CRS_R44115
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{
"title": [
"",
"Introduction and Background",
"Authorization and Reauthorization",
"Federal, State, and Local Administration",
"Funding",
"Eligibility",
"Categorical Eligibility",
"Income Eligibility",
"Nutritional Risk",
"Residential Eligibility and Immigration Status",
"Other Eligibility Issues",
"Certification Period",
"Priority System and Waiting Lists",
"Benefits and Services Provided",
"Supplemental Food Package",
"Federal Requirements for WIC-Eligible Foods",
"Issuance of Food Benefits",
"Nutrition Education, Breastfeeding, and Referral Services",
"Redemption of Food Benefits and Related Cost Containment Policies",
"Retail Food Delivery Systems and the Transition to EBT",
"States' Cost Containment through Approved Foods",
"Approved Food Lists",
"Infant Formula (and Other Food) Rebates",
"Vendor Authorization and Management79",
"States' Authorization of Vendors",
"Overseeing Vendors",
"Conclusion"
],
"paragraphs": [
"",
"The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides supplemental nutrition-rich foods and nutrition education (including breastfeeding promotion and support), as well as referrals to health care and social services, to low-income, nutritionally at-risk women, infants, and children up to five years old. Eligible women are specifically limited to those pregnant and postpartum (if breastfeeding, women are eligible for more benefits for a longer period of time). The WIC program seeks to improve the health status of its participants and prevent the occurrence of health problems during critical times of growth and development.\nWIC is a federally funded program administered by the U.S. Department of Agriculture's Food and Nutrition Service (USDA-FNS). In FY2016, approximately 7.7 million people participated in WIC each month in programs run by 90 state agencies (50 states, District of Columbia, 5 U.S. territories, and 34 Indian Tribal Organizations). USDA has said roughly half of all infants in the United States participate in the WIC program.\nThis report provides an overview of the WIC program, including administration, funding, eligibility, benefits, benefits redemption, and cost containment policies. While this report is meant to be a primer and is not focused on tracking major policy issues, it may be useful for the reader to note that this report does discuss features of the WIC program that are often the topic of policy debate: funding, eligible foods, and the redemption of benefits.",
"The WIC program dates back to a 1972 amendment to the Child Nutrition Act, which created WIC as a two-year pilot program. WIC became a permanent program in 1975 and remains authorized by Section 17 of the Child Nutrition Act (codified at 42 U.S.C. 1786). Congressional jurisdiction over this law has typically been exercised by the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Education and the Workforce.\nCongress periodically reviews and reauthorizes expiring authorities under the Child Nutrition Act, generally in conjunction with the \"Child Nutrition Programs,\" which are authorized by the Richard B. Russell National School Lunch Act, Section 32 of the Act of August 24, 1935, and the Child Nutrition Act. WIC and the Child Nutrition Programs were most recently reauthorized in 2010 through the Healthy, Hunger-Free Kids Act of 2010 (HHFKA, P.L. 111-296 ), and those authorities that expire do so after September 30, 2015 (the end of FY2015). During the 114 th Congress, committees of jurisdiction marked up bills to reauthorize WIC but reauthorization was not completed. As of the date of this report, no bills to reauthorize WIC have been introduced or marked up in the 115 th Congress.\nThe WIC Farmers' Market Nutrition Program (WIC FMNP) is closely related to WIC and also authorized within Section 17 of the Child Nutrition Act (Section 17(m)). This program, which serves much of WIC's population, is also typically reauthorized during the reauthorization of WIC and the Child Nutrition Program. This report discusses WIC and not WIC FMNP; however, a brief overview of that program is provided in Appendix C .\nFor information on WIC reauthorization laws, see the following:\nCRS In Focus IF10266, An Introduction to Child Nutrition Reauthorization CRS Report R44373, Tracking the Next Child Nutrition Reauthorization: An Overview CRS Report R41354, Child Nutrition and WIC Reauthorization: P.L. 111-296 .",
"WIC operates through a federal, state, and local partnership. The U.S. Department of Agriculture's Food and Nutrition Service (USDA-FNS) administers the WIC program at the federal level. USDA-FNS provides cash grants for foods and \"Nutrition Services and Administration\" to 90 state agencies (50 states, District of Columbia, 5 U.S. territories, and 34 Indian Tribal Organizations), which operate the program through local WIC agencies and clinics.\nAt the federal level, USDA-FNS is responsible for issuing and enforcing regulations, providing technical assistance to state agencies, and conducting studies and producing reports to evaluate the WIC program. At the state level, state agencies are generally responsible for program operations within their jurisdictions. States provide subgrants and technical assistance to local WIC agencies. Federal law and regulations allow states some flexibility in program operations, including options for food delivery systems and benefit redemption systems. States also have discretion in deciding the specific brands, types, and package sizes to include in their approved WIC food packages, within the bounds of federal regulations. At the local level, local WIC agencies—generally state and county health departments—provide WIC services and benefits directly or through local service sites and clinics. As of February 2015, there are approximately 1,900 local WIC agencies operating the program in approximately 10,000 local service sites or clinics.",
"Funding for WIC food and services is primarily provided by the federal government; though some states supplement their programs with their own funding, WIC law does not require matching funds. WIC's funding is categorized as discretionary with funding amounts determined entirely through the annual appropriations process. Since the late 1990s, the appropriations committees' practice has been to provide enough funds for WIC to serve all eligible applicants who seek program benefits (i.e., all forecasted participants). Lower levels of funding for the WIC program could reduce the number of pregnant and postpartum women, infants, and children served.\nThe WIC program is typically funded through the annual Agriculture and Related Agencies appropriations bill. Funds are available for two years (e.g., FY2015 appropriations are available for obligation through FY2016). Table 1 displays the funding provided for the WIC account in recent years' appropriations laws.\nThe majority of WIC's funding is distributed by USDA-FNS to states based upon allocation formulas described in federal regulations. The formulas used to allocate federal funds—both money from the annual appropriation and any unused money recovered and reallocated—are designed to (1) guarantee states enough money to maintain their previous year's operating level and caseload (with adjustments for inflation), and (2) distribute any extra dollars to grantees receiving comparatively less than their \"fair share\" of funds (based on their income-eligible WIC population and amount estimated as needed to serve their projected participation level). As needed and authorized, USDA-FNS may reallocate funding throughout the year. State-by-state allocation amounts for recent and past years can be found at USDA-FNS's website.\nIn addition to the appropriated funding provided for the current fiscal year, WIC may carry over funds remaining from the prior year's appropriation; and in the event that these funds from two years prove insufficient, the program maintains a contingency fund that can be spent in any year. Table 2 displays three years of federal WIC obligations. Due to the availability of WIC's appropriated funds, obligated funds may include not only the current year's appropriation but carryover and contingency spending as well.\nAs Table 2 shows, the bulk of WIC funding is provided as two types of grants for states: food grants, and Nutrition Services and Administration (NSA) grants. Food grant funds may be used to pay retail grocery stores for foods purchased by program participants; to acquire, store, and provide supplemental foods to participants; and to purchase or rent breast pumps. NSA grant funds may be used for participant certification costs, nutrition education activities, breastfeeding promotion and support activities, and salaries and administrative costs to provide these services. In general, money for food costs and NSA expenses must be kept separate; however, grantees may, under federal guidelines, convert food funding to support NSA costs. The WIC appropriation also includes federal funds for specified WIC purposes (e.g., Management Information Systems, Breastfeeding Peer Counselors) that may only be used to carry out approved projects or certain activities.\nBecause WIC's funding is tied to the cost of food items, the program has come to include a number of cost containment measures. Such measures include approved food lists with reasonably priced food items, rebates on infant formula and other authorized foods, and the selection of WIC vendors based on competitive prices. These policies are discussed in later sections of this report.",
"Mothers and children seeking WIC assistance must apply to their local WIC agencies and be screened for eligibility. WIC has a number of federal and state eligibility requirements including categorical, financial, and nutritional risk tests.",
"To qualify for benefits, an individual must be categorically eligible (i.e., in a specified participant category). WIC serves individuals in the following participant categories:\nwomen during pregnancy and up to six weeks after delivery, breastfeeding women up to one year after delivery, non-breastfeeding women up to six months postpartum, infants, and children up to age five (eligibility ends at fifth birthday).\nIn FY2016, approximately 24% of participants were women, 24% were infants, and 52% were children under the age of 5. Participant characteristics by category are shown in Figure 1 .",
"Applicants must meet specific income guidelines to qualify for WIC, and applicants who participate in certain programs are deemed income-eligible. Federal law states that the maximum allowable gross family income of an applicant must not exceed the guidelines for reduced-price school meals, which are set at 185% of the federal poverty level (income eligibility guidelines shown in Table 3 ). Although federal regulation allows states to set income limits between 100% and 185% of the federal poverty level, currently all WIC state agencies set the income limit at the maximum of 185%. Federal law also sets the rules for what state agencies may exclude from counted income, with additional options provided in regulations.\nApplicants can become income-eligible for WIC by one of two pathways: (1) providing documentation of income below the 185% FPL threshold, or (2) being deemed eligible based on participation in certain means-tested programs (adjunctive eligibility).\nIn the first pathway, the income of the \"family,\" not only the program participants, is considered. Federal regulation defines family largely as individuals (related or unrelated) who are living together. State agencies have the option to choose the income time frame for applicants (e.g., annually or a shorter term). WIC authorizing law includes state options for whether to count or exclude certain types of military income, and the regulations give additional flexibilities on income exclusions.\nThe second pathway, adjunctive eligibility, deems an applicant income-eligible based on their participation in certain means-tested programs. Applicants that currently receive or are eligible to receive Supplemental Nutrition Assistance Program (SNAP), Medicaid, or Temporary Assistance for Needy Families (TANF) are adjunctively eligible. Recent years' data—from a biennial USDA-FNS study using states' participant data—show that Medicaid has been consistently the most frequent source of adjunctive eligibility for WIC participants. Figure 2 displays the percentage of participants reporting participation in TANF, SNAP, and Medicaid. In April 2014, taking into account multiple program participation, 72.8% of WIC participants' income eligibility was determined through adjunctive eligibility. See Appendix Table A-2 for more detail on WIC participants' cross-program enrollment.\nBecause some states have income eligibility thresholds for SNAP and Medicaid that are above 185% of the federal poverty level, it is possible for WIC participants to have incomes over 185% of the federal poverty level. According to 2014 report data, 1.6% of WIC participants reported income above 185%. The vast majority of participants reporting income (74.1%) are at or below the federal poverty level.",
"Applicants must be at nutritional risk to qualify for WIC benefits, a rule that is unique to the WIC program, compared to other food assistance programs. Federal law recognizes five major types of nutritional risk, falling into two broad categories: \"medically based risks\" and \"diet-based risks.\" Medically based risks include health conditions such as anemia, underweight, maternal age, history of pregnancy complications, or poor pregnancy outcomes. Diet-based risks refer to conditions that predispose applicants to inadequate nutritional patterns such as homelessness and migrancy.\nTo determine nutritional risk, a \"competent professional authority,\" such as a physician, nutritionist, or nurse, must conduct a medical and/or nutritional assessment that includes the collection of anthropometric and biochemical measures, medical history, and dietary information from applicants and participants. This assessment allows WIC providers to tailor participant benefits and services.",
"Applicants must reside within the state in which their eligibility is determined and cannot participate in WIC at more than one WIC clinic at the same time. WIC state agencies have the option to limit WIC participation to U.S. citizens, nationals, and qualified aliens.",
"",
"Once certified eligible for WIC, participants are eligible for a certain period of time. At the end of a certification period, eligible participants must be recertified to continue receiving benefits. At recertification, the WIC clinic will confirm that the participant is still eligible for benefits (including nutritional risk) and may adjust benefits if categorical status and/or nutritional needs change. The lengths of WIC certification periods vary by participant category, but in general, participants are eligible to receive benefits for a six-month period. Pregnant women are certified for the duration of their pregnancy and up to six weeks postpartum. Breastfeeding women are certified for six-month periods up to one year after delivery, while non-breastfeeding women are certified only up to six months after delivery. States have options to certify infants through their first birthday and/or children for up to one-year periods.",
"Federal regulations require states to use a priority system to manage WIC applicant waiting lists, in the event that limited funding prevents all eligible applicants from being served. Because WIC funding is discretionary, the number of participants served by the program is limited by the level of funding appropriated by Congress (and the allocation of these funds by USDA-FNS to each state). However, since the late 1990s funding provided has been adequate to serve all eligible applicants. As a result, the priority system has largely gone unused in recent years—though the issue of WIC waiting lists is often brought up by program advocates in budget-related debates.\nIn the event that limited funding prevents all eligible applicants from participating in the program, local agencies are to create and maintain a waiting list of applicants seeking benefits. Using a seven-point priority system, applicants are prioritized on the waiting list to ensure that those with the greatest nutritional risk and overall need can receive benefits. Typically, applicants with medically based nutritional risks (e.g., anemia) are prioritized over those with only diet-based nutritional risks (e.g., conditions that may lead to inadequate diet). Additionally, certain participant categories—infants, pregnant women, and breastfeeding women—are given higher priority levels than other categories such as children and non-breastfeeding women.",
"The WIC program provides grants to states to provide benefits redeemable for specified supplemental foods (i.e., the WIC food package) and specified services. In addition to foods, WIC participants receive nutrition education, breastfeeding promotion and support, and referrals to healthcare and social services. Recent WIC grants to states for food costs as well as Nutrition Services and Administration (NSA) are displayed in Table 2 , with historical funding in Table A-1 .",
"Typically, WIC participants receive vouchers/checks or an electronic benefit transfer (EBT) card, which are then redeemed for specific supplemental foods, and in some respects tailored to the specific participant's needs. The federal food package regulations and the basis for states' approved food lists are discussed in this section. More information about the delivery of benefits and states' food lists is provided in a subsequent section, \" Redemption of Food Benefits and Related Cost Containment Policies .\"",
"The supplemental food package in a given state is the result of federal regulation and state policies. Federal regulations list seven food packages, including eligible foods and their quantities, based on participant characteristics such as pregnancy status, breastfeeding practices, the age of children or infants, and dietary needs. Food items within the seven food packages include milk, juice, cereal, eggs, whole-wheat bread, legumes and peanut butter, cheese, canned fish, infant formula, infant cereal, and infant fruits, vegetables, and meats. State agencies create their eligible food lists within this framework. For instance, two states may make different brands of infant cereals WIC-eligible but both states' choices will meet the federal regulatory cereal requirements for sugar and fiber. States' WIC food selections are a prime way that states can control costs and make their WIC grants go further. The bulk of participants' benefits are for specific foods, but certain participants also receive a cash value voucher (CVV) for a specified monthly dollar amount to be redeemed for fruits and vegetables. Figure 3 summarizes the federal WIC food packages—noting which packages include a CVV.\nWIC law, as amended in 2004 and 2010, requires USDA to conduct periodic (\"not less than every 10 years\") scientific reviews of foods included in the WIC food packages and to change the regulations as necessary. The current federal food package regulations, discussed in this section and displayed in Figure 3 , are largely the result of significant revisions that began in 2003 with meetings of the National Academy of Sciences' Institute of Medicine (IOM) and continued with a 2007 interim rule that was finalized in 2014, with an added change (allowing CVV purchases of white potatoes) from Congress through the FY2015 appropriations law. The 2003 revision had been the first major revision since the 1970s. Note: In 2016, the IOM was renamed the Health and Medicine Division (HMD) of the National Academies of Sciences, Engineering, and Medicine (NASEM).\nSince the 2014 final rule, USDA-FNS engaged IOM/HMD for further review and assessment of the WIC food package studies. HMD convened an expert committee, and has since produced three reports, the third and final of which is expected to form the basis for FNS's next revision of the WIC food packages.\nAppendix B provides further detail on the WIC food package updates and proposed food package updates discussed in this section.",
"At a WIC clinic (local agency), a \"competent professional authority\" will assign an applicant to one of seven food packages ( Figure 3 ). Participants are eligible to receive up to the maximum food benefits as determined by medical and nutritional need, not household income. Prescribed foods are typically reassessed at each recertification or when a participant's status changes (e.g., after a pregnant participant gives birth). Food package benefits are usually issued monthly.\nCurrently, all but two state agencies have participants redeem their benefits at authorized WIC vendors (retailers). Most are issuing benefits through paper checks/vouchers, but (as of March 2017) 24 state agencies have implemented an electronic benefit transfer (EBT) system statewide. These benefit redemption concepts are discussed further in \" Retail Food Delivery Systems and the Transition to EBT .\"",
"In addition to food benefits, WIC also provides nutrition education and related support. States are required to ensure that nutrition education, including breastfeeding promotion and drug abuse education, is available to all pregnant, postpartum, and breastfeeding participants in the program. States develop and coordinate nutrition education services and oversee and support the administration of these benefits at local agencies. Under federal guidelines, WIC nutrition education must emphasize the relationship between nutrition, physical activity, and health and it must assist each participant in improving health status and achieving a positive change in dietary and physical activity habits. Nutrition education is provided through a number of approaches, including individual consultations, group counseling sessions, and online educational modules.\nThough WIC does provide infant formula for infants whose mothers do not breastfeed, or do not exclusively breastfeed, WIC also promotes and supports breastfeeding in a variety of ways. States must establish standards and practices for breastfeeding promotion within nutrition education services. Additionally, states must spend an annual average of at least $21 per pregnant and breastfeeding woman to promote breastfeeding. Examples of breastfeeding promotion and support services include breastfeeding peer counselors, lactation consultants, classes and support groups, educational materials, and a breastfeeding hotline for questions. According to USDA-FNS, breastfeeding initiation has increased in recent years. 69.8% of WIC infants 6 to 13 months old were breastfed at some point in 2014, an increase from 67.1% in 2012.\nIn an effort to integrate available services, state and local WIC agencies often provide applicants and participants with information on other health-related and public assistance programs (such as Medicaid, SNAP, and immunizations). WIC law requires that states provide Medicaid information to individuals that are income-eligible and not participating.",
"State agencies, under federal guidelines, design and oversee the delivery of food benefits to participants. As stated earlier, almost all state agencies currently provide benefits using a voucher or EBT card for redemption at an authorized vendor. This section provides an overview of benefit redemption, states' transitions to EBT, authorization and management of vendors, and related cost containment policies.",
"Currently, most states have their participants redeem WIC benefits using a paper food instrument in the form of a check or voucher that specifies the types and quantities of foods that can be purchased at an authorized WIC vendor. Vendors send vouchers to the states, and the states reimburse vendors (using food grant funds) for WIC benefit redemptions. With paper vouchers, each will typically be redeemable for a group of approved foods (e.g., milk and eggs for the month), and WIC participants will have to redeem the entire group in the same transaction or lose the benefits if they make a partial transaction (e.g., only milk with the \"milk and eggs\" voucher).\nWIC's 2010 reauthorization included the requirement that state agencies transition to using electronic benefit transfer (EBT) by October 1, 2020 (the end of FY2020). SNAP underwent the transition from paper food stamps to EBT from 1988 to 2004. WIC EBT (referred to by some states and stakeholders as \"eWIC\") replaces vouchers with a card, similar to a debit card, which keeps track of remaining and redeemed benefits. Policy rationales for this transition include program integrity considerations as well as improved services for participants and vendors. EBT, for instance, allows food benefits to be redeemed for each item individually or in groupings of the participant's choice. The WIC technology is more complex than SNAP's, however, and state agencies are at varying stages of making the transition. 24 state agencies (20 states and 4 Indian Tribal Organizations), as of March 2017, have fully transitioned to WIC EBT. The fruit and vegetable cash-value voucher (CVV) is included in a transition to EBT, and so some states and stakeholders have begun referring to it instead as a cash-value benefit (CVB).",
"",
"Referred to earlier, the specific types and quantities of approved foods for redemption are a prime way states control food costs. In practice, states often control food costs by limiting participants' food-item selection to specific brands, economically priced package sizes and product forms, or least-cost brands. States' approved food lists, along with geographic variation in food costs, explain much of the variation between average food package costs in states. In FY2015, the average monthly food package cost was over $43 nationwide; individual state agencies' average monthly food package costs ranged from around $29 to $96. However, states balance cost containment considerations with participant satisfaction, as an approved food list that is too limited may stifle participation.",
"Manufacturers' rebates for infant formula (and some other foods) also serve to contain WIC food costs.\nOver time, one of the ways that WIC has controlled costs has been to require competitive bidding for infant formula, which has resulted in infant formula being available to states at well below market costs, especially due to manufacturers' discounts in the form of rebates to states. Infant formula has been shown to be the most expensive WIC food category. A study of FY2010 found that, without infant formula rebates, infant formula would have accounted for 42% of WIC food costs in FY2010; after rebates, formula costs were only 20%.\nInfant formula manufacturers submit bids through a state's (and, in some cases, alliances of states) competitive bidding process, and the contract is awarded to the manufacturer with the lowest price. The requirement that states pursue such cost containment systems for infant formula was added by the Child Nutrition and WIC Reauthorization Act of 1989 ( P.L. 101-147 ), although some states had begun to enter into these arrangements prior to the law's passage and implementation.\nA rebate contract is a legal agreement between an infant formula manufacturer and a state (or multistate alliance). In a rebate contract, the state agency receives a rebate payment from the manufacturer, with total rebate payments depending upon how much infant formula was ultimately purchased with WIC benefits. The manufacturer receives the exclusive right to sell formula to the state's WIC participants. (Note: Some states competitively bid their milk- and soy-based formulas separately, so WIC participants buy formula from two manufacturers rather than a sole source.) WIC-authorized retailers are reimbursed for the \"full\" retail price of the infant formula, but state agencies then submit their reimbursements to the manufacturers for rebates.\nThough the rebate may impact the manufacturers' profit on the WIC purchases, economic research indicates that the manufacturer who wins the state's WIC business also gains non-WIC business in the state.\nInfant formula rebates have significantly defrayed the costs of operating the WIC program. USDA-ERS estimates that, in FY2013, rebates generated $1.9 billion in savings. USDA-ERS also found that infant formula manufacturers in FY2013 were providing percentage discounts ranging from 77% to 98%, with 21 state agencies receiving discounts of 95% or greater.\nAlthough the law does not require states to pursue competitive bidding for other foods, some states have pursued rebate contracts for infant foods. According to March 2017 USDA-FNS data, eight WIC state agencies had rebate contracts for infant foods.",
"WIC uses the term \"vendors\" to describe the retailers that states authorize to accept WIC benefits. In FY2013, there were over 48,000 WIC authorized vendors nationwide. The sections that follow provide an overview of how states authorize WIC vendors and federal and state price-related policy impacting cost containment in WIC.",
"Vendors include a variety of retailers from supermarkets to convenience stores to military commissaries. State agencies are responsible for setting criteria and authorizing WIC vendors, within the framework of federal law and regulations. State agencies select and authorize vendors based on a set of criteria, such as competitive pricing, minimum stocking requirements of supplemental foods, and business integrity. If a vendor satisfies the state's criteria and participates in the agency's WIC training, it may enter into a vendor agreement with the state agency, thereby agreeing to comply with the state's rules and regulations.",
"As discussed earlier, WIC food benefits are provided in the form of specific foods, rather than a dollar amount of benefits (the cash value voucher/benefit is the exception). This can set up challenges for program spending, as participants are less sensitive to the price of goods and vendors can potentially take advantage of this. Therefore, states consider and monitor WIC vendors' pricing as a means of cost containment. For instance, federal law requires (1) the establishment of vendor \"peer groups\" and (2) additional strictures for vendors that receive over 50% of their revenue from WIC transactions. These policies, discussed further below, were added to WIC law in the 2004 reauthorization.\nFederal law requires states to establish a vendor peer group system for their WIC vendors. State agencies group vendors based on shared characteristics or criteria that affect food prices and compare prices within the group. Groups are based upon factors such as store size, geographic location, sales, and/or type of ownership. For example, large chain groceries may be grouped together as one peer group, while pharmacies may be grouped in another. States establish competitive price criteria for each peer group, with most states establishing a Maximum Allowable Reimbursement Level (MARL) or the total maximum reimbursement rate for each WIC transaction. When a vendor sends in a WIC voucher for reimbursement, the vendor will not be reimbursed above the MARL.\nAlso per the 2004 reauthorization law, states enforce additional requirements for vendors that receive over half their revenue from WIC transactions. These stores have been colloquially referred to as \"WIC-only\" vendors and in WIC regulations are called \"above-50-percent\" (A50) vendors. The 2004 law restricted A50 stores from providing incentives or other free merchandise to customers, and states are also required to limit A50 maximum reimbursements to the average of all other stores in the state. Not all states have A50 stores.\nAt times, USDA and/or state agencies have imposed a vendor moratorium in states that have had issues managing cost containment and maintaining the integrity of existing WIC vendors. Under a vendor moratorium, no new vendors are authorized.",
"Several aspects of the WIC program discussed in this primer—funding, eligible foods, and retail transactions—have been of interest to policymakers in the past and may continue to be in the future. Although the program has been reauthorized roughly every five years, interest in or debate over the program also arises in the context of annual appropriations deliberations. In light of budget laws' discretionary spending limits, congressional appropriators consider forecasted WIC need against other priorities. In addition to funding matters, moving forward, policymakers may be interested in overseeing the next update to the WIC food package regulations and states' transitions to EBT.\nAlong with the sources cited throughout the report, please see the text box below for a listing of additional resources which provide finer detail than was included in this overview.\nAppendix A. Additional WIC Data\nAppendix B. Revisions of WIC Food Packages, 2003-Present\n2009 Changes to the WIC Food Packages\nEffective October 1, 2009, USDA significantly revised the WIC food packages. These changes were made to reflect updates and revisions in nutrition science, public health concerns, and cultural eating patterns. The revised packages provide participants with a wider variety of foods, including whole grains, fruits, and vegetables; increase incentives for breastfeeding; and allow states greater flexibility in accommodating cultural preferences of participants. Before USDA embarked on this process to update the food packages, there had not been a major revision since the 1970s.\nIn 2003, USDA-FNS contracted with the Institute of Medicine (IOM) to independently review the WIC food packages, in order to align them more closely with updated nutrition science. IOM released its final report in 2005, recommending significant, though cost-neutral, changes to the food packages. IOM's major recommendations included the addition of whole-wheat bread and infant foods including fruits, vegetables, and meats; revised food quantities and food package categories; additional foods for breastfeeding women and breastfed infants; providing new optional food-substitutions (such as soy milk and tofu); and the introduction of a cash-value voucher (CVV) redeemable for a specified dollar amount of fruits and vegetables.\nIn December 2007, USDA-FNS published an interim final rule to update the WIC food packages. This interim rule largely included the IOM's recommendations, and state agencies were required to implement the changes in their state lists by October 1, 2009. While the interim final rule was in effect, USDA-FNS collected comments on its implementation, receiving over 7,500 letters. The agency published a final rule in March 2014.\nAbout the White Potato Policy Changes\nThe description of the WIC food packages in the \" Supplemental Food Package \" section of this report largely reflects the March 2014 final rule. Both the interim and final rules restricted the purchase of white potatoes, but a 2015 legislative change now allows their purchase.\nOne of the changes in the updated food packages was the inclusion of the CVV. Based on the 2005 IOM recommendations, these interim and final regulations did not allow participants to purchase white potatoes with the CVV. IOM cited the 2005 Dietary Guidelines for Americans for starchy vegetable consumption as well as food intake data showing that white potatoes, unlike many other vegetables, were already widely consumed.\nThis policy proved to be controversial in Congress and related proposals were included in the 112 th and 113 th Congress. In December 2014, Congress enacted a FY2015 appropriations law that included a policy rider (Section 753 of P.L. 113-235 ) to change WIC's exclusion of white potatoes. The law barred USDA from excluding any vegetable (without added sugar, salt, or fat) from the WIC food packages, therefore allowing white potatoes. The provision also required USDA to conduct another review of the WIC food packages, and, based on the results of that review, white potatoes (or other vegetables) would either continue to be included or would return to being excluded. In response to the appropriations law, on December 30, 2014, FNS issued policy guidance to states for implementing the inclusion of white potatoes. States were required to submit implementation plans to FNS by January 30, 2015. FNS's memo states that \"state agencies are expected to complete all implementation actions as soon as possible, but no later than July 1, 2015.\"\nIOM/HMD's WIC Food Package Review: 2015-Present\nNote: In 2016, the IOM was renamed the Health and Medicine Division (HMD) of the National Academies of Sciences, Engineering, and Medicine (NASEM) .\nSince the 2014 final rule, USDA-FNS engaged HMD for further review and assessment of the WIC food package studies. HMD convened an expert committee and has since produced three reports, the third and final of which is expected to form the basis for FNS's next revision of the WIC food packages.\nThe first, published in February 2015, was a \"letter report\" regarding the inclusion of the white potatoes issue (this was the review required by P.L. 113-235 ). The committee evaluated the 2009 regulation and, along with recommendations on data collection and study topics, recommended that USDA allow white potatoes as a WIC-eligible vegetable for purchase with the cash value voucher so long as this was consistent with the (forthcoming at that time) 2015 Dietary Guidelines for Americans.\nThe second, published in November 2015, established a framework by which the HMD committee would subsequently evaluate the current WIC food packages and make findings in the final report.\nThe third and final report of the series was published in January 2017; it is the HMD committee's final analysis of the current WIC food packages and includes recommendations for changes. In general, the committee recommends increasing the amounts of the cash value voucher, servings of whole grains, and seafood, while decreasing juice, milk, legumes, peanut butter, infant vegetables, fruits, and meats. For all food packages for women and children, the committee recommends\nincreasing the dollar amount of cash value vouchers; adding fish; increasing the amount of whole grains from 16 ounces to 24 ounces; and reducing the amounts of juice, dairy, legumes, and peanut butter.\nHMD also recommended policy changes to encourage partial breastfeeding over the exclusively formula-feeding package. Additional recommendations and the committee's rationale for its recommendations are included in the final report.\nAs of the date of this CRS report, USDA has not published any rules to amend the WIC food package regulations. As discussed earlier, USDA-FNS regulations based upon scientific recommendations, not the scientific recommendations themselves, govern the program's eligible foods and related issuance policies.\nAppendix C. WIC Farmers' Market Nutrition Program (WIC FMNP)\nThe WIC Farmers' Market Nutrition Program (WIC-FMNP) was first established in 1992. WIC-FMNP provides grants to participating states to offer vouchers/coupons/EBT to WIC participants that may be used in farmers' markets, roadside stands, and other approved venues to purchase fresh produce.\nNot all states participate in WIC-FMNP; in FY2015, 38 states, the District of Columbia, 3 U.S. territories, and 6 Indian Tribal Organizations received WIC-FMNP grants. Federal funds primarily cover the program's food costs and 70% of the administrative costs for each participating state. Participating state agencies must provide program income or state, local, or private funds for the program in an amount that is equal to at least 30% of its administrative cost, with some exceptions for tribal agencies.\nIn FY2015, the program covered an estimated 1.7 million recipients, and about 17,900 farmers, 3,400 farmers' markets, and 2,900 roadside stands. Participants received an average benefit of $23. In FY2015, total WIC-FMNP grant funding was approximately $20 million. FY2016 appropriations ( P.L. 114-113 ) provided $18.5 million for WIC FMNP. These are discretionary funds, but while WIC funding is appropriated to the WIC account, WIC-FNMP funds are included in the Commodity Assistance Program account."
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{
"question": [
"What is the WIC?",
"How does the WIC gain its legal support?",
"How are the funds for WIC distributed?",
"How were the state agencies distributed?",
"How do these agencies operate locally?",
"How do WIC participants meet eligibility?",
"What are some physical restrictions guide eligibility?",
"What are the demographic categories of WIC?",
"What does the WIC program provide for its participants?",
"How does the WIC ensure that certain individual participants are getting the specific nutrition they need?",
"How are WIC-eligible foods established on both local and national levels?",
"How do state agencies exert control?",
"What other benefits do state agencies provide?",
"How have federal regulations changed over time?",
"How do WIC participants get foods from the program?",
"How is vendor authorization conducted?",
"What is the state’s role in determining pricing?",
"Why have state agencies transitioned to EBT?"
],
"summary": [
"The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides nutrition-rich foods, nutrition education (including breastfeeding promotion and support), and health care and social services referrals to eligible low-income women, infants, and children. In FY2016, approximately 7.7 million people participated in WIC each month.",
"WIC is authorized by the Child Nutrition Act, as is the related WIC Farmers' Market Nutrition Program (WIC FMNP). WIC, WIC FMNP, school meals, and the other child nutrition programs are typically reauthorized together; these programs were last reauthorized in the Healthy, Hunger-Free Kids Act of 2010 (P.L. 111-296).",
"WIC's funding is discretionary, and the bulk of program funds are allocated via formula grant to state agencies for food costs and \"Nutrition Services and Administration.\"",
"In FY2016, there were 90 state agencies (50 states, District of Columbia, 5 U.S. territories, and 34 Indian Tribal Organizations).",
"These agencies operate the program through local WIC agencies and clinics.",
"WIC has a number of federal and state eligibility rules, including categorical, financial, and nutritional risk. Financial eligibility is met if (1) a household has income at or below 185% of the federal poverty level, or (2) applicants receive benefits through Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), Medicaid, or certain state programs.",
"Households also must meet nutritional risk criteria and reside in the state of application.",
"Participants must fall into one of WIC's participant categories: pregnant, postpartum, and breastfeeding women; infants; or children (under five years of age).",
"WIC provides participants with monthly benefits redeemable for specified foods to supplement their diets, as well as related nutrition and health services.",
"At the WIC clinic, participants are provided the benefits to redeem specific foods (food package) for the participant's category and individual nutritional needs.",
"WIC-eligible foods are laid out in federal regulation, and state agencies develop their own approved food lists within this framework.",
"One way that state agencies control WIC costs is through their approved foods lists. These lists usually include one brand of infant formula, as state agencies are required to control infant formula costs through competitive bidding for infant formula rebate contracts.",
"In addition to providing food benefits, states are required to ensure that nutrition education, including breastfeeding promotion and drug abuse education, is available to all pregnant, postpartum, and breastfeeding participants in the program.",
"Major changes to the federal WIC food package regulations have been made in recent years; for some participant categories, the food package now includes a cash-value voucher redeemable for fruits and vegetables.",
"Nearly all states administer their programs through a retail food delivery system, in which participants purchase foods at authorized retailers (vendors).",
"Accordingly, many WIC policies at the federal and state levels pertain to vendor authorization and oversight as well as benefit redemption. States authorize vendors for the program, considering factors like a vendor's inventory and capacity and geographic distribution of vendors.",
"States also consider and monitor WIC vendors' pricing, as required by federal law, to help contain program costs.",
"Currently, most states distribute checks or vouchers for participants to purchase WIC foods at vendors; however, state agencies are increasingly transitioning to electronic benefit transfer (EBT), in part because the 2010 reauthorization law requires this transition by October 1, 2020."
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CRS_RS22984
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{
"title": [
"",
"China's Stake in the Current Crisis",
"China's Exposure to the Global Financial Crisis",
"China's Response to the Crisis",
"China's Stimulus Program",
"Has China's Economy Bottomed Out?",
"China's Potential Role and Implications for the United States"
],
"paragraphs": [
"",
"China's economy is heavily dependent on global trade and investment flows. In 2007, China overtook the United States to become the world's second-largest merchandise exporter after the European Union (EU). China's net exports (exports minus imports) contributed to one-third of its GDP growth in 2007. China's exports of goods and services as a share of GDP rose from 9.1% in 1985 to 37.8% in 2008 (see Figure 1 ). The Chinese government estimates that the foreign trade sector employs more than 80 million people, of which 28 million work in foreign-invested enterprises. Foreign direct investment (FDI) flows to China have been a major factor behind its productivity gains and rapid economic growth. FDI flows to China in 2007 totaled $75 billion, making it the largest FDI recipient among developing countries and the third largest overall, after the EU and the United States; FDI flows to China in 2008 were $92 billion. The current global economic slowdown (especially among its major export markets—the United States, the EU, and Japan) is having a significant negative impact on China's export sector and industries that depend on FDI flows.\nThe Chinese economy slowed sharply in 2008 and early 2009. China's fourth-quarter 2008 real GDP growth (year-on-year basis) was 6.8%, and its 1 st quarter 2009 growth (year-on-year basis) was 6.1% (reportedly, the slowest quarterly growth in 10 years). Some analysts contend annual economic growth of less than 8% could lead to social unrest in China, given that an estimated 20 million people seek jobs every year (including migrant workers who move to urban centers and high school and college graduates). According to the International Monetary Fund (IMF), China was the single most important contributor to world economic growth in 2007. Thus, a Chinese economic slowdown (or recovery) could also have significant global implications.",
"The extent of China's exposure to the current global financial crisis, in particular from the fallout of the U.S. sub-prime mortgage problem, is unclear. On the one hand, China places numerous restrictions on capital flows, particularly outflows, in part so that it can maintain its managed float currency policy. These restrictions limit the ability of Chinese citizens and many firms to invest their savings overseas, compelling them to invest those savings domestically, (such as in banks, the stock markets, real estate, and business ventures), although some Chinese attempt to shift funds overseas illegally. Thus, the exposure of Chinese private sector firms and individual Chinese investors to sub-prime U.S. mortgages is likely to be small.\nMoreover, Chinese government entities, such as the State Administration of Foreign Exchange, the China Investment Corporation (a $200 billion sovereign wealth fund created in 2007), state banks, and state-owned enterprises, may have been more exposed to troubled U.S. mortgage securities. Chinese government entities account for the lion's share of China's (legal) capital outflows, much of which derives from China's large and growing foreign exchange reserves. These reserves rose from $403 billion in 2003 (year end) to $2.1 trillion as of June 2009. In order to earn interest on these holdings, the Chinese government invests in overseas assets. A large portion of China's reserves are believed to be invested in U.S. securities, such as long-term (LT) Treasury debt (used to finance the federal deficit), LT U.S. agency debt (such as Freddie Mac and Fannie Mae mortgage-backed securities), LT U.S. corporate debt, LT U.S. equities, and short-term (ST) debt. The Treasury Department estimates that, as of June 2008, China's holdings of U.S. securities totaled $1,205 billion (up from $922 billion in June 2007), making it the second-largest foreign holder of such securities (after Japan). Of this total, $527 billion were in LT U.S. agency securities, $522 billion were in LT Treasury securities, $100 billion in LT equities, $26 billion in LT corporate securities, and $30 billion in ST debt.\nIf China held troubled sub-prime mortgage backed securities, they would likely be included in the corporate securities category and certain U.S. equities (which include investment company share funds, such as open-end funds, closed-end funds, money market mutual funds, and hedge funds) which may have been invested in real estate. However, these were a relatively small share of China's total U.S. securities holdings. China's holdings of Fannie Mae and Freddie Mac securities (though not their stock) were likely to have been more substantial, but less risky (compared to other mortgage-backed securities), especially after these two institutions were placed in conservatorship by the Federal Government in September 2008 and thus have government backing.\nThe Chinese government generally does not release detailed information on the holdings of its financial entities, although some of its banks have reported on their level of exposure to sub-prime U.S. mortgages. Such entities have generally reported that their exposure to troubled sub-prime U.S. mortgages has been minor relative to their total investments, that they have liquidated such assets and/or have written off losses, and that they (the banks) continue to earn high profit margins. For example, the Bank of China (one of China's largest state-owned commercial banks) reported in March 2008 that its investment in asset-backed securities supported by U.S. sub-prime mortgages totaled $10.6 billion in 2006 (accounting for 3.5% of its investment securities portfolio). In October 2008, it reported that it had reduced holdings of such securities to $3.3 billion (1.4% of its total securities investments) by the end of September 2008, while its holdings of debt securities issued or backed by Freddie Mac and Fannie Mae were at $10 billion. Fitch Ratings service reported that the Bank of China's exposure to U.S. sub-prime-related investments was the largest among Asian financial institutions, and that further losses from these investments were likely, but went on to state that the Bank of China would be able to absorb any related losses \"without undue strain.\"\nHowever, China's economy has not been immune to effects of the global financial crisis, given its heavy reliance on trade and foreign direct investment (FDI) for its economic growth. Numerous sectors were hard hit. To illustrate:\nThe real estate market in several Chinese cities experienced a sharp slowdown in construction, falling prices and growing levels of unoccupied buildings. This increased pressure on the banks to lower interest rates further to stabilize the market. The value of China's main stock market index, the Shanghai Stock Exchange Composite Index, lost nearly two-thirds of its value from December 31, 2007, to December 31, 2008. China's trade and FDI plummeted sharply, as indicated in Figure 2 . Exports and imports from January-July 2009 were down 22.0% and 23.6%, respectively on a year-on-year basis; they declined 10 straight months beginning in November 2008. FDI flows to China from January-July 2009 were down 20.4%; they declined for 10 consecutive months beginning in October 2008 (year-on-year basis). The Chinese government in January 2009 estimated that 20 million migrant workers alone had lost their jobs in 2008 because of the global economic slowdown. During the first four months of 2009, industrial output rose by 5.5% year-on-year, well below the 12.9% growth rate in 2008.",
"China has taken a number of steps to respond to the global financial crisis. On September 27, 2008, Chinese Premier Wen Jiabao reportedly stated that \"what we can do now is to maintain the steady and fast growth of the national economy, and ensure that no major fluctuations will happen. That will be our greatest contribution to the world economy under the current circumstances.\" In addition to cutting interest rates and boosting bank lending, China has implemented a number of policies to stimulate and rebalance the economy, increase consumer spending, restructure and subsidize certain industries, and boost incomes for farmers and rural poor.",
"On November 9, 2008, the Chinese government announced it would implement a two-year, 4 trillion yuan ($586 billion) stimulus package (equivalent to 13.3% of China's 2008 GDP), largely dedicated to infrastructure projects. The package would finance public transport infrastructure (including railways, highways, airports, and ports) affordable housing, rural infrastructure (including irrigation, drinking water, electricity, and transport), environmental projects, technological innovation, health and education, and rebuilding areas hit by disasters (such as areas that were hit by the May 12, 2008 earthquake, primarily in Sichuan province). China's stimulus, if fully implemented, would likely constitute one of the largest economic stimulus packages (both in spending levels and as a percent of GDP) that have been announced by the world's major economies to date, although it is unclear to what extent the stimulus package represents new spending versus projects that were already in the works before the economic downturn hit China. Table 1 provides a breakdown of the stimulus program spending priorities.\nThe Chinese stimulus program includes steps the government intends to take to assist 10 pillar industries (i.e., industries deemed by the government to be vital to China's economic growth) to promote their long-term competitiveness. These industries include autos, steel, shipbuilding, textiles, machinery, electronics and information, light industry (such as consumer products), petrochemicals, non-ferrous metals, and logistics. Government support policies for the 10 industries are expected to include tax cuts and incentives (including export tax rebates), industry subsidies and subsidies to consumers to purchase certain products (such as consumer goods and autos), fiscal support, directives to banks to provide financing, direct funds to support technology upgrades and the development of domestic brands, government procurement policies, the extension of export credits, and funding to help firms invest overseas.\nOn April 7, 2009, the Chinese government announced plans to spend $124 billion over the next three years to create a universal health care system. The plan would attempt to extend basic coverage to most of the population by 2011, and would invest in public hospitals and training for village and community doctors. A number of efforts have been made to boost rural incomes and spending levels and to narrow the gap in living standards between rural and urban citizens (as well as between coastal and western regions of the country). For example, since February 2009, an estimated 900 million Chinese rural residents have been eligible to receive a 13% rebate for purchase of home appliances. Public housing projects, education, and infrastructure projects are largely targeted to rural areas. The government has also announced plans to boost agricultural subsidies to farmers. On June 24, 2009, China's State Council launched a new pilot rural pension program that will initially cover 10 percent of China's counties beginning in October 2009 (Currently most rural farmers are not covered by pension system).",
"Chinese officials contend that their economic policy efforts are beginning to produce results. They note a number of positive developments:\nGDP in the second quarter of 2009 grew by 7.9%, compared to 6.1% growth in the first quarter 2009, on a year-on-year basis. Several economic forecasting firms have recently predicted a strong Chinese economic recovery. For example, Global Insight in August 2009, predicted China's real GDP would grow 8.0% in 2009 and 10.1% in 2010, while the Economist Intelligence Unit projected real growth at 8.0% for both years. China's Shanghai Stock Exchange Composite Index has risen by 67.3% since the beginning of the year (through August 14, 2009. A number of sectors have enjoyed healthy growth during the first seven months of 2009. Although they have not achieved levels that occurred before the global economic crisis, they could signify that a recovery is taking place. For example, retail sales were up 15% (6.7 percentage points lower than in the previous, urban fixed-asset investment rose 32.9% (0.7% percentage points lower), and industrial output rose by 7.5% (8.6 percentage points lower). Real estate prices in major cities have also begun to rise over the past few months.\nAlthough there are many indicators of a Chinese economic recovery (with the exception of trade and FDI flows), there are numerous concerns over long-term growth prospects. Many analysts note that much of the recent economic growth that has occurred has resulted from large-scale bank lending and infrastructure spending projects, rather than consumer spending. In addition, many analysts have raised concerns that the large level of borrowing by local governments and state-owned enterprises could lead to a sharp rise in non-performing loans on the balance sheets of China's major banks, and could cause local governments to be become heavily indebted.\nMany analysts are also concerned that the stimulus policies that China has implemented to date could slow efforts to further reform the economy, especially in regards to state-owned enterprises and the banking system. Some have charged that China has rolled backed some it its economic reforms by boosting industrial subsidies and increasing trade and investment barriers, in order to assist firms deemed by the government to be vital to future development. China has also imposed \"buy China\" regulations to prevent participation by foreign firms and ensure that stimulus money benefit only Chinese firms. Many economists contend that China's long-term economic growth prospects will likely depend on the ability of the government to rebalance the economy by promoting greater domestic consumption and to deepen market-oriented economic reforms. Thus, China's current economic recovery could be short-lived.",
"Analysts debate what role China might play in responding to the global financial crisis, given its huge foreign exchange reserves (at over $2 trillion) but its relative reluctance to become a major player in global economic affairs and its tendency to be cautious with its reserves. Some have speculated that China may, in order to help stabilize its most important trading partner (the United States), boost purchases of U.S. securities (especially Treasury securities) in order to help fund the hundreds of billions of dollars that are expected to be spent by the U.S. government to purchase troubled assets and stimulate the economy. Additionally, China might try to shore up the U.S. economy by buying U.S. stocks (or might do so to take advantage of relatively low prices).\nDuring her visit to China on February 21, 2009, Secretary of State Hillary Rodham Clinton stated that she appreciated \"greatly the Chinese government's continuing confidence in the United States Treasuries,\" and she urged the government to continue to buy U.S. debt. Some contend that taking an active role to help the United States (and other troubled economies) would boost China's image as a positive contributor to world economic stability, similar to what occurred during the 1997-1998 Asian financial crisis when it offered financial aid to Thailand and pledged not to devalue its currency.\nOn the other hand, there are a number of reasons why China might be reluctant to significantly increase its investments of U.S. assets. One concern could be whether increased Chinese investments in the U.S. economy would produce long-term economic benefits for China. Some Chinese investments in U.S. financial companies have fared poorly, and Chinese officials could be reluctant to put additional money into investments that were deemed to be too risky. Secondly, a sharp economic downturn of the Chinese economy would likely increase pressure to invest money at home, rather than overseas. Many analysts (including some in China) have questioned the wisdom of China's policy of investing a large volume of foreign exchange reserves in U.S. government securities (which offer a relatively low rate of return) when China has such huge development needs at home. China's holdings of U.S. securities at the end of 2008 are estimated to have been roughly equivalent to over $1,000 per person in China, a significant figure for a country with a per capita GDP of about $3,190 (2008). On March 13, 2009, Wen Jiabao at a news conference stated that he was \"a little bit worried\" about the safety of Chinese assets in the United States On March 24, 2009, the governor of the People's Bank of China, Zhou Xiaochuan, published a paper calling for the replacing the U.S. dollar as the international reserve currency with a new global system controlled by the International Monetary Fund. Many analysts (including some in China) have questioned the wisdom of China's policy of investing a large level of foreign exchange reserves in U.S. government securities, which offer a relatively low rate of return when China has such huge development needs at home.\nWhile additional large-scale Chinese purchases of U.S. securities might provide short-term benefits to the U.S. economy and may be welcomed by some policymakers, they could also raise a number of issues and concerns. Some U.S. policymakers have expressed concern that China might try to use its large holdings of U.S. securities as leverage against U.S. policies it opposes. For example, various Chinese government officials reportedly suggested on a number of occasions in the past that China could dump (or threaten to dump) a large share of its holdings in order to counter U.S. pressure (such as threats of trade sanctions) on various trade issues (such as China's currency policy). In exchange for new purchases of U.S. debt, China would likely want U.S. policymakers to lower expectations that China will move more rapidly to reform its financial sector and/or allow its currency to appreciate more substantially against the dollar. Some analysts have suggested that China could choose to utilize its reserves to buy stakes in various distressed U.S. industries. However, this could also raise concerns in the United States that China was being allowed to buy equity or ownership in U.S. firms at rock bottom prices, that technology and intellectual property from acquired firms could be transferred to Chinese business entities (boosting their competitiveness vis-a-vis U.S. firms), and that becoming a large stakeholder in major U.S. companies could give the Chinese government increased political influence in the United States. U.S. policymakers in the past have sometimes opposed attempts by Chinese firms to acquire shares or ownership of U.S. firms.\nWhile attending the G-20 summit in London on the global financial crisis on April 1, 2009, President Obama and President Hu met and pledged \"to work together to resolutely support global trade and investment flows, \"resist protectionism,\" and to resume high-level cooperation on long-term economic issues under the Strategic and Economic Dialogue (S&ED). The first round of the S&ED was held in Washington, D.C. on July 27-28, 2009. The two sides agreed to continue cooperation on a number of economic fronts, including promoting balanced economic growth and financial reforms.\nIt is unclear to what extent the global financial crisis will affect U.S.-Chinese economic ties. Prior to the crisis, U.S. officials urged China to adopt economic reforms, especially in terms of the financial system, in ways that would emulate the U.S. economic model. Once the economic crisis hit, China was quick to blame U.S. economic policies for the crisis, and thus, U.S. influence with China on economic issues may have waned somewhat. China's increased use of subsides, \"buy China\" procurement regulations, and trade and investment barriers could increase pressure in the United States to utilize U.S. trade laws against unfair trade practices and/or to provide temporary relief to U.S. firms and workers injured by import surges from China. Chinese officials have countered with their own complaints over rising U.S. \"protectionism.\"\nAlthough China has attempted to diversify its large foreign exchange holdings and to make its currency more convertible in international exchange markets (such as through currency swap arrangements with various countries), it is unlikely ( at least in the near term) to make major changes to its heavy reliance on the dollar as its main source of foreign exchange reserves (and investments in dollar-denominated assets), nor is China in a position to make its currency fully convertible in international exchange rate markets (due to the relative weakness of its banking system). However, Chinese officials are deeply concerned over the security of their dollar holdings if the dollar undergoes a sharp depreciation against major currencies in the future (possibly arising from rising U.S. public debt). Such concerns may also spur the Chinese government to take more steps to promote domestic consumption, and lessen dependence on trade and FDI flows, as a source of economic growth."
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{
"question": [
"What was the recent trajectory of China's economy?",
"How did the 2007-2008 financial crisis affect the Chinese economy?",
"Why is a failing economy concerning for China?",
"How does the failing economy particularly affect the export industry?",
"How does the Chinese government plan to rebalance the economy?",
"What has the government done to increase domestic growth?",
"How does expanding loans help stabilize the economy?",
"What have the results been so far?",
"What was the trajectory from January to July 2009?",
"What have analysts said about China's economic stimulus policies?",
"What risk do the lending policies of Chinese state-owned banks pose?",
"How does China's economy stabilization policies affect U.S. policy makers?",
"How do these policies affect the U.S. government's borrowing needs?",
"What is the current priority of U.S. policymakers regarding the Chinese economy?"
],
"summary": [
"Over the past several years, China has enjoyed one of the world's fastest-growing economies and has been a major contributor to world economic growth. However, the current global financial crisis has significantly slowed China's economy; real gross domestic product (GDP) fell from 13.0% in 2007 to 8.0% in 2008.",
"Several Chinese industries, particularly the export sector, have been hit hard by crisis, and millions of workers have reportedly been laid off.",
"This situation is of great concern to the Chinese government, which views rapid economic growth as critical to maintaining social stability.",
"China is a major economic power and holds huge amounts of foreign exchange reserves, and thus its policies could have a major impact on the global economy.",
"The Chinese government has stated that it plans to rebalance the economy by lessening its dependence on exports for economic growth while boosting domestic demand.",
"In November 2008, the Chinese government announced a $586 billion spending package to help stimulate the domestic economy, largely geared towards new infrastructure projects. The government has also offered a number of programs to stimulate domestic consumption of consumer products (such as cars and appliances), especially in the rural areas.",
"In addition, the government ordered banks to sharply expand loans to local governments and businesses to expand investment.",
"As a result, China's economy has shown some improvement. For example, its GDP in the second quarter of 2009 grew by 7.9%, compared to 6.1% growth in the first quarter 2009, on a year-on-year basis.",
"However, from January to July 2009, China's trade was down 23% over the same period in 2008, while foreign direct investment fell 18%.",
"Some analysts have criticized various aspects of China's economic stimulus policies. Some contend that China, in an effort to assist firms impacted by the global economic slowdown, has imposed numerous new trade-distorting policies, such as extensive industrial subsidies and trade and investment restrictions on foreign firms.",
"In addition, many analysts warn that the easy lending policies of Chinese state-owned banks may later lead to a sharp increase in the level of non-performing loans by these banks if loans go to investments that fail to produce long-term returns.",
"China's efforts to stabilize its economy are of major concern to U.S. policy makers. If successful, such policies could boost Chinese demand for U.S. products.",
"In addition, China is a major purchaser of U.S. Treasury securities, which help fund the Federal Government's borrowing needs, and thus its decision whether or not to continue to purchase U.S. debt could impact the U.S. economy.",
"U.S. policy makers also want to ensure that, despite the sharp downturn in the Chinese economy from the effects of current global economic downturn, China will continue to reform its economy and liberalizes its trade regime and refrain from imposing policies that restrict or distort trade."
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GAO_GAO-16-446
|
{
"title": [
"Background",
"Diagnosing Autism",
"Interventions for Autism",
"Federal Education Programs that Serve Young Children with Autism",
"Federal Health Insurance Programs that Serve Young Children with Autism",
"Coordination of Federal Autism Research and Other Activities",
"Agencies Used a Variety of Mechanisms to Encourage Early Identification and Interventions",
"Agencies Solicited and Funded Research on Early Autism Identification and Interventions",
"Agencies Encouraged Early Autism Identification and Intervention by Providing Non-Research Grants and Developing Information Resources and Awareness Campaigns",
"Grants for Improving Access to Care and Services",
"Training",
"Information Resources",
"Awareness Campaigns",
"Two Federal Agencies’ Programs that Serve Children Include Screenings to Identify Developmental Concerns Early",
"State and Federal Education and Health Care Programs Provide a Variety of Intervention Services to Young Children with Autism",
"Education Programs Provide Young Children with Autism Individualized Interventions; Selected States and DOD Conducted Autism- Specific Activities",
"California",
"Massachusetts",
"North Carolina",
"Ohio",
"Texas",
"Number of Children with Autism Receiving Intervention Services through Special Education Programs is Likely Underreported",
"Young Children with Autism Enrolled in Selected States’ Medicaid or CHIP Programs, or TRICARE Received a Variety of Intervention Services",
"Medicaid and CHIP",
"Recent Actions by HHS Could Improve Monitoring of Federally Funded Autism Research to Avoid Unnecessary Duplication",
"Agency Comments",
"Appendix I: Detailed Scope and Methodology for Analyzing Health Care Data",
"State selection and data reliability",
"Beneficiary identification",
"Service identification",
"Limitations",
"Appendix II: Number of Children Age 3 through 5 in States’ Special Education Autism Category",
"Appendix III: Selected Federal Health Expenditures for Intervention Services Provided to Children with Autism",
"Medicaid and CHIP Fee-For-Service Expenditures",
"TRICARE Purchased Care Expenditures",
"Appendix IV: Comments from the Department of Education",
"Appendix V: Comments from Department of Health and Human Services",
"Appendix VI: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments",
"Related GAO Products"
],
"paragraphs": [
"Autism is a developmental disability that can cause significant social, communication, and behavioral challenges. Individuals with autism may communicate, interact, behave, and learn in ways that are different from others. The learning, thinking, and problem-solving abilities of individuals with autism can range from gifted to severely challenged. Some individuals with autism need extensive help in their daily lives, while others need less. CDC estimates that about 1 in 68 children have been identified as having autism.",
"Diagnosing autism involves developmental screening and a comprehensive diagnostic evaluation. According to information on CDC’s website, developmental screening consists of a short test to tell if a child is learning basic skills when expected based on the child’s age, or if the child might have delays. During developmental screening, a doctor might ask the parent some questions or talk and play with the child to observe whether the child plays, learns, speaks, acts, and moves as expected. A delay in any of these areas could be a sign of a problem. The American Academy of Pediatrics recommends that all children be screened for developmental delays and disabilities during regular well-child doctor visits and specifically for autism at 18 and 24 months. If a doctor identifies any signs of a problem, a comprehensive diagnostic evaluation, which provides a thorough review that may include looking at the child’s behavior and development, should be performed and parents interviewed. In many cases, the doctor may refer the child and family to a specialist, such as a developmental pediatrician or child psychologist, for further assessment and diagnosis.",
"There are a variety of interventions that are used to treat young children with autism who may face significant social, communication, and behavioral challenges. Typical therapies include physical and occupational therapy, speech and language therapy, and behavioral therapies. For example, occupational therapy can teach a child skills, such as dressing and relating to people in school and social situations, to help the child live as independently as possible. Speech and language therapy can help improve a child’s communication skills, such as verbal skills or gestures. There are many types of behavioral therapies used to treat children diagnosed with autism. For example, applied behavior analysis (ABA) is a commonly used framework to provide intervention services to children with autism. It uses behavior modification principles, such as positive reinforcement, to increase or decrease targeted behaviors. Other interventions can be incorporated into a treatment plan for a child with autism, such as parent-implemented interventions— structured parent training programs through which parents learn intervention practices that they can implement with their child at home and in the community.",
"Children with disabilities—including children with autism—can receive intervention services through IDEA, which is overseen at the federal level by Education. Part B of IDEA requires states to make a free appropriate public education available to eligible children with disabilities as a condition of grant eligibility. In general, under Part B, Education provides formula grants to states to fund a portion of the excess costs incurred by school districts to provide special education and related services— referred to in this report as “special education services”—to students with disabilities ages 3 through 21, including those with autism, who meet certain eligibility criteria. Part B of IDEA requires that the special education services that each individual student needs in order to receive a free appropriate public education be included in the student’s individualized education program (IEP). Each student’s IEP must include, among other information, the child’s present levels of academic achievement and functional performance, measurable annual goals, and the special education and related services to be provided to enable the child to advance appropriately toward attaining the annual goals and to be involved and make progress in the general education curriculum. The IEP is developed by a team of the child’s teachers, parents, a school district representative, other related services personnel, and whenever appropriate, the child. DOD is also required to provide special education services to eligible children who are served by its schools, although the department does not receive funding from Education.\nThrough Part C of IDEA, Education provides formula grants to states to fund a portion of the costs of providing early intervention services to infants and toddlers through age 2 with developmental delays or who have been diagnosed with a physical or mental condition with a high probability of resulting in developmental delays. Under Part C, children are required to have an individualized family service plan (IFSP), which contains information about the services necessary to facilitate a child’s development and enhance the family’s capacity to facilitate the child’s development. Through the IFSP process, family members and service providers are intended to work as a team to plan, implement, and evaluate services tailored to the family’s unique resources, priorities, and concerns related to enhancing the development of the child as identified through the assessment of the family. Again, although DOD does not receive funding from Education, DOD is responsible for providing early intervention services to infants and toddlers through age 2 who are eligible to enroll in a DOD school.",
"Some children with disabilities—including children with autism—can receive intervention services through federal health insurance programs such as Medicaid, a joint federal-state program overseen by CMS that finances the delivery of health care services for a diverse low-income and medically needy population. Although federal law sets minimum requirements for eligibility and coverage, states are accorded significant flexibility to design and implement their Medicaid programs, resulting in over 50 state programs that vary, for example, in how health care is financed and delivered. Children whose household incomes are above the threshold for Medicaid eligibility may have health care services financed through their state’s CHIP. CHIP is also a joint federal-state program overseen by CMS that states administer under broad federal requirements; and like Medicaid, the programs vary in eligibility and services covered. States can use Medicaid or CHIP to cover services such as physical and occupational therapy, and speech and language therapy, which may also be eligible IDEA early intervention and special education services.\nDOD offers health care services for active duty and retired uniformed servicemembers and their families, as well as National Guard and Reserve members and their families through TRICARE. Under TRICARE, beneficiaries may obtain care from military treatment facilities or through its purchased care system of civilian providers. The TRICARE program offers beneficiaries a managed care option, a preferred provider organization option, and a fee-for-service option—as well as other options available to specific eligibility groups. For example, children of active duty servicemembers may also qualify for the Extended Care Health Option, which is a supplementary program that offers additional coverage to beneficiaries with special needs. Among other requirements, beneficiaries must have a qualifying medical condition, which includes autism, to register in the Extended Care Health Option.\nIn recent years, DOD has had a series of demonstrations to increase the provision of ABA to servicemembers’ family members who are diagnosed with autism. In March 2008, DOD began the Enhanced Access to Autism Services Demonstration to increase access to ABA for family members of active duty servicemembers by allowing ABA services to be provided by behavior technicians. In August 2012, DOD expanded ABA coverage to non-active duty family members through the TRICARE basic program. In July 2013, DOD began the ABA Pilot to provide supplemental ABA services to non-activity duty family members who seek additional services.",
"The Autism CARES Act reauthorized the Interagency Autism Coordinating Committee (IACC), which is a federal advisory committee that was initially established under the Children’s Health Act of 2000. The act directs the IACC to monitor autism research—and to the extent practicable, services and support activities—across all relevant federal departments and agencies, including coordination of federal autism activities. The Autism CARES Act also requires the IACC to develop and annually update a strategic plan for autism research, as well as for services and support activities, to the extent practicable, and make recommendations to ensure that federal autism activities are not unnecessarily duplicative. Further, it requires the IACC to meet at least twice annually. As of February 2016, the IACC consisted of 16 federal members and 15 nonfederal members, which included representatives from advocacy groups, university professors, individuals with autism, and parents of children with autism.\nIn our November 2013 report, we found that the IACC’s and federal agencies’ efforts to coordinate and monitor federal autism activities were limited and that the IACC’s data on autism research was outdated. We made recommendations to address these findings. The limited coordination was particularly concerning given that we also found that 84 percent of the autism research projects funded by federal agencies from fiscal years 2008 through 2012 had the potential to be duplicative, because the projects were categorized to the same research objectives in the IACC strategic plan. The research objectives were broad enough to fund research that may not be duplicative, and agencies funding research in the same areas can be appropriate and advantageous—especially with a research topic as complex and heterogenetic as autism. Further, funding similar research on the same topic is sometimes appropriate for purposes of replicating or corroborating results. However, agencies funding research in the same area can also lead to unnecessary duplication and wasting of scarce federal resources, if funding decisions are not effectively coordinated. We concluded that the limited coordination and monitoring of federal agencies’ autism research could lead to numerous projects being funded to address a few specific areas within the realm of autism research—some of the projects having the potential to be unnecessarily duplicative—while other areas may be left unexplored. Consistent with our November 2013 recommendations, the Autism CARES Act directs the Secretary of Health and Human Services to designate an existing official within HHS to oversee—in consultation with the Secretaries of Defense and Education—national autism research, services, and support activities. This official is required to implement autism activities, taking into account the strategic plan developed by the IACC, and ensure that federal autism activities are not unnecessarily duplicative.",
"Agencies specifically solicited research on early autism identification and interventions, and funded research in this area as a result of these solicitations. Other mechanisms agencies used to encourage early identification and interventions included funding for access to care and services, training, information resources, and awareness campaigns. Lastly, two HHS agencies have programs that serve young children and include developmental screenings for enrollees.",
"Through FOAs, four agencies—DOD, Education, NIH, and the Health Resources and Services Administration (HRSA), another HHS agency— solicited research proposals on early screening, diagnosis, and interventions for young children with autism from fiscal years 2012 through 2015. DOD had 3 FOAs, Education had 4, HRSA had 8, and NIH had 10 FOAs soliciting research in these areas during this time period. As a result of these specific solicitations, these agencies funded research projects totaling approximately $109 million during this time period.\nDOD, Education, NIH, and the Administration for Community Living (ACL), an agency within HHS, funded an additional $286 million on research related to early screening, diagnosis, and interventions for autism, though not through FOAs that specifically solicited this type of research from fiscal years 2012 through 2015. For example, Education funded autism research through FOAs that solicited projects on early intervention and early learning in special education in general, as well as through FOAs that solicited research on commercially viable education technology products. NIH also funded intramural research related to autism identification and interventions. See table 1 for the amounts that agencies awarded through FOAs that specifically solicited research on autism early identification and interventions from fiscal years 2012 through 2015, as well as research funded through other solicitations.\nIn addition to soliciting individual research projects, agencies provide funding for centers and networks to conduct research on a variety of autism-related topics, including early identification and interventions. NIH solicits applications for Autism Centers of Excellence to research autism diagnosis, treatment, and optimal means of service delivery, among other topics. For example, officials from one Autism Center of Excellence stated that they were developing eye tracking technology to screen children for autism early in life, as a lack of eye contact is one of the signs of autism. Additionally, CDC has provided supplemental funding to six Autism and Developmental Disabilities Monitoring Network sites to monitor the prevalence of autism in 4-year-old children to better understand their characteristics to increase early identification.",
"Agencies have established various mechanisms to encourage early screening, diagnosis, and interventions for young children with autism. These mechanisms include grants to improve access to care and services and increase provider training, as well as the development of information resources, and awareness campaigns.",
"HRSA’s autism state implementation grant program provides funding to improve access to comprehensive, coordinated health care and related services for children and youth with autism and other developmental disabilities. Most recently, HRSA provided multi-year funding to nine states beginning in fiscal years 2013 and 2014. HRSA required its grantees that received funding in September 2013 or later to focus their efforts on promoting early identification, diagnosis, and entry into services based on lessons learned from early state program investments and expressed needs in the field. Officials from one of these states told us that they pursued the grant to connect the siloed infrastructure that exists within the state and identify children with autism at an earlier age than was occurring in the state. This grantee has conducted activities related to screening, assessment, and early intervention—including offering training to primary care providers, health department officials, interdisciplinary child development centers, and other professionals on developmental and autism screening and autism warning signs—and has plans for sustaining the activities beyond the 3-year grant.",
"Federal agencies provide funding to train educators and practitioners. For example, in fiscal year 2013, HRSA’s two training programs—Leadership Education in Neurodevelopmental and Other Related Disabilities, and Leadership Education in Developmental Behavioral Pediatrics—trained more than 18,000 professionals, including psychologists and pediatricians. These programs provide training on evidence-based services for children with autism and developmental disabilities, and on providing comprehensive diagnostic evaluations to confirm or rule out an autism diagnosis. HRSA also collaborated with CDC in developing Autism Case Training, which is available to the public on CDC’s website. Autism Case Training is designed to educate future health care providers on fundamental components of identifying, diagnosing, and managing autism. Education also funds grants for training scholars and professionals in special education, early intervention, and related services programs, which could include training specific to autism.",
"Agencies have developed documents and websites to provide information and resources on interventions for young children with autism. For example, Education funded the National Professional Development Center on Autism Spectrum Disorder to promote the use of evidence- based practices for children and youth with autism. The center identified 27 evidence-based interventions that were shown to be effective through scientific research for individuals with autism. These interventions are included on the center’s website, as well as instructions on implementing the interventions and an implementation checklist. ACL funded the organization Autism NOW, which maintains a website that provides information and links to resources, including for early detection, early intervention, and early education. DOD also developed a directory for military families to provide them with information on the educational services that are close to specific military installations in select states. HHS and some of its agencies, such as CDC and HRSA, maintain websites that provide resources for families and individuals with autism, including information on diagnosing autism and interventions. Also, another HHS agency, the Agency for Healthcare Research and Quality (AHRQ) published a report in August 2014 on behavioral interventions for autism that focused on children from birth to age 12. According to AHRQ documentation, this report could be used to, among other things, provide clinicians who treat children with autism the evidence needed for different treatment strategies.\nFurthermore, ACL provides funding to the University Centers for Excellence in Developmental Disabilities Education, Research, and Service, which was established in 1963 to help ensure that Americans with disabilities can be independent and productive. ACL’s funding supports, in part, the centers’ core functions, which include information dissemination, research, and training of students and fellows in multiple professional disciplines, as well as community training to professionals working in multiple disciplines supporting individuals with disabilities. According to ACL officials, while autism is not a specific area of emphasis for the centers, a substantial number of their information dissemination, research, and training activities address autism. For example, according to ACL officials, one center disseminated autism guidelines to programs that serve young children in its state, while another center implemented a project to examine ways to reduce barriers to conduct screening for developmental disabilities, including autism, in underserved populations.",
"Multiple federal agencies are involved in producing awareness campaigns related to the identification of developmental delays. In March 2014, a group of HHS agencies—the Administration for Children and Families (ACF), ACL, CDC, CMS, HRSA, NIH, and the Substance Abuse and Mental Health Services Administration—and Education launched the Birth to 5: Watch Me Thrive! initiative to encourage developmental and behavioral screening and support for children—including those with autism—their families, and the providers who care for them. The initiative seeks to celebrate milestones, promote universal screening, identify possible delays and concerns early, and enhance developmental supports. In addition, CDC’s “Learn the Signs. Act Early.” initiative promotes awareness of healthy developmental milestones in early childhood, the importance of tracking each child’s development, and the importance of acting early if concerns are identified. The initiative works with state, territorial, and national partners to improve early childhood systems by enhancing collaborative efforts to improve screening and referral to early intervention services, to promote “Learn the Signs. Act Early.” messages and tools, and improve early identification efforts in their states and territories.",
"ACF and HRSA have programs that include developmental screenings for enrollees. ACF’s Head Start and Early Head Start programs promote the school readiness of young children from low-income families from birth to age 5. Head Start and Early Head Start programs also support the mental, social, and emotional development of children. In addition to education services, programs provide children and their families with health, nutrition, social, and other services. All children in Head Start are required to receive developmental screening—including speech, hearing, and vision—within 45 days of the child’s entry into the program. Children who need further specialized assessment to determine whether they have a disability, such as autism, may be referred for an evaluation.\nHRSA has three programs that seek to reduce the age at which children are screened for developmental delays.\nTitle V Block Grant: This program provides grants to all states to implement plans that address the health services needs within the state for the target population of mothers, infants, and children, including children with special health care needs. According to HRSA officials, as part of this program, 40 states have selected to address a new National Performance Measure looking at the percent of children ages 10 months to 71 months receiving a developmental screen using a parent-completed screening tool. The states’ intent in selecting this measure is to increase the proportion of children, including those with autism, who are screened at a younger age and who receive treatment.\nEarly Childhood Comprehensive Systems Program: This program awards grants to states and organizations with the goal of ensuring that all children birth to age 3 are receiving the appropriate services at the appropriate time. The program brings together primary care providers, teachers, families, and caregivers to develop seamless systems of care for children from birth to age 3 using one of three strategies. One of these strategies is increasing developmental screening of young children to identify and treat problems early, such as autism. In 2013—the most recent grant competition—15 states received grants to implement this strategy.\nFederal Home Visiting Program: HRSA, in partnership with ACF, provides funding to states for the Home Visiting Program, which supports pregnant women and families, and helps at-risk parents of children from birth to kindergarten access resources and develop skills to raise children who are physically, socially, and emotionally healthy and ready to learn. According to HRSA officials, children enrolled in the Home Visiting Program receive an initial baseline developmental screening and may receive additional screening depending on how the program is administered in the state. In 2014, HRSA revised this program to support the goal of reducing the age of diagnosis of developmental disabilities, including autism, by bringing together a select group of grantees to, among other things, identify methods to increase the percentage of children who receive a developmental screening.",
"Individualized intervention services are provided to young children with autism through IDEA early intervention and special education programs; additionally, the five states we examined and DOD have taken specific actions to help respond to the needs of children with autism that they serve. Data on children with autism served through IDEA special education programs is likely underreported as some of these children may be counted in other disability categories, such as the development delay category. Children enrolled in federal health care programs— Medicaid, CHIP, or TRICARE—received a variety of intervention services through these programs.",
"Intervention services provided to young children with autism through IDEA early intervention and special education programs are individualized to the needs of each child; additionally, selected states and DOD have taken specific actions to help respond to the needs of children with autism that they serve. According to IDEA regulations, the services a child with autism receives are determined by the team that develops the child’s IFSP (for children in early intervention programs) and IEP (for children in special education programs), which includes the child’s parent, and must be individualized to the child. Officials from some of the five states we spoke with—California, Massachusetts, North Carolina, Ohio, and Texas—and DOD made comments regarding the need for individualized services regardless of a child’s diagnosis. For example, some state officials commented that specific methodologies or services—such as ABA—could be provided to a child within the context of IDEA-required services if these services are identified as a need for that child, regardless of whether the child has autism or another type of developmental disability. Further, children with autism have needs that can vary considerably and therefore the services provided to these children would vary. DOD officials stated that children with autism who are eligible for special education services—like children with other disabilities—can be provided specialized instruction, intervention strategies, modifications of the general education curriculum, and other related services, such as occupational therapy, physical therapy, and speech and language services, depending on the individual needs of the child.\nThe five states we examined and DOD reported taking specific actions to help respond to the needs of young children with autism that they serve. Some of these actions are provided to children as part of IDEA early intervention or special education programs, while others are provided in addition to these programs. The following are examples of actions taken.",
"California has 21 regional centers in the state that administer California’s early intervention program. According to California officials, funding is made available to each center in order to have an autism specialist on staff that coordinates and directs the diagnostic and treatment practices for the families that they serve.",
"In 1998, Massachusetts began the autism specialty services program to supplement its early intervention program. If a child has an autism diagnosis and is enrolled in Massachusetts’ early intervention program, the child can also enroll in the autism specialty services program and receive autism-specific early intervention services, in addition to general early intervention services. According to Massachusetts officials, the state began the autism specialty services program because many general early intervention providers did not have the appropriate skill set to work with children with autism. Massachusetts has approved 17 providers for autism specialty services across geographic areas. The families choose providers, who are generally in their area, and the providers conduct intake assessments. According to state officials, under the autism specialty services program, children usually receive 10 to 30 hours a week of intensive behavioral intervention in their homes or care centers, in addition to general early intervention services. The autism specialty services program uses interventions for autism including the Early Start Denver Model, Floortime, and ABA.\nAccording to Massachusetts officials, 1,842 children up to age 3 received autism specialty services in the state’s fiscal year 2015. At the time of our review, Massachusetts did not have waiting lists for the autism specialty services program. Massachusetts officials stated that there are waiting lists to get an autism diagnosis—a requirement to receive the specialty services—especially in the western part of Massachusetts. Massachusetts uses a combination of state funding, Medicaid, and private insurance to pay for the program.",
"In 2010, North Carolina partnered with the Carolina Institute for Developmental Disabilities at the University of North Carolina at Chapel Hill to develop clinical guidelines for early intervention services for children with autism. This effort was partially funded by ACL and HRSA grants. The guidelines outline how to integrate information on autism into the state’s early intervention program and contain information on screening for autism, primary models of interventions for autism, and working with parents to implement interventions. Additionally, in 2014, North Carolina worked with professionals at the University of North Carolina at Chapel Hill’s TEACCH Autism Program to organize and conduct training for clinicians in 11 of the state’s 16 Children’s Developmental Services Agencies—the agencies that administer the state’s early intervention program. The training, funded by a HRSA grant, featured the use of the Autism Diagnostic Observation Schedule, Second Edition—a semi-structured assessment of communication, social interaction, play, and restricted and repetitive behaviors for individuals suspected of having autism.\nNorth Carolina’s special education program has developed an autism plan that outlines goals related to building capacity within the school districts to strengthen the provision of autism interventions. For example, this plan includes goals for providing training to teachers related to serving children with autism. North Carolina’s special education program also holds an annual conference that gathers together education professionals and parents of children with disabilities and includes sessions on serving children with autism. According to North Carolina officials, the state also provides funding to autism teams in local school districts that submit a plan on how they will strengthen the instructional practices and services for children with autism in their district, including the use of best practices.",
"Beginning in 2008, Ohio funded the Autism Diagnosis Education Project, which facilitates partnerships between community-based primary care physicians and professionals providing early intervention services to increase access to local and timely standardized, comprehensive diagnostic evaluations for children suspected of having autism. In this program, once an early intervention team has a question about whether a child being served might have autism, the team works with a physician located near the child to make (or rule out) an autism diagnosis. Since its inception, the project has expanded to include 46 participating counties, 330 early intervention professionals, and 39 partner physicians, and the average age of diagnosis has decreased to 29 months. From January 1, 2013, through May 21, 2015, 301 children were assessed in the program and 52 percent were diagnosed with autism. This project is funded through state funds.\nIn 2011, Ohio began to implement an early intervention program across the state, referred to as the Play & Language for Autistic Youngsters (PLAY) project. PLAY is a parent-implemented intervention. Specifically, the PLAY project trains early intervention specialists on certain principles, methods, and techniques that emphasize following the child’s lead as a means for improving social impairment, a core symptom of autism. These early intervention specialists teach parents how to implement and use the intervention in everyday interactions with their child—PLAY providers ask parents to implement PLAY 15 to 20 hours a week. The state has held four trainings since 2011 with about 150 participants. According to Ohio officials, of Ohio’s 88 counties, 45 have early intervention specialists who are either trained, or are in the process of being trained, in PLAY. An additional 17 counties have access to PLAY providers. For children enrolled in Ohio’s early intervention program, the PLAY curriculum may be indicated as an early intervention service need on a child’s IFSP if the IFSP team believes that the PLAY methods and strategies can better help address the family’s outcomes than more traditional service delivery methods, according to Ohio officials. The state, which funds the PLAY project trainings through its general revenue fund, has received positive feedback from the providers and families involved in the PLAY project.",
"In 2007, Texas began requiring the team that develops an IEP to consider 11 strategies when forming IEPs for children diagnosed with autism enrolled in its special education program through what is known as the Autism Supplement. According to Texas officials, the Autism Supplement was designed so that the IEP team would look at the unique characteristics of children with autism. Because not all strategies may be suitable for use with every child, the team has the option to exclude any of the 11 strategies from the IEP, but must provide a written rationale for the exclusion.\nIn 2008, Texas established the Autism Program, which provides ABA to children diagnosed with autism. According to Texas officials, the purpose of the program is to make ABA more accessible, particularly to children diagnosed with autism who are having difficulty in school. The Autism Program is not part of Texas’ special education program, but frequently serves children who are enrolled and receiving services through its special education program. According to Texas officials, the program works with the school districts to avoid duplication of services the districts provide and to make ABA services available after school. Board certified behavior analysts provide oversight and treatment plans; actual treatment services are largely provided by registered behavior technicians.\nAccording to Texas officials, about 295 children were served by the Autism Project in the state’s fiscal year 2014—84 of which were ages 3 through 5. According to these officials, the program is funded through Texas’ general revenue fund and a limited amount of private insurance reimbursement. At the time of our review, the program maintained a waiting list of about 1,150 children and had eight providers in six communities due to limited funding, so very few counties in Texas were covered. State officials noted that this number was likely to increase due to action taken during a previous state legislative session to increase funding.\nIn April 2015, after learning about the PLAY project in Ohio, the Wright- Patterson Air Force Base in Ohio began a PLAY project pilot funded for one year by the Air Force Surgeon General. Two full time staff were hired and trained in PLAY. The pilot has provided PLAY training to 24 enrolled families as an intervention parents can implement with their children diagnosed with autism ages 18 months to 6 years to improve social interactions. PLAY is a transportable intervention parents can take with them when they move to a new duty station. In April 2016, Air Force officials told us that the pilot had been funded through fiscal year 2019. DOD officials told us that it supports continued Air Force funding to allow sufficient time to determine outcomes of the pilot. Additionally, according to DOD officials, autism specialists are available to all DOD schools needing assistance with the education of a child age 3 and older with autism.",
"Data reported to Education from 49 states and the District of Columbia indicate that approximately 66,000 children ages 3 through 5 with autism received services in school year 2014-2015. However, this is likely an undercount of the children with autism receiving special education services, because children with autism may not be reported to Education under the autism disability category. For children enrolled in special education programs, states are required to report to Education the number of children receiving services by disability category, including autism. However, states may use a general disability category, “developmental delay,” when reporting, either because the child may not yet be diagnosed with autism, or the child may be diagnosed, but the parents prefer to use the general disability category for privacy purposes. Further, communication difficulties are a typical symptom of autism, and Education, DOD, and some state officials also told us that children with autism may be reported under the disability category “speech and language impairment.” Children who are placed in the “developmental delay” or “speech and language impairment” category would not appear in the autism category. Certain states’ use of disability categories may also influence the number of children with autism reported by the state. For example, California and Texas do not allow the use of the “developmental delay” category. Ohio pays its school districts based on the number of children served and their disability categories; school districts get more funding for students in the “autism” disability category than those in the “developmental disability” category. See appendix II for the number of children ages 3 through 5 in states’ special education autism category, by state, in school year 2014-2015.\nThe actual number of children with autism receiving early intervention services is also unknown. States are required to report to Education the total number of children served under early intervention programs, but not by disability category. DOD also does not collect these data. DOD and Education officials both stated the specific disability designation of a child does not dictate the types of early intervention services that a child receives. Further, it is common for children under age 3 to not have a specific diagnosis.",
"",
"Children enrolled in Medicaid or CHIP from our five selected states— Delaware, Georgia, Illinois, Kentucky, and Minnesota—received a variety of intervention services during fiscal year 2013. Specifically, we identified 8,208 children ages 1 through 5 with autism in these states and almost all received intervention services. Children age 5 accounted for the largest age group of children that we identified with autism; however, a large proportion of children were ages 3 and 4. We also found that nearly 20 percent of children identified with autism were ages 1 or 2. See figure 1 for the distribution of children enrolled in Medicaid or CHIP from these five states and identified with autism by age.\nOver half of the services young children identified with autism received were within the speech, language, and audiology category and the physical and occupational therapy category—with the former category making up about one-third of the total intervention services received by these children in fiscal year 2013. See figure 2 for the percentage of intervention services received by service category.\nWhen services received are examined by age group, speech, language, and audiology services remain the most commonly received services; however, there is variation in the other categories of services received. Among children ages 1 and 2, physical and occupational therapy were nearly as common as speech, language, and audiology services, and behavioral services and home care and skills training were less common. Beginning at age 3, behavioral services and home care and skills training became more frequently received. Figure 3 shows the category of services received by young children identified with autism by age group.\nWhile autism services are not a specified Medicaid benefit, CMS issued an informational bulletin in July 2014 that may result in more children receiving these services under Medicaid. Specifically, the informational bulletin clarified states’ options for providing autism-related services to children under various Medicaid authorities. It also discussed requirements related to services for children under the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit. Some states have been using other Medicaid authorities, such as home and community-based services waivers, to provide behavioral therapy services, such as ABA. Because waivers cover a limited number of beneficiaries, states’ Medicaid programs may not have been able to fulfill the need for services of children with autism through a waiver. CMS officials told us that the clarifying bulletin would likely result in an increase in the number of children receiving such services, as states may have to transition these individuals to the EPSDT benefit under their state plans, which must be furnished to beneficiaries statewide. For at least one state, this may already be the case. Utah Department of Health officials told us that they transitioned to provide ABA services under their state plan in July 2015 as a result of this guidance. While about 380 children received services under Utah’s autism waiver in the state’s fiscal year 2015, that number increased to about 455 in the first 5 months following the transition, and officials estimate that approximately 4,000 children may now be able to receive autism services through their state plan. CMS officials stated that states may choose to amend their state plan to include autism treatment services in an effort to be more transparent about the services available to children diagnosed with autism. At the time of our review, CMS officials indicated that 7 states had recently approved Medicaid state plans to include autism treatment services, and an additional 18 states have either submitted draft changes to their Medicaid state plan—known as amendments—to cover such services or are in discussions with CMS officials about the autism treatment services they propose to cover in the state plan.\nChildren enrolled in DOD’s TRICARE that were identified with autism received a variety of intervention services in fiscal year 2014. Specifically, 8,103 children ages 1 through 5 identified with autism were eligible to receive services through TRICARE and almost all received services. About half of the children identified with autism were ages 3 and 4, and about 30 percent of children identified with autism were ages 1 or 2. See figure 4 for the distribution of children identified with autism by age.\nUnlike Medicaid and CHIP beneficiaries, we found that young children enrolled in TRICARE and identified with autism most commonly received behavioral services, which comprised about one-third of intervention services received by these children. However, speech, language, and audiology services, and physical and occupational therapy services still made up a large portion of the intervention services received by these children. See figure 5 for the percentage of intervention services received by service category.\nWhen services received are examined by age group, behavioral services remain the most commonly received services by children in most age groups; however, there is variation in the other categories of services received. At age 1, children most commonly received speech, language, and audiology services; physical and occupational therapy were also commonly received. Among children age 2, behavioral services were about as common as physical and occupational therapy, and speech, language, and audiology services. Behavioral services were notably more common than other services among children ages 3 through 5. (See fig. 6.)\nIn 2014, DOD offered ABA to children—who were TRICARE beneficiaries and had an autism diagnosis—through autism demonstrations. Of the approximately 8,103 children enrolled in TRICARE that we identified with autism, 3,788 (47 percent) were enrolled in the demonstrations. Most of the behavioral services received by children through TRICARE went to those who participated in the demonstration—an expected finding given that the demonstration focused on providing ABA and related behavioral services that may not have been as readily accessible by non- participants. Overall, children enrolled in the demonstrations received nearly three times as many intervention services as children who were not enrolled in the demonstrations. See figure 7 for the percentage of total intervention services received by children who were enrolled in the demonstrations compared to those who were not enrolled in the demonstrations.\nInformation on the expenditures related to providing intervention services to young children identified with autism enrolled in Medicaid, CHIP, and TRICARE is available in appendix III.",
"HHS has recently taken steps that could help address recommendations we made in November 2013. Specifically, to promote better federal coordination and avoid the potential for unnecessary duplication, we recommended that (1) the IACC and NIH identify projects through the department’s monitoring of federal autism activities that may be unnecessarily duplicative and thus candidates for consolidation or elimination, and (2) DOD, Education, HHS, and NSF determine methods for identifying and monitoring the autism research conducted by other agencies. To develop these recommendations, we applied criteria from federal internal control standards and best practices for collaboration from our prior work, which state that tracking and monitoring are key activities that can benefit interagency collaborative mechanisms. Since our 2013 report was issued, HHS has continued to disagree that our recommendations were warranted.\nHHS has recently taken actions required by the Autism CARES Act that could help coordinate federal autism research and implement our recommendations. First, as directed by the act, the Secretary of Health and Human Services designated an official to serve as the Autism Coordinator to oversee national autism research, services, and support activities and ensure that autism activities funded by HHS and other federal agencies are not unnecessarily duplicative. HHS announced this designation in April 2016, while a draft of this report was at the department for comment. Second, the Autism Cares Act requires that the IACC’s strategic plan include recommendations to ensure that autism research funded by HHS and other federal agencies is not unnecessarily duplicative. While the 2013 strategic plan—released in April 2014—is the most recent plan, an update to the plan has been under discussion since late 2015. Specifically, the IACC met for the first time as a full committee in November 2015—16 months after its last full committee meeting. During this meeting, as well as subsequent meetings in January and April 2016, NIH staff and IACC members discussed updating the strategic plan. The requirement to include the aforementioned recommendations was discussed; however, no specific details for how this will be accomplished were identified.\nIn addition to recent steps taken by HHS in response to Autism CARES Act requirements, NIH also released fiscal year 2011 and 2012 data on federal autism research, which the agency collects on behalf of the IACC. These data were made available in April 2016, while a draft of this report was at the department for comment. Specifically, these data were released into the Autism Spectrum Disorder Research Portfolio Analysis Web Tool (Web Tool), the IACC’s online database on autism research. Prior to this new release, the Web Tool contained fiscal year 2008 through 2010 data. NIH, on behalf of the IACC, also released the 2011- 2012 IACC Portfolio Analysis Report, which provides an analysis of autism research funding in 2011 and 2012, as well as a five-year overview of autism research funding by the U.S. government and private sector and five-year trends (2008 through 2012) by each of the seven research areas in the IACC’s strategic plan. NIH officials told us that they have also collected data on autism research that was federally funded in fiscal year 2013 and plan to release that data in the second half of calendar year 2016.\nAlthough HHS continues to disagree that our recommendation to develop methods for improved cross-agency coordination was warranted, HRSA took a positive step in April 2014 by contacting DOD to determine whether any potential overlap existed between the agencies’ programs. HRSA officials told us that they reviewed abstracts of all currently funded DOD research projects and found no scientific overlap. HRSA officials also used information from DOD, HHS agency websites, and NIH’s online database when developing new FOAs. For example, in two FOAs HRSA chose to focus exclusively on populations served by HRSA’s Maternal and Child Health Bureau in order to help avoid potential duplication with other federal agencies.\nDuring our review, NIH officials reiterated their position that they believe their processes are adequate to avoid unnecessary duplication and provided us with the 2012 program officer handbook, which outlines the responsibilities of NIH program officers—some of which will help avoid potential unnecessary duplication and were included in our November 2013 report. According to NIH officials, a fundamental part of an NIH program officer’s responsibility is to assure that federal taxpayer funds are expended on research projects that will produce the most effective, efficient, and productive results. The program officer handbook outlines project officers’ responsibility to stay abreast of the scientific literature and attend professional and scientific meetings, which we reported in November 2013. It also discusses the officers’ role in reviewing the “other support” section of research applications. This section details the other active and pending funding available in direct support of an individual’s research endeavors and is provided by the applicant for all individuals designated in a research application as a principal investigator. Program officers must review this section for scientific overlap, among other information. While this type of review is important, as we described in our November 2013 report, it only helps to ensure that an applicant, and the applicant’s principal investigator, is not submitting essentially the same research application to multiple funding sources. This review would not uncover research from different applicants with different principal investigators, which have already been funded, and that may be unnecessarily duplicative of the applicant’s research; in other words, a project with the same purpose, strategies, and target population that is not necessary to corroborate or replicate prior research results. The program officer handbook also includes a description of several databases and web-based tools that are available for the program officers’ use in fulfilling their responsibilities. However, although this information is provided to program officers, NIH officials told us that the agency does not dictate which specific tools or databases program officers should use to identify similar grants by a different principal investigator for each grant funding decision. NIH continues to have limited procedures in place to help ensure that program officers identify potentially unnecessarily duplicative research by different principal investigators when making funding decisions.\nOfficials from the other agencies that were included in our recommendation—DOD, Education, and NSF—told us that they have taken initial steps to monitor other federal agencies’ research. DOD officials told us that the department has finalized an interagency agreement with NIH to complete a pilot study aimed at developing requirements and testing the feasibility of transferring DOD medical research application data to a NIH data system. According to DOD officials, this transfer of data would allow multiple agencies and the public to view research application data to assist in the identification of potential duplication and facilitate funding decisions. DOD officials anticipate that the feasibility studies will conclude by June 2016. Additionally, Education officials told us that they have reached out to HHS and are awaiting guidance on coordination from HHS and in the interim will continue to participate in IACC meetings. Education officials also stated that the department anticipates funding, pending congressional appropriations, model demonstrations projects focused on autism. These projects will build on existing research on promising evidence-based practices for autism by identifying challenges associated with their implementation. According to Education officials, the department will coordinate with the IACC and review relevant research prior to soliciting applications related to these research projects. Also, even though the agency is not a member of the IACC, NSF officials told us that they observe IACC meetings when convened and check the IACC’s Web Tool to monitor autism research funded by other federal agencies and to help avoid unnecessarily duplicative research.\nWe acknowledge the steps taken by the agencies to respond to our November 2013 recommendation, as well as in response to the Autism CARES Act; however, continued action is needed to develop these initial steps into methods for identifying and monitoring federal autism research that are consistently applied. This is especially important given that, as we previously reported in November 2013, agencies are funding research in the same areas, which creates the potential for unnecessary duplication. While we are not making additional recommendations, we believe that our 2013 recommendations remain valid, and that HHS’s continued fulfillment of the provisions in the Autism CARES Act could help the department implement our recommendations.",
"We provided a draft of this report to DOD, Education, HHS, and NSF for review and comment. Education and HHS provided written comments, which are reprinted in appendixes IV and V. These departments, along with DOD, also provided technical comments, which we incorporated as appropriate. NSF did not provide any comments.\nEducation and HHS directed many of their comments to our third finding, which updated the status of agency actions to implement recommendations contained in our November 2013 report. In that report, we found that many autism research projects funded by federal agencies had the potential to be duplicative, because the projects were categorized to the same research objectives in the IACC strategic plan. In their comments on this report, Education and HHS disagreed that there was potential for duplication and questioned the basis of our analysis. The departments stated that the 78 research objectives—which our analysis was based on—are broad, and therefore, may require attention from researchers of different disciplines in order to address the complexity and heterogeneity of autism. This may necessarily involve funding of multiple projects from more than one federal agency. Education stated that a careful review of the projects themselves is needed to determine actual duplication.\nAs we noted in our 2013 report, we agree that it may be appropriate and advantageous to have multiple projects and agencies address the same research objective. We also agree that the specific projects identified as potentially duplicative would need to be reviewed further to identify actual duplication and believe such a review of these data is important to ensure federal funds are used efficiently and effectively so that informed decisions can be made. Our finding that agencies are funding research in the same research areas highlights how imperative it is that agencies effectively coordinate and monitor each other’s autism research. It was the limited coordination and monitoring that we identified in our prior work that was the basis for our prior recommendations. Based on the comments received, we revised the report to acknowledge the breadth of the research objectives and to emphasis our prior findings as they relate to the need for improved coordination and monitoring.\nHHS also commented that staff in its agencies, including NIH, avoid clear and obvious overlap or unnecessary duplication. HHS stated that they do this by utilizing the research project information in their internal database, Information for Management, Planning, Analysis, and Coordination (IMPAC II), which contains detailed pre-award and award data for four HHS agencies— AHRQ, CDC, the Food and Drug Administration, and HRSA—and some research applications and grants of the Department of Veterans Affairs, as well as participating in the IACC. Further, HHS stated that NIH’s internal autism coordinating committee coordinates research internally within NIH. The use of databases and participation in the IACC as a means to coordinate and monitor across agencies is information that we have reported on in this report and our November 2013 report. We continue to believe that these methods are limited. Further, while we appreciate HHS’s comment that it is taking steps to avoid clear and obvious unnecessary duplication, this is not sufficient given the substantial federal investment in this area. From fiscal years 2008 through 2012, agencies awarded funds of about $1.2 billion for autism research, and many funded research in the same areas. Autism is an important and complex public health concern affecting a large number of individuals, which makes it all the more important that scarce federal resources be used efficiently and strategically. Prudent stewardship requires a careful assessment and coordinated effort to look for unnecessary duplication that may be less than obvious.\nLastly, HHS stated that our draft report was incorrect in stating that the Web Tool was the primary tool by which potentially duplicative autism research is to be identified. The department stated that IMPAC II database is used by NIH program officers when evaluating research grant applications. Our draft report did not state that the Web Tool was the primary tool used to identify potentially duplicative autism research; however, we revised the report to clarify information presented on the Web Tool.\nIn its comments, Education also stated that the draft report properly acknowledged the health care and educational programs that provide intervention services to young children with autism. Further, the department stated that it stands ready to work with HHS as HHS implements the Autism CARES Act and that a significant body of research is still needed to better understand and address the developmental academic needs of students with autism, especially given the great variations across the autism spectrum and the range of student learning needs.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees, the Secretary of Health and Human Services, Secretary of the Department of Defense, the Secretary of the Department of Education, the Director of the National Science Foundation, and to other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI.",
"We examined the intervention services that are provided to children with autism through federal health care programs. More specifically, to do this we analyzed fiscal year 2013 fee-for-service claims and managed care encounter data from the Centers for Medicare & Medicaid Services’ (CMS) Medicaid and Statistical Information System (MSIS) for five select states. We also analyzed fiscal year 2014 Department of Defense (DOD) TRICARE military treatment facility and purchased care claims data. At the time we began our review, these were the most recent fiscal years for which CMS’s and DOD’s data were available. Our analysis consisted of the following three steps: (1) state selection for CMS data, as well as assessing data reliability for both our selected states’ and DOD’s data; (2) identification of children with autism; and (3) identification of intervention services for children with autism. Lastly, we describe the limitations of our methods.",
"We selected five states to include in our analysis of health care data— Delaware, Georgia, Illinois, Kentucky, and Minnesota. We chose these five states based on the availability and reliability of their reported Medicaid and State Children’s Health Insurance Program (CHIP) data in MSIS. Specifically, at the time we began our review, there were 35 states that had validated fiscal year 2013 MSIS data from which we could choose. To determine which of these 35 states to include in our review, we reviewed reports with information on states use of managed care organizations and the completeness and reliability of states’ managed care encounter data in MSIS. Similarly, we reviewed reports on states’ use of behavioral health organizations to provide certain services—since those organizations may be used to provide some of the intervention services included in our review—and the extent to which states’ data in MSIS on services provided by behavioral health organizations is reliable and complete. Lastly, we reviewed reports with information on the completeness and reliability of states’ CHIP data in MSIS.\nWe discussed the reliability and usability of the five states’ data with knowledgeable officials from CMS, its contractor responsible for processing Medicaid and CHIP data reported from states (Mathematica Policy Research), and selected state officials. We discussed the reliability and usability of the TRICARE data with knowledgeable DOD officials. We performed data checks, such as examining the data for missing values and obvious errors, to test the internal consistency and reliability of the data. These data were found to be reliable for our purposes.",
"Based on eligibility information in the MSIS eligibility file and the TRICARE beneficiary file, we restricted our study to children who were (1) age 1 through age 5 at the beginning of the fiscal year, and (2) enrolled in one of these programs for at least 10 months. We limited our review to only those children we identified with autism. For purposes of this report, we considered a child to have autism if the child had at least one claim with an autism diagnosis code at any point in the fiscal year.",
"We focused our review on non-institutional services contained within the MSIS other services file and the TRICARE non-institutional file.\nThere is no standard set or list of procedure codes that are used by providers to report the provision of intervention services to children with autism. Therefore, we developed a list of procedure codes that could closely reflect the provision of intervention services to young children with autism. To do this, we took the following four steps. 1. We reviewed documentation and interviewed federal agency officials, as well as officials from non-federal entities, such as the American Academy of Pediatrics, to gather general information on typical interventions for young children with autism. 2. We identified the procedure codes found on claims with an autism diagnosis code in our dataset and examined the definitions of these codes. 3. We discussed procedure codes relevant to providing interventions to children with autism with representatives from the following seven professional associations: American Academy of Child & Adolescent Psychiatry; American Physical Therapy Association; American Occupational Therapy Association; American Psychiatric Association; American Psychological Association; American Speech, Hearing, and Language Association; and Association of Professional Behavioral Analysts. 4. In recognition of variations in the practice of medicine across geographic regions, we gathered information from all five selected states about their use of certain procedure codes to determine if the use of these codes typically reflected the delivery of an intervention service for autism in their respective states.\nBased on the information gathered, we identified a list of procedure codes that appeared to reflect common autism-related interventions. The intervention services in our review also include related diagnostic or evaluation services. When generating the list of procedure codes, it was not possible for us to parse out intervention services from assessment- type services because, in general, an assessment is needed in order to determine the best intervention approach and to adjust that approach over time. Further, we heard from the association officials we interviewed that providers are frequently assessing at the same time they are providing an intervention.\nFor reporting purposes, we categorized the procedure codes we identified into five broad categories. 1. Behavioral, which includes psychiatry services, health and behavioral assessments and intervention services, and applied behavior analysis. 2. Evaluation and management, which includes central nervous system tests, office or other outpatient visits or consultations, and medical team conferences to diagnose and develop intervention strategies. 3. Home care and skills training, which includes teaching skills to the child and the child’s family to promote the child’s development and independent living. 4. Physical and occupational therapy, which includes the provision of therapies to, for example, teach a child how to develop movements involved with walking, eating, or communicating. 5. Speech, language, and audiology, which includes evaluation and treatment of speech, language, voice, communication, and auditory processing.\nTo the extent possible, we based our categorization on the American Medical Association’s Current Procedural Terminology codebook, although our categories are broader than those found in this codebook. We asked experts from each of the seven professional associations to comment on our categorization. We received responses from five of the seven associations. Three of the five associations—American Academy of Child & Adolescent Psychiatry, American Physical Therapy Association and Association of Professional Behavioral Analysts—agreed with our categorization. The other two—American Occupational Therapy Association, and American Speech-Hearing-Language Association—were concerned that putting a procedure code in the “behavioral” category, for example, might imply that the code cannot appropriately be used by professionals, such as speech and language pathologists or occupational therapists. This is not the intention of our categorization, nor should our categories be considered as billing advice to be associated with or used for billing purposes. In fact, we found that four of the seven associations stated that their professionals used codes that fall within our “behavioral” category, and five of the seven used codes that fall with our “evaluation and management” category, among others. See table 2 for the procedure codes included in our review and the categories of interventions they fall under for the purposes of our report.",
"Because our Medicaid and CHIP data are from five states, the results of our analyses of these data are not generalizable across all states. The intervention services in our review only reflect services identified by the procedure codes included in our review, and as a result, the amount of services we report may be an undercount. Based on our methodology, we believe the list of procedure codes is appropriate and fairly represents interventions provided to children with autism. Because we included all claims of children identified with autism (with relevant procedure codes) due to the potential for inconsistency in the diagnosis codes included on a claim, some of the services in our review may not have been provided for, or relate to, the treatment of autism. In these cases, the amount of services we report may be over reported.",
"The Department of Education requires states to report the number of children ages 3 through 5 enrolled in the states’ special education program by disability category—such as autism. The number of children reported in the autism category is likely less than the actual number of children with autism being served by states. Children with autism may be categorized under other categories including a general disability category, “developmental delay,” or the category, “speech and language impairment,” because communication difficulties are a typical symptom of autism. The data provided to Education indicate that approximately 66,000 children ages 3 through 5 under the autism category received services in school year 2014-2015, as shown in table 3.",
"We examined certain expenditures for the provision of intervention services to children ages 1 through 5 identified with autism and enrolled in the Centers for Medicare & Medicaid Services’ Medicaid program, the State Children’s Health Insurance Program (CHIP), and the Department of Defense’s (DOD) TRICARE program.",
"We examined fiscal year 2013 Medicaid and CHIP expenditure data in fee-for-service claims for five states: Delaware, Georgia, Illinois, Kentucky, and Minnesota. Fee-for-service claims were about 87 percent of the total intervention services provided to children identified with autism that we reviewed, with managed care encounters making up the remaining portion of services provided. See table 4 for the expenditures on intervention services provided to children identified with autism enrolled in Medicaid and CHIP, by service category.",
"We examined fiscal year 2014 expenditures for TRICARE purchased care claims. Purchased care claims were about 96 percent of the total intervention services provided to children identified with autism that we reviewed, with military treatment facility claims comprising the remainder of services provided. We examined the expenditures for those young children who were enrolled in DOD’s autism demonstrations—which offered increased access to applied behavior analysis (ABA) to servicemembers’ family members diagnosed with autism—as well as those who were not enrolled in the demonstration. See table 5 for expenditures on intervention services provided to children identified with autism enrolled in the TRICARE autism demonstrations, and those who received such services but were not enrolled in the demonstration, by service category.",
"",
"",
"",
"",
"In addition to the contact named above, Geri Redican-Bigott, Assistant Director; Deirdre Gleeson Brown; Jackie Hamilton; Giselle Hicks; Drew Long; Brandon Nakawaki; Vikki Porter; Sarah Resavy; and Eric Wedum made key contributions to this report.",
"Federal Autism Research: Updated Information on Funding from Fiscal Years 2008 through 2012. GAO-15-583R. Washington, D.C.: June 30, 2015.\nFederal Autism Activities: Funding and Coordination Efforts. GAO-14-613T. Washington, D.C.: May 20, 2014.\nFederal Autism Activities: Better Data and More Coordination Needed to Help Avoid the Potential for Unnecessary Duplication. GAO-14-16. Washington, D.C.: November 20, 2013.\nCombating Autism Act: HHS Agencies Responded with New and Continuing Activities, Including Oversight. GAO-13-232. Washington, D.C.: February 27, 2013.\nFederal Autism Activities: Funding for Research Has Increased, but Agencies Need to Resolve Surveillance Challenges. GAO-06-700. Washington, D.C.: July 19, 2006.\nSpecial Education: Children with Autism. GAO-05-220. Washington, D.C.: January 14, 2005."
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"question": [
"What did GAO find regarding autism intervention services?",
"How do children receive these intervention services?",
"What did GAO find regarding the nature of these interventions?",
"How has HHS helped coordinate federal autism research?",
"What did GAO learn regarding coordination between agencies?",
"Why is limited coordination among agencies concerning?",
"What did GAO recommend to HHS?",
"What would be the benefit to HHS of fulfilling these provisions?",
"What has research on autism discovered?",
"What does the Individuals with Disabilities Act do for children?",
"What are other services that children can use to receive care?",
"How else can children of servicemembers receive care?",
"What were the results of the review on federal autism efforts conducted by GAO?",
"How did GAO select the states for its review?",
"What data did GAO analyze?",
"What was the response of Education and HHS to the review?"
],
"summary": [
"Federal programs provide a variety of intervention services to young children with autism. When examining the education programs administered by five states and DOD, GAO found that specific actions were taken to help respond to the individual intervention needs of children with autism.",
"Children enrolled in federal health care programs—Medicaid, the State Children's Health Insurance Program (CHIP), or TRICARE—received a variety of interventions.",
"Children enrolled in federal health care programs—Medicaid, the State Children's Health Insurance Program (CHIP), or TRICARE—received a variety of interventions. For example, GAO identified about 8,200 young children with autism in five states enrolled in Medicaid or CHIP and found that speech, language, and audiology services were the most common overall; however, the types of services commonly received varied, depending on the age of the child.",
"HHS has recently taken actions required by the Autism Collaboration, Accountability, Research, Education, and Support Act of 2014 (Autism CARES Act) that could help coordinate federal autism research and implement GAO's prior recommendations. For example, in April 2016, HHS designated an autism coordinator to oversee national autism research, services, and support activities.",
"In 2013, GAO reported that there was limited coordination among agencies.",
"This was especially concerning because GAO also found that 11 federal agencies funded autism research in the same areas—resulting in the potential for unnecessary duplication.",
"At that time, GAO recommended that HHS improve the data it collects on autism research and that federal agencies develop methods to monitor and coordinate this research.",
"GAO believes that HHS's continued fulfillment of certain provisions in the Autism CARES Act could help the department implement GAO's 2013 recommendations.",
"Research has shown that early intervention can greatly improve the development of a child with autism.",
"Children with disabilities—including children with autism—can receive intervention services through the Individuals with Disabilities Education Act.",
"Low income children may also receive intervention services through Medicaid or CHIP, health care programs overseen at the federal level by the Centers for Medicare & Medicaid Services and administered by the states.",
"Children of servicemembers may receive services through TRICARE, DOD's health care program.",
"This report describes (1) how federal agencies encourage early autism identification and interventions, and (2) the intervention services provided by federal education and health care programs. It also (3) examines steps taken by HHS and federal agencies to improve research coordination.",
"GAO collected information on education programs in five states that were selected for size, activities, and variation in geographic location.",
"GAO analyzed health care program data: fiscal year 2014 TRICARE data and fiscal year 2013 Medicaid and CHIP data—the most recent data available at the time of the review—from another five states selected based on the availability of reliable data. GAO also monitored the implementation of its 2013 recommendations to improve autism research coordination.",
"Education and HHS provided comments on a draft of this report and disagreed that there is potential for unnecessary duplication."
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CRS_RL34687
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{
"title": [
"",
"Political and Social Challenges to Haitian Development",
"Economic Background",
"Macroeconomic Performance and Policy Responses",
"Sector Issues",
"Foreign Trade and Investment",
"Apparel Production in Haiti",
"Evaluating Haiti's Competitiveness",
"Effects and Implications of the 2010 Earthquake",
"The Haiti HOPE Act",
"HOPE I",
"HOPE II",
"Tariff Preferences and Rules of Origin",
"Labor Provisions",
"The HELP Act",
"Legislative Changes",
"CBTPA and HOPE Act Extended",
"Value-Added Rule Softened",
"Woven TPL Rule Increased",
"Knit TPL Rule Increased",
"3-for-1 Earned Import Credit Reduced",
"Apparel Subject to Certain Assembly Rules and Wire Harnesses",
"Transshipment and Customs Provisions Amended",
"Outlook",
"Appendix. Haiti: Selected Economic Indicators"
],
"paragraphs": [
"Haiti's economic, political, and social development has been on a slow track since the transition from dictatorship to democracy began in the mid-1980s. The devastating earthquake of January 12, 2010, was a major setback to what little progress had already been made. Haiti struggled with providing basic needs even prior to the catastrophe, but currently is without the physical, political, and economic infrastructure to provide adequately for its citizens. As the massive humanitarian relief effort continues, planning for Haiti's economic reconstruction and development is also underway. The transition from disaster relief to a national redevelopment strategy is essential, and by all accounts, must be comprehensive, directed at all sectors of the economy, and guided by the Haitian government in cooperation with the United Nations and other international assistance organizations.\nThe U.S. Congress has long taken a comprehensive view of aid to Haiti, annually appropriating funds in support of security, humanitarian relief, and development assistance. Yet, the Haitian economy even before the earthquake had experienced extremely slow growth in output, employment, and productivity. One important step that reflects the nexus of congressional interest and Haitian need is the HOPE Act. In December 2006, the 109 th Congress passed the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 (HOPE I) to assist Haiti with expanding its apparel trade as a way to help stimulate economic growth and employment. The act included special rules for the duty-free treatment of select U.S. apparel imports from Haiti, particularly those made from less expensive third-country inputs, provided Haiti met rules of origin and eligibility criteria that require making progress on worker rights, poverty reduction, and anti-corruption measures.\nEarly assessments of the effectiveness of HOPE I, however, were disappointing and the 110 th Congress responded in 2008 by amending it with HOPE II. HOPE II extended the preferences for 10 years, expanded coverage of duty-free treatment to more apparel products, and simplified the rules of origin to make them easier to use. The act also included a new requirement to ensure that participating apparel firms comply with internationally recognized core labor standards and submit to regular inspection by the United Nations International Labor Organization (ILO).\nIn the aftermath of the earthquake, congressional interest again turned to amending the HOPE Act to increase incentives for investors. The Haiti Economic Lift Program (HELP) Act of 2010 ( P.L. 111-171 ) was introduced in the House and Senate on April 28, 2010. It passed in the House on May 5, 2010 and in the Senate the following day with strong bipartisan support. The HELP Act extended the Caribbean Basin Trade Partnership Act (CBTPA) and the HOPE Act through September 30, 2020. It further enhanced those HOPE Act trade preferences that appeared to have demonstrated the greatest effect in promoting Haitian apparel exports, particularly the least restrictive of those that allow use of lower-cost apparel inputs sourced from anywhere in the world. These provisions give Haitian firms a competitive advantage in the U.S. market, which is intended to attract long-term investment to Haiti's primary export industry. This report analyzes the evolution of the HOPE Act as it relates to U.S. trade policy, the Haitian economy, and post-earthquake reconstruction efforts.",
"A discussion of Haiti's current social and political situation is now clouded by the massive destruction caused by the January 2010 earthquake. By all accounts Haiti struggles to provide basic services and is in need of massive amounts of international aid. President Préval continues to govern, meeting with his cabinet ministers and helping to coordinate international relief efforts, but the extension of emergency presidential powers and delays in holding local and national elections have emboldened political opposition. This situation exacerbates Haiti's social and political problems deeply rooted in the country's historical development patterns.\nHaiti occupies the western third of Hispaniola, a Caribbean island it shares with the Dominican Republic (see Figure 1 ). Haiti has endured a long post-colonial history of poverty, political repression, and underdevelopment, a trend that continues to challenge the sustainability of Haiti's fragile political stability. Since the end of the Duvalier dictatorship in 1986, Haiti has struggled to institutionalize democracy, and so far has been unable to overcome a legacy of weak governance, economic inequality, and social unrest. The presidency has alternated largely between Jean-Bertrand Aristide and René Préval, both of whom struggled to establish a broadly accepted government, in part for the lack of progress in changing the legacy of inequality in Haitian society. President Préval's second administration, begun in 2006, initially sparked a ray of hope among the masses, but his government has since been marred by decisions that have weakened his support and raised doubts about fledgling institutional democracy. The earthquake has worsened an already difficult political situation.\nThe post-dictatorial political system is new, fragile, and in many ways, susceptible to criticism that it has failed to establish a fully functioning government. After four years into his second non-consecutive term, Préval's leadership, vision, and strategy to address long-standing poverty and unemployment have come under question. The transitory terms of his prime ministers, along with delays in holding Senate elections, and in initiating widely supported constitutional reform (particularly to amend a repetitive, expensive, and so far unworkable electoral system) have compromised the government's legitimacy. The multiparty system, rather than consolidating politics, may be slipping further into factional partisanship, leading to low voter turnout, evidence for some of the failure to promote a \"political culture of participation.\" Multiple observers note that the government bureaucracy suffers from a historic endemic corruption, acting to enrich itself while failing to delivery basic services to the Haitian people.\nPolitical tensions emerged once again during the Senate runoff elections that took place on June 21, 2009. The dominant party of President Préval gained 5 of the 11 seats, but the numbers mask a broader discontent within Haitian society. Turnout was exceedingly poor, estimated at 10% or less of registered voters, and scattered violence marred any overall sense of a society exercising its democratic privileges, not to mention the cancellation of voting in one province. The elections took place amid serious protests by medical students after classes failed to resume, and by society as a whole over an emotional debate on raising the minimum wage, which congress eventually passed and President Préval signed into law. Some constituents have questioned Préval's commitment to the populist platform that helped bring him to power as he pursues a pragmatic middle path to governance.\nIn the wake of the current disaster, Préval's leadership is being fully tested, in part by electoral politics. Elections have been interrupted by the earthquake and as of May 8, 2010, terms for the National Assembly and one-third of the Senate have expired, but not before parliament extended Préval's mandate until May 11, 2011. It also appears as though the presidential and parliamentary elections scheduled for November 2010 may be delayed, in part from lack of presidential action. Taken together, these actions have caused additional friction in an already highly stressed society and have also led to congressional calls for President Préval to expedite efforts to set a firm election date.\nHaiti's uneven social structure lies at the heart of its state of recurring crisis. Haitian society has small middle and working classes, and is dominated by the chasm between a tiny minority of wealthy elite and the impoverished masses, the latter of which have little power or participation in governing. Politics since the transition to democracy in 1986 has not altered this precarious relationship. The highly skewed distribution of power and resources, and the underlying fear it generates, have made the transition to democracy difficult. Haiti's political future appears tenuous as long as entrenched economic and social patterns remain unchanged.\nResearch on the sustainability of young democracies suggests that Haiti occupies the category of highly vulnerable countries. Initial conditions that correlate with a reversal of democracy include poor economic performance overall, low per capita income, highly skewed income and asset distribution, and weak political institutions that have difficulty enforcing checks and balances on executive power. The Préval government is feeling the pressures that poor economic performance places on governments, compounded by the effects of the earthquake. Strong support from the international community will need to be effective in alleviating suffering and providing hope to help rebuild political as well as economic momentum.\nPrior to the earthquake, security was reportedly improving, although it remained a persistent problem, rooted in the history of violence stemming from political and economic inequality. It manifested in the often random violence of gangs and paramilitary groups. Security is currently being enforced by the United Nations Stabilization Mission in Haiti (MINUSTAH), but relief efforts also include the addition of U.S. and U.N. troops. Despite some concerns with sovereignty issues, there is no doubt that the current situation requires a strong foreign military presence for the foreseeable future. The ability of MINUSTAH to handle a possible escalation of social upheaval is an important question given the country's desperate situation, although the temporary deployment of U.S. forces has helped maintain stability.",
"Even prior to the earthquake, economic growth and development was hindered within this often marginally functional political and social landscape. Internally, many doubted that the Haitian government could deliver on changing the day-to-day conditions of a population immersed in poverty. Externally, vast amounts of foreign aid expose the challenge of development in a country devoid of the basic cornerstones of growth. The restoration of growth remains the primary economic goal and is a necessary condition for development. The post-earthquake challenge involves nearly the wholesale reconstruction of an economy. Even if Haiti can emerge from the earthquake's devastation and policies can be designed and resources brought to bear, igniting a sustainable growth trend will not provide the foundation for long-term political and social stability if it cannot begin to address the underlying extreme social inequality.",
"Haiti's dismal economic growth trend epitomizes its long-term development paralysis. From 1960 to 2000, annual average per capita income growth was actually -0.7%, by far the worst performance in the Western Hemisphere. Growth was achieved briefly in the 1970s, led by export-oriented assembly industries, but Haiti experienced a prolonged economic downturn in the 1980s, as did most countries in the region, leading to social and political unrest that ultimately contributed to the overthrow of the Duvalier dictatorship in 1986.\nIn 1991, following an interim government, Aristide emerged briefly as the first elected president, only to be deposed by a military coup within a few months. To force the return of the democratically elected government, the United States and other countries responded with a trade embargo under the auspices of the Organization of the American States (OAS) and the United Nations (UN). Although its success in changing political behavior has been questioned, its economic effects were concrete and devastating. Haiti was already experiencing a decline in output, employment, and income, but the trend mushroomed during the 1991-1994 embargo. The embargo targeted fuel imports (not food, but supplies were delayed), and all exports. Overall, by 1994, per capita income had fallen by 30% in three years and unemployment peaked at 75%.\nSector effects were highly pronounced. Employment in the assembly manufacturing industry (e.g., apparel, electronics, sporting goods), centered in Port-au-Prince, fell by over 80%, shedding 32,000 jobs. One estimate of the multiplier effect suggests that the embargo eliminated some 200,000 jobs in the formal sector. Most assembly plants closed permanently, with only apparel rebounding slightly in the aftermath of the embargo. The inability to import agricultural inputs such as fertilizers and seeds, or to export agricultural goods, had similarly devastating effects on that sector's production. In addition, because oil imports were blocked, there was a sudden increase in the use of charcoal, accelerating the ecologically destructive trends in deforestation and soil erosion, further damaging agricultural production.\nTrade was renewed in 1995, but economic growth oscillated for the next decade, hampered by recession, flooding, and ongoing political turmoil. In the post-embargo period, annual GDP growth for the decade ending 2006 averaged only 1.1%, lower than Haiti's 1.4% average population growth rate. This trend is a recipe for perpetuating chronic unemployment, poverty, and emigration pressures in a country like Haiti that cannot absorb most new entrants into the work force. As seen in Figure 2 , Haiti's economic growth has generally lagged badly compared to Latin America and the Caribbean (LAC) as a whole, a region that is itself known for its poor long-term growth record. Growth has been positive since 2005, but averaged only slightly more than 2.0% per year. There are many domestic and international issues facing Haiti, but sustainability of its long-term growth is at the core of its development challenge (see data in Appendix ).\nHaiti is the poorest country in the region. Over 70% of the population lives on less than $2 per day. Inequality is extreme; Haiti has the most highly skewed income patterns in the Americas, with nearly half of the nation's earnings going to the top 10% of the income distribution, while the bottom 10% earns less than 1% of national income. Inflation has made matters worse, causing real wages to fall by half from 2000 to 2008, despite a major adjustment in 2003 (see data in Appendix ). The 2009 global recession although painful, helped arrest inflation, allowing real interest rates to fall along with food and energy prices. Employment opportunities are few, with 80% of workers operating in the informal sector.\nThe 2009 debate over increasing the minimum wage produced protests and political conflagration, an outrage that attests to the importance that the Haitian people place on the need for policy responses to address persistent poverty. There is little doubt that failure to adjust the minimum wage in line with inflation had deeply eroded the purchasing power of most Haitians. The Haitian Congress proposed to more than double the minimum wage across the board from the equivalent of $1.80 to $5.00 per day. There was disagreement among President Préval's advisors on supporting this level of increase because employers argued that such large cost increases could force worker layoffs and potentially bankrupt some firms, particularly small and medium-sized businesses.\nAs a compromise, President Préval agreed to a minimum wage of $5.00 per day for workers in all sectors except apparel, who received an adjustment to $3.25, with the law requiring parity within a few years. Apparel manufacturers argued that fully trained and efficient apparel sewers already earned in excess of the new minimum wage in any case. The real marginal cost of the raise was associated with increased expenses for training, vacation, and other paid absences. Shortly after the wage increase took effect, there were reported employment responses. Two prominent employment sectors, retail gasoline and private security, both reported employment decreases as adjustments to high wage costs. Gasoline stations, for example, reduced or eliminated afternoon-evening shifts, a time when retail sales tended to diminish. Whether this employment trend will continue over the long run is unknown and perhaps irrelevant in the short run given current conditions.\nTo address the need for a strategic industrial development plan, President Préval established a Presidential Commission on Competitiveness in 2009. Its primary goal was to enact a development strategy based on improving productivity, diversifying the economy, and creating new employment opportunities in the short term. This ambitious plan envisioned the creation of 500,000 jobs within three years by targeting key industries in agriculture, services, and manufacturing sectors that could be started up or expanded relatively quickly. Specifically, the plan calls for investment in five \"growth clusters\" (fruits and tubers, animal husbandry, tourism, garment production, and business process outsourcing), with additional resources committed to \"support sectors\" such as infrastructure, finance, information technology, education, and enhanced business climate.\nWhile the plan is bold, history suggests it will not be easy to achieve. It does, nonetheless, reflect a serious effort to present a comprehensive analytical approach that covers both short-term and long-term development goals. Success in the short term is critical if any progress is to be made in reducing poverty and related social unrest. It will be an important plan to monitor, not only as a gauge of Haiti's economic success, but because it will likely raise expectations that problems can begin to be addressed in the near future, which may entail a higher degree of political risk. Most importantly, it may provide the basis for Haiti's emergence from the economic catastrophe it currently faces, including an assessment of the Haitian government's role in planning and bringing about redevelopment.\nDespite these plans, Haiti's growth trend has suffered from the global downturn, which reduced remittances, exports, and public revenue, presenting a risk to Haiti's economic recovery program. Projections of average annual rates of growth are only between 1% and 2%. To consolidate what little gains have been made in reinvigorating growth, Haiti will have to address a core area of domestic policy, the lack of productivity growth.\nPersistently low or negative productivity is the result of negligible investment in private enterprise, as well as human and social capital such as education, health care, and infrastructure. It is pronounced in the agricultural sector, where primitive methods and ancient equipment perpetuate low yields, lack of growth in cultivated land, and inadequate food supplies, much of this because of the sector's \"decapitalization\" during the 1991-1994 trade embargo. Investment in manufacturing has also been sparse, jeopardizing prospects for longer-term growth. Improvements in public administration, especially those that might address widely perceived problems of crime, corruption, and bureaucratic efficiency, along with private sector gains, could provide the basis for progress under the Préval development plan. A critical reconstruction question for both the public and private sectors is whether to rebuild as quickly as possible to meet immediate needs, or invest the additional time and money to rebuild at higher standards.",
"Slow growth is also an obvious constraint at the sector level. Agricultural production represents 30% of GDP and employs up to 70% of the work force, mostly dedicated to subsistence farming. Output has stagnated for decades and declined for five years in a row until expanding by 3.0% in 2007. Agricultural growth is limited by the small amount of arable land, overuse of soil, and poor irrigation. It is also constrained by poor rural infrastructure, destructive agricultural practices, and frequent hurricanes and other natural disasters. Rice, sugar, and coffee are produced at a fraction of levels achieved decades earlier. Haiti currently produces little of these traditional exports, and output of staples has long been insufficient to meet domestic food needs. Haiti, therefore, must import large amounts of food stuffs. Rising international prices of basic foods exposed Haiti's vulnerability to price shocks and its limited ability to feed itself, as seen in the food riots that occurred in April 2008. The subsequent collapse in commodity prices, although a problem for much of the region, helped alleviate some of Haiti's import bill, at least in the short run.\nManufacturing constitutes only 7.6% of GDP and has shown no growth over the past decade until recently. It, nonetheless, is the major foreign exchange earner and holds out some promise for employment growth. Manufacturing is dominated by food processing (47.2%) and apparel assembly (21.1%). Construction and public works account for another 7.7% of GDP and grew by 6.3% over the last two years. These trends reflect recent, new public sector investment and provide one option for employment growth of low-skilled workers. The services sector constitutes 51% of GDP and is led by restaurant and hotel industries, which together account for 27% of GDP. It grew by nearly 6% in 2007. Tourism is not a major factor, but core ingredients of a tourist industry are present in Haiti, should confidence return in Haiti's ability to maintain political and economic stability.",
"Haiti has a historically unhealthy dependence on foreign commerce and finance, from the colonial days of the sugar trade to the current assistance provided by developed countries. Total trade (exports plus imports) equals 60% of GDP, but the trade imbalance is large with a deficit equal to 33% of GDP. Haiti is in a difficult position because slow growth in output and exports means that it must rely on foreign sources for basic commodities such as food and oil, as well as manufactured and capital goods. The problem is often made worse by deteriorating terms of trade, when prices of oil and other commodity imports rise relative to prices of Haiti's exports.\nHaiti's trade relationship with the world is dominated by the United States, with which it ran a $494 million deficit in 2008. Haiti exports primarily apparel, which accounts for 75%-80% of foreign exchange earnings and for 92% of total exports to the United States. Cacao, mangoes, and coffee compose the small basket (4%) of agricultural exports. In 2008, the United States accounted for 78.2% of Haiti's exports followed in order of magnitude by the European Union (7.4%), Thailand (3.6%), and Canada (3.3%)—see Figure 3 . The United States also accounted for 53.5% of Haiti's imports followed by Latin America (11.6%), the European Union (8.8%), and China (7.1%).\nA return to economic growth is critical to finance the trade deficit in the long run. In the near term, however, there is no alternative to relying on foreign sources of income, principally remittances, foreign aid, and grants. Transfers finance Haiti's fiscal and current account deficits, but they are a poor substitute for production and export-driven financing. They promote long-term dependency and create technical problems, such as exchange rate appreciation that exacerbates Haiti's structural trade deficit, with no concomitant growth in productivity or output that is typically associated with an export-driven exchange rate appreciation. These transfers, so necessary for Haiti's short-term survival, are dependent on the fortunes of expatriate citizens and the generosity of foreign governments, diminishing Haiti's control over the future of its economic well-being.\nHaiti has a poorly diversified export sector, overly dependent on one type of product and a single foreign market, a strategy that has so far shown little lasting positive effect on long-term development. The risk to this export structure became increasingly clear with the U.S. economic downturn, which reduced demand for Haitian goods (falling 7.5% year-over-year). As the Commission on Competitiveness notes, reliance on U.S. trade preferences for apparel exports represents a long-term opportunity, but only if the sector can be expanded into greater value-added activities and other sectors of the economy begin to contribute more to growth in output and exports.\nHaiti's trade dependence is most pronounced on the import side. Haiti imports manufactured goods, machinery, transportation equipment, raw materials, energy, and food. It is unable to produce most of these needs and will be a large net importer for the indefinite future. Haiti's vulnerability became acute over the last decade with the rise in food and energy prices, which had a huge budgetary effect. From 2002 to 2007, the value of food and energy imports rose 57% and 159% respectively, even as volume declined slightly. In 2008, petroleum accounted for 25%-30% of total imports. This trend points to two fundamental problems. First, higher commodity prices make food and energy imports more expensive, decreasing Haitian purchasing power. Second, to compensate, there is a compounding substitution effect, in which other goods must be given up to spend more on food and energy. This effect may be seen in the decline of imports of manufactured goods, which fell by 37% from 2002 to 2007.\nForeign direct investment (FDI) in Haiti has been historically very low. Net FDI inflows ranged from $4 million in 2000 to $14 million in 2004, and then spiked to $160 million in 2006, before falling to $30 million in 2008. The large increase appears to be related to an investment boost in construction and tourist industries, which seems to be limited in duration. Construction activity in the public and private sector has expanded briskly, but FDI inflows were not expected to continue at this recent higher level. One approach to attracting FDI to Haiti rests on reinvigorating the apparel industry, a strategy that the U.S. Congress supports with the HOPE Act.",
"Although agriculture is the single most important sector of the Haitian economy for both jobs and output, apparel assembly is the core export industry and one promising source of employment growth in the formal sector. Apparel production is a globally competitive industry that often relies on a multi-country chain of production. Fiber, yarn, and fabric production is capital intensive and provides the opportunity for the greatest value added. Garment assembly, by contrast, is highly labor intensive, offering thinner profit margins. Assembly factories are far less expensive to build than textile mills and location of production is often a secondary consideration to levels of vertical integration and global networks, use of technology, ability to demonstrate socially responsible production, and overall cost containment. The attraction of apparel assembly is the relatively low levels of investment and skills required to operate this entry-level segment of the industry. It not only provides opportunity for quick job growth, but also for advancement into the higher value-added work as investment, experience, contacts, and labor skills progress.\nHaiti is a prime candidate for redeveloping the apparel exporting industry because assembly requires an abundance of low-skill labor, but relies on relatively simple technology and small capital investment. Therefore, production naturally gravitates toward locations with low labor costs. Although Haiti's labor costs are not as low as those in some Asian countries, they are the lowest in the region, allowing Haiti to niche into apparel assembly. As shall be discussed, at the margin, U.S. trade preferences and relatively relaxed rules of origin can provide a critical benefit.\nThe fortunes of the apparel sector to date, however, have paralleled the broader trends of the economy, which have been subject to tremendous social and political turbulence. Historically, the apparel heyday in Haiti lasted from the 1960s through the end of the Duvalier dictatorship in 1986. The troubled transition to democracy, including the 1991 military coup and trade embargo that followed, caused a massive downturn in production for years. Since 1994, the Haiti apparel industry has entered into a slow and tentative period of rebuilding.\nAt its peak in the 1980s, Haitian apparel industry sources estimate that the number of jobs ranged upward of 100,000. The 1991-1994 trade embargo effectively closed apparel operations, causing employment to fall to near zero for a short time, as many apparel manufacturers apparently left Haiti for Honduras and other sites in the region. In its rebuilding, Haitian apparel firms estimate that employment more than doubled to 27,000 since the original HOPE legislation passed in 2006.\nFirm-level apparel output data are not readily available, but because over 90% of apparel production is exported to the United States, U.S. import data can serve as a reasonable proxy for production trends. Figure 4 shows the trend of U.S. imports of Haitian apparel by volume. Note that imports were falling in the tumultuous aftermath of the Duvalier dictatorship, hitting bottom during the 1991-1994 trade embargo. With a temporary return to relative political calm, U.S. imports (again as a reflection of output) rose, but declined again after 2000 as production was lost to competition and continuing political uncertainty kept investors at bay.\nGrowth renewed after 2002 with industry restructuring. By 2006, a new downturn is noticeable, likely related to two events that occurred at that time: the end of global textile quotas put in place under the World Trade Organization (WTO) Agreement on Textiles and Clothing (ATC), and implementation of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), which shifted regional U.S. tariff preferences for apparel in favor of Central America. The downturn continued into 2008, likely reflecting the effects of the global financial crisis, but returned to growth in 2009.\nHaiti's apparel industry faces many challenges. Domestically, the lack of industrial space, the high cost of capital and utilities, and poor infrastructure top the list. Externally, highly efficient competitors both in the region and in Asia will continue to challenge Haiti's low-cost export strategy. The required use of higher-cost U.S. inputs (e.g., yarns, fabrics, components) for duty-tree entry into the United States has also been a problem, much of it addressed in the HOPE II and HELP Acts (see \" HOPE II \" and \" The HELP Act \"). To improve its competitiveness, the industry underwent major restructuring after 2000. Where it once had been a relatively diversified producer, the industry as a whole adopted a leaner, low-cost business model based on high-volume production that could take advantage of Haiti's low-skill labor pool. Haiti was able to rebuild the industry based on this strategy and can compete at the low end of the U.S. apparel market based on its low wages, quality products, and proximity to the United States, consistent with Haiti's stage of development.\nFor the most part, Haiti's production is still limited mostly to simple knits and some woven products. The mix is shifting, however, toward greater production of more complicated woven goods (e.g., khaki pants), which rose from 12.6% of apparel exports to the United States in 2007 to 18.6% in 2009. Knits (e.g., t-shirts and sweatshirts) fell from 87.4% of apparel exports to the United States, to 74.4% over the same two years. Haiti's top five apparel products account for 90% of U.S. apparel imports from the country. As may be seen in Table 1 , for these articles, Haiti's primary competition is Central America, the Dominican Republic, and Southeast Asia (ASEAN), even more so than China, with the exception of articles produced from man-made fibers. Mexico, Bangladesh, and other countries are also important competitors for some items.\nRejuvenating Haiti's apparel assembly industry has been criticized as a growth strategy for its lack of development potential and vulnerability to rapidly changing market conditions. Nonetheless, it has survived as a niche production strategy in a highly competitive industry, even diversifying its product line. Supporters of the sector argue that given Haiti's limited options for rebuilding its economy in the short term, the apparel sector offers one relatively quick response to chronically high unemployment. Apparel assembly has also allowed manufacturing to remain in Haiti that might otherwise have migrated to Asia or Central America, and the industry has recently begun to diversity production. Haiti's apparel industry relies entirely on foreign producers for yarns and fabrics. Fabric is sourced primarily from the United States, the Dominican Republic, and Asia, in approximately equal proportions. Apparel factories produce for a wide variety of firms including Hanes (U.S.), Gildan (Canadian), Wilbes (South Korean), and Grupo M (Dominican), who contract for many well-known U.S. brand names.\nHaitian apparel production is concentrated in Port-au-Prince, where it is located largely in two free trade zones situated near airport and port facilities. In addition, in 2003, Grupo M began a mutually beneficial apparel co-production arrangement in Ouanaminthe, on the northern border with the Dominican Republic (see Figure 1 , Map of Haiti, p. 2). The plant is located in a relatively new foreign trade zone (Compagnie Development Industriel—CODEVI). Grupo M, the only Dominican company operating a co-production plant, provides management training and guidance, and plans to turn operation of the facility over fully to Haitian managers. It has also worked with the Haitian government in providing the necessary infrastructure investment, including water and electricity, the excess of which is made available to the surrounding community. Selection and training of Haitian workers is rigorous and the jobs are highly coveted. Production was unaffected by the January 2010 earthquake.",
"Haiti has a competitive advantage in apparel based on its relatively low labor costs, proximity to the U.S. market, and a niche strategy based on mass-produced articles. This niche relies largely on simple assembly operations (sewing and some cutting), has few style changes over time, accommodates slightly longer lead times, and has relatively predictable demand schedules. Location of production is often not a critical decision factor for many buyers, but proximity to the U.S. market has proven to be an important benefit for Haiti. There are, however, significant productivity problems, with some firms operating barely at the margin of profitability. A survey of apparel buyers ranked Haiti as \"favorable\" on price and overall product quality, but pointed to the need to (1) improve training for apparel workers and middle management, (2) overcome a poor image for political stability, (3) develop better infrastructure, and (4) compensate for a lack of production in \"apparel infrastructure\" such as thread, linings, and fabric.\nHaiti compares less favorably on costs of electricity, construction, and overall operation. While rent on industrial space is low, buildings are fully depreciated and given high construction costs and the need to rebuild, future rent costs could rise significantly, cutting into apparel firm profitability. Public investment in transport, utility, and modern customs facilities is also needed to support a more competitive apparel sector.\nThere are some key challenges to Haitian apparel competitiveness. One is producer concerns over losing a major cost advantage because of the large 2009 minimum wage increase. Apparel managers note that even though fully trained workers already earn more than the new minimum wage, raising the minimum wage can reduce the worker production incentives. Second, to remain competitive, firms will need investment to move toward higher value-added \"full package\" production, an increasingly standard requirement of U.S. buyers. Full packaging production involves a wide range of skills that include product design, materials sourcing, logistics, manufacture of the entire finished product, packaging, and delivering the final good to the retailer. Full packaging requires advanced financial, managerial, sewing, and other operational capabilities not yet widely available in Haiti.\nThird, few believe that investors are willing to make large capital commitments necessary to construct fabric mills in Haiti. Many view Haiti as politically and socially unstable and unattractive because of high construction, capital, and utility costs. Still, the key to Haiti's long-term apparel production development is moving up the value-added chain toward full package operations. This process can also be done incrementally, as managerial and worker skills improve allowing for additional work in printing, finishing, washing, and other stages of apparel production. The United States Agency for International Development (USAID) has let a long-term contract to help Haiti apparel producers develop these skills, and includes funding construction training centers to develop the managerial expertise and other skills necessary to move toward full package production.",
"The earthquake that rocked Haiti on January 12, 2010, did untold damage to the country, including a significant loss of life and property. The world has responded with an unprecedented humanitarian relief effort. While Haiti grapples with stabilizing a catastrophic situation, the apparel sector is also struggling to regain its previous production capacity as soon as possible. Although buyers are reportedly willing to stay with Haiti, its best chance at retaining apparel customers and future investment rests with a quick return to full production.\nEstimates from Haiti indicate that earthquake damage to firms was serious, uneven, but not as severe as it might have been. Of the 23 plants operating in late 2009, the earthquake completely destroyed one, and seriously damaged four others. Currently 19 are fully operational, two are being relocated, and two are closed. Employment attendance rates have returned to levels seen prior to the earthquake, but with fewer factories operating, total employment has fallen from 26,600 to 23,300. Monthly apparel exports declined 43% from $58.2 million in February 2009 to $33.1 million in February 2010. Many factories are still in need of cleaning, repair, renovation, and equipment.\nEstimates of rebuilding costs for the industry have risen to $38 million to refurbish damaged buildings, replace machinery, and train new employees, among other costs. Others suggest that to the extent that the Haitian apparel firms elect to rebuild at new and higher standards, which would be in line with the broad strategic vision for the sector's long-term development, perhaps twice as much investment capital would be needed. As noted above, construction costs are high in Haiti because most materials must be imported. A key to successful reconstruction will be the availability of affordable financing. The need for immediate and swift reconstruction raises a host of policy questions regarding the use of international aid for providing affordable financing such as grants, subsidized loans, loan guarantees, or other incentives that would entice private investors to take on the risk of rebuilding in Haiti. Congress took one important step by modifying HOPE Act tariff preferences and rules of origin to further enhance U.S. market access for Haitian apparel exports.",
"Congress first provided trade preferences to the Caribbean region in the Caribbean Basin Economic Recovery Act (CBERA) of 1983—often referred to as the Caribbean Basin Initiative. The preferences did not, however, cover textile or apparel goods. In 2000, Congress passed the Caribbean Basin Trade Partnership Act (CBTPA), which provided additional incentives on a temporary basis to select U.S. imports of textile and apparel articles assembled or knit-to-shape by firms in designated beneficiary countries. In general, to qualify for the tariff preferences, the articles had to be made from inputs produced in the United States or the region. The HOPE Act, as amended, builds on this precedent, providing additional benefits exclusively for Haitian apparel exports as a way to support growth and development in Haiti.\nThe HOPE Act, as amended, offers duty-free treatment for U.S. apparel imports from Haiti under rules of origin that allow for more flexible sourcing of materials than those offered to Caribbean countries under the CBTPA. The critical difference is that under the CBTPA, select apparel goods receive duty-free treatment if assembled or knit-to-shape from inputs that use U.S. and in some cases regional fabrics , provided they are made from U.S. yarn . Under provisions in the HOPE Act, as amended, duty-free treatment is extended to apparel articles if wholly assembled or knit-to-shape in Haiti from materials (yarns, fabric, and components) sourced from any country . In some cases there are few restrictions; in others, a minimum portion of the garment's materials must be produced by U.S. firms or those in a country that is party to a U.S. unilateral preferential trade arrangement or a free trade agreement (FTA). Because the HOPE Act allows for the use of non-U.S. fabric and other apparel inputs, Congress sought detailed input from the U.S. textile and apparel industries. The United States is the dominant market for Haitian apparel and therefore the economic benefit of the preferences is potentially significant for enhancing investment, output, and employment in that sector. The legislative development of the HOPE Act follows.",
"In December 2006, the 109 th Congress passed the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 (HOPE I) as an amendment to the Caribbean Basin Economic Recovery Act (CBERA— P.L. 98-67 ). Now referred to as HOPE I, the act provided special rules for the duty-free treatment of select apparel imports from Haiti made from third-country yarns and fabrics, provided Haiti met rules of origin and eligibility criteria. To be eligible, Haiti had to make progress toward establishing a market economy, the rule of law, the elimination of barriers to U.S. trade and investment, policies to reduce poverty, a system to combat corruption, and protection of internationally recognized worker rights.\nThe act required that all eligible exports be shipped directly from Haiti. It also established an overall cap on total qualified apparel imports equal to 1%-2% of total U.S. apparel imports. It included a short supply rule that allowed duty-free treatment of goods made from fabrics found to be in \"short supply,\" as defined in all other preference arrangements and FTAs of the United States, and gave preferences to wire harness automotive imports.\nAt the heart of HOPE I were two new rules of origin allowing for duty-free entry of Haitian apparel goods. First, quotas were established for apparel articles made from inputs that meet the value-added content requirement in which 50%-60% of value added must come from firms in the United States or from firms in countries that are a party to a U.S. FTA or are beneficiary countries under a unilateral preference arrangement. There were no restrictions on the source of the remaining inputs. Second, an additional quota or trade preference level (TPL) of 50 million square meter equivalents (SMEs) was established for duty-free treatment of woven apparel that did not have to meet the 50%-60% value-added rule (allowing all inputs for these articles to be sourced from anywhere in the world).\nDespite these new trade rules favoring Haitian apparel producers, HOPE I soon came under criticism for being ineffective. In 2007, the first year of operation, only 3% of U.S. imports of Haitian apparel entered under HOPE I, the rest still entering duty free under the CBTPA. There were five major criticisms of HOPE I:\nThe three-year program was too short to attract new investment. The 50% value added rule was too high, greatly limiting its use. The TPL for woven articles was too small and did not include knit articles, which constitute 80% of Haitian apparel exports. The requirement for direct shipping from Haiti was cumbersome and costly since apparel finishing had to be done in the Dominican Republic, with the articles shipped back to Haiti for export to the United States. The overall cap on imports was too small.\nIn addition, some U.S. textile producers objected to the preferences, contending that because they permitted use of third-party fabrics and other inputs, they were effectively displacing textile jobs in the United States and the Caribbean with those in Asia. U.S. producers also argued that the rules of origin were vague and difficult to enforce, and that the tariff preferences could result in diverting apparel production to Haiti from countries in the region that had apparel trade preferences in other agreements with the United States.",
"Because early assessments of the effectiveness of HOPE I were critical of its progress in stimulating foreign investment in the apparel sector, and given that Haiti's economic and social conditions were deteriorating rapidly in early 2008, the 110 th Congress amended the HOPE Act with passage of the Hemispheric Opportunity through Partnership Encouragement Act of 2008. It became known as HOPE II, and both houses of Congress agreed quickly on bill language without formal hearings, expediting the legislative process, but to the chagrin of some Members.",
"As with HOPE I, duty-free treatment was provided to apparel articles wholly assembled or knit-to-shape in Haiti. The specific rules of origin determined the amount of third party inputs that could be used in the manufacturing process and still receive duty-free treatment. Congress made three broad design changes to the HOPE Act:\nIt extended all tariff preferences from a period of 3 to 10 years ending September 30, 2018. It allowed direct shipment of final goods from either Haiti or the Dominican Republic. It clarified the quantitative limitation (cap) rules to ensure that (1) articles subject to a specific cap do not count toward the overall value-added cap, (2) articles subject to one cap do not count toward another cap, and (3) HOPE benefits are understood to be extended in addition to any other benefits conveyed under the Caribbean Basin Initiative.\nAmended rules of origin allowed for more liberal application of duty-free treatment for imports of Haitian apparel regardless of the source of inputs (yarns, fabrics, components). The most notable changes were\nAn increase in the annual TPL to 70 million SMEs for select woven apparel imports without regard to source of inputs. The addition of a new TPL of 70 million SMEs annually for knit apparel without regard to source of inputs, with some exclusions. The addition of a new uncapped \"3-for-1\" earned import allowance (EIA). It allowed producers to claim a credit for the export of apparel articles made from qualifying inputs that can be used in exchange for exporting articles duty-free made from non-qualifying inputs in a 3-for-1 ratio. Qualifying woven fabric must be wholly formed in the United States from yarns wholly formed in the United States. Qualifying knit fabric and knit-to-shape components must be wholly formed or knit-to-shape in the United States or any country or combination thereof that is a party to a U.S. free trade agreement or a beneficiary country under a unilateral preference arrangement, from yarns wholly formed in the United States. Continuation of the value-added rule through 2012, but the overall cap on eligible apparel articles was frozen at 1.25% of total U.S. apparel imports. A new uncapped duty-free rule for brassieres, selected women's and girls' sleepwear, luggage, and handbags wholly assembled or knit-to-shape in Haiti. The statute also clarifies that the \"short supply\" rule, or benefits given for the use of non-U.S. fabric and yarns not available in commercial quantities, is uncapped and expanded to include all fabric and yarns in short supply lists in other U.S. preference arrangements and FTAs.",
"Haiti is eligible to receive preferential treatment as long as the President of the United States determines and certifies that Haiti has established or is making continual progress toward establishing protection for internationally recognized worker rights. The statute defines these as including (1) the right of association; (2) the right to organize and bargain collectively; (3) a prohibition on the use of any form of forced or compulsory labor; and (4) a minimum age for the employment of children and acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.\nHOPE II also amended the eligibility requirements by requiring Haiti to create a new independent Labor Ombudsman's Office and to establish the Technical Assistance Improvement and Compliance Needs Assessment and Remediation (TAICNAR) Program within 16 months of enactment of the legislation. The Labor Ombudsman is to be appointed by the President of Haiti and report directly to him. The office's major functions include (1) maintaining a registry of apparel producers who may seek to use the trade preferences; (2) coordinating with government officials to create a system to ensure participation by apparel firms; (3) overseeing the TAICNAR program; and (4) receiving and directing appropriate comments to the Haitian Department of Labor and the United Nations International Labor Organization (ILO) regarding comments and complaints directed at firms participating in the program.\nThe TAICNAR program creates an independent factory monitoring system focused primarily on assisting factories in improving their working conditions and labor-management relations. It is based on the Better Factories Cambodia project that was negotiated as part of the terms of the 1999 U.S.-Cambodia Bilateral Textile Agreement. The ILO has since developed a Better Work Global Program in conjunction with the International Finance Corporation of the World Bank to expand use of this model. The TAICNAR program is one example, referred to by the ILO as Better Work Haiti. The ILO is given the lead because, as with the Cambodia project, Haiti lacks the resources and institutional capacity to monitor and enforce compliance with labor standards. Developing this capacity is also a goal of the TAICNAR program.\nIn the Better Work approach, access to the U.S. apparel market is given in exchange for sustained and verifiable improvement in factory labor conditions. The TAICNAR program employs a similar incentive system and operational structure in that Haiti's duty-free access depends in part on firms complying with core labor standards and submitting to ILO monitoring at the firm level. Although duty-free access can eventually be denied if conditions do not improve, the thrust of the program is to reinforce a positive response to improving labor conditions rather than imposing a punitive system to address noncompliance. Hence, there is emphasis on providing assistance for remediating problems. In addition, for the program to move forward, government and private sector actors in Haiti had to agree to this arrangement that empowers the ILO with operational authority. Haiti stakeholders acquiesced not only to take advantage of the trade preferences, but also to demonstrate their commitment to transparency in an admittedly difficult process of improving working conditions to levels now required of global apparel production.\nHOPE II requires that the TAICNAR program assess registered apparel producers compliance with (1) core labor standards, (2) labor laws in Haiti that relate directly to core labor standards, and (3) a provision that acceptable conditions of work are maintained with respect to minimum wages, hours of work, and occupational health and safety. The ILO has the authority to conduct unannounced site visits to manufacturing facilities and confidential interviews with workers and management, provide the results of assessments to workers and management, and require actions to remediate deficiencies. The ILO must produce publicly available biennial reports on the program and biannual reports evaluating the progress of each factory in meeting these goals. Congress authorized and appropriated $10 million to the U.S. Department of Labor to finance the TAICNAR program.\nAlthough the ILO and some independent analyses have praised the success of the Better Work approach, in Haiti it is too new to evaluate. The ILO representative arrived in June 2009 and only completed the first round of firm site visits before the earthquake interrupted the evaluation process. Review of the labor code has found it acceptable, but as was expected by some, it has been poorly enforced and many firms will be required to improve their practices and factory conditions to comply with the TAICNAR standards. In addition, enhancing Haiti's capacity to do these type of inspections and enforce labor codes is another major challenge.\nOther issues have come to light with respect to the TAINCAR program. First, the relationship between the autonomous nature of the ILO's representative and the government of Haiti is somewhat ambiguous. Although the Haiti Labor Ombudsman views its office as having overall authority, the ILO does operate independently. Despite the agreement to collaborate, this relationship has raised questions in the minds of various stakeholders as to the ultimate authority on labor matters, should disagreements arise. In a related issue, another debate has surfaced as to the implication of the core labor standards listed in the HOPE II legislation. They are the same as those listed in the ILO Declaration on Fundamental Principles and Rights to Work, to which all members are obligated to uphold. The statute, however, does not reference the ILO. Without such a reference, and/or language limiting this understanding specifically to the ILO Declaration and the eight fundamental conventions that back the Declaration (as is done in the case of the Labor Chapters of recent U.S. free trade agreements), some have questioned whether a more expansive application of other ILO conventions and jurisprudence could be applied in Haiti.",
"As part of U.S. support for Haiti's post-earthquake economic recovery, Congress passed the Haiti Economic Lift Program (HELP) Act of 2010 ( P.L. 111-171 ) in May 2010. In the HELP Act, Congress crafted amendments to the HOPE Act, targeting those preferences that had so far appeared to demonstrate the greatest promise of promoting Haitian apparel exports to the United States.\nAn analysis of the apparel trade data from Haiti, as seen in Table 2 , indicates that Haitian apparel producers were increasing their use of the tariff preferences, particularly after HOPE II was passed in 2008. From 2007 to 2009, the proportion of apparel entering under HOPE II grew from 3.3% to 26.9% of total apparel entering duty free under all preference programs (CBTPA and HOPE Act). Although there may have been some switching of exports entering the U.S. market from CBTPA to HOPE II, data reveal that in 2009 there was a 137% jump in the use of the woven TPL and a 41% increase in the use of the value-added rule, likely in response to HOPE II. By 2009, a small portion of apparel began to enter under the knit TPL as well, but there has been little use of other special import rules provided to Haitian apparel exports.\nIn addition, data not shown reflect that the statutory caps on the amount of apparel allowed to enter duty free are still far from being exceeded. For example, in 2009 Haiti filled 5.2% of its overall apparel quota, 2.1% of the knit apparel cap, and 22.8% of the woven cap. Haitian apparel producers lobbied for specific changes including extending the program to 2028, increasing the TPLs for knits and fabrics, reducing the value-added rule to 50% for five years, reducing the earned income allowance from 3-to-1 to 1-for-1, and expanding the apparel and non-apparel items that would be eligible for duty-free treatment.",
"The 111 th Congress examined carefully the HOPE Act trade rules to determine which could be enhanced that would make the most significant and timely contribution to Haiti's economic recovery. It did so in consultation with the U.S. apparel industry, with key, but not all, apparel stakeholders supporting the final bill.",
"The HELP Act extends both the Caribbean Basin Trade Partnership Act (CBTPA) and the HOPE Act through September 30, 2020. Together, the relevant trade preference rules give current producers and would-be investors assurance that enhanced U.S. market access for Haitian apparel will be available for the next decade. This change is important for any calculation of long-term return on investment, a critical element in the decision to invest and operate in Haiti.",
"To receive duty-free treatment under HOPE II, 55% (rising to 60%) of the value of the exported product had to be made from inputs and processes from Haiti, the United States, or a country in an FTA or unilateral preferences arrangement with the United States. Third-country inputs could not exceed 45% of the value of the apparel article. Yarn and fabric constitute the largest cost of apparel, typically 60% of the total product cost, and nearly all the material cost. Therefore, under this rule, the opportunity for Haitian producers to use lower-cost third country fabric was limited because its use would have exceeded the 45% threshold. In other words, most Haitian garment producers do not have the value to add to take full advantage of this rule. Congress responded by extending the 50% threshold though December 20, 2015, the 55% threshold to December 20 2017, and the 60% threshold through December 20, 2018, providing more time for Haitian producers to move up the value-added chain.",
"HOPE II expanded the woven apparel TPL to 70 million SMEs. It was an attractive incentive, easy to use, and for many producers, both foreign and Haitian, small and large, a primary reason for locating and investing in Haiti. Production of woven articles is expanding and because woven articles are more labor intensive than knit articles, they provide a greater employment impact than knits. Producers responded to the incentive, with exports of woven articles to the United States expanding by 79% from 2007 to 2009. Although estimates vary, according to some producers, the 70 million SME cap could be exceeded sometime in 2011 or 2012, although the earthquake may have changed this time frame. Congress decided to allow this cap to grow to 200 million SMEs. To accommodate concerns of U.S. industry that higher TPLs would diminish use of U.S. fabric and other inputs, this new threshold will only be allowed once Haitian producers have exported at least 52 million SMEs. For a select group of woven apparel articles, the threshold would remain at 70 million SMEs to safeguard sensitive U.S. import-competing products, a critical factor in obtaining U.S. industry support.",
"The 70 million SME knit TPL added in HOPE II functions differently than the woven TPL. For example, t-shirts, the largest knit export, are excluded because of a linked preference provided under CBTPA. Industry sources speculate that because of the t-shirt exclusion, knit exports from Haiti are unlikely to exceed the TPL in the near future. Effectively, HOPE II tightened the Haiti knit assembly relationship in an already existing integrated U.S.-Caribbean production process supported by CBTPA. Knit exports to the United States have grown only by 3% from 2007 to 2009, but these products already represented 80% of apparel exports. The HELP Act increases the knit TPL to 200 SMEs subject to the same 52 million SME trigger, but lists exceptions for sensitive products, as with the woven rule, which may not exceed an 85 million SME threshold.",
"This rule potentially benefits mostly those factories that are able to produce large volumes of articles, in this case mostly t-shirts, that use fabric from yarn made in the United States. Potentially, some contractors in the Dominican Republic and Haiti are able to make large runs of cotton t-shirts exported duty-free to the United States under CBTPA (supporting U.S. yarn manufacturers). These same firms then use the earned import credits to produce other articles (mostly t-shirts) assembled from fabric not made from U.S. yarns (cotton or synthetic fabric from Asia or elsewhere), which enter duty-free under HOPE II. The rule has been criticized by Haitian industry representatives as being too complicated and difficult to use. To date it has not been used, largely because apparel articles made from third country inputs enter duty free under the knit and woven TPLs. It may not be used significantly until such a time as these TPLs are exceeded, but Congress reduced the 3-for-1 rule to 2-for-1, thereby requiring less U.S. fabric and yarn before third-country alternatives may be sourced.",
"Certain listed apparel articles that are wholly assembled or knit-to-shape in Haiti and imported directly into the United States from Haiti or the Dominican Republic may enter duty-free regardless of the country source of fabric, yarn, components, or other inputs. This rule originated with brassieres and was expanded under HOPE II. It was further expanded significantly to include various types of garments determined in conjunction with U.S. industry input. In addition, the HELP Act extended duty-free treatment for automobile wire harnesses for an additional five years.",
"The HELP Act requires U.S. Customs and Border Protection (CBP) to verify that apparel articles imported under the TPLs are not transshipped illegally into the United States. CBP is also to evaluate Haiti's customs requirements and set out a plan to improve their capabilities. The HELP Act authorizes appropriations of $100,000 to help meet the immediate customs infrastructure needs of Haiti and $750,000 for fiscal years 2011 through 2020 to maintain support for the Haitian customs initiative.",
"The Haitian apparel industry benefits from a comparative advantage that rests on low-wage production and proximity to the U.S. market, augmented by flexible trade preferences created by the U.S. Congress in the HOPE Act, as amended. Because the United States is the primary market for Haitian apparel exports, these \"uniquely\" generous trade preferences based largely on duty-free treatment for apparel articles made with third-country inputs, especially fabric, are expected to lead to increased foreign investment in apparel manufacturing. Job growth and production increases in the apparel industry since HOPE I was passed in 2006 are early indicators that the strategy may have been taking hold before the earthquake occurred.\nIn the aftermath of the January 12, 2010 earthquake, the apparel industry faces a number of problems in returning to full production, including damaged factories, a devastated work force, and interrupted finance and logistical capabilities. Congress has chosen to respond to Haiti's needs by amending the HOPE Act to enhance even further market access for Haitian apparel and other exports. Two important considerations guided congressional action in addition to a broad-based concern over Haiti's economic and social problems. First, legislation appeared to focus on enhancing those preference rules that have so far shown the most promise for promoting investment, production, and apparel exports. Second, Congress, in amending the preference rules, openly considered the possible negative effects on U.S. producers and workers. In so doing, Congress sought to achieve a policy coherence that attempts to balance domestic and foreign policy considerations.",
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"question": [
"What was the Haitian Hemispheric Opportunity through Partnership Encouragement Act?",
"Why were these rules set in place?",
"What were the components of HOPE I?",
"What inspired the creation of HOPE II?",
"To what extent has HOPE II been effective?",
"How did HOPE II amend eligibility requirements?",
"What does the TAICNAR program do?",
"Why would it apply to only a certain number of firms?",
"How does the TAICNAR program promote self-sufficiency in Haiti?",
"How was the apparel sector of Haiti affected by the 2010 earthquake?",
"How did U.S. Congress help Haiti meet its industry's needs after the earthquake?",
"What considerations were taken into account when creating this action?"
],
"summary": [
"In December 2006, the 109th Congress passed the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 (HOPE I), which included special trade rules that give preferential access to U.S. imports of Haitian apparel.",
"These rules were intended to promote investment in the apparel industry as one element of a broader economic growth and development plan.",
"HOPE I allowed for the duty-free treatment of select apparel imports from Haiti made from less expensive third-country inputs (e.g., non-regional yarns, fabrics, and components), provided Haiti met rules of origin and eligibility criteria that required making progress on worker rights, poverty reduction, and anti-corruption measures.",
"Early assessments of the effectiveness of HOPE I, however, were disappointing. The 110th Congress responded by amending HOPE I with the Hemispheric Opportunity through Partnership Encouragement Act of 2008 (HOPE II).",
"Early evidence suggests that apparel production and exports are responding to these changes.",
"HOPE II also amended the eligibility requirements by requiring Haiti to create a new independent Labor Ombudsman's Office and establish the Technical Assistance Improvement and Compliance Needs Assessment and Remediation (TAICNAR) Program.",
"The TAICNAR program provides for the United Nations International Labor Organization (ILO) to operate a firm-level inspection and monitoring program to help Haitian apparel factories comply with meeting core labor standards, Haitian labor laws, and occupational health and safety rules.",
"It would apply to those firms that agree to register for the program as a prerequisite for utilizing the tariff preferences.",
"The TAICNAR program is also designed to help Haiti develop its own capacity to monitor compliance of apparel producers in meeting core labor standards.",
"The earthquake that rocked Haiti on January 12, 2010 caused considerable damage to the apparel sector, although much has been done to return capacity to pre-earthquake levels. Rebuilding costs for the industry are estimated at $38 million to refurbish damaged buildings, replace machinery, and train new employees.",
"The U.S. Congress responded to the apparel industry's needs by amending the HOPE Act with the Haiti Economic Lift Program (HELP) Act of 2010 (P.L. 111-171), which improves U.S. market access for Haitian apparel exports.",
"Two important considerations guided congressional action in addition to a broad-based concern over Haiti's economic and social problems. First, legislation appeared to focus on enhancing those preference rules that have so far shown the most promise for promoting investment, production, and apparel exports. Second, Congress factored in the possibility of negative effects on U.S. producers and workers, and in so doing sought a policy coherence that attempts to balance domestic and foreign policy considerations."
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GAO_GAO-14-17
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{
"title": [
"Background",
"Foreclosure Rescue Schemes Remain at High Levels and Have Become More Complex",
"Consumer Complaints and Suspicious Activity Reports about Foreclosure Rescue Schemes Increased after 2009",
"Consumer Complaints Reported by FTC and Lawyers’ Committee",
"More Complex Schemes Have Emerged, and Some Groups Continue to Be Targeted",
"FFETF Members Have Focused on Prevention, Detection, and Enforcement to Combat Foreclosure Rescue Schemes",
"MFWG Members Have Developed and Participated in Outreach to Educate Consumers about Schemes",
"Federal Detection Efforts Continue to Focus on Enhanced Incident Reporting",
"MFWG Has Focused on Facilitating Information Sharing and Coordination as Key Efforts to Enhance Enforcement",
"Agency Comments",
"Appendix I: Scope and Methodology",
"Appendix II: Comments from the Department of the Treasury",
"Appendix III: Comments from the Special Inspector General for the Troubled Asset Relief Program",
"Appendix IV: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"The recent foreclosure crisis has resulted in significant opportunities for individuals and companies to take advantage of homeowners who are at serious risk of losing their homes to foreclosure. In 2010, we reported that national default and foreclosure rates rose sharply from 2005 through 2009 to the highest level in 29 years. Since 2009, the rates of default and foreclosures have steadily declined. However, data from the Mortgage Bankers Association for the first quarter of 2013 show that the number of home loans potentially facing foreclosure—borrowers who were more than 60 days past due—remains elevated, with nearly 1.6 million (4 percent) of home loans currently being serviced in the United States. As figure 1 shows, California and Florida have the highest number of potential foreclosures, a statistic that has remained consistent since we reported in 2010.\nIn response to the rising number of defaults and foreclosures, using authority granted through the Emergency Economic Stabilization Act of 2008, the administration announced the Making Home Affordable Program in February 2009, which includes a number of programs, such as the Home Affordable Modification Program (HAMP), intended to assist homeowners facing potential foreclosure.an incentive to servicers and investors for reducing the borrower’s monthly mortgage payment. In addition to HAMP, other government and private programs are designed to provide assistance to homeowners facing foreclosure. For example, Fannie Mae and Freddie Mac have their own loan modification programs. Homeowners may also be able to refinance under the Home Affordable Refinance Program, a program that was created by FHFA to help homeowners who are current on their mortgages, but owe more than the value of their homes. The program is administered by the enterprises. Individual private financial institutions may offer their own proprietary loan modification programs for homeowners who do not qualify for HAMP. Free counseling services, such as those provided by HUD-certified counseling agencies, are available to homeowners seeking to avoid foreclosure and can be accessed through the Homeowner’s HOPE Hotline (1-888-995-HOPE). The hotline is run by a nonprofit organization that works with a coalition of governmental agencies, financial services institutions, and other nonprofit groups to help homeowners struggling to make their monthly mortgage payments. However, desperate homeowners may be unaware of these free alternatives or may be steered away from free sources of assistance.\nUnder HAMP, Treasury pays Further, two major enforcement actions—the Independent Foreclosure Review (IFR) and the National Mortgage Settlement—were brought against leading mortgage servicers following reviews of their foreclosure processes. In 2011 and 2012, the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System (Federal Reserve) issued consent orders against 16 of the largest U.S. mortgage servicers. The consent orders required servicers to conduct foreclosure reviews to determine if borrowers suffered financial harm directly resulting from errors, misrepresentations, or other deficiencies that may have occurred during the foreclosure process. The mortgage servicers were required to retain independent consultants to review foreclosures that were initiated, pending, or completed during 2009 or 2010 and to provide payment to homeowners who suffered financial injury as a result of foreclosure processing errors. In 2013, regulators reached agreements with 15 of the 16 mortgage servicing companies subject to the 2011 and 2012 consent orders to discontinue the foreclosure reviews and to provide over $3.9 billion in direct payments to eligible borrowers and approximately $5.7 billion in foreclosure prevention assistance. In February 2012, DOJ, Treasury, and HUD along with 49 state attorneys general reached an agreement with the five largest mortgage servicers on improper foreclosure practices. This agreement, known as the National Mortgage Settlement, resulted in approximately $25 billion in monetary sanctions and relief to distressed homeowners.the settlement is for immediate aid to homeowners needing loan modifications through principal reduction, refinancing, or other forms of relief. The settlement requires the servicers to pay up to $17 billion in One of the provisions in principal reduction and other forms of loan modification relief nationwide.\nA number of federal and state enforcement agencies perform different roles and use different legal authorities to combat foreclosure rescue schemes. Within the federal government, CFPB, FTC, SIGTARP, U.S. Postal Inspection Service, and agencies within DOJ, FHFA, HUD, and Treasury are members of MFWG and have key roles in investigating and prosecuting persons who have engaged in these types of schemes (see table 1). In addition to MFWG, some member agencies also participate in FFETF’s Rescue Fraud Working Group, another multiagency working group focused on criminal and civil fraud enforcement related to the Troubled Asset Relief Program (TARP), including foreclosure rescue schemes. The Rescue Fraud Working Group is co-chaired by officials from SIGTARP, Treasury’s Office of Financial Stability, and the Acting Assistant Attorney General for DOJ’s Criminal Division. Fannie Mae and Freddie Mac play a role in educating consumers about schemes. On the state level, state attorneys general play key roles in prevention, detection, and enforcement of these schemes.\nIn December 2010, FTC issued the Mortgage Assistance Relief Services (MARS) rule, which includes two primary provisions: (1) a ban on advance fees for foreclosure rescue services; and (2) a requirement that companies inform consumers that a lender may refuse to modify their loan and that consumers can reject any terms negotiated with their lender. Attorneys are generally exempt from the rule if they meet three conditions: (1) they provide mortgage assistance relief services as part of their practice of law; (2) they are licensed in the state where the consumer or the consumer’s dwelling is located; and (3) they are complying with state laws and regulations governing attorney conduct related to the rule. To be exempt from the advance fee ban, attorneys must also meet two additional requirements: (1) they must place any funds they receive from a consumer in advance of performing legal services in a client trust account, and (2) they must abide by state laws and regulations covering such accounts. CFPB reissued the MARS rule without substantive modification in December 2011. All of the states we spoke with reported having laws similar to the MARS rule. In addition, FTC reported that as of 2010, at least 30 states and the District of Columbia had enacted similar statutes or regulations. Except for California, all of the states we spoke with said they also had similar exemptions for attorneys.",
"Since our report in 2010, data collected by federal agencies suggest that foreclosure rescue schemes have increased. Data on these schemes that federal agencies collect include consumer complaints and reports filed by financial institutions. These data show an increase each year from 2009 to 2011, and a slight decline in the number of complaints in 2012. However, the number of complaints through April 2013 suggests another increase for the year. Agency officials and others we contacted noted that foreclosure rescue schemes had become increasingly complex since 2010—involving attorneys and the bankruptcy code, among other things. In particular, schemes involving attorneys appear to have increased recently, presenting challenges to law enforcement.",
"",
"FTC’s Consumer Sentinel Network, an online database available to law enforcement agencies, compiles consumer complaints received by FTC and law enforcement and other organizations, including other federal and state agencies and nonprofit organizations. As shown in figure 2, consumers filed almost 9,000 mortgage modification/foreclosure relief complaints in 2009 to the entities reporting into the network, but more than 20,000 complaints in 2011. The number of these complaints fell slightly in 2012. Preliminary data for 2013 suggest that the number of complaints could increase for the year, as consumers had filed more than 7,000 of these complaints through April 30.\nBased upon a review of FTC’s Consumer Sentinel Network, FTC representatives reported that the median amount paid for foreclosure rescue services remained relatively unchanged, from $2,400 in 2009 to roughly $2,500 in 2012, although not all complaints included this information.percentage of complaints were from homeowners in California. That is, of those consumers that reported their state of residence, nearly 30 percent were from California. While California continued to be the state with the In addition, FTC officials reported that in 2009, the highest highest number of complaints, its share of all complaints decreased in each of the subsequent years, falling to 23 percent in 2010, 19 percent in 2011, 18 percent in 2012, and 15 percent in the first 4 months of 2013. Florida also had relatively more complaints compared with other states, accounting for between 7 and 10 percent of all complaints over the same period.\nIn 2009 and 2010, most of the foreclosure rescue scheme complaints in the Consumer Sentinel Network were submitted directly to FTC by consumers. However, since 2011 the Consumer Sentinel Network’s primary source of foreclosure rescue scheme complaints has been the Lawyers’ Committee. In 2011, 53 percent of complaints were submitted by the Lawyers’ Committee. That percentage increased to 61 percent in 2012 and 75 percent in the first 4 months of 2013. Since early 2010, the Lawyers’ Committee has maintained a complaint database for its public- private partnerships, collectively the LMSPN, which specifically collects information on complaints related to foreclosure rescue schemes. As noted earlier, the database includes consumer complaints submitted directly through the Lawyers’ Committee’s website, as well as those submitted to any of LMSPN’s 85 government members or 47 nongovernment members using the Lawyers’ Committee’s standardized complaint form. In addition to basic information about the homeowner, the complaint form collects other detailed information about the alleged schemes, including type and amount of dollar losses. Like the complaints submitted to the Consumer Sentinel Network, complaints submitted to LMSPN peaked in 2011 and fell slightly in 2012, but early data for 2013 suggest another potential increase.\nTreasury’s Financial Crimes Enforcement Network (FinCEN) receives SARs from financial institutions about suspected violations of financial laws and regulations. FinCEN reported that in 2009 and 2010 it received 189 and 556 SARs, respectively, that contained narratives describing foreclosure rescue schemes. In 2011, the number of SARs related to foreclosure rescue schemes increased considerably, rising to 2,799, and in 2012 the number increased further to 4,427 (see fig. 3). However, FinCEN noted that a growing awareness of and focus on foreclosure rescue schemes may have influenced this upward trend. For example, FinCEN issued an advisory in June 2010 that encouraged SAR filers to use “foreclosure rescue scam” in the narrative part of the report to facilitate the identification and isolation of pertinent SARs.\nWhile both national- and state-level sources of consumer complaints indicate that foreclosure rescue schemes continue to be a concern, consumer complaints may not provide a precise measure of the actual prevalence of these schemes. As we discussed in 2010, consumers can file complaints with any number of federal or state agencies, making the actual number of complaints difficult to aggregate. FTC officials also told us at that time that the complaints the agency received might represent only a small portion of potential schemes. Officials we contacted for this report also noted that consumers might not report being victims of fraud, either because they were unaware that they had been victimized or because they were embarrassed about having fallen prey to a scheme. Finally, trends in the prevalence of schemes over time may also be difficult to determine based on consumer complaints. For example, the increases in complaints from 2009 to 2011 may indicate a growing awareness of foreclosure rescue schemes, prompting more victims to file complaints, rather than an actual increase in schemes. Similarly, increased efforts to collect complaint information, such as those made by the Lawyers’ Committee beginning in 2010, may have contributed to the rise in the number of complaints reported during this time period. The number of homeowners who were at least 60 days delinquent decreased during this time period, suggesting that factors other than the number of borrowers in danger of foreclosure influenced the increase in consumer complaints about foreclosure rescue schemes.\nSAR data have similar limitations. As we noted in 2010, they also do not provide a precise measure of the prevalence of foreclosure rescue schemes or of trends in the prevalence of these schemes, for several reasons. Unlike consumer complaints, SARs are filed by financial institutions, which may not always be aware of the crime because perpetrators usually approach homeowners directly and may even advise them to cease communications with their lenders. In addition, FinCEN noted that most mortgage fraud SARs report suspected fraud that directly affects the lender, such as false statements on loan applications, rather than fraud against the borrower, such as foreclosure rescue schemes. FinCEN analysts also noted that mortgage fraud SARs were typically filed 2 or more years after the suspicious activity began, generally due to financial institutions’ lack of awareness of wrongdoing at the time the activity occurred. This time lag may make it difficult to determine trends. As noted previously, increased awareness of the issue may also have encouraged financial institutions to report foreclosure rescue schemes. In addition to the June 2010 advisory discussed earlier, FinCEN noted that a number of well-publicized federal investigations, enforcement actions, reports, bulletins, and guidance also likely increased awareness and underscored the importance of reporting these schemes.",
"Several agency officials and representatives of nonprofits told us that foreclosure rescue schemes had become more complex over time. For example, we noted in 2010 that there were two primary types of schemes: those that charged homeowners an up-front fee for a loan modification that was never provided (advance-fee scheme), and those that transferred ownership of a house to a third party to avoid foreclosure (sale-leaseback scheme). Officials we contacted for this report, however, described several other types of schemes that had become common. FTC and others have also issued public education material that describes these kinds of schemes. While these schemes also often involve advance fees, they tend to be more complex, as described below.\nForensic audits. Schemes in which the scammer offers to review a homeowner’s mortgage loan documents to determine whether the lender complied with state and federal mortgage lending laws. For example, in a case brought by FTC, the alleged scammers claimed on their website that “up to 95 percent of mortgages may be legally unenforceable due to defects like lost documents, improper notices, appraisal and/or predatory lending.” Using this claim, they said the results of the “forensic audits” they provided would help consumers negotiate a loan modification to avoid foreclosure, according to the FTC complaint. They also promised that, for a fee, consumers could obtain mortgage modifications with reduced interest rates and lower monthly mortgage payments.receive loan modifications and discovered too late that their houses were in foreclosure.\nHowever, consumers often did not\nBankruptcy to avoid foreclosure. Schemes in which scammers promise to negotiate a loan modification with the lender for a fee. However, instead of contacting the lender, the scammer files a bankruptcy case in the homeowner’s name, sometimes without the homeowner’s knowledge. Officials with the Executive Office for U.S. Trustees told us that because the bankruptcy process temporarily halts all debt collection efforts, including foreclosure proceedings, the homeowner believed that the scammer had helped in avoiding foreclosure. In some cases, the homeowner continues to pay regular fees to the scammer, believing that the scammer is still helping. The officials reported that from 2009 through 2012, they had made 45 criminal referrals to law enforcement based on foreclosure rescue schemes and brought 191 formal and informal civil actions. Consumer complaints in the LMSPN database involving such schemes have increased. In 2010, only 4 percent of complaints about foreclosure rescue schemes indicated that bankruptcy services had been offered to them, but this percentage increased to 10 percent in the first 4 months of 2013. However, consumer complaints may undercount the proportion of schemes involving bankruptcy because consumers may not be aware that scammers have filed bankruptcy cases in their names.\nMass joinder lawsuits. Schemes in which the scammer, usually a lawyer or law firm, will promise the homeowner that the lender can be forced to modify the loan through this type of legal action. While mass joinder lawsuits can be used legitimately, the lawyers bringing them are usually paid only if the lawsuit is successful. Fraudulent mass joinder schemes, in contrast, require the homeowner to pay a fee to participate in the lawsuit. In one mass joinder scheme—which was halted at the request of FTC—the scammers were only posing as a law firm and engaged actual attorneys only briefly to file lawsuits. Once the lawsuits were filed and the scammers were paid, the scammers failed to follow through with the lawsuits, leaving homeowners in the same or worse financial shape than before, FTC alleged. According to FTC, the scammers charged each homeowner $6,000 to $10,000 in advance fees.\nShort sale schemes. Schemes in which scammers, sometimes called “short sale negotiators” or “short sale processors,” promise to expedite a short sale and usually require the homeowner to pay a fee for these services. In one type of short sale scheme, “short sale negotiators” guarantee a short sale approval in exchange for an advance fee. The “short sale negotiator” takes the fee and does little or nothing in return.\nMany of the officials we contacted told us that attorney involvement in foreclosure rescue schemes had become a concern in recent years. The Lawyers’ Committee also reported a recent increase in complaints citing legal representation (see fig. 4). This increase may be associated, in part, with the MARS rule’s exemption for attorneys. Further, Lawyers’ Committee data through February 2013 showed that schemes with attorney involvement often resulted in higher losses for the homeowner. The average loss reported by homeowners alleging attorney involvement in a scheme was $3,449, compared with an average loss of $2,727 for homeowners reporting scams with no attorney involvement.\nThe offices of state attorneys general also reported receiving consumer complaints alleging attorney involvement in schemes. For example, a representative of the Illinois state attorney general’s office told us that of the complaints her office received on foreclosure rescue schemes, roughly 70 percent of them involved lawyers or law firms. In addition, a representative from the California state attorney general’s office noted that despite the lack of an attorney exemption in California’s advance-fee ban, the number of reported schemes involving attorneys had risen there as well.\nThe apparent increase in the prevalence of schemes involving attorneys has created new challenges for law enforcement. First, stakeholders noted that it could be difficult to determine whether attorneys were actually providing legitimate services. For example, while the MARS rule prohibits companies from instructing consumers not to contact their lenders, this practice may be permitted if the foreclosure-assistance provider is an attorney. In commenting on FTC’s proposed MARS rule, the American Bar Association (ABA) noted that clients typically expected attorneys they retained to act as their representatives in dealing with other parties, such as lenders and servicers, and that up-front fees, such as a retainer, were typically required by attorneys providing legitimate legal services. However, an attorney acting for a company perpetrating a scheme may not actually act on the client’s behalf and may be brought in only for a short period to file certain documents. As a result, determining in whose interest the attorney is acting in such cases can be difficult. Further, attorney-client privilege can present another challenge. One state official noted that attorneys could cite attorney-client privilege as a way to avoid subpoenas and slow down investigations, allowing companies to continue with their schemes and defraud homeowners. In addition, disciplining attorneys can be a challenge. For example, one state official said that a separate disciplinary group existed for lawyers but that this group did not have law enforcement authority and could investigate only individual lawyers with a license in that state. In addition, this group cannot pursue a case in which the name of a law firm, rather than an individual, is used. Finally, investigations by these disciplinary groups are confidential, making it difficult for law enforcement agencies, such as the state attorney general’s office, to work with them.\nABA has taken some steps to address attorney involvement in foreclosure rescue schemes. In 2010, ABA’s Section of Individual Rights and Responsibilities (IRR) received approval from ABA’s Board of Governors to work with LMSPN. In 2011, IRR created a special advisory group of ABA Committees and Sections that has been involved in combating foreclosure rescue schemes. The purpose of the special advisory group is to examine the issue of lawyer participation in loan modifications and foreclosure rescue schemes and to develop an action plan to deter lawyers from participating in these schemes. A representative of the group noted that it would be proposing a policy resolution for possible ABA adoption and would educate ABA members on this issue. IRR expects to present the resolution to ABA’s House of Delegates legislative session in February 2014. In addition, several state bar associations have issued ethics alerts, warning attorneys in their states against becoming involved in these schemes.\nWe noted in 2010 that some state officials said they were aware of foreclosure rescue schemes that targeted particular communities. Officials we spoke with for this report noted that some populations continued to be the targets of these schemes. For example, a U.S. Trustee Program official noted that schemes involving bankruptcy to avoid foreclosure had targeted minority communities. In addition, available data and other representatives we spoke with continued to indicate that minority populations could be particularly vulnerable to these schemes. According to the LMSPN database, complaints filed by black or African American homeowners have increased since 2010. In 2010, 17 percent of complaints were filed by this group, compared with 20 percent in 2011, 22 percent in 2012, and 23 percent in the first 4 months of 2013. Representatives of the National Community Reinvestment Coalition also said that they had received more than 50 complaints about an attorney who had targeted mostly African-American and Latino communities for his scheme. The attorney told consumers that he had working relationships with various federal agencies and programs, took up-front fees from them, and did not provide any services. In another example, FTC filed two cases against telemarketers who targeted Spanish-speaking homeowners, promising mortgage modifications in exchange for large up- front fees.\nIn addition, older homeowners appear to be common targets for foreclosure rescue schemes. According to the Lawyers’ Committee, seniors (defined as those 51 years or older) are among the hardest hit by rescue schemes. As of October 2012, 49 percent of complaints in LMSPN’s database were filed by those 51 or older. The average loss reported by seniors was $3,129, compared with the overall average loss of $2,997. Additionally, an FBI bulletin warns of schemes in which seniors in danger of foreclosure are led to believe they may obtain a reverse mortgage.qualify for a reverse mortgage but that they do qualify for another type of mortgage that can help save them from foreclosure. According to the FBI bulletin, the perpetrators locate an investor willing to act as a straw buyer (a person who pretends to be a legitimate buyer but is actually purchasing on behalf on another person); order fraudulent home repairs; complete an inflated appraisal; and obtain a forward mortgage subsequently transferring the property away from the seniors and pocketing the equity. The victims lose the equity in their home and may be told to repurchase the property from the scammer or lose it altogether.\nSome foreclosure rescue schemes have associated themselves with government programs that assist homeowners. For example, a Lawyers’ Committee representative told us that some have capitalized on Treasury’s Hardest Hit Fund program, federal settlement funds, and the Emergency Home Loan Program by claiming that they could help In one instance, a group known homeowners access these programs. as the National Legal Help Center claimed that, for a fee, it could assist homeowners in getting benefits from the National Mortgage Settlement. In addition, this group falsely claimed that it was associated with IFR.Websites and announcements for programs such as HAMP, the National Mortgage Settlement, and IFR now have warnings about scams and the availability of free legitimate help, but a Lawyers’ Committee representative noted that such alerts had not always been included in earlier communications with homeowners.\nThe Lawyers’ Committee representative also noted that the sheer number of government programs might provide opportunities for dishonest actors to confuse homeowners, making them unsure where to turn for legitimate help. A representative of the Homeownership Preservation Foundation (HPF), which runs the Homeowner’s HOPE Hotline, noted that complaints related to rescue schemes had spiked in March 2012 and January 2013. The March 2012 spike may be related to the first wave of IFR’s national advertising campaign (January-February 2012), along with the announcement of the National Mortgage Settlement (February 2012). The January 2013 spike followed announcements of IFR payment agreements in January 2013 (see fig. 5).\nAgency officials and representatives of other organizations continued to cite the challenges to combating these schemes that we noted in 2010. For example, law enforcement officials continued to note that the ability of scammers to start up and shut down quickly made it difficult to combat these schemes. In addition, some said that scammers could operate under different names, making them difficult to track. A few stakeholders noted that the small dollar amounts of individual losses presented a challenge because federal agencies were less likely to be able to take on the cases. However, as we noted in 2010, it may be easier for state attorneys general to pursue these cases. Finally, we noted in 2010 that officials had told us that it was essential to encourage consumers to report suspicious incidents to authorities. As noted above, agency officials and representatives of nonprofit organizations we spoke with for this report also said that consumers might not report potential schemes, either because they were not aware that they were being victimized or were too embarrassed to report it. They cited consumers’ unwillingness to report these schemes as an ongoing challenge.",
"Since we last reported on this issue in 2010, FFETF and its members have undertaken a number of activities intended to enhance coordination among federal, state, and local authorities responsible for combating foreclosure rescue schemes. These efforts are consistent with the three key elements of GAO’s fraud prevention model: (1) preventive controls, (2) detection and monitoring, and (3) investigations and prosecutions.\nFFETF’s preventive efforts have focused on educating consumers about these schemes to help them avoid becoming victimized. FFETF and its members have also made efforts to enhance the reporting of potential incidents by both consumers and financial institutions to aid in the detection and monitoring of these schemes. FFETF member agencies that we contacted told us that one of the key outcomes of the task force had been greater information sharing and coordination among enforcement agencies regarding these schemes that facilitated investigations and prosecutions.",
"Members of FFETF’s MFWG have focused their outreach efforts on raising public awareness of foreclosure rescue schemes in order to prevent homeowners from being victimized. The results of our prior work serve to emphasize the overall lesson learned that fraud prevention is the most effective and efficient means to minimize fraud, waste, and abuse. MFWG has used a variety of approaches to consumer education and outreach that are outlined in MFWG’s annual strategic scorecards, a management tool MFWG developed to track its progress in combating foreclosure rescue schemes. Examples of MFWG’s outreach and education efforts include holding regional education summits for distressed homeowners, housing counselors, and public advocates and directing more individuals to FFETF’s mortgage fraud information on its website, StopFraud.gov, which FFETF considers a one-stop site for consumers to learn how to protect themselves from becoming victims and to report cases of fraud.\nMFWG has held at least eight regional summits near areas that have been hardest hit by foreclosures since 2010. During the summits, homeowners and local law enforcement agencies received information on mortgage fraud trends from other law enforcement officials, victims, housing counselors, and industry experts. According to FFETF, the presenters represented law enforcement, victims, housing counselors, industry experts, and others who discussed mortgage fraud issues in the community, including foreclosure rescue schemes. In addition, MFWG noted that it held 27 events to educate homeowners, counselors and public advocates in fiscal year 2012, exceeding its target goal of 20 events. These events included foreclosure prevention forums, training for consumer groups and legal services communities, and presentations to members or representatives of the armed forces. For example, in 2012 two mortgage fraud summits in Las Vegas and Los Angeles included discussions on the impact of mortgage fraud on the community, trends in mortgage fraud, and ways to avoid becoming a victim. The Los Angeles summit was attended by officials and practitioners involved in mortgage fraud enforcement and prevention and included representatives such as the FBI, FTC, HUD, California Attorney General’s Office, California State Bar, California Department of Real Estate, and other federal, state, county, and local agencies, including the Los Angeles County Department of Consumer Affairs.\nIndividual MFWG members and nonprofit organizations have also conducted outreach as a part of their own efforts to increase awareness of foreclosure rescue schemes. For example, HUD’s “Know it. Avoid it. Report it.” information campaign alerts homeowners to the availability of free housing counselors who can help with foreclosure issues and provide information on avoiding foreclosure schemes. According to HUD, the information campaign merges the efforts of NeighborWorks, the Lawyers’ Committee, and the Homeowner’s HOPE Hotline to provide an “early warning system” that helps homeowners protect themselves and their homes, while also providing the tools necessary to report schemes to enforcement authorities. HUD targets its information campaign to areas with the highest rates of foreclosure using multiple kinds of outreach. One official told us that in 2011, the HUD campaign delivered information on schemes via television, radio, and print advertisements to the areas affected by high rates of foreclosure. In 2012, HUD shifted its outreach to these areas to digital and radio-based mediums.\nAccording to the MFWG strategic scorecard, the mortgage fraud prevention and victim assistance sections of the StopFraud.gov website received over 15,000 hits during fiscal year 2012. The mortgage fraud and victim assistance sections contain links to foreclosure rescue scheme resources and educational materials created by other federal agencies, such as FTC, SIGTARP, and nonprofit organizations such as NeighborWorks. For example, the mortgage fraud webpage links to SIGTARP, CFPB, and Treasury’s joint alerts titled “Tips for Avoiding Mortgage Modification Scams” and \"Avoiding HAMP Mortgage Modification Scams; Resources for Servicemembers,\" and directs individuals to the websites of other agencies and nonprofit organizations, such as NeighborWorks, LoanScamAlert.org, and the Mortgage Bankers Association Consumer Help Desk. SIGTARP officials told us that promoting StopFraud.gov and the associated foreclosure rescue scheme resources allows individuals to better protect themselves from victimization. According to FFETF’s first year report, FFETF has also partnered with LMSPN members, Fannie Mae, Freddie Mac, the Lawyers’ Committee, and NeighborWorks to support PreventLoanScams.org, which supports national, state, and local law enforcement efforts to fight mortgage fraud. The website provides tips on how to avoid schemes, information on how to obtain assistance through free housing counseling, and an accessible complaint form that can be filled out online and then entered into the LMSPN complaint database.\nMost individual members of MFWG with whom we spoke had also developed web pages that provided information on foreclosure rescue schemes or directed consumers to the Lawyers’ Committee and NeighborWorks websites on foreclosure rescue schemes. Six of the seven MFWG member agencies we spoke with had specific information on foreclosure rescue schemes on their websites, including descriptions of schemes and information on how to submit a complaint. In addition, several agency and nonprofit organizations’ websites emphasize that borrowers do not need to pay for loan modification assistance. Six of the seven MFWG member agencies we interviewed posted information on their websites about the free assistance that is available to borrowers who are at risk of foreclosure.",
"MFWG member agencies have continued to collect data on foreclosure rescue schemes in order to support efforts to detect and combat them.\nAgency officials and nonprofit representatives told us that they collected information on the borrower, the services they were offered, the amount they paid for the services, and any contact information for the individual or company that offered the service. They explained that individuals could submit their complaints through the detailed LMSPN complaint forms, housing counselors staffing the Homeowner’s HOPE Hotline’s dedicated team, or individual agency hotlines. Agencies might also receive complaints through referrals from enforcement agencies, mail, and emails.\nSince 2010, MFWG and others have made efforts to improve the collection of consumer complaints related to foreclosure rescue schemes.\nFor example, the working group achieved its goal of increasing the number of states reporting consumer complaints to FTC’s Consumer Sentinel Network from 9 to 14 in 2012, and set a goal for 20 states by the end of 2013. In addition, CFPB has begun collecting consumer complaints about these schemes and submits them to the FTC’s Consumer Sentinel Network. Also, LMSPN created a standardized complaint form that is used by all of its government and nonprofit partners. According to Lawyers’ Committee representatives, partner organizations have links to the online form on their websites and the form is also made available at homeowner events, such as Making Home Affordable Program events and during conversations between servicers or housing counselors and borrowers. As of April 30, 2013, nearly three- quarters of the foreclosure rescue scheme complaints in FTC’s Consumer Sentinel Network database had been submitted through LMSPN complaint database.\nAgencies have also continued to make use of available information to aid investigations. In 2010, we reported that FinCEN provided enforcement authorities with investigative information on SAR filings and other data to help develop leads on potential foreclosure rescue schemes. FinCEN officials told us that FinCEN had conducted additional analysis in support of investigative cases for more than 20 state and federal agencies. In addition, state and federal officials told us that they could access complaint information to help develop leads against the criminals perpetrating the schemes. For example, officials from FTC said that its staff members often started their investigations by focusing on companies and individuals associated with a high number of complaints in FTC’s Consumer Sentinel Network. Similarly, a U.S. attorney we spoke with stated that his office regularly consulted several databases, including the Consumer Sentinel Network, when trying to develop leads for their investigations. Other individuals we spoke with said that they also used the databases to find additional information for their ongoing investigations. For example, a representative from one of the attorney generals’ offices whom we interviewed stated that investigators might search the Consumer Sentinel Network for complaints with variations of a certain attorney’s name. Another state official from a state attorney general’s office told us that the office generally used the Consumer Sentinel Network to determine whether additional victims were associated with an individual or company in order to more effectively calculate restitution.\nMFWG members have also sought mechanisms to help financial institutions more easily identify suspected mortgage fraud, including foreclosure rescue schemes. As previously discussed, FinCEN issued an advisory in June 2010 encouraging SAR filers to use “foreclosure rescue scam” in the narrative portion of the report to help law enforcement agencies more easily identify and isolate pertinent SARs. FinCEN officials also noted that as of March 2012, a specific checkbox for foreclosure rescue schemes was added to the SAR form, further facilitating the identification of these schemes. According to the officials, federal and state law enforcement and regulatory agencies continue to track SARs reporting foreclosure rescue schemes, as these reports provide insight into trends for this crime and leads for the initiation and support of investigations and enforcement efforts. MFWG co-chairs discuss the SAR filings and other complaint data twice a year as part of their ongoing effort to identify emerging trends in foreclosure rescue schemes.",
"Multiple representatives of MFWG member agencies that we contacted told us that MFWG had facilitated information sharing and coordination among enforcement agencies on investigations. During MFWG meetings, members discuss the best way to coordinate on emerging trends in foreclosure rescue schemes and enforcement jurisdiction. One FTC official noted that MFWG had been beneficial because it enabled members to make connections with officials from other agencies with whom they might not otherwise interact. Officials from the Executive Office for the U.S. Trustees told us that some of their working relationships were a direct outgrowth of their membership in FFETF. For example, the office did not have any contact with SIGTARP until it became part of the working group. Since beginning to share information, the two entities have been able to develop a case against perpetrators of a national mortgage foreclosure rescue scheme. In addition, according to a FFETF representative, the Los Angeles and Las Vegas mortgage fraud summits held to reach out to homeowners also served the purpose of convening federal, state, and local enforcement agencies to discuss how to improve their regional enforcement coordination efforts.\nBetween 2009 and 2012, working group members using joint investigations and broad enforcement initiatives coordinated their investigations and successfully filed criminal charges against more than 226 defendants allegedly involved in foreclosure rescue schemes. In 2010, we discussed MFWG’s efforts to prosecute individuals and companies perpetrating schemes through Operation Stolen Dreams, a series of federal and state law enforcement actions undertaken by agencies represented on FFETF. DOJ reported that Operation Stolen Dreams involved 119 criminal defendants allegedly involved in foreclosure rescue schemes—and more than 100 civil enforcement actions that pertained to the schemes. In August 2013, MFWG members announced the results of the Distressed Homeowners Initiative, a year- long coordinated enforcement effort conducted by members of MFWG in fiscal year 2012. While Operation Stolen Dreams had a broader focus on mortgage fraud, the Distressed Homeowners Initiative specifically targeted fraud that preyed on homeowners, such as foreclosure rescue schemes. DOJ officials told us that the initiative included undercover work and an enforcement surge led by FBI in Southern California. They also said that FBI compiled information packages on potential targets, which it shared with its field offices across the country. The initiative targeted perpetrators both civilly and criminally and, according to DOJ, resulted in criminal charges against 107 defendants. The estimated losses to at least 17,185 victims totaled more than $95 million. Cases were also filed against 128 civil defendants in federal courts across the country. In these cases, at least 19,198 victims suffered an estimated total loss amount of $54 million.\nFederal enforcement agencies have successfully coordinated investigations beyond the broad enforcement initiatives discussed earlier. SIGTARP officials stated that FFETF’s success is due to members’ ability to work more efficiently together than as individual agencies. SIGTARP reported that 43 of its criminal investigations relating to foreclosure rescue schemes were multiagency efforts between 2009 and 2012. In addition, FTC officials told us that 14 of their 36 cases involving foreclosure rescue schemes were conducted in partnership with other agencies during that same period and that these partnerships were a direct outgrowth of their membership in FFETF. FHFA’s Office of the Inspector General also coordinated on 12 cases with other FFETF members between 2011 and 2012.\nSome agency officials told us that foreclosure rescue scheme cases did not comprise a large proportion of their workload. For example, FHFA officials told us that the majority of cases FHFA filed involved loan origination fraud. However, FTC officials told us that 36 of the agency’s 363 consumer protection cases involved the MARS rule and foreclosure rescue schemes between 2009 and 2012—a relatively substantial portion given the wide range of consumer protection issues FTC covers. In addition, officials told us that many investigations related to foreclosure rescue schemes were conducted at the state level. For example, in 2010, the Florida Attorney General’s Office filed 19 civil cases for foreclosure rescue schemes, representing 8.4 percent of its caseload for that year. An official from the California Attorney General’s Office told us that between 2009 and 2012 its office filed 20 criminal cases and an estimated 10 to 15 civil cases for foreclosure rescue schemes. Officials from the Arizona Attorney General’s Office told us that it received nearly 5,000 complaints relating to foreclosure rescue schemes between 2009 and 2012 and successfully litigated 23 civil cases during that same time.\nMFWG has also identified other areas of focus in its enforcement efforts, including shutting down or forcing into compliance confusing, misleading, or fraudulent web advertisers and websites and conducting training for DOJ attorneys and prosecutors, state and local attorneys, and investigators. For example, according to the MFWG strategic scorecard, Treasury, SIGTARP, and FTC took action against over 800 confusing, misleading, or fraudulent websites in fiscal year 2012. Treasury officials told us that they conducted web scans in order to identify unauthorized uses of Treasury program trademarks or misrepresentations of programs. Between 2009 and 2012, Treasury issued notices of trademark infringement (cease-and-desist letters) to owners of approximately 400 websites for unauthorized use of Treasury program trademarks. In addition, SIGTARP officials told us that they contacted Internet search engines (e.g., Google, Yahoo, Bing) to take down over 200 alleged fraudulent websites. They noted that subsequently, these companies suspended relationships with 900 web advertising agencies related to the alleged fraudulent websites.\nAnother of MFWG’s ongoing efforts is mortgage fraud training and outreach to law enforcement attorneys and industry representatives. For example, DOJ, FBI, and inspectors general from FHFA and HUD conducted 25 training events in 2012 for state and local attorneys and investigators across the country. Officials from the FHFA inspector general’s office told us that the office had coordinated with the National District Attorneys Association to conduct such training for state attorneys general. The officials also said that the office also did outreach to industry representatives, including the Mortgage Bankers Association, the National Association of Appraisers, and the National Association of Mortgage Regulators. MFWG members said that their outreach and enforcement efforts would continue in order to educate homeowners and prevent more from falling victim to schemes.\nMost agency officials we spoke with said that they did not specifically track the amount of resources dedicated to combating foreclosure rescue schemes, but some federal and state officials noted resource limitations as a challenge. A U.S. Trustee official told us that limited resources were a challenge and that he could not be sure whether resource constraints would allow for the same level of effort in combating foreclosure rescue schemes in the future. The U.S. Trustee Program’s 2013 Budget Request notes that these schemes are complex and require the retention and training of specialized attorneys and other staff. Other officials told us that more cases could be pursued if more resources were available, but some officials said that resources were not a limiting factor in the amount of enforcement activity. Representatives of nonprofit organizations we spoke with cited limited resources as a constraint. For example, a NeighborWorks representative noted that finding adequate resources had been a challenge and that its Loan Scam Alert campaign had not been able to purchase as much paid advertising as it would have liked. As a result, the representative noted that the campaign may not have been receiving as much television coverage as the schemes were.\nAvailable data suggest that foreclosure rescue schemes continue to be a concern, and federal agencies and others have increased their efforts to combat these schemes in recent years. Our fraud prevention framework highlights that increased awareness of fraud is crucial to preventing individuals from falling victim to fraudulent situations. Homeowners who have adequate information on foreclosure rescue schemes and legitimate sources of assistance will be more likely to understand and make more informed decisions when seeking assistance. Federal agencies will need to continue to coordinate their outreach, detection, and enforcement efforts to increase awareness among homeowners and prevent more from falling victim to schemes.",
"We provided a draft of this report for review and comment to the heads of the Departments of Justice, Housing and Urban Development, and the Treasury, the Consumer Financial Protection Bureau, the Federal Housing Finance Agency, Fannie Mae, Freddie Mac, the Federal Trade Commission, the Special Inspector General for the Troubled Asset Relief Program, and the U.S. Postal Inspection Service. We received written comments from the Assistant Secretary for Financial Stability at the Department of the Treasury and SIGTARP, which are summarized below and reprinted in appendices II and III, respectively. DOJ, HUD, FHFA, FTC, SIGTARP, Treasury, and the U.S. Postal Inspection Service provided technical comments that were incorporated, as appropriate.\nIn its written comments, Treasury noted that it valued GAO’s insights as it continues to combat foreclosure rescue schemes. Treasury reiterated that the Office of Financial Stability conducts daily website scans to identify unauthorized uses of Treasury program trademarks or misrepresentations of programs, and has issued notice of trademark infringement to owners of approximately 400 websites. Treasury also highlighted that the Office of Financial Stability conducts preliminary investigations into allegations of foreclosure rescue schemes related to the Troubled Asset Relief Program, the findings of which may result in referrals to SIGTARP and other law enforcement agencies, and has partnered with CFPB to provide the public with tips and alerts for avoiding mortgage modification schemes.\nIn its technical comments, SIGTARP noted that it is an independent entity within Treasury and is not subject to the supervision of the Secretary. As such, SIGTARP requested that we separate our discussion of SIGTARP from our discussion of Treasury. In response, we listed SIGTARP as a separate agency from Treasury in our description of agencies’ roles in combating foreclosure rescue schemes. In addition, SIGTARP noted that the draft report did not reflect the work of the FFETF’s Rescue Fraud Working Group, which also plays a role in combating these schemes. We added a description of this working group and noted that SIGTARP is one of its co-chairs. SIGTARP in its written comments stated that it concurred with the sections of the report related to SIGTARP’s work and noted that it has made significant progress in combating these schemes and will continue to work with law enforcement partners to investigate them.\nWe are sending copies of this report to the appropriate congressional committees and to the heads of the Departments of Justice, Housing and Urban Development, and the Treasury, the Consumer Financial Protection Bureau, the Federal Housing Finance Agency, Fannie Mae, Freddie Mac, the Federal Trade Commission, the Special Inspector General for the Troubled Asset Relief Program, and the U.S. Postal Inspection Service. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions concerning this report, please contact me at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV.",
"To examine the nature and prevalence of mortgage foreclosure rescue and loan modification schemes, we analyzed available information on consumer complaints about foreclosure rescue schemes from the Federal Trade Commission’s (FTC) Consumer Sentinel Network, as well as the Lawyers’ Committee for Civil Rights Under Law’s Loan Modification Scam Prevention Network (LMSPN) database. In addition, we examined published information on the number of Suspicious Activity Reports related to foreclosure rescue schemes. We spoke with officials and representatives who manage these databases about their data collection processes and internal quality controls and tested the data where applicable. We found FTC’s Consumer Sentinel Network, LMSPN, and SAR data to be sufficiently reliable for the purpose of discussing the nature and prevalence of foreclosure rescue schemes in this report. We recognize that the total number of foreclosure rescue schemes reported does not capture all occurrences of schemes; however it captures the available information on this area of fraud. We also contacted seven member agencies of the Financial Fraud Enforcement Task Force’s (FFETF) Mortgage Fraud Working Group (MFWG) that were active in combating foreclosure rescue schemes—the Consumer Finance Protection Bureau, the Department of Justice, the Federal Housing Finance Agency and its Office of Inspector General, FTC, the Department of Housing and Urban Development and its Office of Inspector General, the Department of the Treasury, the Special Inspector General for the Troubled Asset Relief Program, and the U.S. Postal Inspection Service. In addition, we contacted representatives of two government-sponsored enterprises, Fannie Mae and Freddie Mac, as well as the offices of the attorneys general from Indiana and the five states we spoke with for our 2010 report—Arizona, California, Florida, Illinois, and New York—states with some of the highest numbers of potential foreclosures. We also spoke with a number of nonprofit organizations that are actively addressing these schemes.\nTo determine the status and scope of the federal government’s multiagency effort and other major efforts to combat these schemes, we interviewed officials and obtained relevant documentation from FFETF and MFWG members listed previously. We also interviewed officials and obtained documents from the enterprises and nonprofit organizations that have undertaken major efforts in this area, including the National Fair Housing Alliance, the National Community Reinvestment Coalition, HOPE NOW, the Homeownership Preservation Foundation, and lead members of LMSPN, including the Lawyers’ Committee for Civil Rights Under Law and NeighborWorks America. We also reviewed MFWG’s 2012 and 2013 strategic scorecards to determine the activities the working group had completed. We also collected information on the number of civil and criminal foreclosure rescue scheme cases state and federal agencies pursued and reviewed individual agencies’ websites for information on foreclosure rescue schemes. We reviewed Standards for Internal Control in the Federal Government to identify requirements for effective internal controls related to fraud detection and prevention. Additionally, we looked at our past reviews of federal programs in which we identified the key elements of a framework for fraud prevention, detection, and prosecution. Finally, we interviewed agency officials about their efforts to conduct outreach, collect consumer complaints, and conduct enforcement activities related to these types of schemes.\nWe conducted this performance audit from November 2012 to October 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
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"In addition to the individual named above, other key contributors to this report were Harry Medina (Assistant Director), Rachel E. Batkins, Bethany M. Benitez, Emily Chalmers, Jena Sinkfield, Andrew Stavisky, Winnie Tsen, and James D. Vitarello."
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{
"question": [
"What did the FTC's Consumer Sentinel Network find regarding foreclosure rescue schemes?",
"What characterized the trends in SAR reports during that same period?",
"How did the schemes evolve in that time?",
"Why do schemes involving attorneys present particular challenges?",
"What populations are frequently targeted in foreclosure rescue schemes?",
"How has the FFETF changed since the GAO’s last report?",
"What else have such efforts emphasized?",
"What outreach efforts has FFETF undertaken?",
"How has FFETF attempted to improve its fraud detection?",
"How has information sharing and coordination been proven useful?",
"What was the impact of GAO's July 2010 report on foreclosure rescue schemes?",
"How does this report complement the 2010 report?",
"Through what methods did GAO addressed the objectives brought up in the report?"
],
"summary": [
"Foreclosure rescue schemes remain at historically high levels and have become more complex. The Federal Trade Commission's (FTC) Consumer Sentinel Network--an online database of consumer complaints received by FTC, law enforcement agencies, and other organizations--showed that complaints about these schemes rose from around 9,000 in 2009 to more than 18,000 each year in 2010, 2011, and 2012.",
"In addition, the Financial Crimes Enforcement Network reported steady increases over the same period in the number of Suspicious Activity Reports (SAR)--reports filed by financial institutions about suspected violations of financial laws and regulations--related to these schemes.",
"Agency officials and representatives of nonprofits told GAO that the schemes had become increasingly complex, creating challenges for law enforcement. For example, schemes involving attorneys--which tend to involve greater losses--had become more common in recent years following a regulation that bans upfront fees, but provides an exception for attorneys.",
"These schemes present unique challenges because attorneys typically collect fees upfront and enforcement officials have difficulty trying to determine whether attorneys are providing legitimate services.",
"Furthermore, officials and representatives of nonprofits also noted that some populations, including minorities and the elderly, continued to be targeted.",
"Since GAO last reported on this issue in 2010, the Financial Fraud Enforcement Task Force (FFETF) and its members have undertaken a number of actions to educate borrowers on how to avoid being victimized by these schemes.",
"These efforts have also emphasized the need for consumers and institutions to report possible fraudulent schemes and the importance of enhanced information sharing among law enforcement agencies investigating and prosecuting these schemes.",
"Specifically, FFETF members have developed and participated in various outreach efforts, including hosting regional education summits for distressed homeowners, counselors, and law enforcement officials and directing more individuals to resources on FFETF's mortgage fraud webpage, StopFraud.gov.",
"FFETF member agencies' fraud detection efforts have focused on gathering information from SARs and complaints from the FTC Consumer Sentinel Network and sharing this information among members.",
"Member agencies that GAO contacted also indicated that information sharing and coordination on investigations among FFETF members had led to joint investigations and broad enforcement initiatives. For example, one year-long multiagency effort resulted in criminal charges against 107 defendants. Cases were also filed against 128 civil defendants in federal courts across the country.",
"In July 2010, GAO reported on federal efforts to combat foreclosure rescue schemes--schemes that promise but do not deliver foreclosure prevention assistance. Subsequently, the Dodd-Frank Wall Street Reform and Consumer Protection Act required GAO to study interagency efforts to crack down on these schemes.",
"This report updates GAO's 2010 report and examines (1) available information about the prevalence and nature of foreclosure rescue schemes, and (2) the status and scope of the federal government's multiagency effort and other major initiatives to combat them.",
"To address these objectives, GAO analyzed consumer complaints, obtained information from federal agencies participating in FFETF, and interviewed representatives of six states with high populations of borrowers at risk of foreclosure, and nonprofit organizations that are also making efforts to combat these schemes."
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GAO_GAO-16-490
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{
"title": [
"Background",
"Patent Examination Process",
"Patent Infringement Litigation and Challenges",
"USPTO’s Enhanced Patent Quality Initiative",
"Patent Infringement Litigation Has Increased in Recent Years, and the Majority of Lawsuits Involved Patents Related to Computers and Computer Software",
"Additional Opportunities Exist to Improve Patent Quality at USPTO",
"USPTO Has Not Consistently Defined Patent Quality or Established Specific Performance Measures",
"USPTO Has Not Fully Assessed the Time Allotted for Examinations or Monetary Incentives",
"USPTO Has Limited Data on PTAB Decisions",
"USPTO Has Not Fully Evaluated the Effects of Other Policies and Procedures on Patent Quality",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: Patent Examination Process at the U.S. Patent and Trademark Office (USPTO) (Corresponds to Fig. 1)",
"Appendix III: Comments from the U.S. Patent and Trademark Office",
"Appendix IV: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments",
"Related GAO Products"
],
"paragraphs": [
"This section provides an overview of USPTO’s patent examination process, patent infringement litigation and challenges, and USPTO’s Enhanced Patent Quality Initiative. A list of our prior work related to patents and intellectual property is included at the end of this report.",
"When USPTO receives a patent application, the agency assigns it to a division of patent examiners with relevant technology expertise called a technology center. There are 11 technology centers focusing on everything from biotechnology to mechanical inventions. After the application is assigned to a technology center, it is then assigned to an individual examiner who is responsible for the examination, or prosecution, of the application. Figure 1 shows the key steps in the patent prosecution process.\nThe focus of patent examination is determining whether the invention in a patent application satisfies the statutory requirements for a patent, including that the invention be novel, useful, not obvious, and clearly described. Generally, prior patents, patent applications, or publications describing an invention, among other things, are known as prior art. During patent examination, the examiner, among other things, compares an application to the prior art to determine whether the invention is novel and not obvious. Finding prior art is the most time consuming part of patent examination, according to our report on prior art. Applicants are not required to search for prior art before submitting their application, although they are required to notify examiners of material prior art they know about.\nA patent application includes the “specification” and at least one “claim.” By statute, the specification is to contain “a written description of the invention, and of the manner and process of making it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains to make and use the invention.” The law requires further that the specification “shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor regards as the invention. A patent application’s claims define the legal boundaries of the invention for which patent protection is sought.\nUSPTO’s data show that, as of April 2016, the average time between filing an application and an examiner’s initial decision on the application was about 16 months, and it takes an average of 26 months after an application is submitted for USPTO to complete the examination of an application. Due to the current inventory of applications awaiting examination, USPTO is not able to begin examining patent applications upon receiving them—as of April 2016, USPTO had a backlog of about 550,000 unexamined applications.\nThrough the initial decision, or first action on the merits, examiners initially notify applicants about the patentability of their inventions. To avoid lengthy back and forth exchanges, the examiner is encouraged to identify all of the problems with the application under the patent statutes and rules during the first “office action”—a USPTO policy called “compact prosecution.” The applicant is able to respond to the examiner after the first office action, and interviews are often used so that the examiner and applicant can clarify their respective positions, as well as the scope of the claimed invention. Ultimately, and sometimes after many months, the examiner then issues a final rejection or allows the claims in the application. If applicants receive a final rejection, they may file a request for continued examination, which requires a new submission and the payment of additional fees, and the examiner will continue examining the application. There is no limit to the number of times an applicant may request continued examination for an application, but USPTO officials say it is rare to have three or more requests for continuing examination filed for a single application. Examination ends with an issued patent, or when the applicant abandons the application—there are no terminal rejections.\nThere are often a dozen or more claims per patent, and they can often be difficult for a layperson to understand, according to legal researchers. For example, one claim for a cardboard coffee cup insulator begins by referring to “a recyclable, insulating beverage container holder, comprising a corrugated tubular member comprising cellulosic material and at least a first opening therein for receiving and retaining a beverage container.” A patent application’s claims can be written broadly or be more narrowly defined, according to legal researchers, and applicants can change the wording of claims—which can affect their scope—based on examiner feedback during examination. Examiners can suggest that applicants amend their claims by adding words to their claims to address statutory impediments to issuance. For example, adding the word “corrugated” to modify “tubular member” in the example claim above narrows the scope of the claimed invention. Companies often prefer broader patent claims that make it less likely a competitor would be able to make a small change to its invention to avoid infringement. Patents are a property right and their claims define their boundaries.\nIn some cases, patent claims define the scope of the invention by encompassing an entire function––like sending an e-mail––rather than the specific means of performing that function. While “functional claiming” is permitted by statute, we reported in 2013 that patents that include functional claiming language were more likely to be unclear and to be disputed in court. For example, if the pencil was patented as a “mechanism for writing,” the owner of the patent could theoretically sue manufacturers of different technologies for infringement, including pens and markers.\nAs of May 2015, USPTO had nearly 8,300 patent examiners across the eight technology centers that we reviewed. The agency uses the General Schedule (GS) classification system for patent examiners, whose levels range from GS-5 to GS-15. Examiners at the GS-14 level or above (44 percent of the examiners in the technology centers we reviewed) are referred to as “primary examiners” who may accept or reject a patent application without additional review. This level of authority is in contrast to junior examiners—most examiners below the GS-14 level— whose work must first be reviewed by a supervisory or primary patent examiner before it can be sent to the applicant.\nExaminers are rated based on their production, or the number of examination tasks they perform, among other factors. The number of examination tasks that an examiner is expected to perform is set based on the examiner’s technology area and experience level. USPTO allots more time to review applications to examiners that deal with more complex technologies. For example examiners working on artificial intelligence patent applications are given an average of about 31 hours to complete an examination, while those working on patent applications for exercise devices are given an average of about 17 hours. As examiners are promoted on the GS-scale, the average number of hours they are allotted to work on each application and the level of review from their supervisors declines. Primary examiners have the least amount of time to examine patent applications and the applications they review undergo the least amount of supervisory review, in part because their experience allows them to work more efficiently and effectively, according to USPTO officials. As examiners rise from junior to primary status, their examination time is roughly cut in half. According to USPTO officials, on average, examiners spend about 22 hours total on average on each application from start to final determination, with a low of about 11 hours on average for some primary examiners in the least complex technologies and a high of about 60 hours on average for an entry-level junior examiner in more complex technologies.\nA few studies have shown that there are differences in issued patents depending on how much time examiners are given to complete their examination. For example, an academic paper from 2012 found that more experienced examiners cite less prior art, are more likely to grant patents rather than reject them, and are more likely to grant patents without any preliminary rejections. Similarly, other researchers have found that examiners put less effort into searching for prior art when they are given less time to review an application. For example, the National Bureau of Economic Research published a paper in 2014 that found when examiners were allotted less time to conduct a patent examination, they were less likely to make time-intensive prior art rejections and more likely to grant a patent.",
"When a patent right is not clearly defined, it can lead to boundary disputes, often in the form of infringement lawsuits. Although litigated patents are a small percentage of issued patents, low quality patents are more likely to be asserted in patent infringement lawsuits because, according to some economists, the less clear the claim boundaries are, the more likely that others will infringe the patent or will continue to infringe when confronted by the patent owner. Patent owners can bring infringement lawsuits against anyone who uses, makes, sells, offers to sell, or imports the patented invention without authorization. If the court finds that infringement has occurred, it must award the patent owner damages adequate to compensate for the infringement. During an infringement case, the accused infringer may seek to have the infringement lawsuit dismissed by showing, by clear and convincing evidence, that the patent at issue is invalid. However, because most of the roughly 4,000 patent infringement lawsuits filed each year settle before the court ever makes a determination of patent validity some patent owners asserting low quality patents may not be concerned with the risk the courts will invalidate their patents. When the courts do rule on validity, they generally invalidate almost half of the patents that are challenged, according to academic research.\nAccused infringers can also challenge a patent’s validity outside of an infringement lawsuit in administrative proceedings at USPTO’s Patent Trial and Appeal Board (PTAB). Patent challenges at PTAB are often initiated by individuals or firms that have been sued for infringing a particular patent, so the patents that appear in these proceedings are often the same ones that appear in patent infringement suits. The challengers in these proceedings seek to present evidence that shows that the patent claims should not have been granted because they failed to meet a statutory patentability requirement. The PTAB proceedings are a lower cost alternative to the federal courts where infringement suits are often very expensive. As of March 2016, there have been around 4,700 patent challenges filed with the PTAB since its inception in 2012 and about 60 percent of these challenged patents are related to computers and software. About 30 percent of the PTAB proceedings have reached a final decision, and nearly 75 percent of those final decisions have resulted in all of the challenged claims being held unpatentable.",
"In February 2015, USPTO launched an Enhanced Patent Quality Initiative designed to improve the quality of patents. According to USPTO, it started its quality initiative because the agency had successfully reduced its backlog of patent applications, and had the financial resources to consider longer-term improvements to patent quality due to fee setting authority provided by the America Invents Act.\nAs part of its initiative, the agency has taken a number of actions, including:\nCreating a new leadership role and Patent Quality Office: The agency created a new senior position for overseeing patent quality—the Deputy Commissioner for Patent Quality—in January 2015 to provide a dedicated focus on the agency’s patent quality efforts.\nPatent Quality Summit: USPTO held its first ever Patent Quality Summit in March 2015. The Summit was designed for the public, including internal and external stakeholders, to provide input to USPTO about patent quality, specifically how the agency could guarantee the most efficient process to review applications and to ensure the issuance of the highest quality patents, according to the USPTO Summit website. According to USPTO, the agency received 1,206 ideas for improvement for patent quality from all sources, including the Patent Quality Summit and examiner forums.\nEvolving programs of the Enhanced Patent Quality Initiative: USPTO established 11 initiatives based on feedback from internal and external stakeholders to help achieve its goals to enhance patent quality, according to its Enhanced Patent Quality Initiative website. These initiatives are in various stages, ranging from early development to having been completed, according to a senior USPTO official. Some of the evolving programs include:\nClarity of the Record Pilot Program: USPTO began this pilot in February 2016 with about 130 examiners, and the pilot is expected to end in August 2016. This pilot seeks to develop best practices for examiners to enhance the clarity of all aspects of the prosecution record, and to study the effect of implementing these best practices during examination.\nClarity and Correctness Data Capture (Master Review Form): This effort is expected to replace USPTO’s current quality assurance and supervisory approaches to reviewing examiners’ work and will allow the agency, for the first time, to collect consistent data across all the reviews. Quality assurance officials also told us that using the form would allow their office to have data on 50 percent more reviews this year than in the past, resulting in a total of about 12,000 reviews of examiners’ work this year compared with about 8,000 reviews per year in the past. USPTO expects to implement the form agency-wide in fiscal year 2017.\nIn addition to the actions taken under its Enhanced Patent Quality Initiative, the USPTO’s Office of Patent Training develops and implements training for examiners on a variety of topics, with a focus on legal and policy matters. For example, the USPTO recently provided examiners with training on functional claiming.",
"The number of federal district court filings of new patent infringement lawsuits has generally increased between 2007 and 2015, from more than 2,000 suits in 2007 to more than 5,000 suits in 2015 (see fig. 2). Because lawsuits can include multiple defendants, we also analyzed data on federal district court filings at the defendant level to account for lawsuits in which a patent was asserted against multiple defendants. Looking at the data in this way, we found that the number of defendants in new patent infringement suits filed in federal district courts increased from about 5,000 defendants in 2007 to more than 8,000 defendants in 2015, as shown in figure 2.\nAccording to some stakeholders with whom we spoke, the decreases in litigation that occurred in 2014, both in the number of suits and defendants, were likely due to a key Supreme Court decision in that year, Alice Corp. Pty. Ltd. v. CLS Bank Int’l. The Court in the Alice decision held that where a patent claim is based on an abstract idea, which is not patentable, merely using generic computer implementation does not transform that idea into a patent-eligible invention. This decision has limited the validity of what some stakeholders considered to be overly broad and low quality patents thus preventing them from being used to file infringement lawsuits. In addition, the ability of potential defendants in patent infringement suits to file inter partes challenges to the validity of a patent at the PTAB beginning in 2012 may have made some patent owners reluctant to bring infringement suits, which could have contributed to the decline in the number of suits according to some stakeholders we spoke with.\nMost patent infringement suits are filed in just a few of the 94 federal district courts, and these suits may generally be brought in any district in the country where the allegedly infringing products are sold. Patent infringement suits are increasingly being filed in the predominantly rural Eastern District of Texas (see fig. 3). In 2007, about 20 percent of all patent infringement defendants were named in cases filed in the Eastern District of Texas, and this percentage increased to almost 50 percent in 2015.\nHistorically, the Eastern District of Texas has been attractive to patent owners filing infringement lawsuits because of the speed at which suits moved to trial, and the perception of plaintiff-friendly juries, as we found in 2013. In addition, according to one published paper we reviewed, judges in the Eastern District of Texas have implemented a number of court rules and practices to attract patent infringement suits to their district. For example, according to the paper and to some stakeholders we interviewed, judges in the Eastern District of Texas have not been suspending infringement lawsuits pending patent validity challenges at the PTAB, as some had anticipated. In addition, most recently, according to some stakeholders, some judges in Eastern Texas have been reluctant to dismiss infringement allegations at early stages of the litigation based on the Alice decision that calls into question the validity of certain types of software-related patents. Our analysis shows a sharp increase from 2014 to 2015 in the number of defendants that were accused of infringing software-related patents in suits filed in Eastern Texas, which have averaged about 85 percent of the defendants in that district each year between 2007 and 2015. None of the other top six district courts saw any large increases in patent infringement suits in 2015, including suits involving patents related to software or otherwise. This indicates that the increase in suits in Eastern Texas drove the overall increase in suits filed nationwide in 2015.\nThe number of defendants in patent infringement litigation was relatively stable between 2007 and 2015, with the exception of lawsuits involving patents for computers and communications technologies (see fig. 4). This area includes technologies related to computer hardware and software. The percentage of defendants in lawsuits involving patents in this technology area increased from 38 percent in 2007 to 62 percent in 2015.\nPatents related to computer and communications technologies are easier to unintentionally infringe because they are more likely to be unclear and overly broad, according to some stakeholders we interviewed and some of the published research we reviewed. In addition, according to a 2003 Federal Trade Commission study, in industries such as computers and communications, firms need to avoid infringing dozens, hundreds, or even thousands of patents to produce just one commercial product.\nTherefore, it is particularly challenging to develop innovative new products where there are thousands of interrelated patents covering similar technologies making it nearly impossible to avoid infringement, according to some stakeholders we interviewed. These stakeholders also noted that unclear and overly broad patents—an indicator of lower quality—can harm innovation regardless of whether the patent owner files an infringement lawsuit because just the threat of an infringement suit can deter the development of new products.\nFurther, the majority of defendants in patent infringement suits were involved in suits with software-related patents each year from 2009 through 2015 (see fig. 5). The number of defendants involved in infringement lawsuits where software-related patents were asserted generally increased through 2013, then dropped in 2014. As with computer and communications technologies, some stakeholders told us that software-related patents are easier to infringe because they also often have overly broad claims, an indicator of low quality patents.",
"USPTO has taken actions to address patent quality—most notably through its Enhanced Patent Quality Initiative—but there are additional opportunities for USPTO to improve patent quality. Specifically, USPTO does not have a consistent definition of patent quality and has not fully developed specific performance measures to assess whether its efforts are affecting patent quality. Further, USPTO has not fully assessed whether the time it allots for examination and the monetary incentives it gives examiners for completing patent examinations faster affect patent quality. In addition, USPTO has limited data available on PTAB decisions. Finally, USPTO has not fully evaluated the effects of other policies and procedures on patent quality.",
"USPTO does not currently have a consistent definition for patent quality, which may limit its ability to assess the effects of its examination policies and review processes—as well as its Enhanced Patent Quality Initiative— on patent quality. Several high level USPTO officials and the four supervisory patent examiners that we interviewed told us there is no consistent definition of patent quality at USPTO to guide the agency in its overall operations. One examiner wrote in our open-ended survey response that the USPTO appears to have no definition of patent quality and that without a working definition, management’s focus on patent quality is meaningless. Most of the stakeholders that we spoke with— including former high ranking USPTO officials, academics, and non- governmental organizations—said that it is important for USPTO to develop a consistent definition of patent quality.\nAccording to USPTO officials, one challenge in developing a consistent definition is that the patent community holds varying definitions of patent quality. For example, patent attorneys who defend companies against patent infringement generally tend to favor clearly defined patents that are easily understood in patent disputes, while patent owners tend to prefer less well defined patents that may offer broader coverage for their invention. USPTO officials offered a variety of definitions of patent quality. Several officials focused on validity, or patentability (i.e., meeting statutory requirements) and clarity, although we could not find this in agency guidance or documents as USPTO’s definition. Some officials also included aspects of patent examination, such as an application that requires a limited amount of time for review by examiners in their definition. While USPTO has found it difficult to clearly define patent quality, most of the stakeholders we spoke with told us that they would define patent quality as patent validity—that is, a quality patent would meet all the statutory requirements for patentability and would be upheld if challenged in a lawsuit or PTAB proceeding.\nAccording to federal standards for internal control, one important internal control activity is that management has established clear, consistent agency objectives that allow the agency to assess the risks the agency faces from external and internal sources. However, USPTO’s objectives may not be clear because it does not have a consistent definition of patent quality. Four supervisory patent examiners we interviewed told us that without a consistent definition of patent quality, USPTO is unable to standardize practices to improve patent quality. As a result, it is hard for USPTO to define, measure, and work toward quality goals, according to these supervisors. Moreover, without a definition for patent quality, USPTO is at risk of having agency officials work inconsistently or at cross-purposes in their attempts to fulfill the call to improve patent quality, based on individual understandings of what patent quality means to each staff person.\nFurther, although USPTO is taking steps to improve patent quality metrics as part of the Enhanced Patent Quality Initiative, it has not established specific goals or performance measures related to its strategic goal to optimize patent quality and timeliness, which may limit its ability to assess potential effects of its efforts on patent quality. USPTO’s 2014-2018 strategic plan includes the goal to “optimize patent quality and timeliness,” but the patent quality objective does not include specific performance measures that fully assess progress towards the goal. For example, USPTO names seven objectives to achieve this goal, but six of the seven objectives focus on timeliness, customer service, and process or production goals rather than patent quality. For the one patent quality objective, USPTO cites improving patent quality data and maximizing the use of such data as two of its four performance measures (see fig. 6).\nThe Government Performance and Results Modernization Act of 2010 (GPRAMA) requires, among other things, that agencies establish objective, quantifiable, and measurable performance goals, and establish performance indicators to measure progress toward each performance goal. Although USPTO is not required to comply with GPRAMA, we have previously reported the practices established by the law, such as establishing goals and performance indicators, can serve as a leading practice for organizational performance management at lower levels within federal agencies, such as individual programs or initiatives. However, USPTO has not established such goals and indicators because the office uses general terms to describe these two performance measures and does not include measurable, quantifiable goals or performance indicators on how the agency plans to define or collect patent quality data or how, specifically, it will maximize use of such data. Without such goals and indicators, USPTO cannot determine whether it is meeting its goal of enhancing patent quality.",
"USPTO has not fully assessed the time allotted for patent examinations or its monetary incentive system, which may be at odds with patent quality. Patent examiners are rated annually on their production and docket management, among other elements. USPTO provides examiners with monetary incentives, or bonuses, for timeliness and production, but does not offer a bonus for producing high-quality work. Three USPTO officials told us that there are trade-offs between timeliness and patent quality, explaining that examiners cannot examine patents quickly and, at the same time, grant patents that are of the highest quality. One of these officials told us that the office’s focus on timeliness currently trumps high quality work at the agency, potentially increasing the tension between the goals of timeliness and quality.\nTime allotments and incentives can lead to pressure for examiners to complete their work quickly. Most of the stakeholders we spoke with told us that examiners’ time pressures are one of the central challenges for patent quality. The results of our survey of patent examiners confirm that examiners are experiencing time pressures. Specifically, on the basis of our survey, we estimate that, given a typical workload, about 70 percent of examiners have less time than needed to complete a thorough examination. In addition, we estimate that more than 70 percent of examiners worked voluntary or uncompensated overtime in the past 6 months to meet their minimum production goals (see fig. 7). Further, incentives appear to motivate examiners to complete their work quickly. For example, on the basis of our survey, we estimate that for 93 percent of examiners, receiving bonuses for achieving production goals motivates them to go above and beyond their base level of performance.\nAdditionally, on the basis of our survey, we estimate that nearly 70 percent of examiners experience pressure to avoid time-consuming office actions. In addition, a few examiners we interviewed said that the system as currently designed incentivizes an examiner to issue a patent instead of issuing a final rejection, suggesting that when pressed for time examiners tend toward granting patents. For example, USPTO rules and procedures do not restrict the number of requests for continued examination an applicant may file, so issuing the patent is the only means USPTO has to end the examination process. This creates an environment where patents may be granted that do not fully meet patentability standards. In a 2015 study, USPTO economists found that patents examined by primary examiners had 26 percent better odds of appearing in a patent infringement lawsuit compared to similar patents examined by junior examiners, which suggests that primary examiners, despite their experience, may not have adequate time to ensure that the patents they issue are always high quality. USPTO officials acknowledged that this difference was likely due to the additional time and supervisory review that junior examiners receive.\nThe precise effects of the time allotted for examinations and incentives on quality are unclear because USPTO has not fully analyzed the effects of current time allotments or incentives on an examiner’s ability to perform a thorough examination. Since creating the time allotments in the 1970s, USPTO adjusted the time allotted to examiners between fiscal years 2010 and 2012 and gave all patent examiners a total of 2.5 additional hours per application. According to federal standards for internal control, agencies should provide staff with the right structure, incentives, and responsibilities to make operational success possible. The right incentives and structure allow staff to be aligned with the agency’s objectives. Without analyzing the time and incentives needed for examiners to complete thorough examinations, USPTO cannot be assured that its current time allotments and incentives support the agency’s goal to optimize patent quality.",
"The PTAB has been in operation since 2012 with hundreds of decisions made to date on challenges to existing patents; however, statistics kept by PTAB staff about the results of PTAB decisions are limited. For example, the data available as of March 2016, did not specify which precise claims in a patent were found to be unpatentable and why, or which sources of prior art were used in the proceeding, both of which are key data fields for potential analysis. Moreover, the data have not been widely shared within USPTO. According to a PTAB official familiar with the data, only a few USPTO staff in the Office of Patent Legal Administration have asked for and received the data that PTAB staff have compiled to date. Information on the results of the PTAB proceedings is not regularly provided to USPTO managers and supervisory patent examiners in the Technology Centers, according to PTAB staff.\nAccording to federal standards for internal control, information from internal and external sources should be obtained and provided to management as a part of the agency’s reporting on operational performance relative to established objectives. In addition, pertinent information should be identified, captured, and distributed in a form and time frame that permits people to perform their duties efficiently. However, USPTO managers and staff in the technology centers do not have data on trends in the outcomes of PTAB’s post-grant proceedings because USPTO has not systematically pulled information from PTAB decisions, has not widely shared PTAB information within the agency, and has not analyzed the data for trends in patent invalidations to identify whether additional training, guidance, or other actions are needed to address issues related to quality. Without a process for USPTO managers and staff to readily access the reasoning underlying PTAB’s invalidation of patents or information on possible trends that may exist with those problem patents, USPTO may be overlooking critical information on problems the PTAB has found with patents issued by the agency. As a result, USPTO may be missing opportunities for using this information to make decisions that could help to improve patent quality, such as improving guidance or providing additional training on potential patent quality issues, and USPTO’s examiners are unable to learn lessons from the PTAB decisions.",
"USPTO has not fully evaluated the effects of other policies and procedures on patent quality, which may also affect their ability to issue high quality patents. Through interviews with USPTO officials and stakeholders and our examiner survey, we identified several policies and procedures that could affect patent quality:\nCompact prosecution: This USPTO policy encourages examiners to complete an examination within two office actions and to address all statutory issues of an application in the first office action. One examiner commented in our survey that compact prosecution compels examiners to guess what unclear claims mean in order to search for prior art. Further, based on our survey, we estimate that a change in policy that would not require examiners to address every issue in the first office action would help about half of USPTO examiners perform examinations more effectively. In addition, some stakeholders raised concerns about the effect of compact prosecution on patent quality, with one stakeholder emphasizing that the policy does not work well in an environment where patent applications are increasingly complex.\nUnlimited number of patent claims: Applicants are allowed to include any number of claims in a patent application. According to USPTO officials, applicants’ ability to file unlimited claims can have a negative effect on quality, because it is more difficult for examiners to fully review an application with numerous claims in the time allotted; this was also supported by our survey results. The 2015 study by USPTO economists also supported this finding; it found that patents that had more claims had better odds of showing up in patent infringement lawsuits.\nRequests for continued examination: Applicants are currently allowed to file an unlimited number of requests for continued examination, which is a request by an applicant to reopen examination of the patent application after the prosecution of the application has been closed. Applicants request continued examination most often after final rejection of an application, according to USPTO officials. Such requests provide applicants with virtually unlimited attempts to secure a patent, which is problematic for patent quality, according to some stakeholders. Some stakeholders also told us that such unlimited requests can wear down examiners, making them more likely to eventually grant the patent. While USPTO has reached out to patent applicants to learn why they were using such continued examinations, the number of requests for continued examination continues to pose a burden for the agency’s examiners.\nFederal standards for internal control direct agencies to comprehensively identify risks and consider all significant interactions between the entity and other parties. Once these risks have been identified, they should be evaluated for their potential effects, including the significance of the risks and the likelihood of their occurrence. USPTO officials acknowledged that some of the agency policies discussed above could affect patent quality; however, officials did not know the extent of the effects because USPTO has not done an evaluation to determine the potential effects. Without evaluating the effects of these policies on patent quality, USPTO is at risk of continuing practices that may adversely affect patent quality.\nAdditionally, USPTO policies and procedures generally require clarity in issued patents. On the basis of our survey, we estimate that additional claim clarity requirements to applicants would help more than 80 percent of examiners do their jobs more effectively. We identified two areas where USPTO has encountered challenges with claim clarity in patent applications that can affect patent quality: (1) unclear terms, and (2) unclear or broadly worded claims including the use of functional claim language.\nFirst, patent applications that include unclear terms contribute to challenges with patent quality. On the basis of our survey, we estimate that 45 percent of examiners always or often encounter terms that are not well defined in the patent applications’ specifications. Most of the stakeholders we interviewed—including legal scholars and former high- ranking USPTO officials—as well as four supervisory patent examiners and the majority of examiners responding to our survey—indicated that requiring applicants to provide a glossary and define their terms would help to improve patent quality. Further, USPTO officials said that examiners and applicants that participated in USPTO’s Glossary Pilot Program generally indicated benefits to including a glossary and that the glossary improved claim clarity.\nSecond, patent applications that include unclear or broadly worded claims, including those that use functional claim language, contribute to challenges with patent quality. For example, on the basis of our survey, we estimate that nearly 90 percent of examiners always or often encountered broadly worded claims in applications they reviewed, and for nearly two-thirds of examiners, applications with broadly worded claims make completing a thorough examination more difficult. In addition, dealing with functional claims, especially for software-related patents, can be time consuming and difficult especially if examiners are not aware of the applicant’s intent to use functional claiming language under section 112, according to a few examiners we interviewed. On the basis of our survey, we estimate that more than 40 percent of examiners experience pressure to avoid making rejections that relate to claim clarity (section 112). Also, according to our survey data, we estimate that for a smaller percentage of patent examiners (41%) correctly applying patentability standards for dealing with functional claims (section 112(f)) was very important compared to the percentage who reported adhering to novelty and nonobviousness standards (sections 102 and 103) was very important (81%). In a 2015 study, the USPTO economists found that patents with broader claims—patents with fewer words in their claims— had better odds of appearing in patent infringement lawsuits than similar patents. Further, that analysis found that patents that contained functional claim language had 40 percent better odds of appearing in patent infringement lawsuits than similar patents that did not contain this language.\nSome stakeholders we interviewed said requiring “claim charts” in patent applications could help improve patent quality. Claim charts use one column to present the claim and another column to present the limitations and boundaries of that claim (see table 1). These charts, which are commonly used in the federal courts and in PTAB’s post-grant proceedings, provide additional information on the boundaries of a patent claim. Similarly, according to some stakeholders, having applicants include a functional claim check box to indicate whether they were using functional claim language under Section 112(f) could help to improve patent quality. If the box is checked it indicates that the examiner should make sure that the functional claim is supported in the patent specification.\nBy statute, an application for a patent must particularly point out and distinctly claim the subject matter of the invention. USPTO regulations require that the application include a description of the process of making and using the invention in such full, clear, concise, and exact terms as to enable a person skilled in the art to use and make the invention. However, examiners continue to encounter problems with patent application clarity because USPTO does not specifically require patent applicants to clearly define the terms used in their applications, provide additional means to clearly describe claim boundaries, or clearly identify when they are using functional claiming language. Without making use of tools to improve the clarity of patent applications, such as by having applicants include a glossary to define the terms used in the application, provide a claim chart, or indicate the use of functional claims through a checkbox, the agency is at risk of issuing unclear patents that may not comply with statutory requirements.",
"The U.S. patent system plays a vital role in our nation’s economy by promoting innovation and supporting millions of jobs in innovation-rich sectors. However, the quality of patents issued by the USPTO has come under scrutiny in recent years, and our analysis suggests that some agency policies and practices may negatively affect the quality of the patents USPTO awards. It has taken several actions to elevate the importance of patent quality within the agency, but additional opportunities exist to improve the effectiveness of the agency’s patent quality efforts.\nUSPTO does not have a consistent definition of patent quality that is clearly articulated in agency guidance or fully developed measurable goals and performance indicators to guide and evaluate work towards the agency’s quality goals. Without a consistent definition of patent quality, USPTO is at risk of having its staff work at cross purposes to improve patent quality based on their individual definitions of patent quality. Further, without improvements to measurable goals and performance indicators, USPTO is at risk of not being able to fully measure and capture key performance data on whether the agency is meeting its strategic goal to optimize patent quality.\nUSPTO’s policies regarding the time allotted to complete patent application reviews and monetary incentives that are based on the quantity of the work examiners complete, not the quality of their work may negatively affect the quality of issued patents. However, USPTO has not analyzed its policies regarding examiner performance incentives and has assessed the time allotted for patent examination only minimally since the 1970s. Without analyzing whether time allotments to complete a thorough examination are sufficient, USPTO is at risk of issuing lower quality patents due to examiners’ not having enough time to complete their work. Our report on prior art searching recommended that USPTO reassess the time allotted to perform a thorough prior art search. Without analyzing the current incentive structure, USPTO cannot ensure that its incentives are aligned with high-quality work.\nFurther, USPTO has limited data available on decisions from the PTAB to assess its patent quality initiatives. The PTAB has reviewed patents and invalidated some, or all, of the claims for hundreds of patents issued by the USPTO. However, the PTAB data and analysis of these decisions are limited in specificity as well as in distribution. Without identifying all of the data fields that would be useful to track, establishing a means for USPTO managers and examiners to easily access information—including information such as why claims were found to be unpatentable—and analyzing the data to identify potential trends, USPTO officials may be overlooking key information that could help them provide additional training or guidance or take other actions to address recurring issues.\nFurther, other USPTO policies and procedures—namely, compact prosecution, unlimited numbers of patent claims, and requests for continued examination—may affect patent quality, but the agency has not evaluated the effects of these policies. Without evaluating the possible effects of these policies on patent quality, USPTO is at risk of continuing practices that could potentially affect patent quality.\nFinally, without requiring greater clarity in applications—through the use of glossaries, check boxes to signal functional claiming language, or claim charts—USPTO is at risk of issuing patents that are overly broad and not clearly worded—and may not comply with statutory requirements— thereby increasing the likelihood that the patent becomes the subject of litigation.",
"We recommend that the Secretary of Commerce direct the Director of the USPTO to take the following seven actions to help improve patent quality:\nDevelop a consistent definition of patent quality, and clearly articulate this definition in agency documents and other guidance.\nFurther develop measurable, quantifiable goals and performance indicators related to patent quality as part of the agency’s strategic plan.\nAnalyze the time examiners need to perform a thorough patent examination. This action could be taken in conjunction with the recommendation in our report on USPTO’s prior art search capabilities (GAO-16-479).\nAnalyze how current performance incentives affect the extent to which examiners perform thorough examinations of patent applications.\nEstablish a process to provide data on the results of the PTAB proceedings to managers and staff in the USPTO’s Technology Centers, and analyze PTAB data for trends in patent quality issues to identify whether additional training, guidance, or other actions are needed to address trends.\nEvaluate the effects of compact prosecution and other agency application and examination policies on patent quality. In doing so, USPTO should determine if any changes are needed to ensure that the policies are not adversely affecting patent quality.\nConsider whether to require patent applicants to include claim clarity tools—such as a glossary of terms, a check box to signal functional claim language, or claim charts—in each patent application.",
"We provided a copy of our draft report to USPTO for review and comment. In its written comments, which are reproduced in appendix III, USPTO generally agreed with our findings, concurred with our recommendations, and provided information on steps officials plan to take to implement the recommendations. USPTO also provided additional technical comments, which we incorporated, as appropriate.\nUSPTO stated in its response to the first recommendation that USPTO already has a consistent definition for patent quality, specifically that a quality patent is one that is correctly issued in compliance with all of the requirements of Title 35 as well as relevant case law at the time of issuance, which is consistent with how we define the term for this report. However, in our audit work, we did not find evidence that this definition was clearly articulated in agency documents and guidance or used in its performance indicators and goals. We revised this recommendation to clarify that USPTO should not only define the term, but also make this definition clear in relevant documents.\nIn response to our second recommendation, USPTO said that it has taken some steps to update and improve its performance indicators and goals related to patent quality. In its technical comments, USPTO suggested that we revise the report to recommend that USPTO further develop its goals and performance indicators. We agree with this suggestion and made the change. As USPTO further develops its goals and performance indicators, we encourage the agency to more clearly link these goals and indicators to its definition of patent quality.\nIn response to our seventh recommendation, USPTO said that, contrary to the draft report’s findings, USPTO’s initial conclusion was that a glossary did not make a meaningful difference in quality during the prosecution of an application, though the USPTO is still analyzing whether the use of a glossary has a long-term impact on a patent. In response to this comment, we revised the statement in the report to more closely align with the information that USPTO officials presented at its March 8, 2016, Patent Quality Chat on the issue.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees, the Secretary of Commerce, the Director of the USPTO, the Commissioner for Patents, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV.",
"To examine recent trends in patent infringement litigation, we obtained patent infringement litigation data from two companies—RPX Inc. and Lex Machina—that included all of the patent infringement lawsuits filed in all 94 federal district courts between 2007 and 2015. These data included information on the patents asserted in each suit, the defendants involved, and the federal district court where the suit was filed. We conducted data quality testing on the data from RPX and Lex Machina to look for missing or out of range values, interviewed relevant officials, and reviewed relevant documentation for the data and found the data to be sufficiently reliable to determine recent trends in patent infringement lawsuits. We also conducted 11 semi-structured interviews with stakeholders from technology companies, venture capital investors, and others knowledgeable about recent patent infringement litigation. In addition, we reviewed published literature on the patent system, including reports from patent researchers, the Federal Trade Commission, and the Congressional Budget Office.\nTo examine what additional opportunities exist, if any, to improve patent quality, we reviewed relevant laws and USPTO documents and interviewed USPTO officials and representatives of the examiners’ union—the Patent Office Professional Association. We interviewed four supervisory patent examiners and six patent examiners from a variety of technology areas. We also conducted 11 semi-structured interviews with patent stakeholders who were knowledgeable about patent quality and USPTO, including legal scholars, former high-ranking USPTO officials, and representatives from public interest non-governmental organizations.\nTwo of the 11 stakeholders we interviewed are currently serving in leadership roles as board members of the American Intellectual Property Law Association. In assessing USPTO’s efforts, we identified criteria in the federal standards for internal control and USPTO’s strategic plan.\nIn addition, we conducted a web-based survey of a stratified random sample of 3,336 eligible USPTO patent examiners from across 8 of the 11 the technology-based subject matter groups (referred to as technology centers) into which USPTO examiners are divided. Fielded between August and November 2015, the survey was designed to collect information on USPTO’s approach to patent quality and how USPTO might improve its patent quality efforts. To identify our survey population, we obtained from USPTO a list of patent examiners as of May 2015. We excluded examiners from three technology centers, as follows:\nWe excluded the Designs technology center because these examiners work on design patents instead of utility patents; design patents are outside the scope of this engagement and have different statutory and administrative requirements than utility patents.\nWe excluded examiners who perform “re-examination” work and not initial patent examination.\nWe excluded examiners in the patent training academy because these examiners are recent hires who are in a 12-month training program.\nWe also excluded examiners employed at USPTO for less than one year. We then defined nine strata by technology center, with one technology center separated into two strata, as described in table 2. Specifically, the Transportation, Construction, Electronic Commerce, Agriculture, National Security and License & Review technology center includes a diverse set of technologies, including transportation, construction, agriculture, and business methods. In our review, we separated the art units—subunits of a technology center—focused on electronic commerce and business methods (collectively referred to as business methods) in light of recent legislation and court decisions related to business methods. This resulted in 9 strata with a target survey population totaling 7,825 eligible examiners. From this list, we drew our stratified random sample of 3,336 eligible USPTO patent examiners. We received responses from 2,669 eligible examiners for an 80 percent response rate.\nBecause we used a probability procedure based on random selections, our sample is only one of a large number of samples that we might have drawn. Since each sample could have provided different estimates, we quantified the sampling error and express our confidence in the precision of our particular sample’s results at a 95 percent confidence interval. This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn. We designed our sample to provide percentage estimates with 95 percent confidence intervals that are within upper and lower bounds of 5 percentage points, within each stratum. We oversampled based on an expected response rate of 70 percent; however, because we achieved a higher than expected response rate, the upper and lower bounds for survey results within each stratum are generally less than 5 percentage points. The only estimates for which the upper and lower bounds exceed 5 percentage points are certain results for the business methods stratum. In these instances, the upper and lower bounds are between 5 and 6 percentage points. In this report, our figures containing survey results show the upper and lower bounds for results at the 95 percent confidence interval. For other estimates in the report, we have not provided the upper and lower bounds in the text or tables; however, those details for all survey results are available in the e- supplement related to this report, GAO-16-478SP.\nThe quality of survey data can also be affected by nonsampling error, which includes, for example, variations in how respondents interpret questions, respondents’ willingness to offer accurate responses, nonresponse errors, and data collection and processing errors. To minimize nonsampling error, we took several steps in developing the survey and in collecting and analyzing survey data. Specifically, in developing the survey, we worked with our survey professionals to, among other things, draft questions that were clear and unbiased. We pre-tested the survey in person with five USPTO staff: three examiners who are also representatives to the examiners’ union, a supervisory patent examiner, and a quality assurance specialist. We used these pre- tests to check that the questions were clear and unambiguous, used correct terminology, requested information that could be feasibly obtained, and were comprehensive and unbiased. We also obtained comments on the survey from USPTO management and leadership from the examiners’ union. In addition, we obtained a quality review by a separate GAO survey methodologist. Based on these activities, we made changes to the survey before administering it. Further, using a web-based survey and allowing examiners to enter their responses into an electronic instrument created an automatic record for each respondent. This eliminated the potential for errors that could have resulted if we had used a manual process to enter respondents’ data from paper surveys. In addition, to account for the complex sample design, we used survey software in our analyses to produce appropriate estimates and confidence intervals, and the programs we used to process and analyze the survey data were independently verified to ensure the accuracy of this work.\nTo minimize nonresponse error, we made a variety of contacts with the sample of examiners during the survey, including follow-up e-mails to encourage responses. In addition, between October 20 and 23, 2015, we attempted to follow-up via telephone calls to all 1,102 examiners who had neither completed the survey nor told us that they were no longer examiners. We also analyzed nonresponse bias to (1) assess whether any factors were associated with examiners’ propensity to respond and (2) to allow our analysis of respondents to properly reflect the sampling universe of eligible examiners. To adjust the sampling weight for potential nonresponse bias, we used standard weighting class adjustments based on the sampling strata and the examiners’ years of experience at USPTO. In this report and in the related e-supplement at GAO-16-478SP, we present the survey results using the nonresponse adjusted weights, which are generalizable to the eligible population of examiners.\nWe analyzed the responses to the survey for all examiners, as well as responses by technology center and by the General Schedule (GS) level of the examiners. We selected three categories of GS levels—less than GS-13, GS-13, and greater than GS-13—because examiners at these levels have different responsibilities and authorities when examining patent applications. Specifically, examiners above the GS-13 level may grant a patent or reject a patent application without additional review; examiners below the GS-13 level must have their actions reviewed and signed by a more senior examiner; and some GS-13 examiners are transitioning from one GS level to the other.\nFor some other survey questions, we also reviewed examiners’ open- ended responses on selected topics. We selected those topics based on our interviews with experts and USPTO officials as well as our analysis of closed-ended survey responses. We selected the questions for which examiners’ responses most frequently included keywords we identified for each topic. An analyst conducted a keyword search of all responses to the selected open-ended questions and coded responses containing the keywords. A second analyst verified the initial analyst’s coding. Our report provides some examples of examiners’ comments based on this review. Examiners’ responses to open-ended questions are not generalizable to other examiners. In addition, because we did not conduct a systematic review of all open-ended responses to our survey, we do not report the exact number of examiners who provided responses on the topics we reviewed.\nIn addition, we conducted statistical tests of association on the results of certain survey questions; all tests were independently verified to ensure their accuracy. All tests of association were carried out at the 5 percent level of significance and were Cochran-Mantel-Haenszel (CMH) Chi- square tests of general association. The testing was carried out in SUDAAN, which is statistical software appropriate for the analysis of survey data. The null hypothesis was that there is no association between the two tested variables. When the association between two variables, conditional on a third variable, is of interest, this relationship is referred to as the stratum-adjusted CMH test. The test statistic is Wald Chi-Square.\nWe conducted this performance audit from November 2014 to June 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"Appendix II: Patent Examination Process at the U.S. Patent and Trademark Office (USPTO) (Corresponds to Fig. 1)\nThis appendix provides details on steps in the patent examination process, including rollover information, depicted in figure 1.",
"",
"",
"",
"In addition to the contact named above, the following individuals made contributions to this report: Hilary Benedict (Assistant Director), Krista Breen Anderson, Richard Burkard, John Delicath, Cindy Gilbert, Shilpa Grover, Rob Letzler, Rebecca Makar, Rob Marek, Chris Murray, Eleni Orphanides, Shep Ryen, Kelly Rubin, Ardith Spence, Sara Sullivan, and Sonya Vartivarian.",
"Intellectual Property: Assessing Factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality. GAO-13-465. Washington, D.C.: Aug. 22, 2013.\nU.S. Patent and Trademark Office: Performance Management Processes. GAO-10-946R. Washington, D.C.: Sept. 24, 2010.\nIntellectual Property: Enhanced Planning by U.S. Personnel Overseas Could Strengthen Efforts. GAO-09-863. Washington, D.C.: Sept. 30, 2009.\nU.S. Patent and Trademark Office: Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog GAO-08-527T. Washington, D.C.: Feb. 27, 2008.\nU.S. Patent And Trademark Office: Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog. GAO-07-1102. (Washington, D.C.: Sept. 4, 2007.\nIntellectual Property: Improvements Needed to Better Manage Patent Office Automation and Address Workforce Challenges. GAO-05-1008T. Washington, D.C.: Sept. 8, 2005.\nIntellectual Property: Key Processes for Managing Patent Automation Strategy Need Strengthening. GAO-05-336. Washington, D.C.: June 17, 2005.\nIntellectual Property: USPTO Has Made Progress in Hiring Examiners, but Challenges to Retention Remain. GAO-05-720. Washington, D.C.: June 17, 2005."
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"question": [
"What was the trajectory of district court filings of new patent infringement lawsuits between 2007 and 2015?",
"How does the Eastern District of Texas illustrate this rise?",
"What accounts for this rise in patent infringement suits?",
"What else has the GAO discovered regarding patent suits?",
"Why is it easy to unintentionally infringe on patents associated with digital technology?",
"How has the U.S. Patent and Trademark Office addressed patent quality?",
"How is the USPTO lacking in patent quality checks?",
"How would stakeholders define patent quality?",
"What is the risk of preceding without a definition of patent quality?",
"What did GAO find regarding time pressure and patent quality?",
"For what reason is it a problem for USPTO to proceed without time standards?",
"What did GAO find regarding USPTO's use of key terms?",
"Why is it important for USPTO to employ such tools as a key terms glossary?",
"What did GAO review regarding patent quality?",
"How did GAO review patent quality issues?"
],
"summary": [
"GAO found that district court filings of new patent infringement lawsuits increased from about 2,000 in 2007 to more than 5,000 in 2015, while the number of defendants named in these lawsuits increased from 5,000 to 8,000 over the same period.",
"In 2007, about 20 percent of all defendants named in new patent infringement lawsuits were sued in the Eastern District of Texas, and by 2015 this had risen to almost 50 percent.",
"According to stakeholders, patent infringement suits are increasingly being tried in the predominantly rural Eastern District of Texas, likely due to recent practices in that district that are favorable to the patent owners who bring these infringement suits.",
"GAO also found that most patent suits involve software-related patents and computer and communications technologies.",
"Several stakeholders told GAO that it is easy to unintentionally infringe on patents associated with these technologies because the patents can be unclear and overly broad, which several stakeholders believe is a characteristic of low patent quality.",
"The U.S. Patent and Trademark Office (USPTO) has taken actions to address patent quality, most notably through its Enhanced Patent Quality Initiative, but there are additional opportunities for the agency to improve patent quality.",
"For example, USPTO does not currently have a consistent definition for patent quality articulated in agency documents and guidance, which would be in line with federal internal-control standards and best practices for organizational performance.",
"Most stakeholders GAO interviewed said they would define a quality patent as one that would meet the statutory requirements for novelty and clarity, among others, and would be upheld if challenged in a lawsuit or other proceeding.",
"Without a consistent definition, USPTO is unable to fully measure progress toward meeting its patent quality goals.",
"Additionally, USPTO has not fully assessed the effects of the time allotted for application examinations or monetary incentives for examiners on patent quality. Specifically, most stakeholders GAO interviewed said that time pressures on examiners are a central challenge for patent quality. Based on GAO's survey of patent examiners, GAO estimates that 70 percent of the population of examiners say they do not have enough time to complete a thorough examination given a typical workload.",
"According to federal standards for internal control, agencies should provide staff with the right structure, incentives, and responsibilities to make operational success possible. Without assessing the effects of current incentives for examiners or the time allotted for examination, USPTO cannot be assured that its time allotments and incentives support the agency's patent quality goals.",
"Finally, USPTO does not currently require applicants to define key terms or make use of additional tools to ensure patent clarity. Based on a survey of patent examiners, GAO estimates that nearly 90 percent of examiners always or often encountered broadly worded patent applications, and nearly two-thirds of examiners said that this made it difficult to complete a thorough examination.",
"Federal statutes require that patent applications use clear, concise, and exact terms. Without making use of additional tools, such as a glossary of key terms, to improve the clarity of patent applications, USPTO is at risk of issuing patents that do not meet statutory requirements.",
"GAO was asked to review issues related to patent quality. GAO examined (1) recent trends in patent infringement litigation and (2) what additional opportunities exist, if any, to improve patent quality.",
"GAO reviewed relevant laws and agency documents; analyzed patent infringement litigation data from 2007 through 2015; conducted a survey of a generalizable sample of USPTO examiners; and interviewed officials from USPTO and knowledgeable stakeholders, including legal scholars, technology companies, and patent attorneys, among others."
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GAO_GAO-15-142
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{
"title": [
"Background",
"Vaccines Covered by the Program and on the Vaccine Injury Table",
"VICP Claims Process",
"Requirements for Disseminating Information on the Program",
"Most Claims Took Multiple Years to Adjudicate and Many Were Adjudicated by Settlement or Addressed by an Omnibus Proceeding",
"Most Claims Filed Since Fiscal Year 1999 Have Taken Multiple Years to Adjudicate",
"Many Claims Were Adjudicated through Settlement or Grouped in an Omnibus Autism Proceeding",
"Vaccines Have Been Added to the Vaccine Injury Table since Fiscal Year 1999 without Covered Injuries, Resulting in More Off-Table Claims",
"Six Vaccines Have Been Added to the Vaccine Injury Table since Fiscal Year 1999 without Covered Injuries; HHS Is Considering Additional Changes",
"Changes in the Vaccine Injury Table Contributed to More Claims for Off-Table Injuries and for Injuries in Adults",
"Trust Fund Balance Has Increased since 2009, As Has Petitioner and Attorney Compensation and Other VICP-Related Spending",
"From Fiscal Year 2009 to 2013 the Trust Fund Balance Gradually Increased to More than $3 Billion",
"Spending on Compensation to Petitioners and Attorneys Has Increased since Fiscal Year 1999",
"Spending on Agency Staff and Other VICP-Related Expenses Has Increased",
"Information on VICP Petitioner Experience Is Limited; HHS Is Taking Steps to Address Criticism of Its Outreach Efforts",
"Information on Petitioners’ Experiences with VICP Is Limited",
"HHS Is Taking Steps to Address Criticism of Its Efforts to Inform the Public of the Program",
"Concluding Observations",
"Agency Comments",
"Appendix I: Vaccine Injury Table, September 2014",
"Appendix II: Covered Vaccines and Injuries on the Vaccine Injury Table, Fiscal Years 1999-2014",
"Vaccine Vaccines and Injuries Added to the Table before Fiscal Year 1999 Tetanus- containing",
"Human Papillomavirus Vaccines and Injuries Added and Removed from the Table since Fiscal Year 1999 Hib polysaccharide (unconjugated)",
"Appendix III: Compensation to Petitioners and Attorneys’ Fees and Costs, Fiscal Years 1999-2013",
"Appendix IV: Comments from the Department of Health and Human Services",
"Appendix V: Comments from the United States Court of Federal Claims",
"Appendix VI: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"In general, individuals seeking compensation for a vaccine-related injury or death must first file a petition making a claim for compensation under Several federal agencies—HHS, DOJ, VICP before suing in civil court.and USCFC, are involved in administering VICP, and Treasury manages the trust fund which funds compensation for successful claims.",
"VICP includes a vaccine injury table that lists the vaccines covered by the program and the injuries associated with each those vaccines. (See app. I for the table.) Vaccines are added to the list covered by the program after the Centers for Disease Control and Prevention recommends them for routine administration to children and they are made subject to an excise tax that funds the Vaccine Injury Compensation Trust Fund. When individuals submit a claim for an injury listed on the table (called an on- table injury), they do not need to prove that the injury was caused by the vaccine. Instead, if they submit documentation showing that they received a particular vaccine and that they sustained the associated covered injury within the time interval specified on the table, they may receive compensation based on a presumption of causation (unless there is evidence that the injury is due to other factors).compensation may submit claims for injuries not listed on the table (called Individuals seeking off-table injuries) but they need to demonstrate by the preponderance of the evidence that the vaccine caused the alleged injury.\nHHS has authority to promulgate rules to modify the vaccine injury table when certain criteria are met. HHS is also required to amend the table to include a vaccine within 2 years of the Centers for Disease Control and Prevention’s recommending it for routine administration to children. The Advisory Commission on Childhood Vaccines, which was established by the act creating the program, is required to make recommendations concerning changes to the table. In 1999, GAO reported that HHS added seven injuries and removed three others from the table in 1995 and 1997, respectively, using findings from Institute of Medicine reviews conducted in 1991 and 1994—in conjunction with public policy considerations provided by the Advisory Commission on Childhood Vaccines, scientific issues raised by HHS’s National Vaccine Advisory Committee, and input from the public.",
"Individuals who believe they or their child have been injured by or a death resulted from a vaccine covered by the program may file a petition making a claim with the USCFC. In general, to be eligible for compensation, a petition must be filed (1) for a vaccine-related injury within 3 years of the first symptom of the injury (or significant aggravation of an injury), or (2) for a death within 2 years of the death and within 4 years after the first symptom of the vaccine-related injury (or signification aggravation of an injury) from which the death resulted.\nHHS, as the respondent in the process, receives a copy of the petition, including medical records, and other documentation filed with the USCFC. HRSA sends a report of its medical review including HHS’s recommendation regarding the claim to DOJ. DOJ lawyers, representing HHS in the proceedings, review the HRSA report and the legal aspects of the claim and produce a report that outlines the government’s position as to why compensation should or should not be awarded, provides a summary and medical analysis of the petitioner’s claims, and asserts applicable legal arguments.\nAfter the claim is filed in USCFC, it is assigned to a special master, a judicial officer who examines the evidence and adjudicates the claim. The special master reviews the petition and may order the petitioner to provide additional records if they are missing or if they are insufficient.Additionally, petitioners and DOJ may file expert reports including additional medical evidence from scientific literature or studies. The special master then determines whether a claim should be compensated.\nFor claims that are compensated, there are three adjudication categories:\nConcession. In a concession, HHS’s review of medical records, scientific literature, and other documents finds that the petitioner is entitled to compensation, because the evidence meets the criteria of the vaccine injury table or because it is more likely than not that the vaccine caused the injury.\nNegotiated settlement. In a negotiated settlement, the petition is resolved via negotiation between HHS (represented by DOJ) and the petitioner.\nContested decision in favor of the petitioner. If HHS does not concede that a petition should be compensated or if both parties do not agree to settle, the special master issues a decision after weighing the evidence presented by both sides, which may involve conducting a hearing.\nIf the petitioner is entitled to compensation as a result of a concession or contested decision in favor of the petitioner, the proceeding then moves to the damages phase, in which the amount of compensation is determined. In a negotiated settlement, the amount of compensation is included in the settlement presented to the special master. VICP may also pay for attorneys’ fees and costs deemed reasonable even for unsuccessful petitioners, and the amounts of these fees and costs may be part of a settlement between the parties or determined by the special masters. After the claim has been adjudicated within VICP, the petitioner may choose to file a suit in civil court. Even if found to be entitled to compensation, the petitioner may elect to reject the compensation awarded and file a suit in civil court.\nThe Vaccine Injury Compensation Trust Fund, managed by Treasury, is funded by an excise tax imposed on each dose of vaccine sold in the United States that is routinely recommended for administration to children. Appropriations from the trust fund to HRSA pay compensation awarded under VICP for vaccine-related injury or death to the petitioner and may also pay for petitioner attorneys’ fees and costs. Appropriations from the trust fund to HRSA, DOJ, and USCFC (for the Office of Special Masters) also pay for administrative and other expenses associated with processing VICP claims.\nUSCFC has managed large influxes of similar vaccine injury claims through omnibus proceedings or groupings of claims. According to the Office of Special Masters, many of the claims alleging that a particular vaccine caused the same injury will rely on similar evidence, so by using omnibus proceedings or groupings to examine evidence for similar claims, the courts can more efficiently review the evidence. In omnibus proceedings, petitioners select a lead claim in each category of injury, and develop these lead claims while the remaining petitioners choosing to participate in the omnibus elect for their remaining claims to be stayed, or put on hold, until the lead claim reaches a final disposition.",
"HHS is required to include a statement of the availability of VICP in the vaccine information materials that health care providers are to distribute to the parent or legal representatives of a child or to any other individual to whom the provider intends to administer a covered vaccine. These materials—referred to as vaccine information statements by HHS—are intended to explain both the benefits and risks of a vaccine covered by VICP. HHS is also required to undertake reasonable efforts to inform the public of the availability of the program.",
"Most of the VICP claims filed since fiscal year 1999 have taken multiple years to adjudicate, but those filed since fiscal year 2009 have taken less time. For many claims, the parties have concluded the proceeding through a negotiated settlement, rather than a contested decision adjudicated by a special master or the courts. Additionally, certain claims were addressed along with similar claims as part of an omnibus proceeding or informal grouping.",
"VICP claims filed since fiscal year 1999 took an average of about 5 and a half years to adjudicate, according to USCFC data for the nearly 8,800 claims filed since fiscal year 1999 that were adjudicated as of March 31, 2014. There was wide variation in the amount of time to adjudicate these claims. The claim that took the shortest time to adjudicate was filed in fiscal year 1999 and took 2 days, and the claim that took the longest time to adjudicate was filed in fiscal year 1999 and took 5,276 days (more than 14 years). More than 1,000 (11 percent) of the claims filed since fiscal year 1999 were still in process (pending) as of March 31, 2014; most of these had been pending for 2 years or less (see fig. 1.)\nFor claims filed since fiscal year 2009, a greater percentage of claims were resolved within 1 or 2 years. One possible reason is that the vast majority of claims alleging autism as the injury were filed prior to fiscal year 2009. Autism claims may have taken longer because they were part of an omnibus proceeding, which suspended activity on most autism claims for a period of time. According to USCFC data, for the more than 1,400 claims filed since fiscal year 2009 that were adjudicated as of March 31, 2014, the average amount of time to adjudicate a claim was 587 days (about 1.6 years). More than 900 (40 percent) of the claims filed since fiscal year 1999 were still pending, which could cause this average to increase over time as these pending claims are resolved (see fig. 2).\nOf the pending claims, nearly half had been pending for 1 year or less as of March 31, 2014.\nHHS has reported the program has met its annual target of 1,300 days (about 3.5 years) for the average time to adjudicate non-autism claims in all but 1 year since fiscal year 2009. This target (1,300 days) has been in place since fiscal year 2009, and applies to claims concluded in a given fiscal year, regardless of the year they were filed, excluding claims that alleged autism as the vaccine-related injury. HRSA has reported meeting this goal since fiscal year 2009, except in fiscal year 2012, when VICP claims concluded that year took an average of 1,309 days to complete.\nOrganizations representing petitioners have criticized the program for taking a long time to resolve claims. Petitioners report that long processing times delay receiving compensation to pay medical bills and other expenses related to the alleged injury. A HRSA-contracted survey of petitioners whose claims were adjudicated (regardless of whether or not they received compensation under VICP), found that nearly two-thirds of the 103 respondents indicated they were somewhat or very dissatisfied with the length of the process. decision is not made on their claim within specific time periods but according to the Office of Special Masters, petitioners rarely exercise this option.\nAltarum Institute, Determining the Feasibility of Evaluating the National Vaccine Injury Compensation Program, Final Report, a report prepared for the Health Resources and Services Administration, June 15, 2009. Of 716 petitioners the researchers identified as meeting their inclusion criteria,107 responded to their survey and 103 responded to this question on the length of the process. The results of this study cannot be generalized to the population of all petitioners who completed the VICP process; instead, they reflect only the VICP petitioners who responded to the survey. According to HRSA, petitioners were included in the sample if they (1) had filed a claim that had been compensated or dismissed in fiscal years 2004-2008 and (2) were represented by an attorney. that the time petitioners spend gathering supporting documentation or evidence can add significantly to the amount of time required to process a claim. These delays may occur at multiple points in the claims process, from petitioners needing to gather sufficient documentation for the court to begin an initial review, to the court needing documentation to determine the amount of compensation that a successful petitioner will receive. According to HRSA, for claims adjudicated as of March 31, 2014, its medical review process averaged over 700 days for claims filed in fiscal year 2010. HRSA attributes the length of time for medical review primarily to time spent waiting for petitioners to submit requested documentation. During the medical review, HRSA may also consult with external experts, who require additional time to review the details of the case; HRSA’s data indicate that over 1,200 outside reviews were conducted from fiscal years 2009 to 2014. Additionally, when special masters are reviewing the claim, a party may request that the special master delay a decision until additional documentation is available.Special masters may also request additional information from petitioners—such as a specialist physician’s opinion.",
"According to HRSA data for claims filed since 2006, most compensated claims were adjudicated through negotiated settlement rather than a concession or a contested decision. HRSA’s data indicated that about 80 percent of the more than 1,500 non-autism VICP claims filed since 2006 for which compensation was awarded were adjudicated through a negotiated settlement between the parties, compared to about 10 percent involving a contested decision in favor of the petitioner and about 10 percent conceded by HHS. According to HRSA, claims which HHS does not concede may be resolved via a negotiated settlement for several reasons, including a desire by both parties to resolve a case quickly and efficiently. According to the Office of Special Masters, a special master may recommend parties settle as an expeditious and efficient method of resolving certain claims.\nThe Office of Special Masters created an omnibus proceeding in order to address thousands of autism cases systematically and efficiently. Beginning in 1999, parents began filing petitions for compensation under VICP alleging that autism or neurodevelopmental disorders similar to autism were caused by the measles-mumps-rubella vaccine or vaccines containing thimerosal, a mercury-containing preservative used in some vaccines, covered by the program, or both. In 2002, the Office of Special Masters held a series of meetings with an informal advisory committee, including attorneys who represented many potential petitioners and legal and medical representatives of HHS, to address the task of dealing with these claims. The Office of Special Masters decided to utilize a two-step procedure: first, looking into whether the vaccinations in question can cause autism and, if so, the circumstances under which this occurs, and second, applying the conclusions from the first step to the individual claims. The omnibus autism proceeding included test cases for two different theories by which vaccines were alleged to cause autism. Some petitioners withdrew from the omnibus proceeding and elected to proceed within the vaccine program on other theories of causation. Some petitioners withdrew from the program entirely, as was their statutory right, which enabled them to pursue claims against vaccine manufacturers in civil court.\nThe influx of new VICP claims for autism continued in fiscal years 2002- 2005, while the number of new non-autism claims remained relatively stable (see fig. 3). HRSA data show that during this period, nearly 90 percent of VICP claims filed alleged autism as the vaccine-related injury. Ultimately, the special masters did not award compensation in any of the test cases, and most remaining omnibus autism proceeding claims were dismissed. However, according to the Office of Special Masters, some petitioners who had been part of the omnibus autism proceeding continued with claims separate from the omnibus proceeding.",
"HHS has added vaccines to the vaccine injury table without adding covered injuries associated with those vaccines. Following their addition to the table, more claims were filed for off-table injuries.",
"Since fiscal year 1999, HHS has added six vaccines to the vaccine injury table (but has not added covered injuries associated with these vaccines to the table). This means that while individuals may file VICP claims for those vaccines, each petitioner must demonstrate that the vaccine that was administered caused the alleged injury. In general, each of the six vaccines was added within 2 years of the Centers for Disease Control and Prevention’s recommending it for routine administration to children and having an excise tax imposed. Since 1999, two vaccines, both of which had covered injuries associated with them, were removed from the vaccine injury table. See appendix II for the vaccines and injuries added and removed from the vaccine injury table since 1999. At the end of the fiscal year 2014, 16 vaccines were covered by the program, 8 of which did not have associated covered injuries on the table.\nHHS has been considering adding injuries to the table in association with the eight vaccines that are listed without covered injuries. HRSA officials said they are working on a final rule to add an injury associated with one vaccine and a proposed rule that would add injuries associated with several other vaccines.\nHHS has also been considering adding injuries in association to covered vaccines that already have associated injuries on the vaccine injury table. vaccine.injury claims attributed to another vaccine that protected against rotavirus but had been removed from the table in fiscal year 2009. According to HRSA, the agency is working on a final rule to add this injury.\nIn proposing the addition, HRSA considered reviews and\nHRSA officials said they are developing a proposed rule to add covered injuries for all seven of the remaining vaccines on the table without covered injuries. For example, HRSA is considering proposing to add Guillain-Barré Syndrome (a disorder in which the body’s immune system attacks part of the nervous system and is characterized by muscle weakness and paralysis), as an injury associated with the influenza vaccine. The agency is also considering proposing to add other injuries associated with the influenza, hemophilus influenza type b conjugate, varicella, pneumococcal conjugate, hepatitis A, meningococcal, and human papillomavirus vaccines.\nAccording to HRSA officials, the factors informing the table changes that they are considering proposing include (1) an Institute of Medicine study of certain vaccines; (2) HHS’s independent review of vaccine causation and medical and scientific evidence; (3) the need to clarify injury definitions on the table; and (4) recent studies related to injuries associated with the influenza vaccine.\nAs of September 30, 2014, HRSA had not promulgated regulations to make these changes to the vaccine injury table. According to HRSA officials, the agency plans to publish the final rule to add the injury associated with the rotavirus vaccine to the table by July 2015, and to publish a proposed rule for the other injuries it is considering adding to the table by August 2015.\nAccording to HRSA officials, the process to publish such a proposed rule can take about 9 months to 1.5 years. The officials also said that the process for publishing such a final rule can take about 1.5 years to 2.5 years after the proposed rule is published. In its justification accompanying its fiscal year 2013 budget request, HRSA acknowledged that many stakeholders, including Congress, have voiced interest and concern over keeping the injury table in line with current science. At that time, HRSA reported that other VICP activities, including medical reviews and court deadlines, have taken priority over updating the table.\nWhile the injuries HRSA is considering have not yet been added to the table, HRSA and DOJ officials report that many claims alleging these injuries that HRSA is considering adding to the table have been conceded or settled. For example, according to DOJ officials, there have been numerous settlements for cases alleging Guillain-Barré Syndrome as an injury associated with the influenza vaccine.",
"The addition of the six vaccines to the vaccine injury table without associated injuries has contributed to an increase in off-table claims. When we reported on this program in 1999, 2 of the 12 vaccines on the injury table were without associated injuries listed on the table. We reported that about one-quarter (28 percent) of claims filed as of February 1999 were for off-table injuries. In contrast, of the 3,007 claims filed since fiscal year 2005 (the year that trivalent influenza vaccine was added to the table) for which the covered vaccine associated with the alleged injury was specified, at least 59 percent were associated with one of five vaccines added to the table without associated table injuries, according to HRSA data.would not have the presumption of causation associated with an on-table claim. Overall, since 2009, more than 98 percent of the new claims filed alleged off-table injuries that required the petitioner to prove their injury was caused by the vaccine they received, according to the Office of Special Masters.\nTo receive compensation, the petitioners in these claims Claims alleging injuries to adults also increased as a result of the addition of vaccines that are recommended for administration in adults (as well as children) to the vaccine injury table. Several of the vaccines added to the injury table—in particular, the vaccine to prevent influenza—are recommended for routine administration to adults as well as children. As a result, although the vaccines were added to the table because they were recommended for children, adults who are vaccinated with them are also eligible for compensation under VICP. More than half (51 percent) of the 4,402 VICP claims filed since fiscal year 1999 (for which the covered vaccine associated with the alleged injury was specified) were for injuries to adults and 1,287 (29 percent) were for adults alleging injuries in association with influenza vaccine, according to HRSA data.",
"The Vaccine Injury Compensation Trust Fund balance increased to more than $3 billion in fiscal year 2013 despite increased spending by HRSA, DOJ, and USCFC on petitioner compensation, attorneys’ fees and costs, and other VICP-related expenses.",
"The balance in the trust fund increased from $2.9 billion at the end of fiscal year 2009 to nearly $3.3 billion at the end of fiscal year 2013. The balance increased because the trust fund’s income outpaced its disbursements to HRSA, DOJ, and USCFC, although disbursements also increased during this period (see fig. 4). Treasury reported over $200 million in net revenues from the vaccine excise tax in each of fiscal years 2009-2013. As required by applicable law pertaining to the management of trust funds, Treasury oversees the investment of part of the net revenue from vaccine excise taxes. Interest from these investments ranged from about $49 million in fiscal year 2012 to about $126 million in fiscal year 2011.",
"Total compensation to petitioners and the number of claims compensated have both increased since fiscal year 1999. Petitioners’ compensation paid by HRSA using appropriations from the trust fund increased to over $254 million in fiscal year 2013. With the exception of fiscal year 2000, the total amount spent on compensation awarded to petitioners remained under $125 million between fiscal years 1999 and 2009. The total amount spent on compensation to petitioners increased to nearly $180 million in fiscal year 2010 and to more than $250 million in fiscal year 2013 (see fig. 5 and app. III).\nAccording to the Office of Special Masters, the increase in the total amount paid to petitioners in compensation and number of compensated claims is related to the addition of the influenza vaccine to the vaccine injury table. The influenza vaccine, which is administered to millions of people each year, was added to the injury table in fiscal year 2005.\nThe annual amount the VICP program paid for attorneys’ fees and costs remained relatively steady from fiscal year 1999 to fiscal year 2007, but started to increase in fiscal year 2008, consistent with an increase in the total number of payments to attorneys (see fig. 6 and app. III). In order to help ensure access to the program, VICP may pay for reasonable attorney fees and costs upon a determination that the petition was brought in good faith and there was a reasonable basis for the claim for which the petition was brought, regardless of whether the petitioner’s claim is compensated or dismissed. The majority of VICP payments for attorneys’ fees and costs have been for compensated or dismissed claims; however, since fiscal year 2008, VICP has also paid some interim attorneys’ fees and costs for selected ongoing claims at the special master’s discretion. Compensation for attorneys’ fees and costs must be reasonable such that it generally reflects the actual time and expense devoted to the case.",
"The total amount obligated by HRSA, DOJ, and USCFC (for the Office of Special Masters) to pay for staff and other expenses related to processing VICP claims increased from $17 million in fiscal year 2009 to about $19 million in fiscal year 2013. The three departments obligated a total of about $91 million for expenses associated with processing VICP claims during those 5 fiscal years. About two-thirds of VICP-related expenses ($61 million) was obligated to pay the salaries and benefits of full-time equivalent (FTE) agency staff and about one-third ($30 million) was obligated for other VICP-related expenses (see table 1).\nThe amounts obligated for FTE salaries and benefits were for staff of HRSA, DOJ, and USCFC’s Office of Special Masters who process the claims and represent the government’s interest in legal proceedings. For example, USCFC’s Office of Special Masters paid the salaries and benefits for special masters and clerks. The average number of full-time equivalent (FTE) staff supported across the three agencies was 81 per fiscal year.\nEach agency also had other VICP-related spending reimbursed by the trust fund. For example, HRSA reported obligating about $9.6 million for medical experts to review petitioner claims and provide expert testimony during adjudication proceedings for fiscal years 2009 through 2013. HRSA also obligated funds to support the Advisory Commission on Childhood Vaccines, including compensation and travel expenses for commission members. The departments reported obligating funds for costs for travel, processing documents, maintaining records, rent, supplies, and equipment. For example, obligations include rental payments to the General Services Administration by DOJ and the cost of court reporters funded by USCFC’s Office of Special Masters.",
"Information on petitioners’ experience with VICP is limited. HRSA has taken some steps to undertake outreach activities, but the agency has not yet assessed the effect of these efforts.",
"Other than a study for HRSA on petitioners’ satisfaction with VICP, the agency officials and stakeholders we interviewed and the documents we reviewed did not identify any data or studies regarding the experience of individuals who have filed VICP claims. The study prepared for HRSA, dated 2009, reported the responses from 107 petitioners whose claims were compensated or dismissed in fiscal years 2004-2008. Because this was a voluntary survey with a low response rate, its results cannot be generalized to all petitioners who completed the VICP process; instead, it reflects only the experience of the VICP petitioners who responded to the survey. We also obtained comments from stakeholders, including officials from organizations representing providers, petitioners’ attorneys, and parents. These stakeholder comments, while providing insight into petitioner experiences, are anecdotal and do not represent the experience of all petitioners who have filed VICP claims. Members of the Advisory Commission on Childhood Vaccines we interviewed expressed interest in obtaining additional information on petitioner’s experience with VICP; however, they told us they had not done so, citing concerns about confidentiality and other issues.\nThe limited comments on petitioners’ experience from those who responded to the survey prepared for HRSA and from stakeholders included the following:\nSome petitioners responding to the HRSA survey reported being dissatisfied with the claims process and some commented that the process places too great a burden on petitioners and family members, with requests for additional information after the claims were filed. Similarly, one stakeholder said that petitioners view the vaccine injury claims process as confusing, time-consuming, too lengthy, and traumatic. Another stakeholder, on the other hand, commented that while vaccine-related injuries do not happen often, the program handles them efficiently and fairly when they do happen.\nOther comments from petitioners responding to the HRSA survey and stakeholders were related to the payment process and amount of compensation. More than half of the 61 petitioners who responded to a question on the method of payment in the HRSA survey reported being somewhat or very satisfied with the method of award payment; however, 14 respondents suggested more timely and flexible payment mechanisms. About half of the 63 respondents to the question on the amount of compensation reported the award amount was inadequate to cover past and future medical care. Similarly, stakeholders we interviewed reported concerns with the amounts petitioners receive, the method of payment, and a perceived lack of transparency regarding how the money from the Vaccine Injury Compensation Trust Fund has been spent. For example, one stakeholder told us that petitioners felt forced to settle for less than what it will cost them to care for their children or themselves for their lifetimes, and another stakeholder raised concerns about the choice of annuities for petitioners.\nOther comments on the program from stakeholders were related to the perception of an adversarial or unfriendly environment throughout the process, the use of settlements and perceived pressure to settle claims, the use of omnibus proceedings to group claims together, and concerns about confidentiality of the medical information filed by the petitioner. Some petitioners responding to the HRSA survey and some stakeholders also reported difficulties finding an attorney to represent petitioners in the process; however, petitioners responding to the survey were split on this issue—about the same number reported that finding an attorney was difficult as reported that finding an attorney was easy.",
"HRSA has acknowledged being criticized for years for not adequately promoting public awareness of VICP, and has recently taken some steps, such as developing and starting to implement an outreach plan for fiscal year 2014 and developing an outreach plan for fiscal year 2015, to improve its efforts to reach out to providers and the public. In its 2006 VICP strategic plan, HRSA noted that one of the critical issues facing the program from 2005 to 2010 was that many parents, the general public, attorneys, and health care professionals were not aware VICP existed. In 2009, HRSA contracted for the development of a comprehensive national marketing and outreach communication plan; the contactor presented the plan to HRSA in November 2010. According to HRSA, the agency used this plan to guide outreach efforts. Prior to the fiscal year 2014 plan, HRSA also reported exhibiting at professional conferences; updating the VICP website and the VICP booklet that is available from the website (including translating the booklet into Spanish); facilitating the review of vaccine information statements (which include a statement on VICP) by the Advisory Commission on Childhood Vaccines; and responding to media inquiries and inquiries received via e-mail, letters, and the program’s toll-free number. HRSA officials also noted the need to carefully balance messages that increase awareness of VICP with public health messages that encourage and promote immunizations.\nHRSA shared an overview of its outreach plans with its Advisory Commission on Childhood Vaccines in September 2014. HRSA reported that many of the activities in the agency’s 2014 outreach plan were in process at the end of the fiscal year. These activities included reviewing the VICP booklets to use plain language and make them more user- friendly, reviewing and upgrading the VICP website to improve navigation, developing VICP message points for target audiences and slides about the program to be used in speeches and other presentations by HRSA staff, and requesting federal websites to provide information on the program and to link to the VICP website. In its outreach plan for fiscal year 2015, the agency is targeting health care providers, parents and expectant parents, adults aged 50 years and older (including Spanish- speaking older adults), and civil litigation and health attorneys, with the goal of informing target audiences of the availability of the program. According to HRSA, these target audiences were selected because they include individuals who administer vaccines and individuals (or their caregivers) who receive vaccinations. HRSA has identified a number of measures to assist in tracking performance of its fiscal year 2015 plan, including website metrics, the number of “retweets” and “shares” from social media initiatives, the number of media inquiries, and the number of attendees or participants at outreach events. Because the agency has not completed many of its planned efforts to improve how it informs the public of the availability of the program, it is too early to determine the effect of HRSA’s current and planned outreach efforts.\nWithout awareness of the program, individuals who might otherwise receive compensation for a vaccine-related injury or death could be denied compensation because of a failure to file their claim within the statutory deadlines. One stakeholder commented that the public is largely unaware of the program, and this lack of awareness contributes to missing filing deadlines and individuals being denied the opportunity for compensation. Members of the Advisory Commission on Childhood Vaccines also told us that many individuals may not know there is a statute of limitations on filing a claim and many miss the opportunity to file a claim because of the statute of limitations. In December 2013, the commission recommended extending the statute of limitations for vaccine-related injuries and deaths. Extending the statute of limitations would require amending the applicable statutory provision.",
"It has been more than 25 years since VICP went into effect in 1988. In that time, the program has awarded more than $2.8 billion to thousands of petitioners. Several aspects of the program have changed over the years. First, while claims alleging injuries on the vaccine injury table made up the majority of claims filed in the first decade of the program, today— after the addition of new vaccines, particularly influenza vaccine, to the table without associated injuries—the majority of the claims filed involve off-table injuries. Stakeholders report that the program has an adversarial environment, as petitioners are required to demonstrate a covered vaccine caused the injury on their VICP claim when there are no associated injuries on the table. The extent to which this will change if HHS updates the vaccine injury table to include more injuries, as expected, is yet to be seen. Second, most of the compensated cases are now adjudicated through negotiated settlement, rather than contested decisions before the special master. And while the vaccines covered by the program are included because they are recommended for children, many of the program’s petitioners in recent years are adults who received covered vaccines.\nAddressing one criticism of the program by stakeholders—specifically the need to increase the statute of limitations—would require a statutory change in the program. Regardless of whether the statute of limitations is increased, HHS’s efforts to increase awareness of the availability of the program will be important to help ensure that potential petitioners are aware of the program and can file claims in time. While HHS has recently taken or planned steps to improve its outreach activities, what effect, if any, these efforts will have remains to be seen. As the agency moves forward, it will be important for HRSA to identify which activities are reaching its target audiences.",
"We provided a draft of this report to HHS, DOJ, USCFC, and Treasury. HHS and USCFC agreed with our findings and provided written comments, which are reprinted in appendixes IV and V, respectively. In its comments, HHS emphasized that it administers VICP jointly with DOJ and USCFC, with HHS responsible for reviewing petitioners’ claims, providing recommendations for entitlement to compensation, and making payments to petitioners and attorneys. In commenting on our identification of its efforts on VICP outreach, HHS noted that it is strengthening its outreach efforts by implementing its fiscal year 2015 VICP outreach plan, which increases outreach to target populations and includes performance measures. In its written comments, USCFC noted that the Administrative Office of the United States Courts and USCFC both supply administrative support to the Office of Special Masters and VICP without reimbursement from the trust fund. The court also commented that, while considerable strides have been made in reducing the average processing time for claims in recent years, the climbing and changing nature of the caseload, coupled with the statutory cap on the number of special masters, present a continuing challenge to the Office of Special Masters’ ability to continue to reduce average processing times. USCFC also commented that following omnibus proceedings, claims have been resolved more expeditiously in recent years, and often through settlements. USCFC also commented that the Office of Special Masters strives to resolve all cases fairly and expeditiously. HHS, USCFC, DOJ, and Treasury also provided technical comments that were incorporated, as appropriate.\nWe are sending copies of this report to the Secretary of Health and Human Services, the Attorney General of the United States, the Chief Judge of the United States Court of Federal Claims, and the Secretary of the Treasury. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI.",
"Vaccine Vaccines against tetanus (e.g., DTaP, DTP, DT, Td, or TT)\nVaccines against pertussis (e.g., DTP, DTaP, P, DTP-Hib)\nAnaphylaxis or anaphylactic shock Encephalopathy (or encephalitis)\nVaccines against measles, mumps, rubella in any combination (e.g., MMR, MR, M, R)\nEncephalopathy (or encephalitis)\nVaccines against measles (e.g., MMR, MR, M)\nVaccines against rubella (e.g., MMR, MR, R)\nVaccines against polio (polio live virus-containing (OPV))\nVaccines against polio (polio inactivated virus-containing (IPV))\nVaccines against hemophilus influenzae type b (Hib conjugate vaccine)\nVaccines against varicella Vaccines against rotavirus Vaccines against pneumococcal disease (pneumococcal conjugate vaccine) Vaccines against influenza (trivalent vaccine) Vaccines against meningococcal disease Vaccines against human papillomavirus (HPV)",
"",
"",
"",
"This appendix shows the total amount paid in compensation to petitioners under the National Vaccine Injury Compensation Program and the number of compensated claims in fiscal years 1999-2013 (see table 2). It also shows the amounts the program paid in attorneys’ fees and costs for those same fiscal years (see table 3).",
"",
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"In addition to the contact named above, Kim Yamane, Assistant Director; George Bogart; Carolyn Garvey; Cathleen Hamann; Katherine Perry; Fatima Sharif; and Eric Wedum made key contributions to this report."
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{
"question": [
"Why might delays on adjudicating claims occur?",
"To what extent have vaccine injury compensation claims experienced delays?",
"How is the program attempting to ensure that claims are meeting the target time?",
"How has HHS changed its vaccine injury table since 1999?",
"What is the consequence of not adding covered injuries?",
"What are some steps the HHS is doing to deal with possible injuries?",
"What are the benefits and risks of vaccines?",
"What can people do when such instances happen?",
"What is the role of the injury table provided by the program?",
"What is the process for injuries not covered by the table?",
"What is the nature of VICP's compensation fund?"
],
"summary": [
"Officials from the U.S. Court of Federal Claims (USCFC), where VICP claims are adjudicated, report that delays may occur while petitioners gather evidence for their claims.",
"Most of more than 9,800 claims filed with the National Vaccine Injury Compensation Program (VICP) since fiscal year 1999 have taken multiple years to adjudicate (see fig.). More than 1,000 (11 percent) of claims filed since fiscal year 1999 were still in process (pending) as of March 31, 2014; most of these were pending for 2 years or less. A greater percentage of the claims filed since fiscal year 2009 were resolved within 1 or 2 years.",
"A greater percentage of the claims filed since fiscal year 2009 were resolved within 1 or 2 years. In all but 1 year since fiscal year 2009, the program has met the target for the average time to adjudicate claims (about 3.5 years) tracked by the Department of Health and Human Services (HHS), which administers the program.",
"Since fiscal year 1999, HHS has added six vaccines to the vaccine injury table, but it has not added covered injuries associated with these vaccines to the table.",
"This means that while individuals may file VICP claims for these vaccines, each petitioner must demonstrate that the vaccine that was administered caused the alleged injury.",
"HHS is considering adding covered injuries associated with these vaccines; but as of September 2014, it had not published any final rules to do so.",
"Vaccines save lives by preventing disease in the people who receive them. In some instances, however, a vaccine can have severe side effects, including death or an injury requiring lifetime medical care.",
"VICP provides compensation to people for injuries and deaths associated with certain vaccines for medical and other costs.",
"The program includes an injury table that lists the injuries that are presumed to be caused by vaccines covered by the program.",
"The program may also compensate individuals for injuries not on the table; however, in those cases causation is not presumed. In both cases, medical and other records are required.",
"VICP pays claims from a trust fund. Since the program began in 1988, it has awarded more than $2.8 billion in compensation."
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CRS_R41138
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{
"title": [
"",
"Federal Facility Security Levels",
"Interagency Security Committee (ISC)",
"1995-2003: GSA Chairmanship",
"2003-Present: DHS Chairmanship",
"Executive Branch Facility Security",
"Federal Protective Service",
"Historical Overview and Current FPS Authority",
"Federal Protective Service Use of Contract Security Guards",
"Federal Court Facility Security",
"Supreme Court",
"Coordination of Federal Building Security",
"Federal Building Security Issues",
"Federal Protective Service Operations and Use of Contract Security Guards",
"Federal Protective Service Operations",
"Concerns About Federal Protective Service Use of Contract Security Guards",
"Coordination and Sharing of Federal Building Security Information",
"Facility Security Committees",
"Legislation in 112th Congress: Federal Protective Service",
"House Bill (H.R. 176)",
"Senate Bill (S. 772)",
"Appropriations and Resources",
"Conclusion"
],
"paragraphs": [
"Prior to the April 19, 1995, bombing of the Alfred P. Murrah Building in Oklahoma City, the federal government had no formally established security standards for federally owned or leased facilities. Immediately following the bombing, President William J. Clinton directed the Department of Justice (DOJ) to assess the vulnerability of federal facilities to terrorist attacks or violence and to develop recommendations for minimum security standards. The U.S. Marshals Service (USMS), within DOJ, coordinated two working groups to accomplish these presidential directives. The working groups identified and evaluated various security measures and activities that could address potential vulnerabilities, and minimum security standards were also proposed for federal facilities. Additionally, USMS deputies and General Services Administration (GSA) security specialists conducted inspections at more than 1,200 federal facilities to obtain security data on buildings for use in upgrading existing conditions to comply with the proposed minimum standards. The result of the working groups' efforts was the report Vulnerability Assessment of Federal Facilities . This report was significant because it represented the first time that broad security standards were applied to federal facilities.\nAfter the report was issued, President Clinton directed all executive branch agencies to begin upgrading their facilities to meet the recommended minimum security standards. Following the DOJ recommendations, President Clinton also required GSA to establish building security committees for all GSA facilities.\nIn the 112 th Congress, legislation was introduced in the House of Representatives and Senate to improve the Federal Protective Service (FPS), the agency charged with responsibility to protect federal buildings. In the House, H.R. 176 , the Federal Protective Service Improvement and Accountability Act of 2011, was introduced on January 5, 2011. Similar legislation, S. 772 , the Supporting Employee Competency and Updating Readiness Enhancements for Facilities Act of 2011 (SECURE Facilities Act of 2011) was introduced in the Senate on April 8, 2011. The purpose of both bills is to strengthen the security of federal facilities and improve the safety of employees who work there and public visitors by enhancing the ability of FPS to provide the necessary security. The two bills are discussed in this report under the section, \" Legislation in 112 th Congress: Federal Protective Service .\"",
"Because of the differences among federal buildings and their security needs, USMS categorized federal facilities into five classes based on building size, agency mission and function, tenant population, and the degree of public access to the facility, and developed security standards corresponding to the security level needed for each class:\nLevel I—buildings with no more than 2,500 square feet, 10 or fewer federal employees, and limited or no public access; Level II—buildings with 2,500 to 80,000 square feet, 11 to 150 federal employees, and moderate public access; Level III—buildings with 80,000 to 150,000 square feet, 151 to 450 federal employees, and moderate to high public access; Level IV—buildings with 150,000 square feet or more, more than 450 federal employees, and a high level of public access; and Level V—buildings that are similar to Level IV but are considered critical to national security (for example, the Pentagon).",
"The Interagency Security Committee was established in 1995, originally as part of GSA, and was transferred to the Department of Homeland Security (DHS) in 2003. The following two sections describe the ISC's work under GSA and DHS chairmanships.",
"On October 19, 1995, President Clinton issued an executive order that established the ISC to address \"continuing government-wide security\" for federal facilities. Chaired at the time by the GSA Administrator, the ISC was composed of representatives from each of the executive branch agencies. The ISC was authorized to consult with other entities, including the Administrative Office of the U.S. Courts, in order to perform its duties. The executive order directed the ISC to\n(1) establish policies for security in and protection of Federal facilities;\n(2) develop and evaluate security standards for Federal facilities, develop a strategy for ensuring compliance with such standards, and oversee the implementation of appropriate security measures in Federal facilities; and\n(3) take such actions as may be necessary to enhance the quality and effectiveness of security and protection of Federal facilities, including but not limited to:\n(A) encouraging agencies with security responsibilities to share security-related intelligence in a timely and cooperative manner;\n(B) assessing technology and information systems as a means of providing cost-effective improvements to security in Federal facilities;\n(C) developing long-term construction standards for those locations with threat levels or missions that require blast resistant structures or other specialized security requirements;\n(D) evaluating standards for the location of, and special security related to, day care centers in Federal facilities; and\n(E) assisting the Administrator in developing and maintaining a centralized security data base of all Federal facilities.\nFollowing its establishment, the ISC began to address new security technology developments, cost considerations, and the need to balance security standards with public access to federal buildings. In May 2001, the ISC issued its Security Design Criteria for New Federal Office Buildings and Major Modernization Projects (updated in 2004), based on the five security levels for federal facilities. This document required new construction projects to include the use of window glazing protection, establish minimum acceptable distances between federal buildings and streets, control vehicular access to buildings, and evaluate the location and securing of air intake vents.\nThe September 2001 terrorist attacks on the Pentagon and the World Trade Center heightened concerns about the vulnerability of federal buildings to violence or bombings. In response to these events, the ISC issued revised procedures to respond to potential vehicle bomb attacks by recommending that new federal buildings be constructed at a minimum distance of between 20 to 50 feet from the nearest perimeter barrier, depending upon the security level.\nEven though the ISC successfully completed its security design criteria and related documents, a 2002 GAO report found that the committee had made \"little progress\" in other mandated responsibilities. While GAO reported that the ISC was successfully disseminating security information to member agencies, it also found that the committee's effectiveness was hindered by GSA's \"lack of aggressive leadership and support,\" in that the agency failed to issue operating procedures and did not provide sufficient staff support and funding. GSA was also unable to provide any documentation indicating that the agency or the ISC had actually monitored agency compliance with the security recommendations.",
"Congressional enactment of the Homeland Security Act in 2002 and the creation of DHS centralized the federal government's efforts to respond to terrorism, including enhancing physical security for federal facilities. Accordingly, the chairmanship of the ISC was transferred from the GSA Administrator to the DHS Secretary on February 28, 2003. Within DHS, the chairmanship of the ISC was delegated to the Director of the Federal Protective Service (FPS) in January 2004.\nA 2004 report issued by GAO recommended that DHS direct the ISC to develop a plan that \"identifies resource needs, implementation goals, and time frames for meeting the ISC's ongoing and yet-unfulfilled responsibilities.\" GAO reported that standard operating procedures had been approved by agency members, and included new requirements for attendance and participation at ISC meetings. To address these issues, DHS (through the ISC) is creating and maintaining a centralized security database of all existing federal facilities. Since its transfer to DHS, the ISC has either updated or established the following standards or best practices:\nUse of Physical Security Performance Measures , gives policy guidance on metrics and testing for physical security programs; Facility Security Level Determinations , defines the criteria and process used in determining the security level of a federal facility; Physical Security Criteria for Federal Facilities , establishes a baseline set of physical security measures to be applied to all federal facilities; Design-Basis Threat Report , creates a profile of the type, composition, and capabilities of potential threats to federal facilities; and ISC Best Practices for Safe Mail Handling , identifies best practices for mail room operations in federal agencies and assists security managers in implementing safe mail-handling practices.\nIn addition to its duties to coordinate federal security efforts and develop security standards for the construction of new federal facilities, the ISC has been assigned responsibility for reviewing federal agencies' physical security plans. Homeland Security Presidential Directive 7, issued December 17, 2003, required federal agencies \"to identify and prioritize United States critical infrastructure and key resources and to protect them from terrorist attacks,\" and it assigned implementation responsibilities to DHS. In July 2004, the ISC was designated to oversee and review each agency's physical security plan pertaining to protection of the nation's infrastructure and key resources. According to GAO, the ISC's successful completion of these new responsibilities would represent \"a major step\" toward carrying out its existing duties pertaining to compliance and oversight. The ISC, however, does not have the authority to enforce standards on other federal departments and agencies. It relies on other federal entities' willingness and abilities to implement security standards and best practices.",
"Numerous agencies have responsibility for federal building security entities. Among them are such law enforcement agencies as the Central Intelligence Agency's (CIA) Security Protective Service, the Department of Defense's (DOD) Pentagon Police Directorate, and the State Department's Diplomatic Security Service's uniformed law enforcement officers. These agencies and facilities are usually limited in scope and size, involving a single location or a limited number of buildings. However, the primary agency for protecting federal facilities is the Federal Protective Service (FPS), which is responsible for protecting almost half (48%) of all GSA owned or leased property.",
"FPS, now within DHS's National Protection and Programs Directorate (NPPD), is responsible for the protection and security of federally owned and leased buildings and property and of federal personnel. In general, FPS operations focus on security and law enforcement activities that reduce vulnerability to criminal and terrorist threats. FPS protection and security operations include all-hazards based risk assessments; emplacement of criminal and terrorist countermeasures, such as vehicle barriers and closed-circuit cameras; law enforcement response; assistance to federal agencies through Facility Security Committees; and emergency and safety education programs. FPS also assists other federal agencies with additional security, such as assisting the U.S. Secret Service at National Special Security Events (NSSE). FPS is the lead Government Facilities Sector Agency for the National Infrastructure Protection Plan. Currently, FPS employs approximately 1,225 law enforcement officers, investigators, and administrative personnel, and administers the services of approximately 15,000 contract security guards. Currently, FPS employs approximately 1,225 law enforcement officers, investigators, and administrative personnel. The Senate-reported version of FY2012 appropriations for DHS recommended $1.2 billion for FPS, and the House-reported version recommended $1.3 billion.",
"The responsibility to protect federal buildings was given to the Federal Works Agency in June 1948. Specifically, Congress authorized the Federal Works Administrator to appoint uniformed guards as special policemen with responsibility for \"the policing of public buildings and other areas under the jurisdiction of the Federal Works Agency.\" The special policemen were given the same responsibility as sheriffs and constables on federal property to enforce the laws enacted for the protection of persons and property, and to prevent \"breaches of peace, and suppress affrays or unlawful assemblies.\"\nOn June 30, 1949, the Federal Works Agency was abolished, and all of its functions, including the protection of federal buildings, were transferred to GSA In September 1961, Congress authorized the GSA Administrator to appoint non-uniformed special policemen to conduct investigations in order to protect property under the control of GSA; enforce federal law to protect persons and property; and make an arrest without a warrant for any offense committed upon federal property if a policeman had reason to believe the offense was a felony and the person to be arrested was guilty of the felony.\nThe GSA Administrator formally established the Federal Protective Service (FPS) in January 1971 through GSA Administrative Order 5440.46. FPS, as an official GSA agency, continued to protect federal property and buildings with both uniformed and non-uniformed policemen.\nFPS was transferred to the Department of Homeland Security, and placed within U.S. Immigration and Customs Enforcement (ICE), with enactment of the Homeland Security Act of 2002 ( P.L. 107-296 ). The act required the DHS Secretary to \"protect the buildings, grounds, and property that are owned, occupied, or secured by the Federal Government (including any agency, instrumentality, or wholly owned or mixed ownership corporation thereof) and persons on the property.\" With the passage of FY2010 DHS appropriations, Congress authorized the transfer of FPS from ICE to the National Protection and Programs Directorate. On October 29, 2009, DHS Secretary Janet Napolitano announced this transfer.\nUnder current statutory provisions, FPS officers are authorized to\nenforce federal laws and regulations to protect persons and federal property; carry firearms; make arrests without a warrant for any offense against the United States committed in the presence of an officer or for any federal felony; serve warrants and subpoenas issued under the authority of the United States; conduct investigations, on and off federal property, of offenses that may have been committed against federal property or persons on the property; and carry out other activities for the promotion of homeland security as the DHS Secretary may prescribe.",
"FPS's contract security guard responsibilities include federal building access control, employee and visitor identification checks, security equipment monitoring, and roving patrols of the interior and exterior of federal property. Within the National Capital Region (NCR), FPS contracts with 54 private security guard companies to provide approximately 5,700 guards to protect 125 federal facilities. FPS issues task orders to contract security guard services that detail the terms and conditions under which the contract security guard services are to be provided. Some of these task orders include the identification of buildings requiring protection, specific guard post locations, and the hours and days of the week each post is to be staffed; whether security guards are to be armed; and the number of guards at each post. FPS currently employs approximately 15,000 contract security guards across the nation, and, according to the DHS Inspector General (DHS IG), contract guard services \"represent the single largest item in the FPS operating budget, with an estimated FY2006 budget of $487 million.\"",
"The safe conduct of court proceedings and the security of judges, court personnel, and visitors in courtrooms, as well as the safety of judges off-site, continue to be a concern. The 2005 murders of family members of a federal judge in Chicago; the killings of a state judge, a court reporter, and a sheriff's deputy at an Atlanta courthouse; and the 2006 sniper shooting of a state judge in his Reno office all spurred efforts to improve judicial security. Other threats against judges and court facilities have not stopped. For example, in September 2009, a plan to bomb the Paul Findley Federal Building and Courthouse in Springfield, IL, was uncovered and an arrest was made. On January 4, 2010, a gunman wounded a deputy U.S. marshal and killed a court security officer at the Lloyd D. George U.S. Courthouse and Federal Building in Las Vegas. Possible threats in the first week of 2010 included suspicious substances in letters sent to courthouses in Alabama. These recent incidents may result in review and increased oversight of judicial security at court facilities to ensure that adequate protective policies, procedures, and practices are in place. Additionally, increased security enhancements may be necessary for federal courthouses where trials of individuals charged with acts of terrorism are to be held.\nEach of the three branches of the federal government plays a unique role in helping to ensure the safety of judges and the security of the federal courts. The role of Congress is to authorize programs that enhance security, appropriate funds, and provide oversight of judicial security. The Judicial Conference's Committee on Judicial Security monitors the security of the judiciary (including the protection of court facilities and proceedings, judicial officers, and court staff at federal court facilities and other locations) and makes policy recommendations to the conference. The Administrative Office of the U.S. Courts implements Judicial Conference policies, including security matters.\nBy statute, the United States Marshals Service within the Department of Justice has primary responsibility for the security of the federal judiciary, including the safe conduct of court proceedings, as well as the security of federal judges and court personnel at court facilities and off-site. USMS is charged with the protection and security of more than 2,000 federal judges and approximately 5,250 other court officials at over 400 court facilities nationwide. Within USMS, the Judicial Security Division (JSD) is specifically responsible for providing security services and staff support for the federal judiciary, including personal protection for judges and physical security for federal courthouses. Other space in the court facilities under the control of USMS includes holding cells adjacent to courtrooms, interview rooms used by attorneys and prisoners, cellblocks, prisoner elevators, and office space for USMS use. An appointed U.S. marshal, confirmed by the Senate, has security responsibility in each of the 94 federal judicial districts and the District of Columbia Superior Court. District U.S. marshals provide and oversee security of the judiciary using USMS resources and court security officers (CSO), who are employees of private security companies under contract with USMS. Over 4,500 CSOs provide various types of security (e.g., fixed posts, roving patrols, entry screening, and mail and package screening) in courthouses and at multi-tenant facilities. Also under USMS jurisdiction are the design, installation, and maintenance of security systems, and the oversight of communications equipment.\nUSMS conducts investigations of threats made against federal judges, U.S. attorneys, court staff, and their family members to determine the level of security that is necessary for developing security plans. In accordance with these findings, USMS assigns the required resources to ensure the safety of these people. A deputy marshal is required to attend any session of court at the request of the presiding judge. A judicial security inspector (a senior-level deputy marshal) is assigned to each judicial district to evaluate courthouse security and procedures and to coordinate scheduling, posting, and other matters related to CSOs. The inspectors also conduct security surveys at judges' homes and recommend improvements. On June 1, 2004, USMS established the Office of Protective Intelligence (OPI) to review and analyze intelligence information about the security of those under USMS protection. OPI issues daily security advisories, intelligence bulletins, and law enforcement alerts to USMS district offices and senior staff at headquarters so that protective measures can be taken. When threats are made, USMS works with the Federal Bureau of Investigation (FBI) to evaluate the threats.\nWithin the Department of Homeland Security, FPS has overall responsibility for security in GSA-managed, multi-tenant federal buildings. When the buildings include court facilities, USMS and FPS share security responsibilities; this is authorized by a series of memoranda of agreement and understanding (MOA and MOU) between GSA and DOJ. When the court is the sole tenant in a GSA-managed building, USMS has primary responsibility for security, although FPS may provide some support for the perimeter security, or it may delegate this responsibility to USMS. The manner in which the responsibilities are shared varies case by case, depending on the differing requirements of tenants, functions, and locations of occupied space. These shared responsibilities and jurisdictions at individual court-occupied buildings are further determined by agreements (sometimes in writing), and coordinated to avoid duplication. Generally, USMS is responsible for and controls access to judicial space, while FPS is primarily responsible for perimeter security and for other interior space that is not court-related space. FPS conducts risk assessments of multi-tenant buildings to deter threats and take countermeasures. Uniformed FPS officers and hired contract guards (similar to court security officers) protect the buildings and their assets, and investigate crime at the facilities. Other than perimeter responsibilities, FPS duties may include visitor entry processing, roving patrols, garage access control, and mail and package screening.\nThese principal entities communicate and coordinate at the national and district levels to ensure the security of the courts. At the national level, the Judicial Conference's Committee on Judicial Security coordinates security issues involving the federal courts with USMS, DOJ, and DHS. According to USMS, the Marshals Service works daily with the AOUSC Office of Court Security and the Office of Facilities and Security, and the Committee on Judicial Security also consults and coordinates over national and district-level security matters. At semi-annual meetings, the Committee on Judicial Security and USMS senior management discuss security, legal, and budget issues. In addition, USMS and AOUSC hold working sessions to discuss issues that include the purchase and installation of security systems, CSO staffing, and budget matters. At the local level, U.S. marshals routinely meet with the district chief judge at court security committee meetings including representatives from the magistrate, district, and bankruptcy courts (and sometimes circuit judges and U.S. attorneys) to review and implement security plans. AOUSC and USMS also consult on security considerations (e.g., design and installation of security systems) in the construction of new or renovated courthouses.\nOn January 5, 2009, USMS implemented a pilot program to assume primary responsibility for perimeter security at selected courthouses that were previously the responsibility of the FPS. This pilot was undertaken in accordance with FY2009 enacted legislation as a result of the judiciary's concerns that FPS was providing inadequate perimeter security. The pilot program, expected to cover an 18–month period, includes five courthouses located in Chicago, Detroit, Phoenix, New York, and Tucson, and two in Baton Rouge. The judiciary submitted a report to the House and Senate Appropriations Subcommittees on Financial Services and General Government on the implementation progress of the pilot program and is currently working with USMS on assessment tools for the program.",
"As the Supreme Court's general manager, paymaster, and chief security officer, the Marshal of the Supreme Court oversees the administration and operations of the Court building. The Marshal manages over 200 Court employees and supervises the federal property used by the Court. The Marshal also directs the Supreme Court Police Force, which comprises a chief of police and approximately 80 officers. The police force jurisdiction covers the Court building, its grounds, and adjacent streets.",
"Federal building security includes such activities as the daily interaction of FPS and its federal customers, the coordination between USMS and the FPS in federal multi-use buildings, and the federal agency interaction with contract security guard companies. It should be noted that some Members of Congress have state and district offices in multi-tenant federal buildings and recently the FBI has coordinated with Members due to an increase in threats to Members and their offices. Federal agencies communicate with one another and state, local, and private sector entities to coordinate federal building security. It is important to note that the federal government's communication of potential and imminent terrorist and criminal threats to states, localities, and private sector entities is an important aspect of federal building security because the majority of federal agencies and departments lease, build, and occupy facilities located in local jurisdictions and are not segregated from the general populace, private industries and businesses, and state and local government facilities. Not only would local jurisdictions be susceptible to collateral damage in a terrorist attack on a federal building, but some federal agencies and departments also rely on state and local law enforcement entities in the event of criminal or terrorism activities at federal facilities.\nOne established way the federal government communicated threats was through the use of the Homeland Security Advisory System (HSAS), which was managed by DHS. HSAS, established on March 12, 2002, was a color-coded terrorist threat warning system. The system, which federal departments and agencies were required to implement and use, provided recommended protective measures for federal departments and agencies to prevent, prepare for, mitigate against, and respond to terrorist attacks. DHS disseminated HSAS terrorist threat warnings to federal departments, state and local agencies, the public, and private-sector entities. DHS, however, only provided protective measures for federal departments. This dissemination of warnings was conducted through multiple communication systems and public announcements. HSAS had five threat levels: low, guarded, elevated, high, and severe. In 2009, DHS's Homeland Security Advisory Council established a task force to review the HSAS and recommend changes to the administration and use of the system. Upon review, DHS replaced the HSAS with the National Terrorism Advisory System (NTAS). NTAS is a new system that is to communicate terrorism threat information by providing \"timely, detailed information to the public, government agencies, first responders, airports and other transportation hubs, and the private sector.\"\nSome federal entities, in response to targeted and specific threats, have developed mechanisms for notifying other federal departments and agencies, such as the U.S. Nuclear Regulatory Commission's Office of Nuclear Security and Incident Response, which coordinates with DHS, the federal intelligence and law enforcement communities, and the Department of Energy (DOE). In 2005, John E. Lewis, Deputy Assistant Director of the FBI's Counterterrorism Division, testified before the House Committee on Homeland Security about the FBI's coordination with other federal agencies concerning potential nuclear threats or incidents. Mr. Lewis stated that the FBI has developed liaison relationships with DHS, DOE, and DOD, and he detailed how the FBI and these departments would coordinate their response efforts if there was a nuclear threat or incident.\nWithin DHS, the Office of Operations Coordination is responsible for monitoring the nation's security situation daily, through the National Operations Center (NOC), and coordinating activities among DHS, governors, homeland security advisors, law enforcement entities, and critical infrastructure operators. Information on domestic incident management is shared with Emergency Operations Centers at federal, state, and local levels through the Homeland Security Information Network (HSIN), and state and local intelligence fusion centers.",
"Due to recent attacks on federal buildings and continued terrorism threats, Congress may wish to address issues associated with federal building security. Some of these issues include FPS's operations and use of contract security guards, coordination and sharing of federal building security information, Facility Security Committees, and appropriations and resources. These issues are discussed below.",
"The threat of terrorism since the September 11, 2001, attacks has increased emphasis on the physical security of federal property and congressional interest in FPS. Since 2009, GAO has issued three reports about FPS, one on FPS's use of contract security guards and two on FPS's operations to address federal facility vulnerabilities.",
"In November 2009, GAO identified the following concerns about FPS's operations:\nFPS does not have a risk management framework that couples threats and vulnerabilities with resource requirements; FPS lacks a strategic human capital plan to guide its current and future workforce planning efforts; FPS lacks a systematic approach for using technology to reduce risk to federal facilities; FPS is inconsistent in sharing information and coordinating security with GSA and tenant agencies; and FPS lacks a reliable data management system for accurately tracking performance measurement and testing.\nOne GAO recommendation is for FPS to improve its use of a fee-based system by developing an accurate method of accounting for the cost of providing security services to tenant agencies and ensuring that its fee structure takes into consideration the varying levels of risk and service provided at GSA facilities. Congress may wish to address the implementation of this recommendation by requiring FPS specifically, and DHS generally, to develop an accurate method for assessing security service costs through statutory or conference language.\nAdditionally, GAO recommended an evaluation of whether continued use of the current fee-based system or another funding mechanism would be the most appropriate method for funding FPS operations. Congress might want to require the DHS IG to review the use of the fee-based system versus the method of directly providing appropriations to FPS. Alternatively, Congress could determine without further review to begin a direct appropriation for FPS operations through statutory language in annual DHS appropriations. This approach would possibly reduce the amount of appropriations GSA and tenant agencies currently receive to pay FPS for security operations.\nConsidering all of these issues, Congress may want to review FPS operations further through oversight hearings or require FPS and DHS to report on what actions, if any, the agency is taking to address GAO and DHS IG findings. Further review and hearings may not, however, immediately ameliorate continuing FPS shortcomings.",
"GAO identified concerns with FPS's use of contract security guards, including that\nFPS does not fully ensure that its contract security guards have the training and certifications required to secure federal facilities; FPS does not have a completely reliable system for monitoring and verifying contract guard training and certification requirements; FPS does not have specific national guidance on when and how contract guard inspections should be performed; and FPS inspections of contract security guard posts at federal facilities are inconsistent, and the quality of the inspections varies across FPS regions.\nFPS has implemented some actions in response to GAO's findings. According to FPS officials, these actions include authorizing overtime to monitor contract security guards during non-routine business hours and requiring penetration tests to identify weaknesses at access control contract security guard posts. Additionally, FPS has implemented a new directive developed to clarify FPS responsibilities for conducting and reporting the results of inspections and evaluations.\nIn FY2010, Congress attempted to address FPS's use of contract security guards by requiring FPS to maintain no fewer than 1,200 full-time equivalent staff and 900 full-time police officers, investigators, inspectors, area commanders, and special agents. This requirement could increase FPS's oversight of contract security guards; however, increasing the number of FPS law enforcement officers may not solve problems immediately because of the time required to inspect contract security guard operations, to identify continuing shortcomings, and to train FPS and contract security guard personnel. Additionally, increasing the number of FPS law enforcement personnel could further strain FPS resources by increasing the amount of personnel benefits afforded to federal employees.",
"Terrorism threat information sharing and coordination of federal, state, and local government security operations are multi-faceted endeavors that require constant attention and are immediately reviewed, and possibly revised, following an attempted or successful terrorist attack, such as the recent attempted bombing of an airplane on December 25, 2009. Federal facilities and agencies sharing terrorism threat information and coordinating facility security are specific and integral parts of this government endeavor to ensure the nation's security. Congressional action on terrorism information sharing includes passage of the Intelligence Reform and Terrorism Prevention Act of 2004, which mandated the creation of an Information Sharing Environment (ISE). The ISE is to facilitate the sharing of terrorism information among federal, state, local, and private sector entities through the use of policy guidelines and technologies. However, problems have arisen related to the coordination and sharing of federal building security information.\nGAO, in November 2009 testimony before the House Committee on Homeland Security, stated that even though FPS and GSA management officials have established communication processes, information sharing at the regional and facility levels is inconsistent, and FPS and GSA disagree overall about what information should be shared. As an example, GAO cited a memorandum of agreement between DHS and GSA that specified that FPS will provide quarterly briefings at the regional level; however, this has not been done consistently across all FPS regions. GSA security officials stated that the briefings that did occur primarily focused on crime statistics and did not constitute comprehensive threat analyses.\nAdditionally, on September 30, 2009, DHS Secretary Janet Napolitano stated, before the Senate Homeland Security and Governmental Affairs Committee, that there is no single process or system for federal, state, and local entities to receive or share terrorism intelligence and threat information. The Secretary stated that the present system of sharing information is not streamlined, that it is a \"work in progress,\" and that this may be the result of the security classification of the information. Also, the Secretary said that state and local officials may be confused about where to obtain terrorism threat information.\nTo address the issue of coordination and sharing of terrorism threat information among federal facilities, Congress could choose to require, through statutory language, that federal agencies report periodically on this matter to the committees of jurisdiction. Additionally, Congress could request that GAO revisit the ISE and its implementation since 2004. In 2008, GAO reported limited success with the implementation and noted that the ISE lacked guidance on ensuring accountability and assessing progress. Additionally, Congress could request information on how federal agencies train personnel (specifically, building security managers and officials) on the sharing of terrorism threat information.\nCongress could also require a review of the coordination and integration of information sharing systems used by federal agencies, such as Law Enforcement Online and the Homeland Security Information Network. This review might identify what systems are utilized most and what systems appear effective. The review might disclose which federal agencies are involved, and at what level, in each system. On this point, GAO noted in 2007 that when \"identical or similar types of information are collected by or submitted to multiple agencies, integrating or sharing this information can lead to redundancies.\"\nNone of these options, however, address the issue of how specific federal facilities interact with federal security entities such as FPS, or what type of informal coordination is conducted daily to ensure the safety and well-being of federal employees, and members of the general public who visit federal facilities.",
"When a federal court is in a multi-tenant building, the court's representative is a member of the Facility Security Committee (FSC) (previously known as the Building Security Committee). Each FSC, made up of tenants in the building, considers and makes decisions on building security matters.\nFSCs were mentioned at the November 18, 2009, House Committee on Homeland Security hearing on Federal Protective Service Transition. The committee chair raised the issue of the potentially dangerous items that are allowed to be brought into federal buildings. In July 2009, GAO staff reported that they were able to smuggle bomb-making components into 10 high-security federal facilities in four different cities and successfully assemble the items inside the building. The components were not on the prohibited list for those facilities. Reportedly, FSCs in each federal building determine what items are prohibited, and there is no standard list of prohibited items. FPS makes security assessments and presents them to FSCs, but, according to the FPS director, FPS does not determine the prohibited items list.\nCongress might consider whether the current process for determining which items should be prohibited is sufficient, and whether the input provided by various tenants, including the judiciary—as well as recommendations by USMS, FPS, GSA, and others—is effective. Further, consideration might be given to mandating a standard list of prohibited items to enhance security at federal facilities and to establishing regular evaluations of the list.\nResearch also indicated that few across-the-board standards have been established for the FSCs. The Interagency Security Committee formed a working group to examine and issue a document to address FSC operations.\nWhile each federal facility may have different or unique security administrative challenges, the lack of standards in FSC administrative operations could imperil security. Among the areas that could be examined are the following:\nFSC membership composition, and the designation and authority of the committee chair; voting issues, including how a quorum and majority vote are determined; whether one vote for each tenant is fair or whether votes should be proportional to tenant space; whether the formula for allocating how much each tenant pays for security enhancements, now generally based on square footage, is equitable or appropriate; whether a minimum number of mandatory regularly scheduled meetings of the FSC (and others on an as-needed basis) should be required; whether there is a need for possible standards for written records of FSC meetings and other recordkeeping requirements; whether there is a system for tenants to appeal decisions and resolve possible disagreements; whether each tenant has efficient processes for securing the approval of its headquarters office with regard to security enhancement requests so that FSC can act to implement improvements without delay from one or more tenants; whether FSCs have adequate and timely communication with federal, state, and local law enforcement organizations; and whether there should be regular congressional or ISC review of FCS operations and reporting requirements.",
"Early in the 112 th Congress, legislation was introduced in both the House and Senate to improve the ability of FPS to protect federal facilities, the employees who work there, and public visitors. Both bills are similar to legislation introduced in the previous Congress but no further action was taken before the 111 th Congress adjourned.",
"On January 5, 2011, Representative Bennie G. Thompson introduced H.R. 176 , the Federal Protective Service Improvement and Accountability Act of 2011. On January 31, 2011, the bill was referred to the House Transportation and Infrastructure Committee; House Homeland Security Committee; and subsequently referred to the Subcommittee on Emerging Threats, Cybersecurity, and Science and Technology, where it is pending.\nH.R. 176 would reform the FPS workforce, security practices, and contract oversight capacity. Following is a summary of the bill's main provisions:\nThe DHS Secretary would be directed to maintain no fewer than 1,350 full-time equivalent positions in the FPS inspector force (fully trained federal law enforcement officers). These positions would be classified as Federal Facility Security Officers (responsible for security assessment), and law enforcement officers (responsible for physical law enforcement and investigations). The DHS Secretary would establish a FPS contract oversight force to monitor contracts, contractors, and contract guards, and require minimum training and certification standards for security guard services at FPS-protected facilities. The FPS Director would begin a one-year pilot program (within six months after the enactment of the act) to research the conversion of contract guard positions to federal employee positions at the highest-risk federal facilities. The GAO Comptroller General would review periodically the pilot program and the performance of federal facility security guards in the program, and submit a final report of its evaluation to Congress. The GAO Comptroller General would review the current FPS fee-based funding system, and recommend changes or alternatives, as appropriate, to the system.\nH.R. 176 also expresses the sense of Congress that specified security standards for federal facilities established by the Interagency Security Committee should be implemented for all federal facilities.",
"On April 8, 2011, Senator Joseph I. Lieberman introduced (for himself and Senators Susan M. Collins and Daniel K. Akaka) S. 772 , the Supporting Employee Competency and Updating Readiness Enhancements for Facilities Act of 2011 (SECURE Facilities Act of 2011). The purpose of the bill is to protect federal employees and public visitors by improving the security of federal facilities and modernizing FPS. The bill was referred to the Senate Hom eland Security and Governmental Affairs Committee on the same day. On May 11, 2011, the committee adopted by a vote of 10-5, an amendment Senator Tom Coburn offered to require the DHS Secretary to offset each new full-time FPS employee position with the reduction of one full-time DHS employee position. On May 18, 2011, the Senate committee reported the bill favorably, as amended, by voice vote.\nS. 772 would increase the guard workforce, require training and regular assessments of guard capabilities, and stabilize the management of FPS. Following is a summary of the bill's main provisions:\nThe DHS Secretary would ensure that FPS maintain at any time no fewer than 1,371 full-time equivalent employees (including no fewer than 950 in-service field staff) in FY2012. The DHS Secretary is also to ensure that there would be no fewer than 1,200 full-time employees at any time (including 900 in-service field staff). After FY2012, the DHS secretary would submit a report to the appropriate congressional committees if there is a decrease in the number of full-time equivalent employees and provide a revised model projected for future fiscal years on the number of full-time equivalent employees. FPS would increase the training provided to contract guards, maintain testing programs to assess training and the security of federal facilities, and establish procedures for retraining or terminating guards. FPS officers would be authorized to carry firearms on or off duty. The DHS Secretary would coordinate with the ISC, to develop standards for checkpoint detection technologies for explosives and other threats at FPS-protected federal facilities. ISC's authority to enforce compliance on security standards for the federal buildings would be increased. The DHS Secretary would submit a report to the appropriate congressional committees if any facility is determined to be in non-compliance with the ISC security standards. Federal agencies' representatives serving on a Federal Security Committee would be trained on security matters, in accordance with standards established by ISC. Other requirements for each committee include meeting on a quarterly basis, or more frequently (as determined by the committee chair), and maintaining official records of the meetings. The DHS Secretary would be required to submit a report to the appropriate congressional committees within 180 days after enactment of the act on the FPS funding system, including recommendations for alternatives, including direct appropriations, or a combination of fee collections, security charges, and appropriations.",
"If the Administration decided to hold trials of individuals charged with terrorist acts in federal civilian court rather than in military tribunals, enhancing communication and coordination of all law enforcement agencies (federal, state, and local) and the judiciary would be critical. The planning and implementation of additional security enhancements, including staff, training, technology, and equipment, would be necessary for the security and safety of all parties involved. A systematic method for identifying and addressing concerns of the local community and officials might include assessing the disruptive impact security measures might have on the businesses and residences in the area, and on traffic around and leading to the courthouses. Depending on the location of such trials, airspace surveillance and extension of the perimeter for security might be considered.\nCongress might take into account the unique jurisdictional responsibilities of each entity, including national intelligence agencies. Establishing a system for entities to coordinate expenditures in a timely manner might be necessary because such trials could continue for several years. Planning for multiple years of appropriations might be needed to enable the entities to continue to fulfill their functions.\nCongressional oversight could be critical to ensure that funds and resources are maximized under fiscal constraints. If sufficient funding is not provided in a timely manner to the federal entities involved, Congress might consider whether authorities are in place for entities to transfer resources currently devoted to other programs, and whether such transfers might adversely affect the performance of other missions.\nCongress might also consider whether funding FPS directly could provide it with more stable and predictable funding than its current reliance on fees from other agencies and the judiciary. In addition, direct appropriations to FPS might reduce administrative costs for both FPS and the federal courts.",
"The federal government faces, daily, the task of securing a portfolio comprising 446,000 buildings. Accordingly, Congress could address concerns, some of which are addressed in this report, to ensure effective federal agency operations and the health, well-being, and safety of federal employees and the public."
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{
"question": [
"What was the goal of the FPS legislation?",
"In what way was the legislation introduced?",
"What was the goal of these two introduced bills?",
"How are federal facilities defined?",
"What is in the federal government’s real property portfolio?",
"What is else included in the report?",
"Why are multi-tenant federal buildings mentioned in the report?",
"What is involved in security of federal facilities?",
"What were the government auditors’ and security experts’ response to these practices?",
"What is the nature of this criticism?"
],
"summary": [
"Early in the 112th Congress, legislation was introduced in the House of Representatives and Senate to improve the Federal Protective Service (FPS), the agency charged with responsibility to protect federal buildings, the employees who work in the buildings, and public visitors.",
"On January 5, 2011, H.R. 176, the Federal Protective Service Improvement and Accountability Act of 2011, was introduced in the House. On April 8, 2011, similar legislation, S. 772, the Supporting Employee Competency and Updating Readiness Enhancements for Facilities Act of 2011, was introduced in the Senate.",
"The purpose of both bills is to strengthen the security of federal facilities and the ability of FPS to provide the necessary security.",
"For the purposes of this report, federal facilities include any building leased or owned by the General Services Administration.",
"In FY2007, the federal government's real property portfolio comprised 446,000 buildings with an area of 3.3 billion square feet and a replacement value of $772.8 billion.",
"Federal courthouses and facilities are also discussed in this report.",
"Additionally, it should be noted that many Members of Congress have state and district offices located in multi-tenant federal buildings.",
"Security of federal facilities includes physical security assets such as closed-circuit television cameras, barrier material, and security guards (both federally employed and contracted).",
"Federal facility security practices have been subject to criticism by some government auditors and security experts.",
"Elements that have received criticism include the use of private security guards, the management and security practices of the FPS, and the coordination of federal facility security."
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CRS_R41605
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{
"title": [
"",
"Introduction",
"What Rules Apply in Committees?",
"Rules of Direct Relevance to Committees",
"Importance of Procedure in Committee",
"Committee Rules",
"Subcommittees",
"Number of Subcommittees",
"Other Committee Subunits than Subcommittees",
"Subcommittee Ratios and Ex Officio Membership",
"Allowing Other Committee Members to Participate",
"Temporary Assignments to Subcommittees",
"Allowing Representatives Not on a Committee To Participate in a Subcommittee Hearing",
"Subcommittee Reporting to Its Parent Committee",
"Layover Rules",
"Explanation of Table 1. Committee Referral of Measures or Matters to Subcommittee, House Committee Rules, 114th Congress",
"",
"Scheduling Committees' Meetings and Hearings",
"Meeting Days",
"Vice Chair Presiding",
"Explanation of Table 2. Meetings of Committees, House Committee Rules, 114th Congress",
"",
"Members' Initiative to Meet to Consider a Measure",
"Notice and Documents",
"Role of Ranking Minority Member",
"Electronic Notification",
"Notice Documents for Meetings",
"Additional Documents for Hearings",
"Scheduling Subcommittee Hearings and Meetings",
"Scheduling Subcommittee Field Hearings and Hearings during House Recesses or Adjournments",
"Open and Closed Meetings",
"Media Coverage",
"Quorum Requirements",
"Meetings",
"Hearings",
"Additional Observations",
"Opening Statements",
"Hearings Procedures61",
"Explanation of Table 3. Hearings, House Committee Rules, 114th Congress",
"Witnesses",
"Advance Testimony and \"Truth in Testimony\"",
"Questioning Witnesses",
"Subsequent Rounds of Questioning and Extended Questioning",
"Recognition to Question Witnesses",
"Questions for the Record",
"Minority Witnesses",
"Closing a Hearing Based on a Witness's Testimony",
"Subpoenas",
"Explanation of Table 4. Authorizing Subpoenas, House Committee Rules, 114th Congress",
"Oversight",
"Authority",
"Organization, Planning, and Subsequent Reporting",
"Committee Procedure for Oversight Reports",
"Referral of Legislation",
"Jurisdiction",
"Referral",
"House Rules and Committee Markups",
"Motions",
"Recess",
"Voting",
"Proxy Voting",
"Postponing Votes",
"Record Keeping",
"Explanation of Table 5. Record Vote Procedures in Committees, House Committee Rules, 114th Congress",
"",
"Reports",
"Contents",
"Supplemental, Minority, Additional, and Dissenting Views",
"Restrictions on Reported Measures",
"Filing",
"Availability",
"Committee Records",
"Record Keeping and Public Access",
"Publication",
"Party and Staff Reports",
"Additional Duties"
],
"paragraphs": [
"",
"The primary legislative function of standing committees in the House of Representatives is to evaluate the thousands of bills and resolutions that Members introduce during each two-year Congress, which are normally referred upon introduction to the appropriate committee or committees. This evaluation process typically begins with an initial screening in which the majority-party committee leaders and staff, perhaps in conjunction with majority-party leadership, identify the relatively small number of measures referred to a committee that may merit more consideration. A committee or one of its subcommittees might conduct one or more days of public hearings to receive testimony on the policy issues in legislation selected for action and the merits of legislation proposed to address it.\nHearings might also be a part of a committee's oversight and investigations. The House depends on its committees to undertake oversight and investigations as another principal part of the legislative authority granted Congress under the Constitution, and to inform the House on the need and options for further legislative action.\nIf a committee wants to recommend that the House take action on legislation, hearings are followed by one or more markup meetings at which committee members propose and vote on amendments to a measure (or the draft of a measure). These meetings are called \" markups \" because committee members \"mark up\" the legislation before them as they debate and decide what amendments to recommend to the House. Finally, the committee votes to approve the bill or resolution with the amendments agreed to in the markup and to report the measure to the House for chamber consideration, with the recommended amendments.\nThis report examines in text and tables how committees implemented House rules in their individual committee rules for the 114 th Congress. The variety as well as consistency in committee rules is analyzed as these rules relate to legislative activities, principally hearings, oversight, and markups. Administrative provisions in House and committee rules are not analyzed in this report. Provisions of committee rules applicable to legislative activities are clustered by topic, rather than by House rule number.",
"The rules of the House of Representatives are not consistently specific concerning the procedures that committees are to follow. There is detail in House rules on questioning of witnesses at a committee hearing, for example, but there is little guidance in House rules on the conduct of a markup. The House, however, requires its committees to adopt rules.\nRule XI, clause 2(a)(1) directs each standing committee to adopt \"written rules governing its procedure.\" This paragraph continues: \"Such rules … (B) may not be inconsistent with the Rules of the House or with those provisions of law having the force and effect of Rules of the House….\" Rule XI, clause 1(a)(1)(A) in addition states: \"The Rules of the House are the rules of its committees and subcommittees so far as applicable.\" Finally, Rule XI, clause 1(a)(1)(B) subordinates subcommittees to the committee of which they are a part: \"Each subcommittee is a part of its committee and is subject to the authority and direction of that committee and to its rules, so far as applicable.\"",
"Many House rules applicable to committee procedures are contained in Rule XI, which includes at clause 3 a statement on the authority and specific procedures of the Committee on Ethics.\nThere are three other House rules that are specifically relevant to committees. Rule X contains the legislative and oversight jurisdiction of each standing committee, several clauses on committee procedures and operations, and a clause specifically addressing the jurisdiction and operation of the Permanent Select Committee on Intelligence. Rule XII concerns the referral of legislation and other matters. Rule XIII addresses the filing and content of committee reports, and addresses privileged reports, with individual provisions applicable to privileged reports of the Committee on Rules. (Clause 1 of this rule names the legislative calendars of the House (Union, House, Private, and Discharge Calendars), and clause 7 applies to committee reporting of resolutions of inquiry. )\nThis report analyzes House Rules X, XI, XII, and XIII, and relevant provisions of other House rules, such as Rule XXI, applicable to committees' legislative activities. It analyzes committees' rules for the 114 th Congress based on and implementing these House rules.",
"House rules and precedents and committee rules are important to the majority and the minority, whether that is a party majority or minority or a policy majority or minority, and to committee leaders of both parties and to individual committee members. The rules allow the party majority to set committees' agendas and conduct hearings of their design, and normally allow the party majority to reach a conclusion in markup when it has the votes for its legislative policy. The rules allow the minority to present its views in hearings and markups and to seek changes in a legislative text being marked up. Adherence to established rules allows all members of a committee to understand that they have been treated fairly, and that they were able to represent their district and constituents and their political point of view, even if the positions they favored did not garner the support of a majority of the committee's members.\nIn addition, majority-party leaders expect their committee chairs to acquit themselves positively. Having conducted hearings and a markup with adherence to House rules and precedents and committee rules, a committee presents its leadership with a clean parliamentary record in anticipation of floor action. Alternatively, although a committee vote to report a measure largely wipes clean the parliamentary record that was created during committee consideration of a measure, decisions and rulings during the markup process could have compromised the majority-party leadership's strategy. The Rules Committee, acting at the reporting committee's or the leadership's behest, might believe it is compelled to include in a special rule waivers of rules and other provisions that could add procedural issues to the policy debate.\nIf a committee does not acquit itself well procedurally, it might erode the majority-party leadership's and the minority's trust in the committee's leadership. The majority-party leadership could assign leading roles on future legislation important to the majority to other committees or to the leadership itself. The minority of the committee, if it feels that it has been treated unfairly, could become intransigent and challenge procedurally future actions of the majority, both in committee and on the floor.",
"A committee adopts its rules at its first meeting, soon after a new Congress convenes and committee members are elected. House committees are required by Rule XI, clause 2(a)(1) to adopt their own internal rules of procedure in an open committee meeting. These rules must incorporate the provisions of Rule XI, clause 2, which are numerous, \"to the extent applicable.\" Committee rules must be published in the Congressional Record and made publicly available in electronic form not later than 30 days after the election of the committee chair at the beginning of a new Congress.\nAs already noted, Rule XI, clause 1(a)(1) also states: \"The Rules of the House are the rules of its committees and subcommittees so far as applicable….\" Committee rules generally restate the many requirements of Rule XI, but also modify or add new provisions consistent with the intent or meaning of Rule XI and other House rules. The effect of Rule XI is that committees have not only direction on hearing and markup procedure but also discretion in creating their own rules, procedures, and customary practices.\nNeither House nor committee rules are self-enforcing, and it is left to each committee to enforce House rules and precedents and committee rules governing hearings and the process of debate, amendment, and reporting in a markup. A committee member must make a point of order if he or she believes that a House or committee rule is being violated.\nA committee typically adopts the committee rules that were in effect in the previous Congress, with any changes agreed to being, usually, incremental. A committee's rules develop over time, fit the jurisdiction, practices, and culture of a committee, and favor the majority, leaving little reason for wholesale change, even when the House majority changes. A committee's chair might consider potential changes in light of the major policy issues the chair anticipates the committee to consider in that Congress and the political environment in which they will be debated, including the committee's party ratio and the ideological makeup of the majority-party members. A chair might also consider his or her party's leadership expectations for how committees will operate, for example, an enhanced or diminished role for subcommittees or the ability to report key legislation aligned with party political objectives. Among the aspects of committee rules that a committee member or staff member might examine to understand a committee's procedures are the following:\nthe role and authority of the committee's chair in scheduling meetings, referring legislation to and discharging it from subcommittees, issuing subpoenas, and taking other actions; the role and authority of the ranking minority member, for example, whether the chair may take specific actions without any involvement of the ranking minority member, after \"notice\" to that member, after \"consultation\" with that member, or with the \"concurrence\" of that member; the role and authority of the committee vis-à-vis the chair—whether specific actions by the committee may be taken only \"by majority vote\"; the role and authority of the minority party, for example, whether the presence of one or more members of the minority party will be required for a quorum for specific business; and the implementation of changes to House rules affecting committees, such as the change in the 112 th Congress (2011-2013), which required committee chairs to make available to committee members and the public at least 24 hours in advance of the markup the text of legislation to be marked up.",
"As already noted, Rule XI, clause 1(a)(1)(B) states: \"Each subcommittee is a part of its committee and is subject to the authority and direction of that committee and to its rules, so far as applicable.\" A number of committees repeat this provision or a variation on it in their own rules.\nSome provisions of Rule XI and other rules governing committee activities apply specifically to subcommittees (e.g., subpoenas), although other provisions of these rules do not (e.g., committee reports). Subcommittees do not have the power to report legislation directly to the House without specific authority granted by the House to do so. Within the parameters of House rules, committees in their own rules may grant authority to or withhold it from their subcommittees.\nSome committees' rules and practices provide extensive guidance concerning the prerogatives of subcommittees, while other committees' rules do not. Some committees grant a degree of autonomy and authority to their subcommittees, but the Committee on Small Business formally limits its subcommittees to the conduct of hearings. A rule of the Foreign Affairs Committee retains a number of legislative topics for the committee's consideration, but another rule of the committee disallows committee consideration of a matter in the absence of a subcommittee's recommendation, except in \"extraordinary circumstances\" to be determined by the chair in consultation with the ranking minority member. A committee's rules do not likely reflect all practices in a committee or within the committee's subcommittees.\nSome committees' rules require measures referred to the committee to be referred to a subcommittee, although other committees' rules leave the decision to refer a measure to subcommittee to the committee chair's discretion (see Table 1 ). Several committees' rules state explicitly that the subcommittee service of a measure's author may not be a factor in referring a measure to a specific subcommittee.\nThe rules of a number of committees restrict subcommittees' scheduling. (See, below, \" Scheduling Subcommittee Hearings and Meetings ,\" under \" Scheduling Committees' Meetings and Hearings .\")\nA few committees provide funding or staff to subcommittees, while most committees require subcommittees to obtain funding and staff from the committee chair or ranking minority member to carry out their responsibilities. The Small Business Committee in its rules states that separate staff is not assigned to subcommittees.",
"Rule X, clause 5(d) limits most committees to 5 subcommittees. If a committee establishes an oversight subcommittee, however, the limit is increased to 6 subcommittees. This rule contains different limits for 2 committees: the Appropriations Committee may have not more than 13 subcommittees, and the Oversight and Government Reform Committee may have not more than 7 subcommittees.\nRule X, clause 2(b)(2) requires standing committees of more than 20 members, other than the Appropriations Committee, to establish an oversight subcommittee or to require its subcommittees to conduct oversight. The rule nonetheless requires any subcommittee with legislative jurisdiction to carry out oversight.",
"Nine committees in their rules allow explicitly for the creation of ad hoc task forces and other committee subunits. These rules may grant or deny the subunits authority to report legislation to the full committee. Several of these rules contain detail on the creation and organization of these subunits. The Ethics Committee's rules contain special provisions applicable to investigative and adjudicatory subcommittees, reflecting ethics procedures in House rules. The Budget Committee's rules mention \"task forces\" in several places, but the committee does not have a rule on task forces.",
"Committee rules, except Appropriations' and Ethics', name subcommittees.\nFour committees have rules requiring only that subcommittee ratios reflect full committee party ratios. Five committees' rules go further and in addition list ratios for their subcommittees. Two committees have different rules on ratios: the rules of the Energy and Commerce Committee and the Homeland Security Committee require subcommittees to reflect the committee party ratio but to have at least two more majority-party members than minority-party members.\nHouse rules provide for equal party representation on the Ethics Committee; House rules also require equal representation on the committee's investigative and adjudicatory subcommittees. Ethics Committee rules require equal representation on all other subcommittees.\nUnder most committees' rules, the chair and ranking minority member of the full committee may serve as \"regular\" or \"assigned\" members of one or more of the committee's subcommittees. Under these rules, they may also serve as ex officio members of all other subcommittees. In their rules, committees may address whether ex officio members of subcommittees may vote, be counted when establishing a quorum, or affect the ratio of majority to minority members.\nSix committees allow ex officio members to vote on matters before a subcommittee; Nine committees prohibit ex officio members from voting on subcommittees; Four committees allow ex officio members to be counted when determining a quorum; Eight committees prevent ex officio members from being counted for this purpose; Three committees count ex officio members of subcommittees when determining the ratio of majority to minority members; Three committees do not count ex officio members for this purpose; One committee does not address these matters related to ex officio subcommittee service; and Five committees did not explicitly address the issue of ex officio membership of subcommittees.",
"Nine committees allow other members of the committee to sit with a subcommittee on which the committee member does not serve. Six allow committee members to join subcommittee hearings and meetings; three allow committee members to join only subcommittee hearings. For hearings, these committees allow committee members to ask questions of witnesses—by committee rule, with the permission of the subcommittee by vote, with permission of the subcommittee by unanimous consent, with the agreement of the subcommittee chair in consultation with the subcommittee ranking minority member, or with the chair's permission.\nSeven committees' rules proscribe committee members who are sitting with a subcommittee from voting, being counted for a quorum, or raising a point of order. Two committees' rules in addition disallow committee members from offering amendments at markups.",
"Under some committees' rules, committee members might also be temporarily assigned to a subcommittee. The Education and the Workforce Committee allows its chair to make temporary assignments to subcommittees for field hearings so that a quorum may be made or to allow a member not on a subcommittee to participate in a hearing. The Oversight and Government Reform Committee also allows its chair to make temporary assignments to subcommittees for field hearings so that a quorum may be made. The rule disallows a member with a temporary assignment to vote. Several committees' rules state that a subcommittee vacancy does not interrupt the work of the subcommittee. The Agriculture Committee's rules state that the committee chair may set the dates of a subcommittee's hearings and meetings during a vacancy of the subcommittee chairmanship.",
"Four committees have rules applicable to participation on the committee of Representatives who are not committee members. The Foreign Affairs and Veterans' Affairs Committees allow Representatives who are not committee members to sit with subcommittees at hearings by unanimous consent of the subcommittee. The Member may question witnesses after all subcommittee members have done so. The Small Business Committee requires a Representative who would like to participate in a hearing to notify the chair and ranking minority member 24 hours in advance of the hearing. The Science, Space, and Technology Committee allows Representatives not on the committee to ask questions of witnesses at hearings with the permission of the chair.",
"Several committees' rules contain a specific provision requiring a subcommittee chair to report promptly or to notify the committee or the committee's chair and ranking minority member of the subcommittee's action on a matter. In addition, a rule of the Agriculture Committee states that the majority staff director must notify all committee members of a subcommittee reporting. A rule of the Education and the Workforce Committee allows a majority of a subcommittee to force the subcommittee chair to file a bill or other matter favorably reported by the subcommittee.\nA rule of the Homeland Security Committee treats a tie vote in subcommittee on a motion to report or forward a measure to the full committee as a vote to order a measure reported without recommendation. A rule of the Foreign Affairs Committee requires a majority of a subcommittee to be \"actually present\" to report a measure or recommendation to the full committee.\nThe Education and the Workforce Committee requires a subcommittee to provide a section-by-section analysis of a reported bill. The chair may also direct the subcommittee to provide a Ramseyer-type analysis (a comparative analysis showing proposed changes to existing law). The Transportation and Infrastructure Committee's rules require, where practicable, both of these analyses to accompany a subcommittee-reported measure. The Science, Space, and Technology Committee explicitly allows the chair to direct a subcommittee on the form of a report to the committee. Several committees' rules direct subcommittees to provide the committee with records of roll-call votes and other documentation.\nThe Ways and Means Committee requires four analyses to accompany a measure reported by a subcommittee: a Ramseyer-type analysis, a section-by-section analysis, a section-by-section justification, and a draft statement of the measure's budget effects consistent with the requirements for committee-reported measures.",
"In addition, some committees' rules contain a layover period before the committee may consider subcommittee recommendations. The Agriculture Committee has a two-day layover requirement that may be waived by the chair or a committee majority. The Ways and Means Committee also has a two-day layover rule, but the rule does not contain a waiver provision. The Armed Services Committee has a three-day layover that may be waived by a committee majority vote. The two-day layover rule of the Natural Resources Committee prohibits committee consideration before every committee member who requests it has a copy of the subcommittee-reported measure. The committee by majority vote may waive tis requirement.\nThe Education and the Workforce and Transportation and Infrastructure Committees have 48-hour layover rules that begin to toll once all committee members receive the reported measure or matter. The chair of the Transportation Committee may waive the layover rule. The Science, Space, and Technology Committee also has a 48-hour layover rule. The rule in addition requires printed hearings to be made available to committee members, although the chair in consultation with the ranking minority member may waive that provision.",
"Table 1 compares committee rules in the 114 th Congress across the 21 standing House committees on referring measures or matters to subcommittees. Committees are listed in alphabetical order in the left column, except for the Permanent Select Committee on Intelligence, which appears last. The first two rows of the headings contain key terms describing committees' rules, as explained immediately below. A check in a box indicates that a committee adopted a rule or a closely related variation on it. An empty box indicates that a committee did not address that subject, although a footnote may appear in an otherwise empty box to explain a committee rule different from the choices exercised by other committees. Certain checks are also footnoted to offer additional detail on a particular committee's rule. In some cases, a single footnote is used to offer additional detail on a rule that appears in more than one committee's rules.\nThe following list explains the headings in Table 1 :\nChair Must/May Refer to Subcommittee—indicates whether a chair must refer measures or matters to the subcommittee(s) of jurisdiction or whether the chair may decide to retain a measure or matter for consideration by the committee. Time Allowed before Referral—indicates whether committee rules require that a chair decide to refer or retain legislation within two weeks of receipt by the committee, or if the referring or retention may simply be done \"expeditiously.\" Chair May Refer to ____ Subcommittee(s)—indicates whether committee rules explicitly grant a chair authority to refer legislation to one or more than one (\"several\") subcommittees; authority to refer to several subcommittees includes the authority to refer to one subcommittee. Authority to Reassign or Discharge—refers to whether authority to reassign measures or matters, or discharge a subcommittee of its consideration of a measure or matter, rests with a chair or with the majority of a committee. A check in both boxes indicates that both the chair and the committee have this authority.\nCommittee rules pertaining to scheduling hearings and meetings of subcommittees appear below at \" Scheduling Subcommittee Hearings and Meetings ,\" under \" Scheduling Committees' Meetings and Hearings .\"",
"",
"Committees meet pursuant to House and individual committee rules regarding notice, the availability of documents, open-meeting requirements, and quorums (see \" Quorum Requirements \" below). Rule XI, clause 2(i) prohibits committees from meeting while the House and Senate are in a joint session or during a recess when a joint meeting is in progress.\nRule XI, clause 2(m)(1)(A) authorizes committees to meet and hold hearings, whether the House is in session or has recessed or adjourned, providing the meeting is in the United States. Rule XI, clause 6 allows business to be carried over to a successive session of Congress, normally to the second session from the first session.",
"Rule XI, clause 2(b) requires standing committees to establish regular meeting days not less frequently than monthly for the consideration of committee business. Clause 2(b) also provides that a committee is to meet on its regular meeting day to consider legislation pending before the committee or for transacting other committee business if notice is given as provided in clause 2(g)(3). Nearly every committee has given the chair the authority to cancel a meeting at his or her discretion. Clause 2(c) grants the chair authority to call additional meetings, which make up the majority of committee meetings and might be held several times a month. A committee may also adopt rules pertaining to additional meetings. (See, below, \" Notice and Documents .\") Committees' rules implementing these House rules are analyzed in Table 2 .\nAlthough there is no requirement that committees meet on their regular meeting day, an established day might provide a determined minority an opportunity to seek to force a meeting. Clause 2(c) also establishes a procedure by which committee members, including minority members, may request or call additional meetings. (See, below, \" Members' Initiative to Meet to Consider a Measure .\")",
"Rule XI, clause 2(d) directs committee chairs to designate vice chairs of their committee and its subcommittees, and authorizes a vice chair to preside in the absence of a chair. A committee or subcommittee member appointed as a vice chair does not have to be the most senior member. In the absence of both a chair and vice chair, the ranking majority member present is authorized to preside.",
"Table 2 compares committee rules in the 114 th Congress across the 21 standing House committees for regularly scheduled meetings, scheduling additional meetings, and cancelling meetings. Committees are listed in alphabetical order in the left column, except for the Permanent Select Committee on Intelligence, which appears last. The first three rows of the headings contain key terms describing committees' rules, as explained immediately below. A check in a box indicates that that committee adopted a rule or a closely related variation on it. An empty box indicates that a committee did not address that subject, although a footnote may appear in an otherwise empty box to explain a committee rule different from the choices exercised by other committees. Certain checks are footnoted to offer additional detail on a particular committee's rule. In some cases, a single footnote is used to offer additional detail on a rule that appears in more than one committee's rules.\nThe following list explains the headings in Table 2 :\nDay—refers to the day of the week a committee rule establishes as the committee's regular meeting day. The numbers in the third row of the headings indicate, for example, the first Tuesday of the month, second Tuesday of the month, and so on. Committees with a check in every box for one weekday are scheduled to meet weekly. Committees' rules may formally dispense with the regular meeting if the House is not in session. Time—for committees that specify a meeting time in their rules. Additional—refers to the authority that rests with the chair in a committee's rules to call additional meetings. Cancel—refers to committee rules that allow a chair to cancel meetings at his or her discretion. The committees indicated in the second column have rules that state the chair should determine that there is no business to be considered in canceling a scheduled meeting.",
"",
"If a chair has not called a meeting on a measure or matter, Rule XI, clause 2(c)(2) allows a majority of a committee's membership to convene a meeting. Under this rule, any three members of a committee in a letter to the chair may request a meeting of the committee to consider a specific measure or matter. The chair has three calendar days to call the requested meeting, which must be scheduled within seven calendar days after the request is filed. If the chair does not act, a majority of committee members may file a written notice in the committee offices ordering the meeting to occur and specifying the time of the meeting and the subject matter. If a majority files the notice, the committee clerk is then required to inform all committee members of the meeting, which will be held at the time identified in the notice.\nMany committees repeat or reference this rule in their own rules.\nThis authority may be employed as a tactic by the minority, or by members having a minority policy viewpoint, in seeking action on a measure or matter. Such a tactic is unlikely to be successful if the chair has the backing of his or her party's members on the committee, but it might prove suasive in obtaining an assurance from the chair to schedule the desired business at a future date. A chair might also act if he or she believes that his own party's members are sympathetic to action on the subject at issue.",
"Rule XI, clause 2(c)(1) authorizes committees to adopt procedures for scheduling \"additional and special\" meetings; many committee meetings are scheduled pursuant to these committee rules. Under this authorization, committees minimally adopt \"notice requirements\" in their rules to inform committee members of a meeting a certain number of hours or days in advance of a meeting and of the agenda for the meeting.\nIn implementing House rules, committees distinguish between meetings , including markups, and hearings in their rules' notice requirements. Rule XI, clause 2(g)(3) states that \"a committee meeting may not commence earlier than the third day on which members have notice thereof.\" This time is a minimum requirement; committees may adopt a rule requiring notice of more than three days.\nRule XI, clause 2(g)(3) also requires a committee chair to publicly announce the date, place, and subject matter of a hearing at least one week in advance of the hearing.\nPursuant to this same subparagraph (3), should a chair determine that there is \"good cause\" to shorten the notice for a meeting or hearing, he or she may do so either by obtaining the concurrence of the ranking minority member or by obtaining a majority vote of the committee, a quorum being present. A few committees' rules specifically allow only one of these options. A number of committees provide for waivers of their rules on distributing agendas and other documents, or alternate schedules for doing so, when notice is shortened.\nA notice of a meeting or hearing is to appear \"promptly\" in the Daily Digest of the Congressional Record and to be published electronically.",
"The notice requirement in a committee's rules might spell out a role for the ranking minority member, such as his or her concurrence in the chair's initiative or a requirement that the chair consult with or notify the ranking minority member. Committees might also allow for emergency meetings to be scheduled at the chair's discretion, such as the Rules Committee; or at the chair's initiative with the concurrence of the ranking minority member, such as the Judiciary Committee; or after the chair's consultation with or notification to the ranking minority member, such as the Veterans' Affairs Committee. Under their rules, committees by vote might also make scheduling decisions. Some committees have specific scheduling requirements applicable to their subcommittees, as discussed immediately below.",
"Committees have turned by practice to electronic notification in addition to or instead of written notification. Although some committees' rules do not make a distinction, committee chairs may clarify what a committee's practice will be, in the course of approval of the committee's rules or in a later committee meeting. If a committee is not of one understanding, a member could make a point of order of insufficient notice based on a violation of a committee's rules.",
"Committee rules might also list specific documents to be made available with the notice. For example, in order to avoid reading in its entirety a bill or resolution to be marked up, committees must supply a copy of a listed measure. With electronic notification, a committee might provide an electronic link to the measure to be marked up rather than a copy of it. Rule XI, clause 2(g)(4) specifies that the text of legislation to be marked up must be available at least 24 hours in advance of the markup and must be publicly available in electronic form. If a meeting is held sooner than 24 hours, with the concurrence of the ranking minority member or by a majority vote of the committee as provided in Rule XI, clause 2(g)(3)(B), the legislative text must accompany the announcement.\nCommittees have added interpretative provisions or requirements to the notice requirements of House rules. A rule of the House Administration Committee states that advance availability also applies to resolutions and regulations to be considered by the committee. A rule of the Budget Committee provides that the markup text is the chair's mark (or other material that will be considered by the committee) for a concurrent resolution on the budget. This rule also allows the chair with the concurrence of the ranking minority member to waive the 24-hour requirement for bills and resolutions.\nThe Appropriations Committee's notice rule requires texts, including those of reports, to be made available three days in advance, excluding weekend days and holidays unless the House is in session. The chair and ranking minority member may concur to waive this requirement.\nA rule of the Homeland Security Committee requires markup texts to be made available 48 hours in advance and a substitute for an amendment in the nature of a substitute, to be available 24 hours in advance. A rule of the Veterans' Affairs Committee also requires markup texts to be made available 48 hours in advance, and requires all amendments to be provided 24 hours in advance. Amendments not so submitted are not in order, although the requirement may be waived by unanimous consent.\nThe Science, Space, and Technology Committee also makes markup texts available 48 hours in advance and requests that amendments be submitted to the chair and ranking minority member at least 24 hours in advance of a meeting. The rule indicates that the chair may oppose any amendment not submitted in advance.\nA rule of the Judiciary Committee also requires markup texts to be made available 48 hours in advance and, by committee rule rather than practice, requests that amendments be submitted to the chair and ranking minority member at least 24 hours in advance of a meeting, to which the chair may give priority in a markup. The Education and the Workforce Committee and the Oversight and Government Reform Committee have the same rule applicable to amendments. The Education and the Workforce Committee also requires reports that will be considered to be available to committee members 48 hours in advance of a meeting.\nA rule of the Small Business Committee makes the provision of markup texts 48 hours in advance a target, but indicates the committee rule is to provide the texts 24 hours in advance.\nA rule of the Agriculture Committee allows chairs of the committee and its subcommittees to request amendments and motions to be submitted 24 hours in advance and asks the cooperation of members.\nRule XI, clause 1(a)(2)(A)(ii) allows a privileged, nondebatable motion in committee to dispense with the first (full) reading of a measure on the agenda if printed copies of the measure are available. Committees typically interpret the availability criterion to be met by distributing the measure (or link to the measure) with the meeting notice.",
"A committee might also have a rule on documents to be made available to committee members prior to a hearing. For example, a rule of the Natural Resources Committee requires that, in addition to a tentative witness list made available as soon as practicable, the majority staff make publicly available to the extent practicable a memorandum explaining the subject matter of the hearing, including relevant legislative reports and other necessary material. The rule continues that the chair make available to committee members department and agency reports on the subject matter \"as they are received.\" The Transportation and Infrastructure Committee's rule is similar.\nThe Small Business Committee rule requires the chair 48 hours in advance to provide a memorandum to committee members on the subject matter of the hearing and to also provide related reports from departments and agencies. These reports may be withheld by the chair in consultation with the ranking minority member. A rule of the Agriculture Committee also requires, to the extent practicable upon the announcement of a hearing, a summary of the subject matter, including legislative reports and relevant department and agency reports, to be distributed to committee members.\nA rule of the Energy and Commerce Committee requires a memorandum on the purpose of a hearing and the list of witnesses be distributed to members 48 hours prior to the hearing. The Education and the Workforce and Homeland Security Committees also require their witness lists to be available 48 hours prior to a hearing. The Oversight and Government Reform Committee's rule requires a memorandum on the purpose of a hearing, a list of witnesses, and the reasons for witnesses' appearance to be distributed to committee members 3 days prior to a hearing.\nA rule of the Financial Services Committee prohibits a witness list to be modified less than 24 hours before a hearing, unless the ranking minority member concurs in the change.\n(See also, below, \" Advance Testimony and \"Truth in Testimony\" \" under \" Hearings Procedures .\")\nA defective notice provides opponents with an opportunity to employ procedural roadblocks to a chair's desired action and schedule.",
"Committees' rules vary greatly in how they address scheduling of subcommittees' hearings and meetings. Most committees, however, express at least a desire to avoid subcommittee hearings and meetings that conflict with the schedules of other subcommittees or, in particular, the parent committee. Some committees' rules do more than exhort subcommittees to coordinate:\nsix committees' rules indicate that subcommittees may not meet when the full committee is meeting; one committee's rules, those of Education and the Workforce, provide that the full committee chair designate dates on which specific subcommittees could meet; and six committees' rules require the full committee chair to approve scheduling of subcommittee meetings.\nThe rules of a number of committees that do not require the committee chair's approval to schedule a subcommittee hearing or meeting provide for consultation by a subcommittee chair with the committee chair before a subcommittee meeting is scheduled, and may require additional consultation as follows:\nseven committees require the consultations by a subcommittee chair with the full committee chair and all subcommittee chairs; one committee, Agriculture, requires the full committee and the subcommittee chair to consult with other subcommittee chairs and relevant ranking minority members; another committee, Foreign Affairs, delegates this breadth of consultation to the subcommittee chair; one committee, Armed Services, requires a subcommittee chair to consult the committee chair, other subcommittee chairs, and the subcommittee ranking minority member; and two committees' rules require a subcommittee chair to consult with the full committee chair.\nOne committee's rules, those of the Oversight and Government Reform Committee, require a subcommittee chair to notify the full committee chair two weeks in advance of a hearing and to provide details on witnesses. An Ethics subcommittee meets at the discretion of its chair.",
"To schedule a field hearing, the Agriculture Committee requires a subcommittee chair to consult the committee chair, other subcommittee chairs, and the subcommittee's ranking minority member. To schedule a field hearing, or any hearing or meeting during a recess or adjournment of the House, the Education and the Workforce Committee requires the committee chair's authorization. Such subcommittee meetings are also subject to a 14-day notice rule. A subcommittee chair on the Foreign Affairs Committee must consult the subcommittee's ranking minority member to schedule a field hearing or to schedule a hearing in Washington, DC, before the first House vote or after the last House vote of the legislative week. The Small Business Committee permits subcommittees to hold field hearings, the scheduling of which is overlapping.",
"Pursuant to Rule XI, clause 2(g)(1), committee and subcommittee meetings , including markups, must be open to the public and to media coverage. To hold an executive, or closed, markup session, a committee or subcommittee must vote in open session, with a majority present and by recorded vote, to close a meeting on \"all or part of the remainder of the meeting on that day. \" (Emphasis added.) A motion to close a committee meeting is not debatable. The rule states that a meeting may be closed only for one of four reasons:\n\"disclosure of matters to be considered would endanger national security\"; \"disclosure of matters to be considered … would compromise sensitive law enforcement information\"; \"disclosure of matters to be considered … would tend to defame, degrade, or incriminate any person\"; or \"disclosure of matters to be considered … otherwise would violate a law or rule of the House.\"\nRule XI, clause 2(g)(1) also lists persons permitted at an executive session as members of the committee and others \"as the committee may authorize\": other Members, including the Delegates and Resident Commissioner, not on the committee; congressional staff; and departmental representatives. Several committees' rules contain additional detail to this House rule; for example, the Armed Services Committee specifies staff who may attend a closed hearing or meeting.\nRule XI, clause 2(g)(2) applies the same requirements to hearings , with a different procedure applicable to the third reason listed above. First, if it is asserted by a committee member that testimony may \"tend to defame, degrade, or incriminate any person\" or by a witness that evidence may \"tend to defame, degrade, or incriminate the witness,\" the committee by a majority vote makes a determination in executive session under Rule XI, clause 2(k)(5) of that assertion, the number of members required under committee rules for the receipt of testimony being present. If the vote determines that the testimony would tend to defame, degrade, or incriminate any person, the testimony must be received in executive session. If the committee determines, a majority being present, that the testimony will not tend to defame, degrade, or incriminate any person, then the testimony must be received in open session. (See also \" Closing a Hearing Based on a Witness's Testimony ,\" below, under \" Hearings Procedures \".)\nIn implementing House Rule X, cl. 11(d)(2) in its rules, the Intelligence Committee allows a vote to close a hearing so long as one member of the minority is present and votes. The committee's rules also state that briefings are closed to the public.\nA Member, Delegate, or the Resident Commissioner may not be excluded from a hearing as an observer or nonparticipant unless the House by a majority vote closes one or more hearings to the membership (Rule XI, clause 2(g)(2)(C)). (See, above, \" Subcommittee Ratios and Ex Officio Membership \" under \" Subcommittees .\")\nA committee by the same procedure may also vote to close a hearing for one additional day, although the Committees on Appropriations, Armed Services, and Intelligence may vote to close up to five \"additional, consecutive\" days of hearings.\nThere are generally three nondebatable motions available to close a committee's business: (1) a motion to close; (2) a motion to close pending discussion; and (3) a motion to close proceedings for an additional day.\nThere may be unanimity among committee members on the need for an executive session. However, tactical use could be made of any of these motions to delay proceedings, to identify differences among committee members, or for another purpose.\nRule XI, clause 2(k)(7) allows testimony received in an executive committee session to be released only by a vote of the committee, a majority being present. (See also \" Record Keeping and Public Access ,\" below.)",
"In response to campaigns for openness and changes in technology, House rules have been regularly amended over several decades to increase public access to hearings and meetings. Media access has been an important component of public access.\nRule XI, clause 4 regulates audio and visual coverage of open committee meetings and hearings and establishes procedures to be followed in the conduct of such coverage. Committees are directed to adopt rules implementing provisions in this clause, which most committees accomplish by referencing the clause or by duplicating it in their rules. Some features of this rule include—\nradio and television recordings made under the authority of this rule provision are not to be used for partisan political campaign purposes; individuals at meetings where audio and visual coverage is allowed are to conduct themselves with \"dignity, propriety, courtesy, and decorum\" so as not to \"distort the objects and purposes\" of the meeting or to \"cast discredit\" on the House, committee, or members; meetings open to the public are open to audio and visual coverage; generally, not fewer than two television cameras and two still cameras must be allowed; live coverage must be presented without commercial sponsorship; television cameras may not obstruct the line of vision between any witness and any committee member; equipment may be installed only before a meeting commences and removed only after it concludes; television media may install additional lighting, but other supplemental lighting is not allowed; photographers may not occupy the space between the witness table and committee members during a meeting; media representatives must be accredited by the appropriate congressional correspondents committee; and allocation of television media positions and of photographers' positions is made in accordance with guidelines of the appropriate congressional correspondents committees.",
"Committee quorum rules are most often expressed as a portion of a committee's (or subcommittee's) membership or as a specific number. A point of order would lie in committee against a committee or subcommittee proceeding in the absence of a quorum. A chair beginning or continuing a hearing, or, especially, a markup with a quorum but with a majority of minority members, could allow challenges to be mounted by the hearing's or markup's opponents. The failure of a committee to have a majority present to report a measure or matter, as required by House rule, will likely necessitate the committee reassembling with the proper quorum to vote again on the motion to report.",
"Rule XI, clause 2(h)(3) sets the minimum quorum for committees (except the Appropriations, Budget, and Ways and Means Committees) to conduct business at not less than one-third of a committee's members and allows committees in their rules to set a higher quorum. Most committees have explicitly or implicitly adopted the House rule as their quorum rule for business meetings such as markups, although the Education and the Workforce Committee, Ethics Committee, and Natural Resources Committee require a majority to amend the committee's rules, and the Transportation and Infrastructure Committee requires a majority for approval of five specific business items. A rule of the Natural Resources Committee contains a procedure for conducting a call of the roll when the committee needs to ascertain the presence of a quorum.\nThe Budget, Ethics, Rules, Veterans' Affairs, and Ways and Means Committees require a majority of their members to conduct business.\nPursuant to Rule XI, clause 2(h)(1), however, a majority of any committee must be \"actually present\" to report a measure or recommendation. Pursuant to Rule XI, clause 2(g)(1), a majority must also be present to close a business meeting, as explained above (see \" Open and Closed Meetings \"), or, pursuant to Rule XI, clause 2(k)(7), to release testimony received in executive session. Pursuant to Rule XI, clause 2(m)(3), a majority must be present to authorize and issue a subpoena, unless, as allowed by this rule, a committee has in its rules delegated this authority to its chair. (See, below, \" Subpoenas .\")",
"All committees but one have adopted the House quorum rule of two members to take testimony and receive evidence (Rule XI, clause 2(h)(2)). The Rules Committee has a quorum requirement of five members to receive testimony on requests for special rules and three members to receive testimony on measures or matters within the original jurisdiction of the committee.\nSeveral committees require or encourage the participation of minority-party members in achieving a quorum for a hearing. The Small Business Committees requires the presence of a minority-party member, although the requirement may be waived after a waiting period. The Ways and Means and Foreign Affairs Committees have rules that encourage the presence of minority-party members. The Intelligence Committee's rules require that at least one member present to receive testimony be a member of the majority party.\nA rule of the Homeland Security Committee requires consultation between the majority and minority staff on the scheduling of meetings and hearings to \"ensure that a quorum ... will include at least one Minority Member of the Committee.\"",
"Quorums that are no greater than required by House rules tend to favor the majority, whose Members generally have more committee assignments than minority Members have. Such quorums also allow committees to proceed with business with less risk of being unable to assemble or keep a quorum.\nRequiring or encouraging minority-member participation in a hearing favors the minority, and might be seen as contributing to comity among the membership of a committee. A refusal by any minority member of a committee to attend a hearing could also be a tactic available to the minority if it disputes the subject, witnesses, or other attributes of a hearing.",
"Committee rules, supplemented by committee practices and ad hoc unanimous consent agreements, typically allow and regulate opening statements—short, initial statements made orally or submitted in writing by committee members on the business for which a chair has called a meeting or hearing. A committee's rules adopted at the beginning of a Congress may preclude oral opening statements or restrict them, often to oral statements made only by the chair and ranking minority member of the committee or a subcommittee. Some committees' practices also allow the relevant subcommittee chair and ranking minority member to make oral opening statements at full-committee markups, and allow a full committee's chair and ranking minority member, who serve ex officio on some or all subcommittees, to make oral opening statements at subcommittee meetings.\nRules, practices, or unanimous consent agreements normally require equivalency in treatment between the majority and minority in oral opening statements where a committee allows some discretion to a chair in permitting opening statements. By committee rule or practice or by unanimous consent, other committee members are allowed to submit opening statements in writing for the record; these statements are not read aloud.\nCommittee rules or practices may restrict oral opening statements to five minutes. Committees that allow more members than the chair and ranking minority member to make oral opening statements may restrict opening statements to less time, for example, three minutes or one minute, as the rules of Energy and Commerce Committee provide in certain circumstances. Committees as an alternative might also cap the total time for opening statements, as the rules of the Financial Services Committee and the Science, Space, and Technology Committee do. The Science Committee, nonetheless, makes five minutes available to the ex officio members of its subcommittees if such a member requests it.\nThe Education and the Workforce Committee by rule disallows oral opening statements. If, however, the chair wishes to make an oral statement, the ranking minority member is also entitled to make one. A rule of the Natural Resources Committee is similar, but extends the prerogative of an oral opening statement to the vice chair as well. If the vice chair chooses to make an oral statement, the ranking minority member may designate a minority member to also speak.\nA rule of the Homeland Security Committee allows the chair with the concurrence of the ranking minority member to permit opening statements in addition to their own.\nAt the commencement of a hearing, a chair must announce the \"subject\" of a hearing (Rule XI, clause 2(k)(1)). Chairs may incorporate this requirement into their own opening statements. (See also, above, \" Notice and Documents \" under \" Scheduling Committees' Meetings and Hearings .\")",
"A standing committee is authorized in House rules to \"hold such hearings as it considers necessary.\" (Rule XI, clause 2(m)(1)(A).) At the commencement of a hearing, a chair must announce the \"subject\" of the hearing (Rule XI, clause 2(k)(1)). (See also, above, \" Notice and Documents \" under \" Scheduling Committees' Meetings and Hearings .\")\nPursuant to Rule XI, clause 2(k)(4), a chair is charged with keeping order in a hearing, and empowered to punish \"breaches of order and decorum.\" A chair's enforcement may be directed at the actions of anyone in the hearing room, including the \"professional ethics\" of a witness's counsel. The chair may punish breaches of order and decorum by censure and by exclusion of the individual from the hearing. The committee may cite an individual to the House for contempt. (See also, above, \" Media Coverage \" under \" Scheduling Committees' Meetings and Hearings .\")\nPursuant to Rule XI, clause 2(m)(2), the chair of a committee or a member designated by the chair may administer oaths to witnesses.\nAs explained above, Rule XI, clause 2(h)(2) requires a quorum of two members to receive testimony. (See \" Hearings ,\" under \" Quorum Requirements .\")\nHearings rules specifically related to witnesses, including presenting testimony in executive session, are discussed below (see \" Witnesses \"). Additional discussion of conducting a hearing in executive session appears above (see \" Open and Closed Meetings \" under \" Scheduling Committees' Meetings and Hearings .\").\nSee generally the discussion above of rules applicable to meetings and hearings (\" Scheduling Committees' Meetings and Hearings .\")",
"Table 3 summarizes committee-by-committee several components of committees' rules in the 114 th Congress related to hearings. These components are the quorum needed for hearings, how time allocated for questioning witnesses may be extended, and the order of recognition to question witnesses—across the 21 standing House committees. Committees are listed in alphabetical order in the left column, with the Permanent Select Committee on Intelligence listed last. The first four rows of the headings contain key terms describing committees' rules, as explained immediately below. A check in a box indicates that that committee adopted a rule or a closely related variation on it. An empty box indicates that a committee did not address that subject in its rules, although a footnote may appear in an otherwise empty box to explain a committee rule different from the choices exercised by other committees. Certain checks are footnoted to offer additional detail on a particular committee's rule. In some cases, a single footnote is used to offer additional detail on a rule that appears in more than one committee's rules.\nThe following list explains the headings in Table 3 :\nQuorum (Two)—indicates that a committee has a rule requiring at least two members to be present in order to receive testimony: One Minority Member—indicates whether an \"effort\" must be made to have a minority member at a hearing or whether a minority member \"must\" be in attendance for a hearing to proceed. Extended Time to Question Witnesses—indicates how extended time for questioning witnesses may be obtained: Chair—the chair may grant a member additional time for questioning a witness: Ranking Minority Member (RMM)—the chair must \"Consult\" with the RMM before granting additional time for questioning witnesses or the RMM must \"Concur\" in the chair's request. Time—indicates the maximum amount of time that the chair may extend the questioning of witnesses: \"1 Hour\" or \"½ Hour\" for additional questioning of witnesses. Equal—indicates that committee rules state that, should extended time for questioning witnesses be granted, the time must be divided equally between the majority and minority, reflecting a provision of House rules.. Staff Questioning—some committee rules allow time for questioning of witnesses to be extended for designated staff members of each party. Order of Recognition for Questioning Witnesses—refers to how committee rules specify members will be recognized for questioning a witness: Seniority at Start—members present at the start of a hearing will be recognized in order of seniority. Arrival Order—members arriving after the start of a hearing will be recognized in order of arrival. Alternate—the chair alternates between members of the majority and minority parties when recognizing members for questioning witnesses. Consider Ratio—the chair \"may\" or \"shall\" consider the ratio of majority to minority members when recognizing members for questioning witnesses. Chair/RMM—the chair and RMM are by rule recognized to question witnesses before other members are recognized.",
"In practice, the chair of a committee (or subcommittee) determines most or all witnesses to be invited to a hearing, and issues invitations over his or her signature. The chair also plans the order of witnesses' appearance, panels, time allocations, and other matters. Under any agreement between the chair and ranking minority member on minority witnesses, the chair invites the minority's witnesses as well.\nThe Ways and Means Committee has a unique rule that oral and written testimony and statements will be accepted only from persons who are U.S. citizens or from entities organized under the laws of the United States (or the states or the District of Columbia), although the chair may make exceptions. In addition, the committee may accept a written statement from a non-citizen if it is submitted by written request by a Member of Congress.\nPrior to a witness delivering testimony, the chair introduces the witness. A chair may also allow a committee member to briefly introduce a witness from the member's state or district.\nA witness is entitled to a copy of a committee's rules upon request. A witness is entitled to be accompanied by counsel \"for the purpose of [advice] concerning [his or her] constitutional rights.\" (Rule XI, clause 2(k)(2) and (3), respectively.) A witness may also submit a \"brief and pertinent\" written sworn statement for inclusion in the record. Whether to accept such a statement, and the determination of its pertinence, is within the sole discretion of the committee (clause 2(k)(8)). Finally, a witness may obtain a transcript of his or her testimony given in public session, but the witness may obtain a transcript of testimony given in executive session only \"when authorized by the committee.\" (Rule XI, clause 2(k)(9).)\nPursuant to Rule XI, clause 2(m)(2), the chair of a committee, or a member designated by the chair, may administer oaths to witnesses.\nThe Committee on House Administration, in its role regulating spending by committee and Member offices, has indicated that reimbursement of travel expenses incurred by a witness is considered an \"extraordinary measure\" and will only be made when authorized by a committee chair. When being reimbursed by a committee, a witness travels at the government rate. If a witness resides outside of the United States, including its territories and possessions, reimbursement may be made to the witness for transportation expenses to and from the United States.\nThe Committee on Foreign Affairs has a rule that allows witnesses to present testimony other than in person. The rule states that, if a witness is presenting testimony other than in person, the chair of the full committee or subcommittee must notify the relevant ranking minority member no later than 48 hours beforehand. Witnesses testifying remotely may not present their testimony in an audio-only medium without concurrence of the chair and ranking minority member. The relevant chair must make reasonable efforts to verify the identity of any witness participating remotely. Another rule of the committee anticipates that some witnesses may need a translator, but the rule requires the witness to identify the translator in conjunction with the submission of advance testimony.\nThe chair of the Intelligence Committee has discretion under the committee's rules to withhold the name of a witness until a hearing or indefinitely.",
"Rule XI, clause 2(g)(5) directs committees, to the extent practicable, to require witnesses to submit advance written statements of their testimony and to confine their oral presentation to a brief summary of their written testimony. Several committees in the 114 th Congress reiterated this language in their rules. Committees customarily allow witnesses five minutes to summarize their testimony. (See \" Questioning Witnesses ,\" immediately below.)\nIn addition, many committees specify in their rules that testimony must be received 24 or 48 hours in advance. The Agriculture, Energy and Commerce, Natural Resources, and Transportation and Infrastructure Committees' rules, on the other hand, express time as \"two working days,\" and the Financial Services and Foreign Affairs Committees provide for \"two business days.\" The Appropriations Committee's rules are silent on this matter.\nThe Financial Services specifically requires a witness who wishes to present information in an electronic format to transmit the information one business day prior to a hearing.\nSome committees specifically authorize the chair, the chair after consultation with the ranking minority member, or the committee by majority vote to waive advance testimony requirements. Some committees provide waivers of various rules when there is less notice than one week.\nMost committees require that witnesses submit a sufficient number of copies of their advance statements for committee members, and some committees require electronic files to be submitted as well. Some committees set a goal or target for distribution of advance testimony to committee or subcommittee members, typically 24 hours in advance of a hearing.\nPursuant to clause 2(g)(5), under a provision applicable to a witness who is not a government employee, a witness must submit a curriculum vitae and a disclosure of \"any Federal grants or contracts, or contracts or payments originating with a foreign government, received during the current calendar year or either of the two previous calendar years by the witness or by an entity represented by the witness and related to the subject matter of the hearing.\" House rules require that these witness disclosures, popularly known as \"truth in testimony,\" be made available in electronic form \"not later than one day after the witness appears\" before a committee. A witness's private information is to be redacted from publication.\nWhile a number of committees state in their rules that advance statements and truth-in-testimony information \"shall\" be submitted, seven committees further indicate that failing to comply with submission deadlines could or would result in a witness being denied the opportunity to testify. The Homeland Security and Ways and Means Committees' rules state that failure to comply with advance testimony requirements could result in a witness being denied the opportunity to testify in person. The Homeland Security Committee's rules state that the failure could result in the witness's written statement being excluded from the hearing record.\nThe Natural Resources Committee's rules indicate that failure to comply with the truth-in-testimony requirement could result in disallowing either oral testimony or written testimony or both. A rule of the Transportation and Infrastructure Committee could result in disallowing oral or written testimony or both for failure to submit advance testimony. The Small Business Committee's rules indicate that failure to comply with either requirement could result in disallowing oral or written testimony or both.\nThe Armed Services Committee allows a chair, with the concurrence of the appropriate ranking minority member, to exclude a witness if the witness's testimony has not been timely submitted. A rule of the Foreign Affairs Committee allows a witness who is not a federal official to seek waiver of advance submission of testimony through a written explanation. In the absence of the explanation, the witness is \"released\" from testifying unless a majority of the committee votes to accept the witness's testimony.",
"Rule XI, clause 2(j)(2) provides a principal and two alternative committee procedures for questioning witnesses. The principal procedure is to allow each committee member five minutes to question a witness or panel of witnesses until each member has had five minutes' time for questioning. Under this paragraph, a committee may also adopt a rule or motion that allows a specified number of committee members longer than five minutes to question a witness, with time allocated equally between the majority and minority and not in total to exceed an hour. This paragraph also allows committees to adopt a rule or motion permitting committee staff to question a witness, with time allocated equally between the majority and minority and not in total to exceed an hour. This additional time for questioning by committee members or staff is referred to as \"extended questioning\" or \"extended time for questioning.\"\nCommittees also use unanimous consent to achieve additional variations on how members or staff question witnesses. In addition, a committee member, once recognized, might also yield to another committee member to allow that individual to jump ahead of other members in asking questions or to have more than one opportunity to question a witness or panel of witnesses.\nIn practice, witnesses make brief oral statements—customarily five minutes—prior to questioning. These oral statements are intended to provide a summary of their written statements. Most committees provide for this practice in their rules.\nAll committees have explicitly or implicitly adopted the House rule allowing committee members five minutes each to question witnesses, and nearly all committees with a rule include the provision that five minutes for each member is allowed until all members have had one opportunity to question witnesses. While in practice many committees do not limit the chair and ranking minority member to five minutes for questioning witnesses, only the Armed Services Committee explicitly exempts these committee leaders from the time limit.",
"Committee rules on subsequent rounds of questioning and on extended times for questioning vary. The rules for the Agriculture, Armed Services, and Foreign Affairs Committees describe additional rounds of questioning. The Agriculture Committee's rules state that the chair of the committee or a subcommittee may allow for additional rounds after giving consideration to the importance of the subject matter and the length of time available. The rules for the Armed Services Committee give the chair of the committee or subcommittee discretion over additional rounds of questioning. The rules of the Foreign Affairs Committee suggest that rounds of questioning continue.\nWith regard to extended time for questioning witnesses, committees' rules allow the chair to consult with the ranking minority member to permit a period of extended questioning for members or for staff, or require the chair to obtain the concurrence of the ranking minority member, or permit the committee by motion to make a decision on extended questioning. A number of committees include two or more of these options in their rules. A few committees in their rules reference the House rule, and a few committees' rules make no provision for extended questioning of witnesses.",
"The order in which committee members are recognized to speak is addressed in many committees' rules. Ten committees explicitly give precedence to chairs and ranking minority members. Seven committees' rules require recognition by seniority of the members present when the chair convenes a hearing. Nine committees' rules base their recognition after a hearing commences on order of arrival.\nTen committees' rules explicitly require that the chair to alternate recognition to question witnesses between the majority and minority, but some of these same committees' and other committees' rules require the chair to take into consideration the ratio of majority to minority members in recognizing members. Most of these rules state or suggest that the chair should consider the majority-minority ratio on the committee in order to not disadvantage the majority.\nNew committee members on a large committee can be advantaged or disadvantaged by committee recognition rules.",
"At hearings, committee members may ask permission to submit questions for the record to one or more witnesses, or the chair may make an announcement concerning questions for the record. A rule of the Energy and Commerce Committee provides a process for questions for the record for all hearings. A provision in the rule requires members to submit questions to the committee chair within 10 business days. The rule of the Homeland Security also requires questions for the record to be submitted in 10 business days. A rule of the Science, Space, and Technology Committee limits committee members to two weeks from the date of a hearing to submit questions for the record. A rule of the Natural Resources Committee requires materials submitted for inclusion in a hearing record to address the hearing's subject matter and to be submitted to the clerk within ten business days of the last hearing day.",
"Rule XI, clause 2(j)(1) provides the minority a right to call witnesses of its own choosing. If a committee has held a hearing, a majority of minority committee members may request of a chair, before completion of the hearing, a day of committee hearings to call their witnesses to receive testimony on the same subject matter. The chair must comply with the request, but he or she is not constrained in setting the day or time of the hearing. Nearly all committees repeat this House rule in their own rules.\nIn practice, a committee majority and minority normally negotiate to include minority witnesses as individual witnesses or on panels, obviating the minority's need to resort to their right under House rules. The majority and minority normally find cooperation to be beneficial to each side. The majority through cooperation can prevent its schedule from being changed. The minority normally finds it preferable to have its perspective represented at a regularly scheduled hearing than clustered at a perhaps inconvenient time and to be able to present another perspective to contrast with those of majority witnesses. When the House and the presidency are controlled by different parties, a committee majority sometimes seeks to count administration witnesses as minority witnesses, which the minority resists.",
"Rule XI, clause 2(g)(2) applies the same requirements on open and closed committee sessions to hearings as it applies to committee business meetings (discussed above at \" Open and Closed Meetings \" under \" Scheduling Committees' Meetings and Hearings \"), with a difference concerning testimony that might defame a person: If it is asserted by a committee member that testimony may \"tend to defame, degrade, or incriminate any person \" (emphasis added) or by a witness that evidence may \"tend to defame, degrade, or incriminate the witness \" (emphasis added), the committee makes a determination in executive session under Rule XI, clause 2(k)(5) of that assertion by a majority vote, the number of members required under committee rules for the receipt of testimony being present. If the vote determines that the testimony would tend to defame, degrade, or incriminate any person, the testimony must be received in executive session. If the committee determines, a majority being present, that the testimony will not tend to defame, degrade, or incriminate any person, then the testimony must be received in open session.\nClause 2(k)(5) also requires that a committee allow a witness to voluntarily appear, and that a committee must receive and dispose of requests from a witness to subpoena additional witnesses.\nClause 2(k)(7) protects testimony received in executive session. Only by a vote of the committee, a majority being present, may such testimony be released to the public. A witness may also submit a \"brief and pertinent\" written sworn statement for inclusion in the record. Whether to accept such a statement, and the determination of its pertinence, is within the sole discretion of the committee (clause 2(k)(8)).",
"Rule XI, clause 2(m)(1) and (3) authorizes committees and subcommittees to issue subpoenas for the attendance of witnesses and the production of documents. Clause 2(m)(3) requires authorization by a committee or subcommittee, \"a majority being present.\" (See also \" Meetings \" under \" Quorum Requirements \", above.) Unless otherwise provided in their rules, a quorum of one-third is required to debate a subpoena, under Rule XI, clause 2(h)(3).\nRule XI, clause 2(m)(3) also allows committees to adopt rules to delegate the authorization and issuance of subpoenas to a committee's chair \"under such rules and under such limitations as the committee may prescribe.\" Many committees in their rules have delegated authority to issue subpoenas to their chair, but have imposed requirements for consultation or notification on chairs that vary from committee to committee. This same subparagraph requires subpoenas to be signed by the chair or a member designated by the committee.\nRule XI, clause 2(m)(3)(B) allows a committee or subcommittee to designate another return than at a meeting or hearing. Clause 2(m)(3)(C) allows enforcement of a subpoena only as authorized or directed by the House.\nIf a committee meets to consider a subpoena, it meets in a markup session, and members may offer amendments and motions, make points of order, and engage the procedures and procedural strategy that could occur in a markup of legislation. The House Office of General Counsel maintains standard forms related to subpoenas to assist committees, although some committees, such as Oversight and Government Reform, have long experience with subpoenaing witnesses and documents from federal government officials and agencies and from outside of government.",
"Table 4 compares committee rules in the 114 th Congress on whose authority a subpoena may be authorized and issued and on notifying all members of a committee that a subpoena has been issued. Committees are listed in alphabetical order in the left column, with the Permanent Select Committee on Intelligence appearing last. The first three rows of the headings contain key terms describing committees' rules, as explained immediately below. A check in a box indicates that that committee adopted a rule or a closely related variation on it. An empty box indicates that a committee did not address that subject, although a footnote may appear in an otherwise empty box to explain a committee rule different from the choices exercised by other committees. Certain checks are footnoted to offer additional detail on a particular committee's rule. In some cases, a single footnote is used to offer additional detail on a rule that appears in more than one committee's rules.\nThe following list explains the headings in Table 4 :\nCommittee/Subcommittee by Majority Vote—a committee or subcommittee may issue a subpoena by a majority vote. Chair—indicates under what conditions a chair may issue a subpoena: On Own Initiative—a chair may use his or her discretion in authorizing subpoenas, subject to any conditions in the committee's rules. Ranking Minority Member—indicates the role of a ranking minority member in allowing the chair to issue a subpoena: Concurs—the ranking minority member must concur with the chair before a subpoena is issued. Consulted—the chair must consult with the ranking minority member before issuing the subpoena. Three Days—a chair may issue a subpoena only when the House has adjourned for more than three days. Notification to Committee (as soon as practicable)—a chair shall notify the committee as soon as practicable that a subpoena has been issued.",
"Committees have both legislative and oversight jurisdiction. The former refers to the authority of a committee to report legislation on subject matter. The latter refers to the authority to conduct oversight on subject matter. Although oversight jurisdiction may be the product of a specific legislative enactment, it also accrues where committees have responsibilities for broad subject areas. Hence, overlaps in oversight jurisdiction among committees are more likely to occur than overlaps in legislative jurisdiction.",
"Rule X, clauses 2 and 3 assign oversight responsibilities to standing committees, and clause 4 assigns \"additional functions\" to four committees. Clause 2 requires committees on a \"continuing basis\" to study and review the execution of laws, departmental and agency organization, conditions that might necessitate \"new or additional legislation,\" and \"future research and forecasting.\" Clause 2(c) specifically allows committees to study the potential impact of tax policies on subjects within their jurisdiction.\nClause 3 assigns \"special\" oversight functions to committees, generally clarifying that the identified committees' oversight (not legislative) jurisdiction extends to broad subject matter that is not specifically named in their jurisdictional statements in Rule X, clause 1. Thirteen committees are named. For example, the Committee on Natural Resources is given a special oversight function for \"laws, programs, and Government activities relating to Native Americans.\"\nClause 4 assigns \"additional functions\" to four standing committees: Appropriations, Budget, Oversight and Government Reform, and House Administration. These additional functions include directives or authority, or both, not granted elsewhere in House rules. For example, the House Administration Committee is directed to provide policy direction to the House inspector general; to conduct oversight of House officers (the clerk, sergeant-at-arms, chief administrative officer, and inspector general); to conduct oversight of the services provided to the House by the Architect of the Capitol (except those within the jurisdiction of the Committee on Transportation and Infrastructure); to accept gifts in behalf of the House, subject to named conditions, and to promulgate regulations for this activity; and to establish standards for making House and committee documents available in electronic formats. The chair and ranking minority member of the committee are also under this clause given authority to approve or disapprove proposed settlements by employing offices of the House under the Congressional Accountability Act of 1995.\nClause 4 also directs every standing committee to study appropriations made for programs and activities of the federal and District of Columbia governments. The stated purpose of this activity is to ensure appropriations are made annually and consistent with program objectives. In instances where no appropriation is made, a committee is to determine whether program changes are suggested.\nRule XI, clause 1(b) authorizes committees to conduct \"investigations and studies\" at any time. Rule X, clause 4(c)(3) provides deposition authority to the Oversight and Government Reform Committee. Other committees generally receive authority to conduct depositions through resolutions or another means. The 114 th Congress rules package, H.Res. 5 , provided deposition authority for the first session of the Congress to the Committees on Energy and Commerce, Financial Services, Science, Space, and Technology, and Ways and Means.\nRule XI, clause 2(n), (o), and (p) contain additional oversight directives to committees. Clause 2(n) directs each standing committee, or a subcommittee of a committee, to hold a hearing within each 120 days (or three times a year) on \"waste, fraud, abuse, or mismanagement\" in federal programs authorized by a committee, specifically on the \"most egregious instances\" as documented by a department or agency inspector general or the Government Accountability Office (GAO). Clause 2(o) requires at least one hearing in a session of Congress by a committee or one of its subcommittees when a committee receives from an agency auditor \"disclaimers of agency financial statements\" of an agency within its jurisdiction. Clause 2(p) requires at least one hearing by a committee or one of its subcommittees when GAO has identified a federal program within the committee's jurisdiction as at high risk for waste, fraud, or mismanagement.",
"Rule X, clause 2(b)(2) requires standing committees of more than 20 members, other than the Appropriations Committee, to establish an oversight subcommittee or to require its subcommittees to conduct oversight.\nEach standing committee is also directed by February 15 of the first session of a Congress to adopt an oversight plan for that Congress, meeting in open session with a quorum present. Clause 2 details attributes of oversight plans. Once adopted, oversight plans are submitted to the Committee on Oversight and Government Reform and the Committee on House Administration. The Committee on Oversight and Government Reform is directed to consult the Speaker, majority leader, and minority leader before reporting committees' oversight plans to the House, with any recommendations by the Oversight and Government Reform Committee or the House leadership \"to ensure the most effective coordination of oversight plans and otherwise to achieve the objectives of this clause.\"\nRule XIII, clause 3(c)(1) requires committees to include oversight findings and recommendations in reports on legislation.\nRule XI, clause(1)(d) requires each committee, by January 2 of odd-numbered years, to file with the House a so-called activities report for the preceding two-year Congress. This rule also authorizes the chair of a committee to file an activities report after the sine die adjournment of Congress, or after December 15, whichever occurs first, without the committee's approval, provided that the report was available to committee members for at least seven calendar days, and it includes any committee member's supplemental, minority, additional, or dissenting views.\nThe activities to be reported are those undertaken by the committee, with legislative and oversight activities appearing in separate sections. The requirements for the oversight section attempt to provide a measure of accountability by requiring a committee to summarize its oversight plan and additional oversight activities, and to summarize actions and recommendations made pursuant to the plan and the additional activities. This section must also list hearings held pursuant to the directives in Rule XI, clause (2)(n), (o), and (p), as explained just above (see \" Authority \").",
"Rule XI, clause 1(b) contains four procedures applicable to oversight and investigative reports. First, it allows such a report to be considered as read if it has been available to committee members for 24 hours or longer, excluding Saturdays, Sundays, and holidays if the House was not in session. In this circumstance, such a report would not have to be read for a committee to consider it. Second, such a report conducted by more than one committee may be filed jointly with the House so long as each committee individually complied with requirements for approving and filing the report. Third, such a report may be filed with the clerk of the House after the sine die adjournment of a session of Congress. Fourth, a committee filing a report after the sine die adjournment of a session of Congress must have allowed committee members, who gave timely notice, seven calendar days (rather than the otherwise required two calendar days) to file supplemental, minority, additional, or dissenting views to be included in the report. (See also, below, \" Party and Staff Reports \" under \" Committee Records .\")",
"",
"Committee jurisdiction is determined by a variety of factors. Paramount is Rule X, which lists the subject matter within the jurisdictional purview of each standing committee. These jurisdictional statements, however, are very broadly worded and are the product of an era in which governmental activity was not so extensive and relationships among policies not so intertwined as now. Most of Rule X was drawn from 19 th and early 20 th century precedents and codified in the Legislative Reorganization Act of 1946. Although the rule underwent modest revisions in 1974 and 1980, as well as more extensive changes in the 104 th and 109 th Congresses, topic omissions and a lack of clarity, as well as overlaps among committees in areas of jurisdiction, still exist. Accordingly, the formal provisions of Rule X are supplemented by an intricate series of precedents and informal agreements governing the referral of legislation.\nIn general, based on precedent, once a measure has been referred to a given committee, it is within the jurisdiction of that committee, and the committee is responsible for any subsequent legislative action on it. If the measure is enacted into law, amendments to the law are presumed to be within the originating committee's jurisdiction. Relatedly, bills that are more comprehensive than the measure they amend or supersede are presumed to be within the jurisdiction of the committee reporting the more comprehensive measure. The resultant accretion of subject responsibility may broaden the range and scope of jurisdictional subjects assigned to each committee.\nFormal agreements, drafted among committees to stipulate their understanding of jurisdictional boundaries, are also used. House parliamentarians, in advising the Speaker, have generally considered agreements as authoritative when drafted with the assent of the Speaker and the guidance of the Office of the Parliamentarian and when they are signed by the chairs of the relevant committees of jurisdiction.\nLegislative jurisdiction may generate conflict between committees. Committees carefully monitor legislative referrals and committee reports to ascertain any encroachment on their jurisdiction. A committee might seek a referral whenever it believes a new measure or a reported measure has provisions that fall within its jurisdiction or seek the removal of offending provisions from a measure under another committee's consideration. Committees might also formally waive a referral with the understanding that the waiver does not detract from their jurisdiction or from the committees' participation in later congressional action, such as a conference committee.",
"The Speaker refers legislation and other matters to committees pursuant to authority granted in Rule XII. The House might also by resolution or motion refer legislation or other matters, but referrals are made almost exclusively by the Speaker. Pursuant to Rule XII, clause 2, the Speaker—\nrefers legislation and other matters pursuant to the jurisdictional statements of Rule X and House precedents; refers a piece of legislation or other matter to all committees with jurisdiction over one or more provisions of the legislation or matter so that to the \"maximum extent feasible\" each committee may consider provisions within its jurisdiction; designates a committee of primary jurisdiction, unless \"extraordinary circumstances justify\" two or more committees acting as though primary; may refer a measure or matter sequentially to additional committees when it is introduced (\"additional initial referral\") or when it has been reported (\"sequential referral\"); may refer portions of a measure or matter to additional individual committees (\"split referral\"); may refer to an ad hoc committee approved by the House; may refer with time limits; and may \"make such other provision as may be considered appropriate.\"\nWhen a measure is introduced and referred to more than one committee, the referral language often includes the phrases \"in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned\" and \"for a period to be subsequently determined by the Speaker.\" The former phrase places provisions of a measure that are clearly outside a committee's jurisdiction outside the committee's ability to report the measure with amendments to those provisions; a point of order could lie against amendments recommended by a committee to provisions outside its jurisdiction.\nThe latter phrase allows the Speaker at a later time to impose time limits on any or all of the committees that received a referral. In some instances, when the committee of primary jurisdiction has reported, the Speaker has discharged all other committees that received a referral. In other instances, the Speaker, at the time the committee of primary jurisdiction reported, has imposed a time limit on the other committees that received a referral. For example, when the Committee on Agriculture reported H.R. 1947 in the 113 th Congress on May 29, 2013, the Speaker sequentially referred the legislation to the Committees on Foreign Affairs and on the Judiciary and imposed a time limitation of June 7, 2013, on their consideration. He later extended the time for their consideration to June 10. The Committee of the Judiciary reported the measure, while the Committee on Foreign Affairs was discharged from further consideration of the measure.\nAs an example of a House referral decision , the House on June 19, 2002 (107 th Congress), agreed to H.Res. 449 , creating a Select Committee on Homeland Security. The resolution authorized the Speaker to refer a bill—creating a homeland security department to be introduced by the majority leader—to committees of the House; subject to any time limitation imposed by the Speaker, the resolution directed these committees to report their recommendations to the select committee. The select committee was directed to report legislation to the House. When the majority leader introduced H.R. 5005 on June 24, 2002, it was referred to 12 committees for a period set by the Speaker as not later than July 12.\nThe other clauses of Rule XII proscribe the introduction of measures for certain purposes; govern the introduction or referral of petitions, memorials, private bills, and executive communications; and regulate the sponsorship of legislation.\nCommittees operate within the Speaker's, or House's, referral decisions as well as House rules.",
"House rules contain few rules on committee markups and do not state which of the chamber's rules are applicable to committees and their subcommittees in markups. House rules contain different sets of procedures that the House uses under different circumstances to consider various bills and resolutions. It would be not be possible for all of these procedures to be applicable to committees or applicable at the same time. It would also not be possible for committees to adopt rules that avoid inconsistency with all House procedures.\nThe House parliamentarian, however, has provided important guidance relevant to committee markups in the parliamentarian's notes to Section XXX of Jefferson's Manual: \"The procedures applicable in the House as in the Committee of the Whole generally apply to proceedings in committees of the House of Representatives.... \" The phrase \"House as in the Committee of the Whole\" refers to a distinctive set of procedures that the House may, but rarely does, use to consider measures. These procedures are not listed in the House's rules; rather, they are a matter of well-established precedent. For example, the motion for the previous question is available in the House and in the House as in the Committee of the Whole, although it is not available in the Committee of the Whole. As the phrase suggests, the procedures applicable in the House as in the Committee of the Whole combine elements of the procedures that apply in the House and those that are followed in Committee of the Whole House on the state of the Union (the Committee of the Whole).\nAlthough no House rule specifically requires committees to follow these procedures in marking up legislation, committees typically do follow them—unless a committee agrees by unanimous consent to diverge from these procedures. To the extent feasible or applicable, House rules and precedents on reading measures, amending, voting, and other aspects of legislative procedures, including the authority of the presiding officer, are employed in committee and subcommittee markups.\nThere are in addition some well-established procedures in committees that differ from the procedures of the House as in the Committee of the Whole. For example, in the House as in the Committee of the Whole, a measure is considered as read and open to amendment at any point. However, the same parliamentarian's notes that indicate that the procedures of the House as in Committee of the Whole \"generally apply\" in committee proceedings also state, \"except that a measure considered in committee must be read (by section) for amendment….\"\nBased on the parliamentarian's guidance and House rules, the key procedures applicable to House committees in the markup process are then as follows:\nFirst Reading. A measure is first read in full. Pursuant to Rule XI, clause 1(a)(2), this first reading may be waived by a privileged, nondebatable motion, if printed copies of the measure are available. Reading Sections (or Paragraphs) of a Measure. A section (or paragraph) of a measure must be read verbatim before committee members offer amendments to it. This reading may be waived only by unanimous consent. Reading a Measure for Amendment. A measure must be read for amendment one section (or, if so organized, one paragraph) at a time, unless the committee agrees by unanimous consent to another reading procedure. Members offer their amendments to each section of a measure after that section has been read and before the next section is read. A committee may consider a measure as open for amendment in another way (e.g., by title or at any point or by use of an amendment roster) only by unanimous consent. Reading Amendments. Each amendment must be read before debate on it begins. Reading of an amendment may be waived only by unanimous consent. Debate. All debate on amendments and the legislative vehicle is conducted under the five-minute rule. The chair normally entertains parliamentary inquiries and debate on points of order at his or her discretion. Discussion under reservations of the right to object to a unanimous consent request is by practice normally brief, but is not limited by the five-minute rule. Motion to Limit or Close Debate. A committee member may move to limit or close debate on a pending section (and all amendments thereto) or on a pending amendment (and all amendments thereto). This motion may provide that debate end immediately, at a certain time, or after a specified number of minutes or hours. A motion is not in order to close debate on an entire measure if any portion of the measure has not yet been read. Previous Question. A nondebatable motion to close debate does precisely that: it stops the debate. It does not prevent committee members from offering additional amendments. To end debate and preclude further amendments, a member may move the previous question on a pending amendment and all amendments thereto. A member may also move the previous question on an entire measure (and all amendments thereto) only after the measure has been read in full. Vote to Report. After a committee disposes of the last amendment to a measure, it votes on a motion to report the measure, together with any amendments the committee has agreed to. The committee does not vote on passing the measure, and amendments agreed to are not changes to the measure but recommendations to the House for change. A majority of a committee must be \"actually present\" to vote to report a measure.\nAdditional sections, above, of this report also explain the conduct of committee markups. Regarding scheduling, see \" Notice and Documents \" and \" Scheduling Subcommittee Hearings and Meetings .\" Concerning markups being conducted as open meetings, see \" Open and Closed Meetings \" and \" Media Coverage .\" Regarding quorums, see \" Meetings \" under \" Quorum Requirements .\" See also, below, \" Reports \"",
"Three motions specific to committees are authorized in Rule XI.\nRule XI, clause 1(a)(2) provides a privileged motion to recess, either recessing subject to a call of the chair within a 24-hour period or recessing day to day. The motion to recess is not debatable.\nPursuant to Rule XI, clause 1(a)(2), the first reading of a measure may be waived at a markup by a privileged, nondebatable motion, if printed copies of the measure are available.\nRule XI, clause 2(a)(3) allows committees to adopt a rule to direct the committee's chair to offer a motion in the House under Rule XXII, clause 1 whenever the chair considers it appropriate. Such a rule provides authority for a chair at his or her discretion to initiate a request for or to agree to conference with the Senate in lieu of a specific committee authorization to a chair required by Rule XXII, clause 1. Otherwise, Rule XXII, clause 1 allows the Speaker to recognize the chair of the \"primary committee\" to make a motion to disagree to Senate amendments to a House proposition and to request or agree to a conference or to make a motion to insist on House amendments to a Senate proposition and to request or agree to conference.\nNumerous other motions and requests, based on House rules or precedents applicable to the House as in the Committee of the Whole, are available in committees. A chair and individual members might also ask for unanimous consent to take procedural actions that violate a rule or precedent; individual members might pose parliamentary inquiries to a chair; and individual members might reserve or make points of order. Motions and requests can be used to facilitate committee action, to reach agreement, or to impede or delay committee action.",
"Rule XI, clause 1(a)(2) establishes a privileged motion to recess a committee (or subcommittee) subject to the call of the chair within a 24-hour period, or to recess day to day. This motion is not debatable.",
"Obtaining a Record Vote\nRule XX, clause 1(b) states that a recorded vote in the House, when requested by a Member, will be taken if one-fifth of a quorum supports the request. There is not a specific House rule applicable to obtaining a vote in committee. Rule XI, clause 2(h)(1) states, however, that committees may not report any measure or recommendation unless a majority of the committee is actually present.\nAs shown in Table 5 , sixteen committees specify the procedures to obtain a recorded vote in their rules. The Ethics Committee's rules address recorded votes. Four committees do not have a rule on obtaining a recorded vote: Homeland Security, Judiciary, Ways and Means, and Intelligence. These committees may follow the House rule, requiring a quorum to be present and the support of one-fifth of the members to obtain a recorded vote; may allow an individual member to call for a roll-call vote; or may follow another practice.",
"Proxy voting in committees is prohibited by Rule XI, clause 2(f).",
"Rule XI, clause 2(h)(4) authorizes each committee to adopt a rule to allow its chair to postpone proceedings to take a recorded vote on an amendment or approval of a measure and to permit a chair to resume proceedings after notice. This rule also provides that such a committee rule must allow the underlying proposition to be subject to further debate or amendment to the same extent as when the question was postponed. All but three committees (Budget, Ethics, and Rules) have adopted a rule allowing votes to be postponed, as shown in Table 5 . Some committees' rules provide a role for the ranking minority member in the decision to postpone votes.\nIn practice, most committees postpone votes to allow members to vote on the House floor or, for the convenience of members, to cluster votes in committee on amendments. Because floor votes are often clustered and might therefore consume much more time than the 15 minutes that a single vote could minimally take, committee chairs typically announce when proceedings will resume in committee after chamber votes, for example, 10 minutes following the conclusion of the last floor vote. A quorum must be reestablished when the committee reconvenes.\nA chair might postpone votes as a tactical move so that he or she can assemble a majority of votes on the side of the proposition that the chair is supporting. It could be that the chair wishes to persuade additional committee members, to await the attendance of committee members not currently available, or to negotiate a compromise with an amendment's sponsor.\nA determined minority might take tactical advantage of a recess to allow committee members to vote on the floor by not returning to committee in a timely fashion, requiring additional time for a quorum to be assembled and thereby delaying the resumption of business. They might also try to build support for their position in the interim.",
"Rule XI, clause 2(e)(1) requires committees to keep a record of all roll-call votes, as detailed in this paragraph. With exceptions, these records must be available for inspection by Members, staff, and the general public in the committee offices. In addition, committee votes must be posted electronically within 48 hours. The text of any amendment agreed to in committee must be posted electronically within 24 hours of its adoption (Rule XI, clause 2(e)(6)). One committee in its rules (Armed Services) provides a means for members to explain their absence from a roll-call vote. (See also, above, \" Subcommittee Reporting to Its Parent Committee \" under \" Subcommittees .\")",
"Table 5 compares committee rules in the 114 th Congress on calling for a record vote and on delaying further proceedings once a record vote has been demanded. Committees are listed in alphabetical order in the left column, with the Permanent Select Committee on Intelligence appearing last. The first three rows of the headings contain key terms describing committees' rules, as explained immediately below. A check in a box indicates that that committee adopted a rule or a closely related variation on it. An empty box indicates that a committee did not address that subject, although a footnote may appear in an otherwise empty box to explain a committee rule different from the choices exercised by other committees. Certain checks are footnoted to offer additional detail on a particular committee's rule. In some cases, a single footnote is used to offer additional detail on a rule that appears in more than one committee's rules.\nThe following list explains the headings in Table 5 :\nRecord Vote—indicates under what circumstances a recorded vote may be obtained: One-fifth of the Members Present—if one-fifth of the members present request a recorded vote, assuming a quorum. Upon Request of 3 or More Members—if 3 or more members request a recorded vote. Upon Request from Any Member—if any member requests a recorded vote. Any Member in the Absence of a Quorum—if it is determined that there is not a quorum present, then one member may request a recorded vote. Postponing Further Proceedings—indicates under what circumstances further proceedings may be postponed if a record vote is requested: Chair—the chair may postpone further proceedings in the event a recorded vote is requested: On Own Initiative—Discretion resides with the chair. Ranking Minority Member Consultation—the chair must consult with the ranking minority member before postponing further proceedings in the event of a record vote. Ranking Minority Member Concurs—the chair must obtain the concurrence of the ranking minority member before postponing further proceeds in the event of a record vote. No Rule—the committee does not specify a rule on this issue.",
"",
"The word \"report\" has several meanings in Congress. The chair of a committee or subcommittee or the presiding officer in the House or the Committee of the Whole might direct a clerk to report a measure or amendment. Depending on the parliamentary circumstances, the clerk is being directed to read the title or text of a measure or to read or designate an amendment.\nAt the conclusion of a committee markup, a committee member typically makes a motion to report the marked-up measure to the parent chamber. Assuming that a majority is \"actually present\" to vote on this motion, as required by Rule XI, clause 2(h)(1), and that the motion is agreed to, the chair must promptly report the measure to the House by submitting it to the Clerk of the House for printing and reference to the appropriate calendar. (See the explanation of filing adverse reports and of filing reports on privileged legislation below, \" Filing .\")\n\"Report\" may also be a noun. When a committee approves a motion to report, it normally writes a report explaining the measure and advocating its passage by the House with any amendment(s) recommended by the committee. (What immediately follow are the requirements in House rules for the content of a House committee report.) Report is also used to designate a committee document submitted to the House on a committee investigation, study, or other activity.",
"Rule XIII, clause 3 delineates many, but not all, requirements for the content of committee reports. Clause 3 requires a report to be filed as a single volume, allowing a supplemental report only for the correction of a technical error in the main volume. Highlights of the content requirements include—\nrecord votes on amendments and the motion to report; oversight findings (see, above, \" Organization, Planning, and Subsequent Reporting \"); new budget authority in spending bills; a cost estimate; performance goals and objectives; changes to existing law, the so-called Ramseyer rule; a list of unauthorized appropriations in a report on a general appropriation bill; and in measures reported by the Committee on Ways and Means, a tax complexity analysis of amendments to the Internal Revenue Code of 1986 and an analysis of the budgetary effects of major legislation, as defined in the House rules.\nA report on a special rule by the Rules Committee \"shall to the maximum extent possible specify ... any waiver of a point of order against the measure or against its consideration.\" (Rule XIII, clause 6(g).) A committee rule paraphrases this provision. Practice, however, has not been to use specific waivers, but rather so-called blanket waivers to protect a measure against possible points of order.",
"Rule XI, clause 2(l) allows any committee member to file supplemental, minority, additional, or dissenting views for inclusion in a committee report accompanying legislation reported to the House, provided that the views are filed \"not less than two additional calendar days after the day of such notice (excluding Saturdays, Sundays, and legal holidays except when the House is in session on such a day).\" Most committees explicitly or tacitly follow the House rule of two calendar days.\nRule XIII, clause 3(a)(1) requires committee reports to be filed as a single volume and to include supplemental, minority, additional, and dissenting views that are timely submitted. The cover must show that these views are included. Rule XIII, clause 2(c) also requires supplemental, minority, additional, and dissenting views that are timely filed to be printed as part of a committee's report. A committee may arrange to file its report with the clerk not more than one hour after time has expired, or earlier if all views have been received. This subparagraph also allows a committee to file a report if a request to file views is not timely made.\nIn practice, committees interpret differently the two days in the House rule. A committee might interpret two days as 48 hours from the time of a vote to order a measure reported or from the conclusion of the markup meeting, or might even interpret the first day as the day on which the vote occurred to order a measure reported. A committee might interpret two days to commence at midnight the day of the vote to order the reporting of a measure and count the second day as ending a midnight of that day or during business hours of that day. Potential later questions can be resolved if committee members discuss their committee's interpretation of the House and any related committee rule at the committee organization meeting.\nSupplemental, minority, additional, and dissenting views may foreshadow arguments and amendments in the Rules Committee and on the House floor.",
"In addition to requirements and restrictions on reports and reported measures already described, such as the requirement that a majority be actually present to report a measure or that a committee report be published as one volume, other restrictions appear in several places in House rules on what measures committees may report. For example, the Committee on Rules is prohibited from reporting a special rule preventing a motion to recommit, with or without instructions, from being made for a bill or joint resolution. This motion by tradition is a right of the House minority. (Rule XIII, clause 6(c).)\nThe House is also prohibited from considering a special rule waiving the rule requiring the disclosure of earmarks in bills, joint resolutions, committee amendments, and conference reports. The House, however, may dispose of a point of order that a special rule waives the disclosure requirement on a question of consideration. (Rule XXI, clause 9.) (The earmark disclosure rule is discussed below in this section.)\nRule XXI contains a number of restrictions on reported measures applicable to tax, appropriations, and budget measures.\nWith regard to tax or tariff measures and amendments, no committee may report a bill or joint resolution containing a tax or tariff unless the committee has jurisdiction to do so. Likewise, an amendment in the House or proposed by the Senate containing a tax or tariff is not in order when the House is considering a bill or joint resolution reported by a committee without jurisdiction over the tax or tariff. A point of order lies against the bill, joint resolution, or amendment while the measure is open for amendment. This rule protects the jurisdiction of the Ways and Means Committee. (Rule XXI, clause 5(a).)\nThe House may also not consider a bill, joint resolution, amendment, or conference report carrying a \"retroactive Federal income tax rate increase.\" (Rule XXI, clause 5(c).)\nAnother clause of Rule XXI protects the jurisdiction of the Appropriations Committee. Clause 4 provides that a committee may not report a bill or joint resolution carrying an appropriation unless the committee has jurisdiction to report appropriations. Likewise, an amendment providing an appropriation to a bill or joint resolution reported by a committee, which is without jurisdiction to report appropriations, is not in order. A point of order lies against the bill, joint resolution, or amendment while the measure is open for amendment.\nWhile a general appropriations bill and, after September 15, a continuing appropriations resolution may be called up by a privileged motion, an appropriation bill today is typically considered pursuant to a special rule. A special rule may be used to waive various points of order that would lie against an appropriations bill under Rule XXI, clauses 2 and 3. The restrictions in clause 2 disallow the Appropriations Committee from reporting measures, with limited exceptions, containing unauthorized appropriations or changing existing law. Other restrictions on bills and amendments appear in clause 2. The restriction in clause 3 prohibits the House from considering a general appropriation bill or joint resolution, or conference report on these measures, that provides spending from the Highway Trust Fund or reduces or limits balances accruing in the Highway Trust Fund, except for activities authorized for highways and mass transit.\nRule XXI also contains restrictions on various budgetary measures. Clause 7, for example, disallows the House from considering a concurrent resolution on the budget, an amendment to it, or a conference report on it, that contains reconciliation directives that would result in an increase in net direct spending. Direct spending is defined to include mandatory spending and changes in mandatory spending included in appropriations acts. Similarly, clause 10 disallows the House from considering bills, joint resolutions, amendments, or conference reports on bills and joint resolutions that have the net effect of increasing mandatory spending, including changes in mandatory spending included in appropriations acts, over 5-year and 10-year budget windows.\nRule XXI also disallows the consideration of legislation where earmarks have not been disclosed and of certain public works. Rule XXI, clause 9 disallows the House from considering a bill or joint resolution, whether or not reported from committee; a committee amendment; or a conference report—unless the report on a reported measure, the joint explanatory statement accompanying a conference report, or a list provided for an unreported measure or a committee amendment lists the earmarks, limited tax benefits, or limited tariff benefits that the proposition contains and the sponsor of each, or carries a statement that the proposition contains no earmarks, limited tax benefits, or limited tariff benefits. An additional requirement applies to the joint explanatory statement accompanying a conference report on a general appropriations bill: it must disclose any earmarks, limited tax benefits, or limited tariff benefits included that had not been submitted to conference by either house. (The restriction on special rules was described above in this section.)\nRule XXI, clause 6 disallows the House from considering a bill, joint resolution, amendment, or conference report that designates or redesignates a public work in honor of a sitting Member of Congress.",
"Rule XIII, clause 2(b) requires a committee chair to \"promptly\" report a measure or matter approved by a committee and to \"take steps necessary to bring the measure or matter to a vote.\" This paragraph also requires a report to be filed within seven calendar days, excepting days when the House is not in session, of the day that a majority of committee members file a written request with the committee clerk for filing of the report.\nRule XIII, clause 2(a) provides that committee reports are to be delivered to the clerk and referred to the appropriate calendar as directed by the Speaker. A report made adversely is laid on the table unless the committee requests its referral to the appropriate calendar or unless, within three days, any Member, Delegate, or the Resident Commissioner requests its referral to the appropriate calendar. (See also \" Committee Procedure for Oversight Reports ,\" above.)\nPrivileged reports are listed in Rule XIII, clause 5, which identifies five committees and the specific matters they might report that are eligible under this clause. Unlike nonprivileged reports, privileged reports are filed from the floor and referred to the appropriate calendar.\nIf a resolution of inquiry has not been reported from the committee to which it was referred, a privileged motion to discharge the committee is available 14 days after the referral (see Rule XIII, clause 7.)",
"Rule XIII, clause 4(a) disallows the House from considering in the House a measure or matter reported by a committee until the third calendar day (excluding Saturdays, Sundays, and holidays unless the House was in session) on which a report was available. In addition, this paragraph exempts five kinds of measures from the rule:\na resolution providing a rule, joint rule, or order of business reported by the Rules Committee; a committee funding resolution reported by the House Administration Committee; a question of the privileges of the House reported by any committee; a declaration of war or national emergency; and a measure disapproving of a government agency's decision or action that would be effective unless disapproved by one or both houses of Congress.\nThis layover requirement does not apply to a supplemental committee report to correct record votes (Rule XIII, clause 3(a)(2)).\nA one-day layover rule applies to reports of the Rules Committee (Rule XIII, clause 6), although this layover may be waived by a two-thirds vote of members. The layover also does not apply during the last three days of a session or in two limited instances under Rule XXII pertaining to reaching agreement with the Senate. Other paragraphs of Rule XIII, clause 6 address additional aspects of the consideration of resolutions reported by the Rules Committee.\nA measure to be called up under the suspension of the rules procedure might have been reported by a committee, might have been ordered reported by a committee, or might have another status in the legislative process. Since the motion is to \"suspend the rules and pass\" the measure, House rules are waived by the motion. Both parties have guidelines that the party leadership may follow in deciding whether to schedule a measure for House consideration by suspension of the rules.",
"",
"Rule XI, clause 2(e)(1) requires committees to keep records of all committee actions, including \"substantially verbatim\" accounts of hearings and meetings, including markups, and a record of all roll-call votes. With exceptions, these records must be available for inspection by Members, staff, and the general public in committee offices. A committee's records must be kept by the committee, separately from the office records of the committee's chair. Public availability does not necessarily allow a person reviewing a record to photocopy it or make notes.\nThe House requires its committees to post a markup text not less than 24 hours in advance of a markup meeting (Rule XI, clause 2(g)(4)). Rule XI, clause 2(e)(5) requires committees, to the \"maximum extent practicable,\" to provide audio and video coverage of each hearing or meeting in a way that allows for easy public viewing or hearing and then to maintain those recordings so that they are readily accessible to the public.\nCommittees are required to post electronically votes taken in a markup (within 48 hours) and amendments adopted (with 24 hours) (Rule XI, clause 2(e)(1)(b) and (6), respectively). Witnesses' \"truth-in-testimony\" filings are to be posted electronically within one day of a witness's appearance (Rule XI, clause 2(g)(5)).\nPursuant to Rule VII, each committee chair is responsible for transferring noncurrent records of the committee to the Clerk of the House, who is then responsible for transmitting those records to the National Archives. Committees are directed in Rule XI, clause 2(e)(3) to adopt in their rules \"standards for availability\" of committee records delivered to the National Archives, addressing specified policies. Rule VII contains additional provisions on the availability of records, including committee records, and assigns regulatory authority on implementation to Rule VII to the Committee on House Administration (Rule VII, clause 5(b)).\nA number of committees have rules on access to or protection of classified, sensitive, or confidential information.",
"Pursuant to Rule XI, clause 1(c), committees are authorized to print hearings. Clause 2(e)(4) states that committee publications must be made available in electronic form \"to the maximum extent feasible.\"\nRule XIII, clause 4(b) directs a committee that reports a measure or matter to make \"every reasonable effort\" to have its hearings printed and available before the measure or matter is considered by the House.",
"Committees might publish reports that have not been approved by a majority vote of the members of a committee. As a result, a report might be issued without the knowledge of certain members of the committee, perhaps minority members. In response to this possibility, some committees have added provisions to their rules that attempt to alleviate their committee members' concerns. Committees' responses may generally be characterized in two ways:\nDisclaimer—the committee requires that any report not approved by a majority vote of the committee carry a disclaimer on its cover explaining that the report was not adopted by that committee and may not necessarily reflect the views of its members; or Individual Views—members would be afforded the opportunity to add their views to the report.\nSix have rules requiring a disclaimer, and six committees allow individual views. A committee might also proscribe by rule the printing of a report not approved by a majority of a committee, as is the case with the Science, Space, and Technology Committee.",
"Rule X, clause 4(f) requires each standing committee to submit to the Budget Committee its views and estimates six weeks after the President transmits the executive budget to Congress. This clause also requires the Ways and Means Committee, after undertaking public hearings, to recommend in its submission an \"appropriate level\" of public debt to be included in the concurrent resolution on the budget.\nA rule of the Budget Committee governs information the committee provides to the Speaker in fulfillment of its duties under the Congressional Budget Act to inform floor debate on measures with a budgetary effect. This information is contained in the Parliamentarian's Status Report and the Section 302 Status Report. Another rule provides the committee chair with the opportunity to consult committee members on recommendations to the Rules Committee on waivers of Budget Act points of order. Modifications to the Budget Committee's reports and roles are regularly included as separate orders in the biennial rules packages.\nRule X, clause 6 governs aspects of committee expense resolutions reported by the House Administration Committee. Rule XI, clause 1(b)(1) allows committees to conduct \"investigations and studies\" subject to any expense resolution adopted pursuant to Rule X, clause 6."
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{
"question": [
"What is the nature of Rule XI?",
"What is Rule X?",
"What does Rule XIII concern?",
"How do House committees interact with these rules?",
"What does this report concern?",
"What topics does the report not address?",
"How is the report organized?",
"To what extent do committees adapt the rules?",
"How much do committee rules change between Congresses?"
],
"summary": [
"Many provisions of House rules applicable to committee procedures appear in Rule XI, which also includes procedures specifically applicable to the Committee on Ethics.",
"Rule X contains the legislative and oversight jurisdiction of standing committees, several clauses on committee operations, and a clause specifically addressing the jurisdiction and operation of the Permanent Select Committee on Intelligence.",
"Rule XII concerns the referral of legislation and related matters. In addition to calendars, Rule XIII addresses the filing and content of committee reports.",
"Each House standing committee implements these rules, and select provisions of other House rules, in adopting its rules.",
"Variety as well as consistency in committee rules is analyzed in this report as the rules relate to legislative activities, principally hearings, oversight, and markups.",
"Administrative provisions in House and committee rules are not analyzed.",
"Provisions of committee rules on legislative activities are clustered by topic, rather than by House rule number.",
"In adopting their rules for the 113th Congress, committees in some instances adopted House rules unchanged, and in other instances adapted House rules to their own needs where they had discretion to do so.",
"Committee rules change incrementally from one Congress to the next, with a committee typically making several amendments to its rules from the preceding Congress."
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|
GAO_GAO-15-511
|
{
"title": [
"Background",
"Intent of and Eligibility Requirements for LQA",
"State, OPM, and DOD Roles and Responsibilities for LQA",
"DOD’s 2013 Audit of Employees Who Were Hired Overseas and Receiving LQA",
"DOD Has Taken Steps to Clarify Requirements for LQA Eligibility, but Is Not Monitoring LQA Eligibility Determinations Made by Its Components",
"DOD and Its Components Have Taken Some Steps to Clarify LQA Eligibility Requirements",
"DOD Has Not Monitored DOD Components’ LQA Eligibility Determinations",
"Agencies Have Missed Opportunities to Help Ensure Consistent Determinations of LQA Eligibility Requirements",
"DOD Has Not Discussed with State Its Concerns about DSSR LQA Eligibility Requirements",
"OPM Has Not Posted Its Compensation Claim Decisions in a Timely Fashion",
"DOD Has Plans to Better Disseminate and Issue Guidance for OPM Compensation Claim Decisions That May Affect LQA Eligibility Determinations",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments",
"Appendix I: Scope and Methodology",
"Appendix II: Results from the Department of Defense’s 2013 Audit of Living Quarters Allowances",
"Appendix III: Comments from the Department of Defense",
"Appendix IV: Comments from the Office of Personnel Management",
"Appendix V: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"",
"Congress passed the Overseas Differentials and Allowances Act of 1960 (hereinafter referred to as the Act) to (1) provide a means for more effectively compensating government employees for the extra costs and hardships associated with overseas assignments; (2) provide for the uniform treatment of government employees stationed overseas; (3) establish the basis for more efficient and equitable administration of the laws compensating government employees who are assigned overseas; and (4) facilitate government recruitment and retention of the best The Act qualified employees for civilian employment overseas.authorized the granting of LQA whenever government-owned or government-leased housing is not provided free of cost to an employee assigned overseas. LQA is intended to reimburse employees for the costs incurred for rent, heat, light, fuel, gas, electricity, and water.\nLQA is generally intended as a recruitment incentive to encourage individuals who are recruited by federal agencies in the United States— hereinafter referred to as “U.S. hires”—to live and work overseas for a limited period of time. However, under certain circumstances the DSSR also permits federal agencies to provide LQA to employees recruited and hired overseas. Specifically, the DSSR allows LQA to be granted to employees hired overseas provided that the following eligibility requirements are met: the employee’s actual place of residence overseas where LQA is to be granted can be fairly attributable to employment by the federal agency that is hiring him or her; prior to appointment by the federal agency, the employee was recruited in the United States or a U.S. territory by the U.S. government, including by the military; by a U.S. firm, organization, or interest; by an international organization in which the U.S. government participates; or by a foreign government; the employee must have been in “substantially continuous employment by such employer”; and the employee must have been authorized by such employer to receive paid transportation back to the United States or U.S. territory after the conclusion of his or her overseas employment.\nAccording to DSSR § 013, the head of a federal agency may issue further implementing regulations within the scope of the DSSR. According to OPM compensation claim decisions, agency implementing guidance may impose additional requirements, but may not be applied unless the employee has first met the basic DSSR eligibility criteria. implementing regulations such as DOD’s LQA Instruction may impose additional requirements to further restrict LQA eligibility but may not exceed the scope of the DSSR.",
"State, OPM, and DOD have varying roles and responsibilities related to LQA for civilian employees assigned overseas, as shown in figure 1.\nOPM File Number 11-0037 (July 11, 2012).\nOPM File Number 12-0019 (Oct. 9, 2012).\nDOD’s LQA Instruction was last revised in February 2012. According to DCPAS officials, the primary reason for the revision was to extend eligibility for overseas allowances and differentials to same-sex domestic partners of civilian employees and their children, to comply with a 2010 Presidential Memorandum. The secondary reason for the revision, according to DCPAS officials, was to add a requirement that the heads of DOD components conduct ongoing quality assurance reviews to verify that foreign allowance and differential payments are consistent with applicable statutory and regulatory provisions. The addition of this requirement was partly in response to a DOD Inspector General’s report in August 2010 that found that the Office of the Deputy Assistant Secretary of Defense for Civilian Personnel Policy did not provide uniform guidance to the human resource offices of DOD components with regard to their authorizing overseas allowances and differentials accurately and consistently. The 2012 revision to the LQA Instruction also assigned responsibility to the Deputy Assistant Secretary of Defense for Civilian Personnel Policy for developing, revising, and monitoring the implementation of overseas allowance and differential policies and procedures.\nAccording to DOD’s LQA Instruction, overseas allowances and differentials, including LQA, are neither automatic salary supplements nor entitlements that are automatically granted to all employees who meet eligibility requirements. The LQA Instruction states that allowances and differentials are specifically intended to be recruitment incentives for U.S. citizens who are civilian employees living in the United States to accept federal employment overseas, and that ordinarily, if a person is already living overseas, that inducement is unnecessary. DOD’s LQA Instruction defines a “U.S. hire” as a person who physically resided permanently in the United States from the time he or she applied for employment until and including the date he or she accepted a formal offer of employment.DOD’s LQA Instruction permits LQA and other allowances in certain circumstances to be granted to employees hired overseas when those employees meet eligibility requirements.\nDOD components are responsible for making LQA eligibility determinations for individual job applicants or employees, and for ensuring that employees are paid LQA properly, in accordance with DOD’s LQA Instruction and the DSSR. For example, each military service has multiple human resource offices within the geographic combatant commands’ areas of responsibility that hire and work with employees regarding personnel issues. The level of local human resource office that determines LQA eligibility varies by military service and their respective human resource offices. For example, officials from the Army’s local human resource offices propose initial LQA eligibility determinations to the Army’s Civilian Human Resources Agency’s regional office, which makes the final eligibility determinations. In contrast, Navy officials stated that Navy local human resource offices in the EUCOM area of responsibility have full responsibility to make LQA eligibility determinations, although the local offices can contact the Navy Installation Command’s regional human resource office in Europe if there are questions associated with a particular LQA eligibility determination. The defense agencies and field activities have a much smaller overseas presence than the military services and generally centralize LQA eligibility determinations at the headquarters level. Table 1 shows the number of DOD employees who received LQA during fiscal years 2011 through 2014, as well as the total amount of LQA payments.",
"Prior to the 2008 and 2011 OPM compensation claim decisions that discuss the single employer interpretation, many DOD components interpreted the LQA Instruction and the DSSR as authorizing LQA for employees hired overseas in situations of continuous employment with multiple employers, rather than a single employer. In May 2011, U.S. Army in Europe, in response to the 2011 OPM decision, concluded that its LQA eligibility determinations had been inconsistent with OPM’s single employer interpretation of the DSSR. In May 2012, EUCOM requested authorization from the Under Secretary of Defense for Personnel and Readiness to continue LQA for not longer than 12 months for employees working for DOD components in the EUCOM area of responsibility who were currently receiving the allowance, but who did not meet OPM’s single employer interpretation.\nEUCOM’s request prompted the Acting Principal Deputy Under Secretary of Defense for Personnel and Readiness to issue a memorandum on January 3, 2013, directing all DOD components to conduct an audit of all “locally hired overseas employees” (that is, employees hired overseas) currently receiving LQA. The audit results showed that 680 DOD civilian employees were considered to have been “erroneously paid LQA after having been hired overseas,” including 444 who were identified in the audit as being ineligible for LQA because of inconsistency with the single employer interpretation.results of DOD’s 2013 audit.",
"",
"DOD, through its components and DCPAS, has taken some steps to clarify LQA eligibility requirements, particularly as they relate to the single employer interpretation and the definition of a U.S. hire. For example, DCPAS is drafting an update to DOD’s LQA Instruction that will address the single employer interpretation. Also, the Office of the Under Secretary of Defense for Personnel and Readiness has issued a memorandum and DCPAS has issued a point paper and fielded questions from DOD components about individual employees to clarify LQA eligibility requirements. In addition, in September 2013, the Deputy Assistant Secretary of Defense for Civilian Personnel Policy issued a policy advisory to clarify the definition of a U.S. hire. However, the policy advisory’s definition of a U.S. hire appears to conflict with OPM’s interpretation of the DSSR. DCPAS is currently consulting with DOD components to decide whether to continue using the policy advisory’s definition, which could prompt it to discuss possible revisions to the DSSR with State, or to invalidate that definition.\nSingle Employer Interpretation. The January 2013 memorandum that initiated the 2013 LQA audit stated that employees hired overseas after working for more than one employer are not eligible to receive LQA. DCPAS also disseminated a point paper to DOD components in April 2013 that acknowledged the components had been incorrectly interpreting the DSSR and further reinforced the single employer interpretation as the correct interpretation. In the point paper, DCPAS also provided examples of employee categories that did not meet the single employer interpretation and thus were not eligible for LQA.example, the point paper clarified the status of military members who separated from service in a location outside the United States, were employed in a federal civilian position and properly provided LQA, left for employment with a contractor(s), and subsequently returned to a federal civilian position with DOD. The point paper stated that it does not matter that such employees properly received LQA during their initial civilian employment. Based upon the clarified definition of “substantially continuous employment by such employer,” these employees had intervening employment and were not eligible for LQA upon appointment to the subsequent period of federal civilian employment with DOD. In addition, DCPAS officials have periodically assisted officials from DOD components’ headquarters if they have questions regarding LQA policies. In particular, officials from two military departments told us that DCPAS officials will answer questions about LQA eligibility determinations for individual employees and will respond to inquiries about interpretations of DOD’s LQA Instruction.\nDCPAS is drafting an update to DOD’s LQA Instruction that will address the single employer interpretation. The LQA Instruction was last revised in February 2012, prior to the 2013 LQA audit, and therefore does not reflect, among other things, the single employer interpretation. Specifically, DOD’s LQA Instruction currently does not state that, to be eligible for LQA, an employee must have remained with the same employer that recruited him or her from the United States, and must have had no intervening employment, prior to his or her DOD civilian position. Officials from several DOD components told us that it would be helpful to have an updated LQA Instruction that reflects the single employer interpretation to minimize potential misinterpretations. According to DCPAS officials and a February 2015 draft LQA Instruction we reviewed, DOD’s updated LQA Instruction will address the single employer interpretation and other LQA eligibility requirements, such as former military members’ eligibility to receive LQA immediately after separating from the military. However, the draft LQA Instruction we reviewed also includes a proposal to eliminate LQA for DOD civilian employees hired overseas unless a Service Secretary or equivalent grants an exception. If DOD adopts this proposal, the number of instances where DOD would apply the single employer interpretation to determine LQA eligibility would likely be significantly reduced.\nDCPAS officials told us that, at the direction of the Deputy Assistant Secretary of Defense for Civilian Personnel Policy, they began a review of DOD’s LQA Instruction in fall 2013. As part of this review, DCPAS officials solicited informal comments and recommendations from DOD components on the draft LQA Instruction. DCPAS officials stated that they sent the draft LQA Instruction to DOD components for initial informal comments in early 2014. These officials explained that they then transitioned their focus to a larger effort reviewing all DOD guidance related to overseas civilian employees, and the update to the LQA Instruction was incorporated into this effort. According to the officials, DOD’s draft LQA Instruction was sent in February 2015 to DOD components for additional informal comments. DCPAS officials stated that they expect DOD’s updated LQA Instruction to be finalized and released in late 2015. Officials from military service component commands in the EUCOM area of responsibility told us that they are waiting for DCPAS to release the updated LQA Instruction before they issue their own updated LQA guidance.\nIn addition, DOD components have taken steps to clarify LQA eligibility requirements, including issuing memorandums and adopting new procedures for making LQA eligibility determinations. Prior to the 2013 LQA audit, U.S. Army in Europe and U.S. Air Forces in Europe modified their interpretation of LQA eligibility requirements to be consistent with the single employer interpretation. For example, U.S. Army in Europe issued a memorandum in January 2012 stating that six months earlier it had begun applying the single employer interpretation when making LQA eligibility determinations, and that the single employer interpretation was consistent with the DSSR. Also, U.S. Air Forces in Europe revised its guidance in October 2012 to emphasize that “substantially continuous employment by such employer” is restricted to the single employer that initially recruited the employee from the United States.\nAfter the 2013 LQA audit, some DOD components adopted new procedures for making LQA eligibility determinations with the intent of ensuring that civilian employees hired overseas met the single employer interpretation. For example, prior to the 2013 LQA audit, LQA eligibility determinations for Army overseas civilian employees to receive LQA were made at the local overseas human resource office level. After the audit, the Army’s Civilian Human Resources Agency established the following multitier review for making LQA eligibility determinations in each of its overseas regions:\nFirst, a human resource specialist at the local human resource office reviews an LQA questionnaire filled out by the job applicant to ensure that the applicant meets LQA eligibility criteria found in both the DSSR and DOD’s current LQA Instruction.\nSecond, the human resource specialist’s supervisor conducts another review. If both of the local officials agree with regard to the job applicant’s eligibility for LQA, the applicant’s LQA questionnaire is forwarded to the overseas regional office.\nThird, an LQA subject matter expert at the regional office conducts an additional review.\nFourth, a senior-level LQA subject matter expert at the regional office conducts a final review before sending the final determination of the job applicant’s eligibility to receive LQA back to the local human resource office.\nArmy officials explained that if at any point there is disagreement among the officials regarding the eligibility assessment, the officials will discuss the job applicant’s LQA questionnaire to reach consensus. Similarly, U.S. Air Forces in Europe developed a flow chart to help local human resource specialists determine whether overseas job applicants are eligible for LQA. For example, the flow chart seeks to determine whether an applicant is a contractor or a separated military member, and whether he or she was recruited in the United States.\nDefinition of a U.S. Hire. In an August 2013 memorandum, the Army Civilian Human Resources Agency requested that Department of the Army headquarters provide clarification on the definition of a U.S. hire found in DOD’s LQA Instruction. In the memorandum, the Army Civilian Human Resources Agency explained that the Department of the Army had been interpreting DOD’s LQA Instruction to mean that a physical presence overseas during time of recruitment (that is, from the time of application to a job offer), for any reason, disqualified a job applicant from meeting the definition of a U.S. hire. The Army Civilian Human Resources Agency memorandum stated that this interpretation of a U.S. hire did not appear to be logical, and cited a recent case as an example.\nAfter receiving the Army Civilian Human Resources Agency’s request for clarification, in September 2013 the Deputy Assistant Secretary of Defense for Civilian Personnel Policy sent a policy advisory to the Department of the Army with guidance on how to define a U.S. hire. The policy advisory stated that an individual may still be considered a U.S. hire even though he or she may have left the United States for a short period of time, and it provided examples of such scenarios. Specifically, it clarified that a job applicant should be considered to physically reside in the United States and considered a U.S. hire if he or she takes a vacation outside the United States, travels outside the United States on a temporary duty assignment, or is deployed overseas as a reservist or National Guard member during the time of recruitment. In addition, the policy advisory stated that reservists and National Guard members deployed overseas benefit from the provisions afforded by the Uniformed Service Employment and Reemployment Rights Act when determinations are made as to whether they are recruited from the United States, and they should be allowed employment benefits that would accrue as if a deployment had not occurred. Regarding the issue of U.S. hire, the policy advisory stated that it was DCPAS’s intent for personnel physically residing in the United States before being deployed overseas to be considered for LQA eligibility as if they were not deployed.\nThe definition of a U.S. hire in DOD’s September 2013 policy advisory appears to conflict with OPM’s interpretation of the DSSR in compensation claim decisions since at least 2012. May 2014 OPM compensation claim decision, OPM further clarified that an employee must be physically residing in the United States during recruitment to be considered a U.S. hire. Specifically, OPM stated that the DSSR does not exempt particular categories of employees, such as military reservists mobilized overseas, from the DSSR’s requirements for a U.S. hire. Thus, federal agencies cannot exempt categories of employees in their implementing regulations, since that would exceed the scope of the DSSR.\nOPM File Number 11-0037 (July 11, 2012). in Europe told us they had seen and implemented the policy advisory, but later advised their local human resource offices to disregard it when they discovered OPM compensation claim decisions that they felt conflicted with the policy advisory’s definition of a U.S. hire. The September 2013 policy advisory not being disseminated department-wide and the absence of a consistent interpretation of how to apply the policy advisory may have led to inconsistencies in how DOD components determined whether those applying for a civilian position overseas were “U.S. hires” and thus eligible for LQA.\nWhen asked about the apparent conflict between OPM’s interpretation of a U.S. hire and DOD’s September 2013 policy advisory, DCPAS officials told us that they did not initially believe the policy advisory conflicted with the definition of a U.S. hire in the DSSR or with OPM’s interpretation. However, officials told us that they have since recognized such a conflict may exist. As a result, DCPAS is currently soliciting DOD components’ views on the definition of a U.S. hire. DCPAS officials stated that if DOD components support the definition in DOD’s policy advisory, then DCPAS will determine with senior DOD officials whether to discuss the matter with State and request a revision to the DSSR that reflects the definition in DOD’s policy advisory. (This issue is discussed in greater detail later in the report.) They explained that if the components or senior officials do not support the definition in DOD’s policy advisory, then the definition in the updated LQA Instruction will invalidate the policy advisory’s interpretation and no further action would be necessary. As of April 2015, DCPAS had not yet decided which definition will be included in DOD’s updated LQA Instruction. According to DCPAS officials, they discussed the definition of a U.S. hire with OPM in April 2015, at which time OPM officials agreed that DCPAS should discuss with State revising the DSSR if DOD continues to use its September 2013 policy advisory. OPM officials explained to us that they informed DCPAS officials at that meeting that OPM would continue to apply its interpretation of U.S. hire until or unless State revised the DSSR.",
"DOD has not monitored DOD components’ LQA eligibility determinations for civilian employees overseas to help ensure the consistent application of DOD’s LQA Instruction across the department. According to DOD Instruction 1400.25, Volume 100, DOD Civilian Personnel Management System: General Provisions, the Deputy Under Secretary of Defense for Civilian Personnel Policy is responsible for monitoring the implementation and effectiveness of DOD’s civilian personnel management, including DOD’s LQA Instruction. This requirement was the basis for a 2010 recommendation from the DOD Office of the Inspector General that the Deputy Under Secretary of Defense for Civilian Personnel Policy conduct periodic quality assurance reviews. In implementing the Office of the Inspector General’s recommendation, DCPAS charged the heads of DOD components with conducting periodic quality assurance reviews. However, DCPAS officials told us that they have not monitored the LQA eligibility determinations of DOD components, indicating that it is the responsibility of the components to do so.\nDOD’s LQA Instruction includes a requirement that the heads of DOD components conduct ongoing quality assurance reviews to verify that overseas allowance and differential payments are proper and consistent with applicable statutory and regulatory provisions. However, according to DCPAS officials, the heads of DOD components have not consistently conducted these reviews due to the 2013 LQA audit. DCPAS officials explained that they became aware of issues with LQA eligibility determinations in the EUCOM area of responsibility approximately in May 2012, shortly after the February 2012 LQA Instruction with the new requirement for ongoing quality assurance reviews was issued. DCPAS officials chose not to have DOD components begin conducting the periodic quality assurance reviews because they anticipated that the components would soon be involved in what became the 2013 LQA audit.\nDCPAS officials told us that they added this requirement in response to one of the recommendations in the DOD Inspector General’s report, although it differs from the actual recommendation for the Deputy Under Secretary of Defense for Civilian Personnel Policy to conduct the review of DOD components. DOD Inspector General, Report No D- 2010-075, Foreign Allowances and Differentials Paid to DOD Civilian Employees Supporting Overseas Contingency Operations (Aug. 17, 2010). of employees who receive overseas allowances and differentials, and then send a report with the audit results to the Deputy Assistant Secretary of Defense for Civilian Personnel Policy by March of each year. However, there is no specific requirement in the draft LQA Instruction to monitor the reviews of DOD components to ensure they are accurately and consistently authorizing LQA as well as other overseas allowances and differentials. Standards for Internal Control in the Federal Government state that internal control monitoring should assess the quality of performance over time and ensure that the findings of audits and other reviews are promptly resolved. Specifically, managers are to (1) promptly evaluate findings from audits and other reviews, (2) determine proper actions in response to findings and recommendations from audits and reviews, and (3) complete, within established time frames, all actions that correct or otherwise resolve the matters brought to management’s attention. Without monitoring DOD components’ reviews, DCPAS cannot ensure that DOD components are making LQA eligibility determinations and payments in accordance with applicable statutory and regulatory provisions.",
"",
"DOD, through DCPAS, has not discussed its concerns related to the DSSR with State’s Office of Allowances to determine whether LQA eligibility requirements should be revised, notwithstanding DOD components’ concerns that some of those requirements are ambiguous or outdated. Of particular concern are the DSSR requirements related to “substantially continuous employment by such employer” and the definition of a U.S. hire, as discussed earlier.\nOfficials from one military service component command, as well as regional and local human resource offices in the EUCOM and PACOM areas of responsibility, told us that the DSSR requirement for “substantially continuous employment by such employer” remains unclear, even after the 2013 LQA audit. In particular, the DSSR has not been modified to explicitly reflect OPM’s single employer interpretation. Officials we spoke with at the service component command and local human resource office levels stated that even if DOD’s LQA Instruction was updated to include the single employer interpretation, as previously discussed, it would still be helpful to revise the DSSR to clarify the phrase “substantially continuous employment by such employer,” since local human resource specialists routinely use both the LQA Instruction and the DSSR to make LQA eligibility determinations.\nOfficials from the military department headquarters, military service component commands, and regional and local human resource offices in the EUCOM and PACOM areas of responsibility informed us that the DSSR’s U.S. hire definition should be updated to reflect modern travel and Internet access realities, temporary duty assignments, and the overseas deployment of reservists and National Guard members. DCPAS’s definition of a U.S. hire in its September 2013 policy advisory to the Army attempts to update the definition within DOD, as previously discussed, but it may also expand the DSSR’s LQA eligibility requirements, thereby exceeding DOD’s authority according to OPM’s interpretation of the DSSR.\nState officials told us that, although there is no requirement for State to proactively review the DSSR and assess the need for revisions, there have been occasions when State collaborated with other federal agencies—including DOD—on eligibility issues for overseas allowances. According to State officials, they have done so when other federal agencies have initiated the collaboration. For example, in 2014, DCPAS officials requested that State’s Office of Allowances consider revising a provision within the DSSR relating to the separate maintenance allowance. Previously, if the overseas employee was a former military member whose family had access to military commissary and exchange facilities, the separate maintenance allowance provided was reduced by 10 percent. DCPAS officials communicated to State that former military members and their families appeared to be unfairly penalized by this requirement. In response to DCPAS’s request, State reviewed the proposed revision and sent it to other federal agencies for comment. Neither the other federal agencies nor State’s legal counsel had any substantive objections to the proposed amendment, so the DSSR was updated in January 2015. DCPAS officials told us they requested that State revise this provision of the DSSR because it was negatively affecting a specific class of DOD employees.\nState officials also told us that they initiated an internal review of the DSSR in early 2015. The review encompasses offices within State—such as the Office of Overseas Schools—and is intended to provide State’s Office of Allowances with suggestions for revisions or updates to sections of the DSSR that those offices routinely use. Once the Office of Allowances receives all internal suggestions, officials told us that they intend to compile a list of proposed changes to the DSSR and share them with other agencies, including DOD, for comment. The officials told us that when they send this list to other agencies, they plan to ask whether the agencies have any other suggestions for revising the DSSR. State officials indicated that they expect this review to be completed by the end of 2015.\nNotwithstanding the example cited above, and the concerns about LQA eligibility raised by the DOD component officials with whom we spoke, DCPAS officials stated that they have not yet discussed with State their concerns related to the DSSR, particularly with regard to OPM’s single employer interpretation and the definition of a U.S. hire. According to DCPAS officials, they did not feel the need to collaborate with State to discuss modifications to the requirement for “substantially continuous employment by such employer” in the DSSR because they believe that updating DOD’s LQA Instruction would be sufficient to resolve any ambiguity. However, DOD component officials we interviewed who determined LQA eligibility told us that updating DOD’s LQA Instruction and revising the DSSR is needed to help ensure consistent eligibility determinations as both documents are considered in making such determinations. DCPAS officials also stated that they have not discussed with State their concerns with the DSSR’s definition of a U.S. hire or requested a potential revision of the DSSR definition because, as previously discussed, they have not yet made a decision about whether the definition in the September 2013 policy advisory will be included in DOD’s updated LQA Instruction.\nWhile federal agencies are not required to collaborate with State about questions related to LQA eligibility requirements, the Standards for Internal Control in the Federal Government state that, in addition to internal communications, management should ensure that there are adequate means of communicating with, and obtaining information from, external stakeholders who may have a significant effect on the federal agency achieving its goals. Additionally, in prior work, we have reported on leading practices for interagency collaboration. One of these practices is to establish compatible policies, procedures, and other means to operate across federal agency boundaries. Frequent communication among collaborating agencies is another means to facilitate working across agency boundaries. In the absence of DOD initiating a discussion with State about concerns related to DSSR LQA eligibility requirements for U.S. and overseas hires and whether they should be revised, State may not have the information it needs to determine whether the DSSR should be revised with regard to the “substantially continuous employment by such employer” and definition of a U.S. hire provisions.",
"Until recently, past OPM compensation claim decisions have not been widely available to federal agencies, including DOD, and the public. OPM officials told us that compensation claim decisions usually have been provided only to the claimant involved in the specific OPM compensation claim and to the office within a federal agency that issued the final agency-level decision. OPM officials added that, under some circumstances, they send compensation claim decisions to other offices higher in the employee’s chain of command. To make compensation claim decisions more widely available, OPM maintains a public website on which it can post compensation claim decisions. This website is the primary means by which federal agencies could learn of compensation claim decisions involving another federal agency that could have implications for LQA eligibility determinations. However, until recently OPM did not post its compensation claim decisions on its website for the years 2003 through 2012. This is because, according to OPM officials, they lacked the funds needed during that 10-year period to comply with the statutory requirement that federal agencies make their electronic and information technology accessible to individuals with disabilities. OPM compensation claim decisions could not be posted unless they were compliant. These officials stated that they did not have the resources available to make the postings accessible to individuals with disabilities because funding for other OPM programs was prioritized ahead of funding for the updates necessary to comply with this requirement during that time. OPM officials stated that those compensation claim decisions are now compliant with the statutory requirement and are being posted. According to the officials, in June 2013 and August 2014, respectively, OPM posted all its compensation claim decisions from 2003 through 2012 and some decisions for 2013 and 2014.\nOPM officials told us that they are implementing a new web application for posting compensation claim decisions to the OPM website in a more timely manner. This web application—estimated to be fully functional by June 2015—will facilitate making compensation claim decisions accessible to individuals with disabilities when posted on OPM’s website. However, OPM officials acknowledge that they still have a backlog of decisions that have not been posted online because the web application was not operational when those decisions were made. We found that as of early May 2015, no new compensation claim decisions had appeared on OPM’s website since June 2014, during which time OPM officials told us they had adjudicated 20 claims, over half of which were related to LQA.\nIn addition, OPM officials told us they have not yet developed timeframes for individual compensation claim decisions to be reviewed and then posted online after these decisions have been made. For example, these officials have not determined how long it should reasonably be expected to take between the time when OPM sends a decision to the claimant and to the office that issued the final agency-level decision, and the time when the decision can be posted on its public website. Although there will be some expected lag time, since OPM must first notify the parties involved in the compensation claim before the compensation claim decision can be made publicly available, OPM has not determined how to ensure that the time it takes to post decisions is of a reasonable length. Standards for Internal Control in the Federal Government state that agencies must identify, capture, and distribute pertinent information in a form and in a timeframe for their employees to perform their duties efficiently. Managers should also ensure an adequate means of communicating with and obtaining information from external stakeholders who may have a significant effect on achieving their federal agency’s goals. Until OPM develops and implements timeframes for posting individual LQA-related compensation claim decisions online in a timely manner, it cannot ensure that agencies, including DOD, have access to the most up-to-date information to provide accurate guidance on issues relating to LQA eligibility determinations to their employees.",
"While DCPAS has not generally disseminated OPM compensation claim decisions that may affect LQA eligibility determinations and guidance for how to apply those decisions, DCPAS officials told us they recently assigned an official responsibility for doing so. As previously discussed, earlier this year OPM made compensation claim decisions from 2003 through 2012 and some decisions from 2013 through 2014 available on its website. OPM officials stated that they expect agencies—including DOD—to distribute OPM compensation claim decisions internally if they wish to do so. DCPAS officials agreed that their office should remain informed of OPM compensation claim decisions. According to OPM officials, while compensation claim decisions are binding at the individual case level, it is up to agencies to determine the extent to which the decisions necessitate broader policy changes. OPM officials also told us that it makes sense for agencies to reevaluate their policies if necessary in order to prevent future compensation claims and legal liabilities.\nWe found that military service component commands and local and regional human resource offices in the EUCOM and PACOM areas of responsibility varied in how they viewed and applied OPM compensation claim decisions when making LQA eligibility determinations, even when they are in possession of the decisions. For example, some officials in the Navy stated that they do not consider it mandatory to incorporate OPM compensation claim decisions into their broader personnel policies, while other Navy officials stated their understanding was that DOD components were obliged to comply with all OPM compensation claim decisions relating to LQA eligibility. Similarly, some Air Force officials stated that they considered OPM decisions related to LQA eligibility to be binding, but recognized that other Air Force officials considered them discretionary.\nDCPAS told us the recently assigned official will review OPM compensation claim decisions and determine the implications for DOD’s implementation of LQA eligibility determinations. This official will then disseminate those decisions that affect LQA eligibility determinations to DOD components, providing views on each decision’s implications and guidance for how components should use the decisions when making LQA eligibility determinations. This may help to reduce the confusion that exists among DOD components about how OPM compensation claim decisions should be applied when making LQA eligibility determinations.",
"Since DOD’s 2013 audit determined that 680 of its civilian employees assigned overseas had erroneously received LQA because of misinterpretations of eligibility requirements, DCPAS and DOD components have taken steps to clarify the eligibility requirements outlined in DOD’s LQA Instruction. The steps include DCPAS drafting an update to the instruction that reflects OPM’s single employer interpretation and coordinating with the components about their views on the definition of a U.S. hire. However, the Deputy Assistant Secretary of Defense for Civilian Personnel Policy or DCPAS, as delegated, have not carried out their responsibility for monitoring the implementation and effectiveness of DOD’s LQA Instruction, including monitoring reviews of LQA eligibility determinations conducted by DOD components. Without fulfilling this responsibility, DOD cannot ensure the consistent application of LQA eligibility requirements throughout the department, and is at risk for future erroneous payments of this allowance to its civilian employees overseas.\nAdditionally, agencies have missed opportunities to ensure consistency in LQA eligibility determinations. First, in light of State’s willingness to discuss revisions to the DSSR if requested and State’s ongoing DSSR review, DOD has an opportunity to work with State to ensure that State has the information it needs to determine whether the DSSR needs to be revised. Doing so would help reduce the risk of future misinterpretation of terms related to LQA eligibility requirements, including “substantially continuous employment by such employer” and “U.S. hire,” thereby avoiding situations similar to that which led to the 2013 LQA audit. Second, OPM has made some progress that has resulted in the posting of compensation claim decisions from the past 10 years on its website, but more recent decisions have not yet been posted. Further, while OPM is about to launch a new web application to post compensation claim decisions, it has not yet established timeframes for posting its backlog of decisions and any future decisions to ensure that the website remains up to date. Unless OPM establishes timeframes for posting compensation claim decisions to its website, the number of unposted decisions could grow, leading to continued delays in agencies’ ability to access the most recent decisions that may affect their LQA eligibility determinations.",
"To ensure that DCPAS and DOD components are determining LQA eligibility consistently with DOD’s LQA Instruction, the DSSR, and OPM compensation claim decisions, we recommend that the Secretary of Defense direct the Under Secretary of Defense for Personnel and Readiness to take the following two actions: require the Deputy Assistant Secretary of Defense for Civilian Personnel Policy or DCPAS, as delegated, to monitor reviews of LQA eligibility determinations conducted by DOD components; and discuss with State its concerns related to the DSSR to determine whether LQA eligibility requirements should be revised and then, as appropriate based on those discussions, request that State make any revisions deemed necessary, particularly with regard to the requirement for “substantially continuous employment by such employer” and the definition of a U.S. hire.\nTo ensure that agencies have access to recent OPM compensation claim decisions online, including those related to LQA, we recommend that the Director of OPM develop timeframes for posting its compensation claim decisions on OPM’s public website.",
"We provided a draft of this report to DOD, OPM, and State for review and comment. In written comments, which are summarized below and reprinted in appendix III, DOD concurred with the two recommendations directed to it. In its written comments, which are summarized below and reprinted in appendix IV, OPM concurred with the recommendation directed to it. State did not provide comments on the draft.\nIn its written comments, DOD noted that it is in the process of revising DOD Instruction 1400.25, Volume 1250, which provides guidance for overseas allowances and benefits for civilian employees. Further, DOD indicated that it welcomes State’s review of the DSSR and the opportunity to work with State on any proposed changes, including any changes DOD initiates.\nIn its written comments, OPM noted that, in May 2015, it used its new web application to successfully post 13 LQA-related claim decisions. OPM expects to complete testing of the new web application in June 2015 and post the current backlog within two months after testing is complete. Thereafter, OPM expects to post completed cases monthly. OPM also provided technical comments, which we have incorporated into the report, as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, the Secretary of State, the Director of OPM, and the Under Secretary of Defense for Personnel and Readiness. In addition, this report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions regarding this report, please contact me at (202) 512-5741 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix V.",
"To conduct this review, we used the Defense Finance and Accounting Service’s payroll data for fiscal years 2011 through 2014 to assess the number of employees who received a living quarters allowance (LQA), the total dollar amount spent for LQA, and the debt incurred for the employees determined by the Department of Defense’s (DOD) 2013 LQA audit to have been erroneously paid LQA. To assess the reliability of these data, we interviewed Defense Finance and Accounting Service’s knowledgeable officials about these data and performed electronic testing to identify obvious problems with completeness or accuracy. We found these data to be sufficiently reliable for the purposes of our report. See the Background section and appendix II of this report for additional information.\nTo evaluate the extent to which DOD has clarified its LQA eligibility requirements and is monitoring its components’ LQA eligibility determinations, we reviewed DOD Instruction 1400.25, Volume 1250, DOD Civilian Personnel Management System: Overseas Allowances and Differentials and a related September 2013 policy advisory. We also reviewed the Department of State (State) Standardized Regulations (DSSR) and selected Office of Personnel Management (OPM) compensation claim decisions to determine if DOD had incorporated into DOD’s current LQA Instruction OPM’s interpretation of the DSSR’s requirement for federal overseas civilian employees to be in “substantially continuous employment by such employer” prior to their current job. We interviewed officials from State’s Office of Allowances and OPM’s Merit System Accountability and Compliance division on OPM’s interpretation of key LQA eligibility requirements. In addition, we assessed a DOD policy advisory on the definition of a U.S. hire to determine if it was consistent with DOD’s current LQA Instruction and the DSSR. We also interviewed Defense Civilian Personnel Advisory Service (DCPAS) officials to assess their oversight of DOD components’ LQA eligibility determinations, including plans to conduct periodic audits. We also determined the status of DCPAS officials’ efforts to update DOD’s current LQA Instruction. We interviewed officials from the Army, Navy, Air Force, and Marine Corps who are involved in creating implementing LQA guidance for the military services and providing support to the overseas officials who make LQA eligibility determinations to identify potential challenges with implementing DOD’s current LQA Instruction and recommendations for improving the instruction and the DSSR. We also interviewed similar officials from the DOD office, the DOD field activity, and one DOD agency that were identified in the 2013 LQA audit: the Office of the Under Secretary of Defense for Intelligence, the Defense Logistics Agency, and the Department of Defense Education Activity. We interviewed officials at U.S. European Command (EUCOM) and U.S. Pacific Command (PACOM) to identify potential effects that the 2013 LQA audit had on those commands’ missions and readiness.\nWe also interviewed officials involved in determining LQA eligibility from the Army, Navy, and Air Force service component commands in the EUCOM and PACOM areas of responsibility, as well as 15 of the 33 local human resource offices that report to those service component commands to identify potential challenges in applying LQA eligibility requirements at the operational level. To select the local human resource offices we conducted interviews with, we selected a nongeneralizable sample of 15 of the 33 offices from service component commands in both the EUCOM and PACOM areas of responsibility, as well as offices from each of the military departments’ service component commands. In developing our selection criteria, we chose local human resource offices with the most employees determined to have been erroneously paid by the 2013 LQA audit. We also chose a set of local human resource offices with relatively few such employees, which allowed us to identify any variation in how eligibility determinations were made between them and the other local human resource offices with the most employees determined to have been erroneously paid. Specifically, we interviewed officials from nine human resource offices in the EUCOM area of responsibility and six human resource offices in the PACOM area of responsibility, which included seven Army human resource offices, five Air Force offices, and three Navy offices. While the results of these interviews are not representative of all offices, they provide valuable insights.\nTo evaluate the extent to which DOD, State, and OPM have helped ensure consistency in the interpretation of LQA eligibility requirements, we interviewed officials from DCPAS, DOD components, and the local human resource offices to determine the extent to which DOD has communicated with State and received and disseminated OPM compensation claim decisions with implementation instructions during and since the 2013 LQA audit. We evaluated DCPAS’s process for collaborating with State regarding the DSSR’s definition of a U.S. hire and “substantially continuous employment by such employer.” We also interviewed officials from State’s Office of Allowances on the extent to which they communicated with DCPAS on issues related to LQA eligibility requirements and the process for updating the DSSR. We assessed DOD’s collaboration with State against Standards for Internal Control in the Federal Government. To evaluate DOD’s process for receiving and disseminating OPM compensation claim decisions related to LQA eligibility requirements, we evaluated the extent to which DCPAS, DOD components, and the local human resource offices we interviewed receive, share, and incorporate OPM compensation claim decisions into LQA eligibility determinations. We also interviewed officials from OPM’s Merit System Accountability and Compliance division to assess the process for adjudicating OPM compensation claim decisions and procedures for disseminating those decisions to agencies and publicly on OPM’s website.\nWe conducted this performance audit from July 2014 to June 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our objectives.",
"In response to the January 3, 2013, memorandum from the Acting Principal Deputy Under Secretary of Defense for Personnel and Readiness, all Department of Defense (DOD) components conducted an audit of all “locally hired overseas employees” (that is, employees hired overseas) currently receiving a living quarters allowance (LQA). On May 15, 2013, the Acting Under Secretary of Defense for Personnel and Readiness issued a memorandum announcing the LQA audit conclusion and results. The audit results showed that 680 DOD civilian employees were considered to have been “erroneously paid LQA after having been hired overseas,” 444 of whom were identified in the audit as being ineligible for LQA because of inconsistency with the single employer interpretation.\nTable 2 shows the DOD components to which the 680 employees were assigned, as identified in DOD’s 2013 audit as erroneously receiving LQA.\nFigure 2 shows the command locations of the overseas assignments of the 680 employees, as identified in DOD’s 2013 audit of LQA.\nEmployees identified by the 2013 LQA audit as erroneously receiving LQA were determined to owe a debt to the United States for the full amount of LQA payments they had been erroneously granted. DOD is required to initiate collection on all debts due the United States promptly and in accordance with applicable laws and regulations. Because of the unique circumstances involved with these debts, however, the Office of the Under Secretary of Defense for Personnel and Readiness decided that it was in the best interest of the department to support requests for debt waivers, so long as each employee making a request was unaware that he or she had not been entitled to LQA and there was no evidence of misrepresentation, fraud, or deception to initially acquire LQA. The Defense Finance and Accounting Service received and sent 592 debt waiver applications to the Defense Office of Hearing and Appeals for review, and all of these applications were approved. As shown in table 3, the total amount of debt incurred was about $104.5 million.\nTable 4 shows the status of employees, as of January 2015, who were identified in DOD’s 2013 audit of LQA.\nDOD took additional measures to assist those employees who were determined by the 2013 LQA audit to have been erroneously paid LQA. For example, a team from the Defense Finance and Accounting Service traveled to local human resource offices in the U.S. European Command and U.S. Pacific Command areas of responsibility to directly assist employees who were determined to have been erroneously paid LQA with preparing requests for waivers of debt. In addition, DOD authorized a temporary limited exception to a standard priority placement program for employees determined to have been erroneously paid LQA that allowed them to be placed in U.S. job vacancies that were otherwise subjected to a hiring freeze. DOD also provided counseling services to those employees who were determined to have been erroneously paid LQA.",
"",
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"In addition to the above named contact, Tina Won Sherman, Assistant Director; Tracy Barnes; Nick Benne; Tom Costa; Alissa Czyz; Lorraine Ettaro; Susannah Hawthorne; Amie Lesser; Biza Repko; Steven Rocker; Wayne Turowski; Sarah Veale; and Cheryl Weissman made key contributions to this report."
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{
"question": [
"What is the current status of LQA eligibility requirements?",
"Through what regulations does DOD make LQA eligibility determinations?",
"What problems have occured with LQA eligibility?",
"To what were these errors attributed?",
"What steps has DOD taken to improve this process?",
"To what extent has DOD evaluated its eligibility process?",
"What are the possible effects of the lack of monitoring?",
"How have concerns about LQA eligibility unfolded?",
"How might State participate in this process?",
"Why is it necessary that DOD and State communicate?",
"To what extent are the OMP compensation claim decisions readily available?",
"How has OPM attempted to increase access?",
"Why is it necessary that decisions be widely available?",
"What is the purpose of LQA?",
"What is the scale of LQA spending?",
"What was GAO asked to study?",
"What does its report discuss?"
],
"summary": [
"The Department of Defense (DOD) and its components have taken steps to clarify living quarters allowance (LQA) eligibility requirements for civilian employees overseas, but DOD has not monitored its components' LQA eligibility determinations.",
"DOD and its components are to make LQA eligibility determinations in accordance with Department of State (State) Standardized Regulations (DSSR) as well as department-wide and component-level guidance.",
"However, after conducting an audit in 2013, DOD determined that 680 of its civilian employees had erroneously received LQA.",
"Most erroneous LQA payments were attributed to misinterpretations of eligibility requirements. This determination was based in part on a 2011 interpretation of a DSSR eligibility requirement for LQA by the Office of Personnel Management (OPM), which settles federal employee compensation claims.",
"After the audit, DOD issued a memorandum and point paper to implement OPM's interpretation and clarify LQA eligibility requirements. DOD is also updating its LQA Instruction, DOD Instruction 1400.25, Volume 1250, to incorporate OPM's 2011 interpretation. Some DOD components also issued clarifying guidance and adopted new procedures for making LQA eligibility determinations. For example, U.S. Air Forces in Europe developed a flow chart to help human resource specialists determine whether overseas job applicants are eligible for LQA.",
"DOD's LQA Instruction directs DOD components to conduct periodic quality assurance reviews of LQA eligibility and payments, but according to DOD and component officials, they have not consistently done so. Further, the Deputy Assistant Secretary of Defense for Civilian Personnel Policy is responsible for monitoring the implementation and effectiveness of DOD's LQA Instruction and administers this responsibility through the Defense Civilian Personnel Advisory Service. However, this office has not monitored its components' reviews of LQA eligibility determinations.",
"Without such monitoring, DOD cannot ensure that LQA eligibility determinations are being made in accordance with applicable regulations and policies.",
"DOD components have raised concerns that some DSSR LQA eligibility requirements are ambiguous or outdated, but DOD has not discussed these concerns with State to determine whether the DSSR should be revised.",
"State officials told GAO that they have collaborated with DOD and other agencies on eligibility issues for other allowances in the past and would be open to future discussions.",
"Without communicating its concerns to State, DOD cannot ensure that State has the information it needs to make any adjustments to the DSSR, if appropriate.",
"Until recently, OPM had not made its compensation claim decisions widely available to federal agencies, including DOD, and the public because of limited funding.",
"OPM is implementing a new web application for posting compensation claim decisions to its website, but has not established timeframes to routinely post individual decisions.",
"In the absence of doing so, OPM cannot ensure that agencies will have timely access to the most up-to-date information on LQA eligibility issues.",
"DOD provides LQA as an incentive to recruit eligible individuals for civilian employee assignments overseas.",
"In 2014 DOD spent almost $504 million on LQA for about 16,500 civilian employees to help defray overseas living expenses, such as rent and utilities.",
"GAO was asked to review DOD's implementation of LQA policies for overseas employees.",
"This report evaluates the extent to which (1) DOD has clarified its LQA eligibility requirements and is monitoring its components' LQA eligibility determinations; and (2) DOD, State, and OPM have helped ensure consistency in the interpretation of LQA eligibility requirements."
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CRS_R44680
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{
"title": [
"",
"Introduction",
"U.S. Law and Internet Gambling",
"Online and Traditional Gambling",
"Lotteries",
"Commercial Casinos",
"Tribal Gambling",
"Indian Gaming Regulatory Act",
"Financing Uncertainty",
"Pari-Mutuel Betting",
"Sports Betting",
"Regulation of Internet Gambling",
"Problem Gambling",
"Gambling as a Government Revenue Source",
"State Action on Internet Gambling",
"Congressional Action on Internet Gambling",
"Appendix. A Short History of U.S. Gambling and Lotteries"
],
"paragraphs": [
"",
"Gambling, once widely outlawed, is now a heavily regulated, taxed activity that is legal in some form in all states except Hawaii and Utah. While state governments have the main responsibility for overseeing gambling, Congress historically has played a significant role in shaping the industry. Congressional actions date back to 1960s-era antiracketeering laws, a 1988 statute setting policy for Indian gambling, and a 1992 law banning sports betting in all but four states.\nLike so many other industries, the gambling industry has been transformed by developments in computing and telecommunications. Antigua and Barbuda offered the first Internet gambling sites in the mid-1990s. The first online poker site, Planet Poker, was launched from Costa Rica in 1998. Online gambling is now legal in more than 85 countries, although some of the biggest potential markets, including China, Japan, South Korea, and the United States, continue to prohibit many forms of gambling over the Internet. Delaware, Nevada, and New Jersey are the only states that currently allow intrastate Internet gambling. Online gambling is also legal in the U.S. Virgin Islands, but it has not yet gone live. It is explicitly outlawed in several states, including Indiana, Louisiana, Montana, and Washington.\nMany of the most popular sites are licensed in the European Union (EU), which accounts for approximately 40% of the worldwide online gambling market. According to one private estimate, annual gross global revenue from online, television, and mobile gambling is now around $50 billion, and is forecast to exceed $65 billion by 2021 (see Figure 1 ). H2 Gambling Capital, a consulting firm, estimates that Americans gambled $2.1 billion on foreign gambling websites in 2016. An American Gaming Association (AGA) survey showed that 4% of U.S. adults who gambled in 2014 did so over the Internet.\nDebate over the appropriate federal role has become more prominent with the increasing interest in online gambling. No federal legislation governing Internet gambling has been passed in recent Congresses, but there have been major developments at the state level. The spread of Internet gambling worries some casino operators, including many Indian tribes. With overall U.S. casino revenues barely growing, these opponents fear that easier access to Internet gambling could reduce patronage of casinos and related hotels and restaurants. Other casino owners disagree, seeing Internet gambling as a potentially significant new revenue source and a possible complement to land-based casino operations. This division within the gambling industry is one reason that bills concerning Internet gambling, including some that would subject it to federal licensing and others that would ban it altogether, have gained little traction in Congress.",
"The U.S. government has acted against Internet gambling under a series of 1960s statutes, including the Wire Act, which makes it a federal crime to use telecommunications to conduct illegal gambling. In one of the best-known cases, Jay Cohen, a co-operator of the Antigua-based World Sports Exchange, was arrested in 1998 and charged with violating the Wire Act for advertising his company's services in the United States and accepting wagers from bettors in states where such gambling was illegal. Cohen was sentenced to 21 months in prison and fined $5,000. The U.S. Supreme Court declined to hear his appeal.\nIn 2003, the U.S. Department of Justice (DOJ) warned media outlets that running advertisements for gambling websites could violate the Wire Act. Microsoft, Google, and Yahoo agreed in 2007 to pay a combined total of $31.5 million to resolve DOJ claims that they were promoting illegal gambling by running advertisements for certain websites.\nIn 2006, partly in response to the recommendations of a congressionally created commission, Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA; P.L. 109-347 ). The law bars gambling-related businesses from accepting payment that is outlawed by state or federal statutes. UIGEA makes it illegal for banks and credit card firms to process payment to online gambling companies. However, UIGEA does not outlaw any specific types of gambling over the Internet and allows states and tribes to permit Internet gambling within their borders if they apply certain safeguards. While UIGEA included exceptions for certain intrastate and tribal Internet gambling operations, including state lotteries and Indian casinos, it did not clarify the scope of older laws that DOJ has used to prosecute Internet gambling, such as the Wire Act.\nOn April 15, 2011, which online poker players have dubbed \"Black Friday,\" the U.S. Attorney for the Southern District of New York indicted the founders of three major Internet poker websites—PokerStars, Full Tilt Poker, and Absolute Poker/Ultimate Bet—for allegedly using phony corporations and websites to disguise illegal payments to their operations. DOJ charged that the companies, which were located overseas but took bets from U.S. players, violated UIGEA, the Wire Act, and other federal laws. In September 2011 DOJ filed a civil suit against Full Tilt Poker, which had an estimated 60% of the global Internet poker market, for allegedly defrauding bettors. On July 31, 2012, all civil complaints against PokerStars and Full Tilt Poker were dismissed following agreements with DOJ, payments of $731 million to settle the claims, and the purchase of Full Tilt by PokerStars. Fulltiltpoker.com reopened in Europe. With the exception of New Jersey, Americans cannot gamble on the Full Tilt or PokerStars websites. PokerStars in 2015 acquired licenses to operate in New Jersey, allowing it to offer games involving real money to players physically located in the state.\nDOJ announced a major shift in its view of Internet gambling in December 2011, when it concluded that the Wire Act applies only to sport-related gambling activities. This reversed its long-held assertion that all forms of Internet gambling are illegal. DOJ's opinion has been widely interpreted to mean that states can allow online gambling if it does not involve sports.\nA number of states and tribes have taken advantage of the DOJ memo to allow online betting on horse races and Internet lotteries. Nevada now permits online poker, and Delaware and New Jersey have authorized all forms of Internet gambling (poker, slots, and various table games), with the exception of sports wagering. Internet gambling is also regulated in the U.S. Virgin Islands, another tiny Internet gambling market. These state-authorized activities rely on software that uses global positioning technology, Internet addresses, and other data to ensure that gamblers are physically located within the state's borders and are old enough to gamble legally. Regulations to implement UIGEA have also made it easier for state lotteries and other legal gambling operators to receive payment via credit cards and other electronic methods.\nWith at least some restrictions now lifted, many participants in the gambling industry have been exploring ways to increase their involvement in Internet gambling. Companies not involved in the traditional gambling industry are also interested. Social gaming—games hosted on social networking sites such as Facebook and Google+—provides a way to play online games in the United States, but without cash prizes. Internet sweepstakes cafés, where consumers buy phone cards that, as a bonus, include sweepstakes entries and then use the cards to play games that resemble slot machines, are estimated to take in $10 billion to $15 billion annually nationwide, but Ohio, Florida, Mississippi, and California have outlawed them. Daily fantasy sports (DFS), where players assemble imaginary teams on online platforms for a chance to win cash jackpots based on the statistical performance of players in real-life games, is another form of gambling that can be played over the Internet. In 2014, DFS operators were reported to have $86 million in revenue after payouts to winning players. At the state level, a patchwork approach is being used to regulate DFS. Nevada, for example, requires a DFS operator to obtain a license. A few states, including Kansas, allow DFS companies to operate without regulation. And some states, such as Washington, expressly prohibit Internet gambling, including online fantasy sports wagering.",
"Many traditional forms of gambling, which can require substantial capital investments, could be affected in significant ways by the legalization of additional Internet gambling. Currently, 19 states permit commercial casino gambling. On the one hand, online gambling could allow land-based casinos to expand their businesses and promote their brands. Yet it could also present a new competitive challenge if fewer customers frequent brick-and-mortar gambling establishments. Casinos that rely heavily on slot machines, especially those that primarily serve day trippers, may face the greatest challenges.\nTaken together, gambling industries and casino hotels employed about 400,000 people nationwide in 2015 (see Figure 2 ). Of these, 129,100 worked in gambling, while 265,800 were employed in casino hotels. Nearly two-thirds of these jobs were located in Nevada, New Jersey, Louisiana, or Mississippi. Gambling industry and casino hotel employment fell 7% between 2005 and 2015. According to the Bureau of Labor Statistics, the average annual wage in 2015 for gambling industry employees was $31,814, and casino hotel workers earned an average of $36,983.\nThe U.S. market for gambling consists of several distinct sectors, each with its own business model and technology.",
"Lotteries, generally defined as games of chance with the winner chosen via the drawing of lots, are the most widespread form of gambling in the United States. Regulated by state governments, lotteries are now run in 44 states and the District of Columbia. Unlike many other countries, including Ireland, the United Kingdom, and Germany, the United States does not have a national lottery.\nSince New Hampshire reinstituted the modern lottery in 1964, state offerings have moved from rudimentary games with preprinted tickets and weekly or monthly drawings to instant scratch-off tickets, lotto games (in which players pick their own combination of numbers), and, in a growing number of states, video lottery terminals, commonly referred to as VLTs, that offer casino-type games such as blackjack and poker. According to the Rockefeller Institute of the State University of New York, the majority of states transfer 20% to 30% of gross lottery revenues to their state treasury.\nStates have banded together to offer lottery games such as Powerball across state lines, working through the Multi-State Lottery Association and the Mega Millions consortium. The two lottery groups in 2010 agreed to cross-sell tickets. Such mega-games offer jackpots that can be in the millions of dollars, increasing demand. In 2016, Powerball made history with a jackpot of $1.6 billion.\nLottery gross gambling revenues reached $31.4 billion in FY2015, according to the North American Association of State and Provincial Lotteries (NASPL). This represented an increase of about 3% from FY2014. In recent years, state lottery administrators have experimented with strategies to increase revenue, such as online sales. Illinois was the first state to privatize the management of its lottery in 2011, in the expectation that a private operator might be better able to boost sales while the state would benefit from an up-front payment. Illinois's lottery privatization has not been smooth. In 2015, the state canceled its contract with Northstar Lottery Group, a private company, primarily because the company failed to meet the contracted revenue targets for several straight years; however, Northstar will manage the Illinois Lottery until January 1, 2017, or until a new private company is chosen. Illinoisans can continue to buy lottery tickets on a website or by using an app on their mobile phones, even though the law authorizing the sales expired in March 2016. Illinois's Internet lottery sales totaled about $10 million in FY2016. Indiana and New Jersey have also privatized their lotteries.\nAs of September 2016, Georgia, Illinois, Michigan, and Kentucky were the only states selling lottery tickets online. Colorado has expressly prohibited online lottery sales until at least July 1, 2017, and Minnesota suspended the sale of lottery scratch-off and draw tickets through a website or self-service device in 2015.",
"According to the Rockefeller Institute, at the end of FY2015 there were about 450 land- or riverboat-based commercial casinos in the United States, along with 55 racinos (gambling venues located at race tracks). In addition, AGA has reported there are more than 400 card rooms in the United States. As of October 2016, commercial casinos, owned and managed by private companies without the involvement of Indian tribes, operate in 18 states. State-licensed boat or barge casinos are now permitted in six states, namely Illinois, Indiana, Iowa, Louisiana, Mississippi, and Missouri. Racinos currently operate in 13 states. AGA reports gross revenues for commercial casino operators at $38.3 billion in 2015 (see Figure 3 ). But the industry's rapid expansion is over. With new casino properties open in nearby states, five Atlantic City casinos have been shuttered since 2014. In Mississippi, three casinos have also closed since 2014, including Harrah's in Tunica, MS. The number of commercial casinos in Colorado dropped from 40 in 2013 to 36 in 2015.\nAGA reports that slot machines now account for 70% of revenue on commercial casinos' floors, up from about 40% in the 1970s. The machines are increasingly sophisticated, using electronic screens that display a variety of games, and offering combined jackpots that can run into the millions of dollars. Commercial casinos in South Dakota and Iowa earn more than 90% of their revenues from slot machines. In Nevada, where table games are more important than in other states, slot machines accounted for more than 60% of gambling revenues in 2015.\nWith more than 270 locations with each grossing more than $1 million in gambling revenue, Nevada had the largest number of commercial casinos in 2015. The state is home to 60% of all U.S. casino facilities. Other major locations with commercial casinos are Atlantic City, the Chicago area (including neighboring parts of Indiana), Detroit, Connecticut, Philadelphia, St. Louis, and the Mississippi Gulf Coast. Each generated $2 billion or more in casino revenues in 2014 (see Table 1 ). While many casinos, such as riverboat casinos, cater to day visitors, major casinos in Las Vegas, Atlantic City, and other select areas market themselves as vacation destinations, with high-end amenities, convention and meeting facilities, and big-name entertainers. For example, Las Vegas casinos have become increasingly reliant on hotel rooms, food, night clubs, and entertainment for revenue. Gambling revenue on the Las Vegas Strip accounted for slightly less than 35% of total revenue of casino hotels in 2015, compared to nearly 59% in 1984.\nCommercial casinos are regulated by the states. States generally mandate background checks for key employees, specify the level of payouts to players, and require audits and inspections. Many large casino companies, such as Caesars Entertainment, MGM Resorts International, Wynn Resorts, and Las Vegas Sands Corporation, are publicly traded on U.S. stock exchanges, making them subject to Securities and Exchange Commission financial reporting requirements.",
"According to the National Indian Gaming Commission (NIGC), an independent federal regulatory agency within the Department of the Interior, 244 of the 566 federally recognized tribes ran gambling operations across 29 states in 2016. More than 470 Indian facilities generated $29.9 billion in gross gambling revenue in FY2015 (see Figure 4 ). Notwithstanding the recession-related declines in 2009 and 2010, Indian gambling revenues have risen steadily since the Indian Gaming Regulatory Act (IGRA; P.L. 100-497 ) was passed in 1988.\nMany Indian gambling establishments are relatively small, but tribes also own major casinos such as the Mohegan Sun, operated by the Mohegan Tribal Gaming Authority Management Board, and Foxwoods Resort Casino, owned and operated by the Mashantucket Pequot Tribal Nation. Foxwoods is not only the nation's largest tribal casino, but one of the largest casinos in the United States. Both are located in Connecticut. According to a private report, the largest casinos (estimated to account for about the top 6% of all Indian gaming facilities) accounted for about 40% of tribal gambling revenues in 2015.\nSome tribes are interested in sponsoring online gambling, including California's Alturas Indian Rancheria tribe, California's Iipay Nation of Santa Ysabel, and the Iowa Tribe of Oklahoma. The Tribal Internet Gaming Alliance, which currently includes the Lac du Flambeau Band of Lake Superior Chippewa Tribe and the Bad River Band Chippewa Tribe, was established in 2013 to help shape federal Internet gambling policy. The Indian tribes that operate casinos generally have not weighed in on daily fantasy sports, but some are concerned that the DFS industry could affect the near $30 billion in annual revenue from their existing gambling facilities. Recently, the Mille Lacs Band of Ojibwe launched a DFS platform, Grandfantasysports.com, which is open to customers in 11 states, including California, Colorado, Mississippi, Nebraska, South Dakota, and Wisconsin. (For more on daily fantasy sports, see \" Sports Betting \" below.)",
"Congress passed the IGRA after the Supreme Court held in 1987 that state law does not apply to tribal gambling on tribal lands. IGRA authorizes three classes of gambling:\nClass I social gaming, for prizes of minimal value or in connection with traditional tribal ceremonies, is subject to tribal regulation. Class II bingo and card games, excluding baccarat and slots, are subject to joint tribal and federal regulation. Class III gaming includes all other kinds of gambling and is subject to both state and tribal control through a tribe-state compact, which must comply with a federal framework.\nFor a tribe to offer class II and class III gambling on a reservation or land held in trust, the tribe must be \"located in a State that permits such gambling for any purpose by any person, organization or entity.\" Federal courts have interpreted this provision to permit tribes to conduct any type of gambling permitted in the state, but without state limits or conditions. For example, tribes in states that permit \"Las Vegas\" nights for charitable purposes may seek to negotiate a compact with a state that allows for class III casino gambling. On the other hand, the fact that state law permits some form of lottery is not, in itself, sufficient to permit a tribe-state compact allowing all forms of casino gambling.\nThere has been controversy regarding so-called reservation shopping, in which tribes, often in rural areas, seek to locate casinos on land closer to urban centers in order to attract more customers. The Secretary of the Interior has authority to approve tribe-state compacts. NIGC oversees class II gaming, tribal gaming ordinances, and some regulatory issues. Its chairman is appointed by the President and confirmed by the Senate. The other two commissioners are appointed by the Secretary of the Interior.\nIGRA places limits on the use of tribal revenues from Indian gambling. Among the permissible uses are education, health care, tribal government and other development activities, charitable giving contributions to local governments, and per capita distributions to tribal members. Because Indian tribes are sovereign nations under federal law, they are not subject to regulations by state or local governments and do not pay taxes on income generated by commercial activities. Tribes pay employment taxes, however, and are taxed on wagering. In negotiating compacts with state governments, some tribes have agreed to share a portion of proceeds from class III gambling with the states.",
"As is the case with commercial casinos, some tribal operations that expanded in recent years have had difficulty meeting or restructuring debt obligations. The Mashantucket Pequot Nation, which operates the Foxwoods casino, defaulted in 2009 and completed the restructuring of its debt of $2 billion on July 1, 2013. According to recent news reports, Foxwoods remains in a precarious financial position, with outstanding loans of around $1.7 billion. The Mohegan Tribal Gaming Authority, which refinanced $1.64 billion of long-term debt in March 2012, announced layoffs involving hundreds of employees at the Mohegan Sun in several years since then. Because tribes are sovereign nations, there are emerging complications for lenders. For example, the Mohegan tribe's constitution gives its Gaming Disputes Court, made up of a trial court and an appeals court, exclusive jurisdiction over disputes involving gambling. The Mohegan Sun 20 15 Annual Report spelled out some of the potential legal issues:\nWe, the Tribe and our wholly-owned subsidiaries may not be subject to, or permitted to seek protection under, the federal bankruptcy laws since an Indian tribe and we, as an instrumentality of the Tribe, may not be a \"person\" eligible to be a debtor under the U.S. Bankruptcy Code. Therefore, our creditors may not be able to seek liquidation of our assets or other action under federal bankruptcy laws. Also, the Gaming Disputes Court may lack powers typically associated with a federal bankruptcy court, such as the power to non-consensually alter liabilities, direct the priority of creditors' payments and liquidate certain assets. The Gaming Disputes Court is a court of limited jurisdiction and may not have jurisdiction over all creditors of ours or our subsidiaries or over all of the territory in which we and our subsidiaries carry on business.\nAn ongoing dispute between Wells Fargo Bank and Saybrook Investors LLC, and Wisconsin's Lac du Flambeau Band of Lake Superior Chippewa Indians could affect gaming financing. Wells Fargo has sued the tribe over its failure to make monthly payments on a $50 million tribal bond to consolidate debt and invest in a riverboat casino operation in Mississippi. The U.S. District Court for the Western District of Wisconsin in 2010 found that the bond deal was invalid because it had not been reviewed by the National Indian Gaming Commission, as the court said was required under IGRA. The complicated and long-running dispute has continued after a remand in September 2011 by the Seventh Circuit Court of Appeals. It may take more years and possibly a few more appeals for a ruling on the validity of the bond documents other than the bond indenture.",
"Legal in 43 states, pari-mutuel betting is defined as \"player-banked betting with all the bets pooled and prizes awarded from the pool.\" The most common examples in the United States are dog and horse racing and jai alai (a game played on a court with a ball and wicker racket), and other sporting events in which participants finish in ranked order.\nIn recent years, the industry has developed an extensive system of Internet and off-track wagering. In 2000, Congress approved legislation to amend the definition of \"interstate off-track wager\" in the Interstate Horseracing Act (15 U.S.C. §§3001-3007). Proponents claim the amendment permits tracks to accept bets online from individuals located in states where pari-mutuel betting is legal (although not necessarily where either off-track or online betting is legal); the Department of Justice disagrees. A bill introduced in the 114 th Congress, H.R. 707 , would have clarified that the Wire Act and other laws do not apply to the Interstate Horseracing Act.\nDespite the legal uncertainty, interstate pari-mutuel betting with remote devices is growing through the use of advance deposit wagering (ADW). Players first set up accounts with companies such as Twinspires (owned by the Churchill Downs racetrack), Xpressbet, or TV Games Network. They then use the accounts to place bets on races over the phone, on a computer, with mobile devices, or with set-top remote control devices linked to television channels that broadcast horse racing. The Oregon Racing Commission, which licenses and audits many of the largest firms taking advance deposit wagers, reports that online wagering via its licensed companies rose to $2.9 billion in 2015, from $962 million in 2005.",
"Congress in 1992 passed the Professional and Amateur Sports Protection Act (PASPA; P.L. 102-559 ) with strong support from the National Basketball Association, the National Football League (NFL), Major League Baseball, the National Hockey League, and the National Collegiate Athletic Association, among others. The law generally barred state governments from licensing, sponsoring, operating, advertising, promoting, or engaging in sports gambling. It contained exceptions for Nevada, Oregon, Delaware, and Montana, each of which allowed certain types of sports betting at the time of passage. New Jersey failed to pass legislation in time to qualify for the PASPA exemption. Currently, Nevada is the only state to permit wagers on a full complement of sporting events and leagues. According to the University of Nevada, Las Vegas Center for Gaming Research, casino-goers in Nevada wagered about $4.2 billion on sporting events in 2015, a rise from $3.4 billion in 2012.\nDelaware, which allowed only limited multigame or parlay betting on NFL contests at the time the 1992 law was passed, enacted a law in 2009 to create a state sports lottery. The NFL and other sports leagues challenged the law, and the U.S. Third Circuit Court of Appeals ruled that the state was limited to offering narrow betting, similar to what existed in 1992. The U.S. Supreme Court in May 2010 declined to hear an appeal, effectively ending Delaware's effort to expand sports betting. After its voters authorized sports betting at casinos and racetracks in 2011, New Jersey mounted other court challenges to the constitutionality of PASPA. In February 2016, the U.S. Third Circuit Court of Appeals ruled that New Jersey's sports wagering law conflicts with PASPA and could not be implemented. The Supreme Court may consider whether to hear New Jersey's appeal of the lower court ruling. According to an estimate by AGA, Americans spent around $150 billion on illegal sports betting in 2015.\nTwo bills have been introduced in the 114 th Congress related to sports gambling. The New Jersey Betting and Equal Treatment Act of 2015 ( H.R. 457 ) would expressly exempt New Jersey from PASPA. The Sports Gaming Opportunity Act ( H.R. 416 ) would create an exemption from the PASPA prohibitions for any state that establishes sports gambling through laws enacted on or after January 1, 2015, and that go into effect no later than January 1, 2019.",
"Federal Internet gambling legislation could benefit some sectors of the gambling industry more than others, depending on how it is crafted. State lottery officials, for example, have expressed concern that proposals that would give existing gambling establishments preference for online poker licenses could give those businesses an advantage in the market. By the same token, commercial casinos are worried that under the existing legal framework, online state lottery promotions, such as keno-type games, could encroach on their turf. If the United States passes federal online gambling legislation and all states opt in during the next 12 months, H2 Gambling Capital predicts a U.S. online gambling market of $15 billion to $16 billion by 2021.\nInterest groups and gambling companies are at odds over remote gambling. One of the strongest proponents of legalized online poker is the Poker Players Alliance. Caesars Entertainment and MGM are among the large casino operators that have urged Congress to adopt federal legislation to regulate Internet gambling to avoid a patchwork of state regulations and different tax rates. These interests formed the Coalition for Consumer and Online Protection in 2014. Aligned against them are others, including most prominently the Coalition to Stop Internet Gambling. The North American Association of State and Provincial Lotteries (NASPL) and the National Conference of State Legislatures (NCSL) want individual states to have the right to legalize, license, and tax Internet gambling. In 2015, the National Council of Legislators from Gaming States (NCLGS) adopted a list of 10 policy standards for Internet gambling legislation addressing topics such as player protections, taxation, licensing, enforcement, payment processing, and geolocation standards. The National Governors Association largely echoes this view, and it has called on lawmakers to include state input before acting on any online gambling legislation.\nMany Indian tribes have declared their opposition to any federal gambling regime, although some of the larger tribes are now beginning to reverse their previous positions, viewing online gambling as a possible business opportunity. The National Indian Gaming Association (NIGA) has a set of conditions it wants to see met in any bill to legalize interstate Internet gambling. The tribes, as sovereign nations, want to ensure that their Internet gambling revenues are not taxed, that qualified tribal operations are allowed to participate in the online market from the outset, and that existing state-tribal compacts are not undermined. NIGA has been concerned that some proposals could give commercial casinos and other established businesses early entry into the market, possibly putting tribal operations at a disadvantage.\nEven if it leads to the growth of gambling revenues and employment at the national level, federal Internet gambling legislation has the potential to cause revenue and employment declines in certain locations. These effects may well depend upon the details of whatever legislation Congress passes and the specific actions taken by individual states in response.\nEnforcement of Internet gambling laws also presents logistical difficulties, including monitoring myriad websites to make sure that minors do not gamble; verifying the geographic location of gamblers on sites that are limited to certain states or territories; and auditing websites and payment systems. Consumers may experience difficulty resolving disputes with online operators whose physical locations may be in countries with weak law enforcement or extreme banking secrecy.\nFederal rules to implement UIGEA require financial firms to engage in due diligence to ensure that businesses engaged in Internet gambling furnish proof of legal operating authority and that state or tribal gambling ordinances include requirements verifying the age and geographic location of clients. Nonetheless, the Department of Justice, the Department of State, and state attorneys general have raised questions about the potential for fraud and money laundering. In December 2015, Joseph S. Campbell, assistant director of the FBI Criminal Investigative Division, cautioned that Internet poker could \"give rise to potential criminal activity,\" and that \"using online tools, like TOR networks and Virtual Private Networks, criminal actors could conceal their identity, location, and true gambling activity.\"\nThe Oregon Racing Commission has addressed some of the regulatory issues in its procedures for licensing firms that provide advance deposit wagering (ADW) on horse races. Some ADW firms ran into difficulties after final regulations to implement UIGEA took effect, as several credit card issuers blocked payment to the companies out of concern that they might be linked to illegal gambling operations. Oregon now requires such firms to be licensed and audited by the commission, whether or not they are physically headquartered in the state. ADW firms must provide financial information including resources and detailed projections of revenue, expenditures, and cash flows by month; a list of all personnel; a segregated account with a federally insured bank to hold the funds of its account holders; a $50,000 security fee; and proof of \"an operational presence within the State of Oregon,\" such as a call center or a subcontract with an existing call center.",
"As states have expanded legal gambling, several have also created programs—funded through tax revenues or assessments on private companies—for treatment of individuals who are considered problem or pathological gamblers. The National Council on Problem Gambling (NCPG) estimates, based on previous research, that about 1% of the population can be classified as pathological gamblers and another 3% as problem gamblers. It has estimated that problem gambling affects 6 million to 8 million Americans. Adolescents and males are considered to be at higher risk of a gambling disorder. In April 2012, NCPG released standards for responsible Internet gambling, which are intended to provide guidance to new online operators and regulators.\nAccording to a survey by the Association of Problem Gambling Service Administrators, nearly 40 states offer some type of publicly funded gambling addiction service; about 15 states fund employees who work full-time on the issue. Spending ranges from nothing in a dozen states to a high of about $1.42 per capita in Delaware.\nOpponents of legislation to expand Internet gambling cite the potential for an increase in problem gambling if the ease of online gambling encourages even more people to gamble. As dissenting members of the House Financial Services Committee wrote in opposing a bill in the 111 th Congress that would have allowed Internet gambling ( H.R. 2906 ),\n[y]oung people are particularly at risk. John Kindt, Professor of Business Administration at the University of Illinois says: \"It's 'click the mouse, lose your house.' It puts gambling at every work desk and every school desk and in every living room. It would increase problem gambling rates exponentially.\" By approving this bill, the largest expansion of gambling in history, the Committee has taken steps to open casinos in every home, dorm room, library, iPod, Blackberry, iPad and computer in America.\nBecause Internet gambling has developed only recently, the scientific literature on its effects on problem gambling is in its infancy. In 2013, the American Psychiatric Association classified problem gambling as an addictive disorder akin to alcoholism. Gambling addiction experts at Washington University in St. Louis found that \"based on available research, it is unclear if the Internet contributes to more gambling problems, but we know that those who choose to gamble using the Internet and experience problems are often involved in other forms of gambling as well.\" Likewise, a survey of more than 4,500 participants in Internet gambling in Australia showed that \"online gamblers were not more likely to be classified as problem gamblers than non-online gamblers.\" Iowa's Department of Public Health recently studied the potential health issues related to legalizing Internet poker in Iowa. Among other findings, the study said that \"the literature cannot support a claim that Internet poker will cause people to become problem or pathological gamblers; however, researchers have asserted that Internet gambling has the potential to contribute to problem gambling.\" Some groups also oppose all forms of gambling, including online gambling, for moral reasons, arguing that the \"national explosion of gambling may well be the most underrated dimension of America's moral crisis.\"",
"Gambling is a way for states to raise revenue. Revenues from lotteries, taxes on commercial casinos, and other gambling in most states represented between 2.0% and 2.5% of state own-source general revenues, according to the Rockefeller Institute of Government. State gambling revenues rose from $20.7 billion in FY2005 to $27.7 billion in FY2015, in part because more casinos, racinos, and lottery products entered the market (see Figure 5 ).\nState revenues from casinos have fallen or been largely flat since 2013, and 9 of 17 states with commercial casinos experienced revenue declines in FY2015. West Virginia and Indiana reported the sharpest declines. Revenue from lotteries has been rising slowly. Changing consumer behavior, especially among younger people who may view gambling as a less attractive leisure activity than their parents and grandparents, is a contributing factor to the more recent softening in the growth of gambling revenues.\nAlthough minor on a national scale, gambling taxes are extremely important for certain states. In Nevada, gambling taxes made up about 20% of the state's general fund revenue in 2015, compared with 30% from sales and use taxes. In Delaware, the state lottery was the fourth-largest source of general fund revenue in FY2016, and Rhode Island's general fund received more than 10% of its revenue from the state lottery. Even though Las Vegas is the nation's number one gambling venue, Pennsylvania collected more commercial casino tax revenue in 2015 ($1.4 billion) than Nevada ($907 million). Tax rates may partly explain the difference. Pennsylvania taxes at a rate of 55% of gross slot machine revenue and 16% of table games revenue, whereas Nevada's rate tops out at 6.75% of gross gambling revenue, with additional county fees and levies.\nFederal licensing of Internet gambling could potentially bring additional revenue to the federal government. In 2010, the Joint Committee on Taxation estimated that licensing fees under the proposed Internet Gambling Regulation, Consumer Protection, and Enforcement Act ( H.R. 2267 , 111 th Congress) would result in a net federal revenue increase of $283 million over a 10-year period. That legislation would have authorized the Secretary of the Treasury to license and regulate Internet wagering, subject to additional oversight and licensing investigations performed by recognized state gaming authorities. The Joint Committee on Taxation also estimated that the federal government would collect an additional $42 billion over 10 years under H.R. 2230 , the Internet Gambling Regulation and Tax Enforcement Act of 2011, which would have imposed a license fee equal to 2% of all funds deposited by customers into special accounts that could be used for online wagering; the revenue estimate was based on the assumption that no states opted out of the proposed system.",
"In recent years, a few states have legalized online gambling, others have considered legislation on Internet gambling, and still others have made it illegal (see Figure 6 ).\nAmong recent developments at the state level are the following:\nNevada in 2001 became the first state to develop a regulatory framework for online gambling. It awards online gambling licenses for poker only. By federal law, online poker games approved in Nevada can only be played within the state. Before any online system can go live, the licensees must \"prove their systems are capable of identifying players by location and that players are of legal age.\" Only 2 of Nevada's 271 casinos currently offer online poker. In November 2014, Ultimate Poker, the nation's first licensed online poker room, ceased operations, citing sluggish revenue and a limited pool of players. In 2014, Internet poker revenue totaled $16.5 million. In October 2015, Nevada became the first state to require gambling licenses for DFS operators. Delaware became the first state to authorize full online casino-style gambling (poker, table games, and video lottery games), legalizing it in June 2012. Full-scale online gambling was launched in November 2013 at the state's three racetrack casinos. The state's tax revenue from Internet gambling has failed to meet forecasts, totaling only $1.8 million in FY2015. In February 2014, the governors of Nevada and Delaware signed the Multi-State Internet Gaming Agreement, the first-of-its-kind Internet gambling deal. Delaware's authorized online casino and poker offerings are operated by a single provider, 888 Holdings. New Jersey's regulations governing online gambling took effect in October 2013, allowing licensed casinos to offer poker, table games, and slots over the Internet. Each of the state's seven brick-and-mortar casinos offers online gambling in partnership with an online gaming operator, such as Gibraltar-based Bwin.party Digital Entertainment and 888 Holdings. Gross gambling revenues from New Jersey's virtual casinos totaled $149 million in 2015, an uptick from $123 million in 2014. Bills to authorize Internet gambling have been debated, but not adopted, by state legislatures including those in California, Pennsylvania, and Michigan. Colorado, Indiana, Mississippi, Missouri, New York, and Tennessee legalized online DFS betting in 2016. Because of the state's new law, New York's Gaming Commission has issued temporary permits to almost a dozen fantasy sports operators, including DraftKings, FanDuel, and Yahoo.",
"Since 2013, committees in both houses of Congress have held hearings on Internet gambling. In 2015, the House Judiciary Subcommittee on Crime, Terrorism, Homeland Security, and Investigations held a hearing on the Restoration of America's Wire Act (RAWA; H.R. 707 ), and the House Committee on Oversight and Government Reform also held an informational hearing on RAWA. The bill, also introduced as S. 1668 , would amend the Wire Act to prohibit all forms of Internet gambling in the United States, including in the three states where online gambling has already been licensed and regulated. This bill would not make online games themselves illegal, but rather would prohibit use of the communications network to play games like poker or bingo over the Internet, restoring the original interpretation of the Wire Act. It contains exemptions for online interstate horse race wagers, fantasy sports competitions, and state-licensed computer-generated retail lottery sales. The Coalition to Stop Internet Gambling supports these bills.\nIn 2015, the Senate Committee on Indian Affairs held an oversight hearing on Internet gambling and how it might affect Indian tribes. S. 3376 , introduced in September 2016, would prohibit financial institutions from processing Internet gambling transactions, and it aims to overturn the Department of Justice's 2011 memorandum, which interpreted the Wire Act as applying only to sports gambling and not to other forms of online gambling, including casinos and poker.\nAnother online gambling measure introduced in the 114 th Congress, the Internet Poker Freedom Act of 2015 ( H.R. 2888 ), would allow a state or tribal gambling oversight commission approved by a new Office of Internet Poker Oversight in the Department of Commerce to license online poker sites only. Registered sites would be subject to regulation and inspection to, among other things, prevent minors from playing, stop money laundering, and identify problem gamblers. The bill would prohibit the use of credit cards on poker websites. Certain established gambling businesses would initially have preference for licenses.",
"Government-supported gambling has been part of America's development since the earliest days of colonization, starting with a 1612 London lottery to raise money for the Virginia Colony. While gambling restrictions were imposed in some of the colonies, the Continental Congress used lotteries to raise funds for forces during the Revolutionary War. Lotteries were used to finance public works projects and establish universities, including Harvard, Yale, Columbia, Dartmouth, and Princeton. By 1832, there were more than 400 lotteries in eight states. Annual ticket sales came to 3% of national income and were several times larger than the federal budget.\nPublic opinion began to sour due to high-profile scandals and graft in lotteries, and by the time of the Civil War legal lotteries basically had been halted. Some gambling and gamblers moved west with the Gold Rush. During Reconstruction, Louisiana created a special lottery to help rebuild the state, drawing players from around the nation. The Louisiana Lottery continued for years, despite evidence of mismanagement and theft. Congress intervened, passing legislation in 1876 banning the use of mail for lottery advertising. Congress approved a second bill in 1890 to ban the use of mail to sell lottery tickets, and in 1895 banned the transport of lottery tickets in interstate commerce.\nBy 1910, U.S. legal gambling, with the exception of horse racing, was moribund. State-sanctioned gambling began a comeback during the Great Depression as a means to raise money for charity and government services. States began to legalize bingo games in the 1930s, and Nevada legalized casino gambling in 1931.\nIllegal gambling also proliferated, leading Congress in 1950 to investigate organized crime and gambling casinos. In 1951 lawmakers passed the Johnson Act, which barred transport of gambling machines in interstate commerce unless they were being moved to a legal jurisdiction. A second round of congressional investigations (from 1955 to 1960) resulted in a series of laws to combat gambling and racketeering.\nIn 1964, New Hampshire became the first state to reinstate a lottery, and, in 1976, New Jersey voted to allow casinos in Atlantic City. In 1979, Indian gambling began on the Seminole reservation in Florida. In 1987, the Supreme Court upheld the right of Indian tribes to offer unregulated gambling on sovereign lands, so long as they did not violate state criminal laws. In response, Congress in 1988 passed the Indian Gaming Regulatory Act (IGRA) providing for Indian gambling to be regulated under compacts negotiated between state governments and tribes. In 1992, Congress passed the Professional and Amateur Sports Protection Act (PASPA) limiting states' ability to offer sports gambling. In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA), which prevents payments to illegal gambling-related businesses but does not outlaw all forms of Internet gambling."
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{
"question": [
"What is the current nature of the gambling industry?",
"How has digital technology changed the industry?",
"How much revenue does the online gambling industry produce?",
"On what level of government is gambling regulated?",
"How has Congress shaped the industry?",
"What is the impact of these legislative decisions?",
"How has the debate over online gambling shifted?",
"In what ways has Internet gambling increased?",
"What different paths have states taken in expanding online gambling?",
"How does the gambling industry view Internet gambling? Some companies and Indian tribes see it as a promising revenue source. Others fear loss of patronage at brick-and-mortar casinos.",
"How has Congress recently dealt with this issue?",
"How might Congress place greater restrictions on online gambling?",
"To what extent has Congress acted on these proposals?"
],
"summary": [
"Gambling, once widely outlawed, is now a regulated, taxed activity that is legal in some form—bingo, card games, slot machines, state-run lotteries, casinos, and even online—in all states except Hawaii and Utah.",
"Like so many other industries, the gambling industry is being transformed by technology that has begun to shift patronage from casinos, bingo halls, or stores selling lottery tickets to desktop computers and tablets connected to the Internet and to mobile devices that may communicate by telephone or direct satellite links.",
"According to one private estimate, annual revenue in the global Internet gambling market, less gamblers' winnings, is around $50 billion.",
"State governments have the main responsibility for overseeing gambling. Congress, however, historically has played a key role in shaping the industry.",
"The Unlawful Internet Gambling Enforcement Act (UIGEA; P.L. 109-347) of 2006 prevents payments to illegal gambling-related businesses, but does not outlaw all forms of Internet gambling. In December 2011, a Department of Justice (DOJ) interpretation of the 1961 Wire Act (18 U.S.C. §1084), which has been used to prosecute Internet gambling, authorized states to allow online gambling, except for sports betting.",
"As a result, states and Indian tribes are allowed to permit Internet gambling within their territory if certain conditions are met.",
"With the increasing interest in online gambling, debate over the appropriate federal role has become more prominent.",
"Currently, a majority of states allow Internet betting on horse racing, and a few now permit Internet lottery games. A number of Indian tribes and gaming companies have created entities to develop Internet gambling, and seem likely to expand them rapidly if the legal issues are clarified.",
"Delaware, Nevada, and New Jersey have implemented online gambling programs within their borders. Several more states are considering whether to legalize Internet gambling, although some have laws that expressly prohibit online gambling. A growing number of states have taken a legislative interest in new forms of online gaming, such as daily fantasy sports.",
"The gambling industry is divided over Internet gambling.",
"One bill introduced in the 114th Congress, H.R. 2888, would allow online poker, overseen by a new Office of Internet Poker Oversight in the Department of Commerce.",
"An opposing group that also includes prominent casino owners, the Coalition to Stop Internet Gambling, supports the Restoration of America's Wire Act (H.R. 707, S. 1668), which would prohibit the use of communications networks to gamble over the Internet. Another bill, S. 3376, would prohibit financial institutions from processing Internet gambling transactions.",
"Perhaps reflecting divisions within the gambling industry, Congress has not acted on any of these proposals. No legislation affecting Internet gambling has been enacted since UIGEA."
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CRS_R44294
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{
"title": [
"",
"Introduction",
"The Correa Government",
"2017 Elections and the Moreno Government",
"Economic Conditions",
"U.S. Relations",
"U.S. Foreign Assistance",
"Commercial Relations",
"Outlook"
],
"paragraphs": [
"",
"Ecuador is a small nation situated along the Pacific coast of South America (see Figure 1 ). Located between Colombia and Peru, two major cocaine-producing countries in the Andean region, Ecuador is strategically important to the United States. In addition to being a major transshipment point for U.S.-bound illegal drugs, it has been used as a refuge by Colombian terrorist groups seeking to rest, resupply, and transport drugs. At one time, it was also the destination for thousands of refugees fleeing Colombia's internal armed conflict who crossed into Ecuador along its porous northern border.\nRafael Correa, elected president three times (2007-2017), was one of Ecuador's most enduring leaders. Although the United States traditionally has had close relations with Ecuador, under Correa's leadership the relationship grew tense due to his populist governing style and his combative, self-described \"anti-imperialist\" stance. Friction between the two countries culminated in the expulsion of the U.S. ambassador in 2011 related to disclosures in confidential diplomatic cables made public by WikiLeaks. Although the United States and Ecuador restored full diplomatic relations in 2012 with the appointment of a new U.S. ambassador to Ecuador, tensions between the countries remained. President Correa called his reform approach a \"Citizens' Revolution\" and placed it in the tradition of \"21 st century socialism\" personified by populist leaders of Venezuela and Bolivia.\nAn earthquake on the country's northwest coast in April 2016 left more than 4,000 injured and 651 dead and led to the displacement of some 30,000 people. The Correa government estimated that earthquake damage to infrastructure exceeded $3.3 billion. Belt-tightening measures taken by the government in response to a significant decline in oil revenues had exacerbated political tensions, and President Correa struggled with low approval ratings in 2016, when Venezuela and Bolivian leftist populist leaders in South America and President Daniel Ortega in Nicaragua also faced greater internal and external criticism. In 2016, the Ecuadorian economy contracted by 1.6%, although it recovered in 2017 with a 1.3% expansion.\nFormer Vice President Lenín Moreno won a narrow victory in April 2017 presidential elections on the Alianza País (AP) party ticket. President Moreno veered away from former President Correa soon after he came to office. Moreno called a national referendum on February 4, 2018, that openly challenged some of the Correa government's efforts to centralize power, including abolishing indefinite reelection and limiting tenure to two terms, turning back a measure that had insured the judiciary contained only presidential supporters, and making mining off-limits in indigenous and protected areas. The referendum's seven measures won handily, with greater than 60% voter approval.\nPresident Moreno faces economic challenges and will have to rely on his supporters within the now-divided AP governing party in the legislature to move reform efforts and deal with governance challenges. Correa—who returned from Europe, where he was living for a period with his Belgian wife, to fight the referendum advocated by President Moreno—managed to convince about a third of AP members of congress to join him in forming a new party. In January polling, President Moreno continues to enjoy a popular approval rating of near 70%, which in 2018 is perhaps the highest level of support for a president in the Western Hemisphere.",
"Ecuador has a relatively long experience with democracy, but it has been marked by frequent cycles of instability. Since its independence in 1830, regionalism and personalism have defined Ecuador's political culture. Following a return to democracy in 1979 after nine years of military rule, political party splits, bureaucratic ineptitude, and corruption proliferated. Voters have periodically blamed incumbent governments for the country's problems and often have turned to populist, anti-traditional party candidates to govern.\nIn 2007, Ecuador ended a decade of political and economic instability with the election of Rafael Correa, a left-leaning, U.S.-trained economist. Before running for public office, Correa was a professor of economics and served as finance minister during the previous Alfredo Palacio Administration. Correa built a broad coalition of support for his first presidential campaign that included Ecuador's organized indigenous population, Ecuador's poor, trade unions, environmentalists, and others who were disenchanted with the highly unstable national government.\nOnce elected, Correa succeeded in rallying the nation to support a referendum to rewrite Ecuador's constitution. The new constitution, Ecuador's 20 th , was written by an elected Constituent Assembly, and the new constitution increased the power of the executive and allowed the president to run for two consecutive terms. As required under the new constitution, in 2008 new elections were then organized for president, vice president, members of the unicameral National Assembly, and provincial and local offices. President Correa was elected in 2008 and took office in April 2009. His party— Alianza País (AP), or Country Alliance, which is sometimes compared to a political movement—won the most seats in the National Assembly, although it did not win a majority.\nEcuador's economy benefitted from oil price increases beginning in 2006 with petroleum selling at $52 a barrel and reaching $98 a barrel by 2013. The Correa government effectively used petroleum exports to invest in infrastructure and economic development. The Administration increased public expenditures, including conditional cash transfer programs to those living in poverty. According to statistics provided by the Correa government, the poverty rate in Ecuador declined from about 38% in 2006 to 25.8% in 2014, with the extreme poverty rate falling by more than half. The World Bank estimates that poverty declined to a level just under 23% in 2016.\nDespite broad popularity over many years, many observers viewed President Correa as \"prickly\" and very defensive in response to criticism; some analysts described Correa as a charismatic populist leader with authoritarian tendencies. In his first term, strong economic growth permitted President Correa to implement redistributive policies that provided benefits to Ecuador's majority lower-income groups. President Correa's Citizens' Revolution, as he called his ideology, incorporated themes of economic justice and Andean pride with a critique of the traditional partisanship of Ecuadorian politics.\nIn September 2010, President Correa faced a police uprising over pay and work conditions that resulted in five deaths, which Correa and his supporters called an attempted coup. Some observers viewed Correa's brash response to the police rebellion as a way to burnish the president's reputation. Critics noted that he continued to centralize political power in the presidency, politically influenced the judiciary, and targeted media and political opponents. In 2011, President Correa won a lawsuit against El Universo newspaper for a column critical of the president. The court found in President Correa's favor, and the ruling would have resulted in a $40 million fine as well as jail time for the journalist, but after significant international criticism the president pardoned the newspaper's executives and the columnist. According to Human Rights Watch and other nongovernmental organizations, the Correa government's efforts to reform the justice system instead politicized it as the government harassed and punished its critics.\nOn February 2013, Correa ran for a second term and won with 57% of the vote. Correa's share of the vote was more than 30 percentage points higher than his nearest rival, Guillermo Lasso, of the center-right Movimiento Creando Oportunidades (CREO) party. In addition to the presidency, Correa's AP won a strong congressional majority with 100 seats in the 137-seat National Assembly. President Correa became the first leader in Ecuador since the late 1970s to enjoy sustained popularity across the regions and a broad array of class and demographic groups.\nIn mid-2013, the president issued an executive decree (Decree 16) that allowed the government to disband civil society organizations for any of a variety of reasons, including compromising the interests of the state, disrupting public order, or moving away from the objectives for which they were created. In a notable case in 2014, Ecuador's Media Oversight Commission, set up by Correa through a highly restrictive communications law passed by the AP-dominated legislature, fined the daily newspaper El Universo and required cartoonist Xavier Bonilla (known as Bonil) to amend his drawing that depicted a police search of the home of someone who defamed Correa. In 2015, the country fell by 13 places in the Reporters Without Borders press freedom index.\nOpposition to President Correa formed in the summer of 2015 and lowered the president's approval rating. In August 2015, the major labor union confederation called a national strike in response to what they viewed as a restrictive new labor code and unfair pension changes. The union members were joined by other protestors, including right-leaning opponents of proposed legislation to sharply increase real estate and inheritance taxes and the once pro-Correa indigenous organization Confederación de Nacionalidades Indígenas del Ecuador , or CONAIE. Human Rights Watch criticized the Correa government's use of excessive force and arbitrary arrests of nonviolent protesters during this time.\nPresident Correa introduced legislation to allow indefinite reelection in the National Assembly late in 2014. The legislature, dominated by Correa's political party, which held two-thirds of the seats, appeared likely to approve the change. Government efforts to push through a constitutional amendment permitting indefinite reelection were criticized, because many citizens wanted to see the change put to a national referendum—even if they planned to vote in favor of Correa in the 2017 national elections. Support for the referendum reportedly exceeded 80%. Many analysts maintained that changes to the constitution would easily win approval in the National Assembly. In mid-November 2015, President Correa made a surprising announcement that he and others who had already served two terms would not be eligible to benefit from the constitutional change to allow for indefinite reelection and compete in the 2017 elections. The National Assembly then approved a set of constitutional changes in December 2015 that included the measure allowing a future president to be reelected indefinitely. President Correa appeared to be satisfied to wait out the economic downturn and return to run for president in the next term in 2021.",
"The 2017 elections were the first in a decade in which Rafael Correa did not run for president, but his two former vice presidents both ran. Lenín Moreno served as vice president under Correa from 2007 to 2013, and Jorge Glas was Correa's most recent vice president until he left office to become Moreno's vice-presidential running mate.\nAs a candidate for the AP party, Moreno campaigned on continuing the work of the leftist Correa government but suggested the country needed a better balance between public and private interests. In the preelectoral stage of the presidential race, Moreno polled in first place most often, although he faced a field of candidates ranging from right to far left. He came close to winning the first round, held in February 2017, with the needed 40% of the vote. Moreno generally is regarded as more affable and easygoing than former President Correa, and Moreno worked for years as a disability advocate. Moreno was shot during a carjacking years ago and is wheelchair-bound. He continued his advocacy for disability issues after leaving the Correa government by serving as the U.N. Special Adviser on Disability and Accessibility based in New York.\nJorge Glas ran on the same ticket as Moreno's vice president, but Glas turned out to be an unpopular running mate. He was seen as much closer to Correa, and some observers indicated that Glas was likely to assume the presidency if Moreno decided to step down for possible health reasons. Following his victory in April, Moreno held a press conference to say he was not likely to succumb to health problems and leave his post. Glas was embroiled in a corruption scandal that worsened in December 2016. Moreno vowed during the campaign to make the management of Petroecuador, where Glas once was in charge, much more transparent.\nOn April 2, 2017, Moreno narrowly won in the runoff for the presidency with a margin of slightly more than 2% of the vote, according to Ecuador's National Election. Moreno took 51.2% of the vote, and opposition candidate Guillermo Lasso received 48.8%. Lasso, came in second in the first-round vote in February 2017, had gained the backing of an array of opposition parties. A former banker, Lasso posed his campaign as a movement for change following a decade of rule by the AP party. Moreno and Glas began their term on May 24, 2017.\nEcuador also held elections for the legislature in February 2017. According to official tallies, more than 3,900 candidates competed for National Assembly seats in the 137-member body. In total, 70 different political parties registered candidates. Hamstrung by low oil prices and a contracting economy, the dominant AP party, as expected, lost seats in the National Assembly; it went from holding a supermajority of 100 seats in the prior congress to 74 seats in the February elections, but it retained a majority (see Figure 2 ).\nThe Moreno Administration likely will wrestle with a more fractured National Assembly than the previous administration, in part because of expected widening fissures within the AP. Those divisions sharpened after Vice President Glas was impeached in January 2018 following his conviction for taking a $13.5 million bribe from the Brazilian construction company Odebrecht and his sentence to six years in prison in late 2017. In early January 2018, former President Correa returned from Europe to campaign against the Moreno-declared public referendum slated for February 4, 2018, which Correa viewed as a direct attack on his legacy.\nIn campaigning for the referendum, President Moreno declared that his predecessor had concealed the weak state of the Ecuadorian economy. Correa responded by seeking to split the AP. In mid-January, Correa induced 28 of the 74 AP legislators to leave the AP party and join a new, Correa-based variant, called Citizens Revolution, thus causing the AP party to lose its legislative majority. President Moreno now will have to negotiate with numerous parties to form a coalition to pass certain types of legislation, such as constitutional reforms, even though the February referendum results (such as canceling the option for indefinite reelection, reimposing term limits, and not allowing public office holders to return to office after a corruption conviction) was approved by voters in early February 2018 (see results in Table 1 ).",
"Historically, Ecuador's dependence on a few export commodities—primarily bananas, cacao, coffee, and sugar—that are subject to highly volatile price swings left it vulnerable to economic instability. The discovery of oil in the Amazon region in 1967 transformed the economy. In 2000, Ecuador adopted the U.S. dollar as its national currency following a major recession in 1999. Dollarization helped curb inflation and restored some macroeconomic stability. In 2009, however, economic growth declined to 0.6% during the global recession, accompanied by falling oil prices and a decline in remittances provided by Ecuadorians living and working abroad (a major source of external revenues). Showing signs of recovery in 2010, the economy rebounded and grew by 2.8%. After growth of 7.4% in 2011, Ecuador's growth averaged 4.5% from 2012-2014.\nSome observers have attributed the high growth to a public investment boom that was fueled by high oil prices and lending from China. According to the U.S. Energy Information Administration, Ecuador was the third largest source of foreign oil to the western United States in 2014. However, in the middle of 2014 after the price of oil declined significantly, Ecuador's oil earnings fell. As a consequence, the Economist Intelligence Unit (EIU) forecast that Ecuador's economy would contract slightly in 2015, although the economy ultimately grew by less than half a percent. President Correa's plans to begin extracting crude oil from the Ishpingo, Tambochoa, and Tiputini field in Yasuní National Park in the Amazon to provide an economic boost did not salvage the economy from going into recession. In 2016, Ecuador's gross domestic product contracted by 1.6%.\nEcuador's economic slowdown in 2016 and the country's need for external finance were exacerbated by a deadly April 2016 earthquake. Ecuador's estimated $3 billion costs for reconstruction and humanitarian assistance for 720,000 people in the affected region remain a burden that the government and private sector have sought to address. In response, the U.S. Office of Foreign Disaster Assistance provided more than $3 million in assistance, including provisions airlifted in for 50,000 people in the earthquake-prone region and assistance with water and sanitation systems in affected areas. A U.N. appeal by the Office of Coordination of Humanitarian Assistance sought to raise $73 million. However, as of July 2016, only one-fifth of this amount had been received from donor countries, including the United States.\nThe Correa government increased a value-added tax and implemented a plan to further cut government expenditures after cutting capital expenditures by 30%. Despite President Correa's reluctance to ask for assistance from the International Monetary Fund (IMF), the IMF approved a request for $364 million in financial support under its Rapid Financing Instrument in early July 2016 for Ecuador. Additional loans from China and the World Bank to help ease the government's balance-of-payments needs were considered.\nEcuador's access to global financial markets also had been limited by its 2008 default on $3.2 billion in debt to global lenders. Consequently, the Correa government turned to nontraditional allies, such as China, for external finance. From 2005 to 2014, Chinese banks provided almost $11 billion of financing to Ecuador. The Correa government also asked China for an additional $7.5 billion in financing in early 2015 as crude oil prices—the nation's biggest export—weakened further. China agreed to the financing request and began to disburse funding, including nearly $1 billion in May and June of 2015. Ecuador successfully returned to the international capital market in June 2014 with a $2 billion bond issue followed by additional smaller bond issues in 2015. President Moreno later discovered loans made by China over the years currently require that Ecuador pay China back with almost 500 barrels of crude oil—or roughly three years of the country's oil production. According to press reports, some private sector analysts question whether Ecuador will be able to meet its debt obligations given two strains on the country's public finances: the slump in oil income due to the commodity's low price and the strong U.S. dollar, which, as a result of Ecuador's dollarized economy, makes the country's exports less globally competitive.\nEcuador withdrew from efforts to develop a regional free trade agreement (FTA) between the United States and Bolivia, Colombia, Ecuador, and Peru in 2006. The United States subsequently signed bilateral FTAs with Peru and Colombia, but Ecuador showed no interest in pursuing an FTA with the United States. Following Venezuela's acceptance in 2012 to full membership in the South American customs union, Mercosur ( Mercado Común del Sur or Common Market of the South), the leftist governments in Bolivia and Ecuador applied to move from observer status to full membership in the trade bloc originally composed of Argentina, Brazil, Paraguay, and Uruguay. According to some observers, out of a concern for Ecuador's struggling non-oil exporters, Correa embraced a trade agreement with the European Union (EU) as part of the EU-Andean Community Association agreement that went into effect in January 2017. Recently the EIU forecast that Ecuador's economic growth in 2018 will increase from 1.2% to 2%.",
"Through the two terms of former president Correa, Ecuador's relations with the U.S. government were frequently tense. Over the course of his time in office, former president Correa expelled various U.S. State Department representatives. In 2014, the Correa government imposed restrictions on the work of the U.S. Agency for International Development (USAID), which resulted in the agency closing its offices in Ecuador after 60 years of operating in the country. Correa also expelled the World Bank's representative, and, as noted above, defaulted on $3.2 billion in sovereign debt in 2008. Correa drew Ecuador closer to nontraditional allies such as China and Iran, raising concern among Washington policymakers. Moreover, the former president at times adopted a brash stance toward U.S. policies, accusing the administration in Washington of imperialism and threatening Ecuador's sovereignty.\nTraditionally, the Ecuadorian government has cooperated closely with the United States on counternarcotics efforts and combating crime. However, President Correa came to office as a vocal critic of Plan Colombia, the multi-billion dollar program aimed at countering terrorism and drug trafficking in neighboring Colombia that received crucial support from the United States. He shut down U.S. counterdrug operations at the Manta air force base by refusing to renew its lease in 2009. Ecuador joined the Bolivarian Alliance of the Americas (ALBA) started by former Venezuelan President Hugo Chávez in 2004 as an alternative to U.S.-led trade partnerships. Ecuador, Bolivia, Venezuela, Cuba, and Nicaragua all belong to the alliance along with a group of smaller Caribbean nations. (Following Chavez's death in 2013 and Venezuela's economic decline since 2014, however, ALBA has been significantly weakened.)\nIn 2012, Ecuador provided asylum to WikiLeaks founder Julian Assange, who has remained in Ecuador's embassy in London. However, President Moreno indicated in 2018 that housing Assange was no longer convenient. It remains unclear in February 2018 what action President Moreno may take to expel Assange. In 2013, President Correa also announced that he was considering an asylum request from Edward Snowden, who was wanted by the United States for release of top-secret documents about U.S. surveillance programs.\nThroughout Correa's decade in office, State Department spokespersons criticized violations of constitutional freedoms in Ecuador. These ranged from President Correa's frequent lawsuits against the press and his national broadcasts lambasting journalists by name, to his efforts to dismantle nongovernmental and civil society organizations and insisting that USAID partner organizations be registered with the government. Forced closures include the Pachamama Foundation in late 2013, which advocated for environmental and indigenous culture protections, and steps to shutter the last watchdog media organization in the country, Fundamedios. According to the government, Fundamedios failed to block social media posts deemed critical of the Correa Administration and conducted other political speech that according to the government contradicts the group's stated mission. Although the Correa government announced steps to close Fundamedios in early September 2015, three weeks later Ecuador's government suspended the closure, seemingly responding to widespread international criticism.\nThe State Department's 2017 Trafficking in Persons Report maintained that Ecuador is a source, transit, and destination country for men, women, and children subjected to sex trafficking and forced labor, with many cases of sex trafficking and also domestic servitude. The report notes that particularly vulnerable populations are Afro-Ecuadorians (7% of the population, according to the most recent census data) and indigenous people (7% of the population). For five years, the State Department has classified Ecuador as a Tier 2 country—a rating that indicates that Ecuador does not comply fully with the minimum standards for the elimination of trafficking but is making some efforts to improve. Key recommendations of the report were for Ecuador to fund and enhance programs for trafficking victims, to implement a national anti-trafficking plan, and to improve investigations of trafficking cases and prosecutions.",
"In FY2013, foreign assistance appropriated by Congress for Ecuador exceeded $18 million and included more than $13 million in development assistance administered by USAID. However, as the Correa Administration more tightly restricted the programs that the State Department and USAID could conduct in Ecuador, most U.S. assistance programs, ranging from counternarcotics to environmental sustainability, closed down. In FY2015, the foreign aid allocations for Ecuador dropped below $1 million. In the FY2016 foreign assistance budget request, the Obama Administration requested $2 million in development assistance for Ecuador, primarily to support Ecuadorian civil society groups engaged in policy dialogue, and this funding level was appropriated. For U.S. foreign assistance to Ecuador in FY2017, $1.6 million was appropriated for similar activities. In the Trump Administration's FY2018 budget justification for foreign assistance programs, no funding for Ecuador was requested.\nThe United States also provides funding to a Peace Corps program in Ecuador. In FY2017, the Peace Corps provided $5.1 million to support 110 volunteers in its program in Ecuador. In FY2016, Ecuador received earthquake response assistance from the State Department's Office of Foreign Disaster Assistance. In addition, Ecuador requested that temporary protected status be granted to Ecuadorian citizens living in the United States who were affected by the natural disaster and who overstayed visas or were illegally present in the United States but could not safely return home. The U.S. government declined to make this determination.",
"Some observers maintain that U.S.-Ecuadorian relations have managed to stay on a fairly even keel despite strains, citing the still-vibrant relationship as trade partners. Ecuador's major exports include petroleum, bananas, cut flowers, and shrimp while its imports include industrial materials and fuels and lubricants (see Figure 1 ).\nA persistent U.S.-Ecuador commercial dispute has been the long-standing, multi-billion-dollar lawsuit against the U.S. oil company Chevron. In 1993, 30,000 Amazon residents in Ecuador brought a class-action suit claiming they were injured by toxic waste from Texaco's oil production activity between 1964 and 1990. Texaco (which has since merged with Chevron) is accused of contaminating large areas of Ecuadorian rainforest. The contentious and complex 22-year-old legal case has been through many appeals. In 2011, an Ecuadorian court in Lago Agrio found in favor of the Amazonian plaintiffs, issuing an $18-billion judgment against Chevron, which eventually was upheld in a higher court but lowered to a $9.5-billion damage award. Chevron subsequently claimed that the judgment in Ecuador was achieved by fraud and bribery, and the energy company has pursued international arbitration in the case. The Amazonian plaintiffs have sought to target Chevron's assets in other countries, such as Canada.\nAccording to the 2017 investment climate statement by the U.S. State Department, Ecuador has attracted little foreign direct investment (FDI). This low level of FDI is partly because of uncertainty facing prospective investors, such as corruption, systemic weaknesses in the judicial system, and inconsistent application and interpretation of existing laws. For example, former President Correa threatened to withdraw the existing U.S.-Ecuador Bilateral Investment Treaty, and the treaty was voted out by Ecuador's legislature in May 2017, shortly before President Moreno took office. On the other hand, the Correa government had taken steps to try to attract more investment in key sectors, such as mining. In late 2015, it also passed a law encouraging Public-Private Partnerships. Corruption remains a problem, and Ecuador ranked 120 out of 176 countries surveyed for Transparency International's 2016 Corruption Perceptions Index and received a score of 31 out of 100.\nBetween 1991 and 2013, Ecuador was a beneficiary country under the Andean Trade Preferences Act (ATPA). The law provided eligible countries with unilateral preferential access to the U.S. market for certain products in an effort to replace the dependence on the illegal narcotics trade. However, after Congress extended ATPA preferences to Ecuador and Colombia through July 31, 2013, Congress decided not to extend the preferences again to Ecuador (Colombia and the United States had enacted a free trade agreement so the preferences were no longer relevant). During the time the renewal for Ecuador was under consideration, Ecuador was indicating it might respond favorably to an asylum request by former National Security Agency contractor Edward Snowden and did not want to be swayed by its pursuit of ATPA benefits.\nAnother U.S. trade preference program that Ecuador benefits from is the U.S. Generalized System of Preferences (GSP). Ecuador continued to be a designated beneficiary developing country under the GSP, and the GSP was extended through December 2017. In 2014, for instance, about $291 million, or about 3% of Ecuador's total exports to the United States (about $10.9 billion), qualified for GSP treatment. In December 2017, however, the GSP was not renewed.",
"Ecuador is a more divided and polarized nation than in the years when Correa won elections by a landslide. How the historically close ties between Ecuador and the United States may fare under President Moreno's leadership remains to be seen, following his successful consolidation of power and declaration of independence from his one-time mentor and predecessor with a victory in the February 2018 public referendum. Some analysts warn that President Moreno may be constrained in pursuing meaningful policy change as he tries to move within the same party and gain backing from a political movement built by Correa while navigating a more fractured National Assembly and relying on ad hoc coalitions."
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{
"question": [
"What best describes Ecuador?",
"How important is Ecuador in the oil trade?",
"What is the nature of its trade relationship with the United States?",
"How has Ecuador's oil export changed in recent years?",
"What characterized Ecuador's leadership in the past two decades?",
"How did his popularity change?",
"What was the cause of this decline in popularity?",
"What did his critics say?",
"What was the nature of Ecuador's 2017 election?",
"What was the outcome of the election?",
"What happened once the election was over?",
"What happened to the AP after the 2017 election?",
"What did some predict about Correa's trajectory?",
"How did Moreno consolidate his power?"
],
"summary": [
"Ecuador is a small, oil-producing country of 16 million inhabitants located on the west coast of South America between Colombia and Peru.",
"In 2017, Ecuador was considered to have the third-largest proven reserves of crude oil in South America, with 8.3 billion barrels. It is the smallest member of the Organization of the Petroleum Exporting Countries (OPEC).",
"Petroleum is Ecuador's largest export to the United States, the country's top trade partner.",
"With the reduction in crude oil price since 2014, Ecuador's earnings have fallen after years of strong growth.",
"Former President Rafael Correa (2007-2017), a leftist populist leader, was elected and reelected over a decade, bringing stability to Ecuador.",
"In 2015, his popularity began to decline; he dropped in the polls to a 35% approval level by the middle of 2016.",
"A recession brought on by low oil prices had diminished government revenues, and President Correa had adopted many unpopular budget-tightening measures. Protests from diverse groups—indigenous people, trade unionists, environmentalists, and critics from the right and center-right—became more frequent.",
"Correa's critics accused him of constraining freedom of assembly and association, stifling freedom of the press and expression, and restricting independence of the judiciary.",
"The 2017 election was the first in a decade in which Rafael Correa did not run for president. His two former vice presidents both ran on the same ticket: Moreno, who served six years as Correa's vice president, was at the top of the ticket, and Jorge Glas, Correa's most recent vice president, left the Correa Administration in 2016 to become Moreno's vice presidential running mate.",
"On April 2, 2017, presidential candidate Lenín Voltaire Moreno of the Alianza País (AP) party narrowly won a runoff election in Ecuador, with a margin of slightly more than 2% of the vote.",
"Once in office, Vice President Glas remained close to Correa, whereas President Morena moved quickly to adopt a more moderate and conciliatory position and shifted away from Correa's abrasive style. In October 2017, President Moreno suspended Glas from the vice presidency due to accusations of \"illicit association\" with the Brazilian construction company Odebrecht. In December 2017, Glas was convicted and sentenced to six years in prison for taking more than $13 million in bribes from Odebrecht executives. Out of office for 90 days, Glas was impeached in January 2018 and replaced by acting Vice President Maria Alejandro Vicuña, who is close to Moreno.",
"Correa's party, the AP, had retained a majority in the February 2017 legislative elections but split as Moreno was accused of being a traitor and of undermining Correa's reform approach, which he called the \"Citizens' Revolution.\"",
"Many observers thought that Correa planned to return in 2021 to be easily reelected. Correa had pushed through legislation in the National Assembly allowing for indefinite reelection, and many assumed he would avail himself of this option after his former vice presidents served a term as caretakers.",
"However, President Moreno set a public referendum for February 4, 2018, to limit the presidency to two terms, among other measures. The referendum was approved by a large margin, thus consolidating Moreno's control and making Correa's return to power unlikely."
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GAO_GAO-17-47
|
{
"title": [
"Background",
"Proxy Advisory Firms",
"U.S. Regulatory Framework",
"International Regulatory Actions Related to Proxy Advisory Firms",
"Several Factors Have Led to Increased Demand for and Influence of Proxy Advisory Firms, but Mixed Views Exist on the Extent of Influence",
"Increased Demand for Proxy Advisory Firms’ Services Stems from Rise of Institutional Investing and Requirements for Shareholder Voting",
"Studies and Market Participants Agreed That Proxy Advisory Firms Influence Voting and Corporate Governance, but Had Mixed Views about Extent of Influence",
"Proxy Advisory Firms Have Increased Engagement with Market Participants and Stakeholders in the Vote Recommendation Process",
"Proxy Advisory Firms Have Increased Engagement with Stakeholders in Development of Their Voting Policies to Address Concerns",
"Proxy Advisory Firms’ Voting Policies for Selected Governance Issues Generally Were Similar to or Stricter Than Those of Other Selected Market Participants",
"Proxy Advisory Firms Considered Company- Specific Information in Vote Recommendations and Allowed Some Corporate Issuers Opportunities to Correct Data",
"SEC Oversight Activities of Proxy Advisory Services Have Included Information Gathering, Guidance, and Examinations",
"Agency Comments",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"Publicly traded companies are generally required by state law to hold annual meetings to conduct business that requires shareholder approval. U.S. public companies hold their annual meetings to consider key management and shareholder proposals that may have an effect on a company’s operations and value, such as executive compensation and director elections, or other more routine issues that may not affect value, such as changing a corporate name or approving an auditor. They also occasionally hold special meetings during the year to consider key issues such as proposed mergers and acquisitions.\nShareholders are provided advance notice of annual and special shareholder meetings through a written proxy statement, which typically includes a proxy ballot (also called a proxy card) that allows shareholders to appoint a proxy to vote on the shareholder’s behalf if the shareholder decides not to attend the meeting. Proxy voting can be conducted online, by mail, or by telephone. Shareholders may instruct the proxy how to vote the shares or grant the proxy discretion to make the voting decision. Because of their large stockholdings, institutional investors (such as investment advisers, insurance companies, mutual funds, and pension plans) cast the majority of proxy votes.\nIn general, proxy voting in shareholder meetings involves several key participants such as shareholders (including institutional investors), corporate issuers, proxy agents, and proxy advisory firms (see table 1). Institutional investors frequently hire proxy advisory firms to provide analysis and proxy voting recommendations and facilitate voting, record keeping, reporting, and disclosure requirements. For instance, the mechanics of tracking proxy cut-off times, managing and analyzing proxy materials, and casting votes can require significant resources. Many institutional investors use a proxy advisory firm to help perform some or all of these services. While proxy advisory firms perform services year- round, most of the services center on the proxy season. Some publicly- traded companies also may use a proxy solicitor to identify, locate, and communicate with shareholders to secure votes on certain issues.",
"Currently, the proxy advisory industry in the United States consists of five firms: Institutional Shareholder Services (ISS), Glass Lewis & Co. (Glass Lewis), Egan-Jones Proxy Services (Egan-Jones), Marco Consulting Group (Marco Consulting), and ProxyVote Plus.\nISS, founded in 1985, provides research and analysis of proxy issues, custom policy implementation, vote recommendations, vote execution, governance data, and related products and services. ISS also provides advisory/consulting services, analytical tools, and other products and services to corporate issuers through ISS Corporate Solutions, Inc. (a wholly owned subsidiary). ISS is owned by Vestar Capital Partners, a private equity firm, and company management. As of September 2016, ISS had more than 900 employees in 18 offices in 12 countries, and covered approximately 39,000 meetings in 115 countries. ISS had about 1,600 institutional investor clients and executed more than 8.5 million ballots annually on behalf of those clients.\nGlass Lewis, established in 2003, provides proxy research and analysis, custom policy implementation, vote recommendation, vote execution, and reporting and regulatory disclosure services to institutional investors. Glass Lewis is an independent portfolio company of the Ontario Teachers’ Pension Plan Board and Alberta Investment Management Corporation. As of September 2016, Glass Lewis had more than 350 employees and offices in San Francisco, New York, Ireland, Australia, and Germany that provide services to more than 1,200 institutional investors that collectively manage more than $20 trillion.\nEgan-Jones Proxy Services was established in 2002 as a division of Egan-Jones Ratings Company. Egan-Jones provides proxy services, such as notification of meetings, research and recommendations on selected voting issues, voting guidelines, execution of votes, and vote disclosure. As of September 2016, Egan-Jones Ratings Company had approximately 450 clients of all types firm-wide including funds, institutions, corporate issuers, and public entities. Of these, Egan- Jones’ proxy research or voting clients mostly consisted of mid- to large-sized mutual funds. Egan-Jones covers approximately 40,000 companies. Many of its largest institutional clients use Egan-Jones research to augment their own research. Egan-Jones is based in Haverford, Pennsylvania.\nMarco Consulting Group, an Illinois-based firm, was established in 1988 to provide investment analysis and advice, and proxy voting services to a large number of Taft-Hartley and public benefit plans. As of September 2016, Marco Consulting served 300 clients with assets of $145 billion. Marco Consulting uses ISS as the provider for its proxy voting platform and reporting. Marco Consulting also subscribes to research services from ISS. It has offices in Chicago, Boston, and Denver.\nProxyVote Plus, also based in Illinois, is an employee-owned firm established in 2002 to provide proxy voting services to Taft-Hartley fund clients. ProxyVote Plus conducts internal research and analysis of voting issues and executes votes based on its guidelines. ProxyVote Plus reviews and analyzes proxy statements and other corporate filings, and reports annually to its clients on proxy votes cast on their behalf. As of September 2016, ProxyVote Plus had more than 200 clients throughout the United States and Canada.\nOf the five firms, ISS and Glass Lewis are the largest and most often used by institutional investors. To compete, proxy advisory firms must offer comprehensive coverage of corporate proxies and use sophisticated systems to provide research and proxy vote execution services. As we reported in 2007, ISS’s long-standing history—since 1985—of working with institutional investors, as well as its reputation for providing comprehensive proxy voting research and recommendations, makes it the most dominant proxy advisory firm. We found that ISS’s dominance makes it difficult for competitors to attract clients and compete in the market. We also reported that institutional investors may be reluctant to subscribe to a potentially inexperienced or less-established proxy advisory firm that may not provide thorough coverage of all of their institutional holdings. According to market participants and other stakeholders with whom we spoke, these conditions continue to exist, and, among other things, the initial investment required to develop and implement the necessary technology is a significant expense for firms.",
"Under the Securities Exchange Act of 1934 (Exchange Act), SEC regulates the proxy solicitation process for publicly traded equity securities. SEC also regulates the activities of proxy advisory firms that are registered with SEC as investment advisers under the Investment Advisers Act of 1940 (Advisers Act). Under SEC rules, when soliciting proxies, certain information must be disclosed in writing to shareholders in a document referred to as a proxy statement. These proxy statements must include important facts about the issues on which shareholders are asked to vote. A party soliciting proxies must file such proxy statement with SEC unless it is exempt under the proxy rules. Under the Advisers Act and related SEC rules, registered investment advisers are subject to a number of regulatory requirements that provide important protections to the firm’s clients. For example, an investment adviser must disclose information about its business practices and potential conflicts of interest to clients and prospective clients. Additionally, registered investment advisers are required to adopt and implement written policies and procedures reasonably designed to prevent violation of the Advisers Act. Finally, regardless of whether a proxy advisory firm is registered as an investment adviser, all firms that meet the statutory definition of investment adviser, and are unable to rely on an exclusion from the definition, are subject to the antifraud provisions of the Advisers Act. This act prohibits investment advisers from engaging in any act, practice, or course of business that is fraudulent, deceptive, or manipulative.\nTable 2 describes whether and how proxy advisory firms are registered with SEC. ISS, Marco Consulting, and ProxyVote Plus are registered as investment advisers and, according to their SEC registration filings, identified their work as pension consultants as the basis for registering as advisers. Egan-Jones Ratings Company (Egan-Jones’s parent company) is registered as a Nationally Recognized Statistical Rating Organization and must meet certain regulatory requirements related to its credit ratings activity, but these requirements do not apply to its proxy advisory services. Glass Lewis is not registered with SEC.\nSEC also has issued several rules and policy documents that provide guidance on proxy voting by investment advisers and investment companies. For example, SEC issued a final rule in February 2003 that addresses an investment adviser’s fiduciary responsibilities to clients when the adviser has the authority to vote their proxies, including adopting policies and procedures to ensure proxies are voted in the best interest of clients. The rule also requires that an adviser must (i) disclose to clients how they can obtain information from the adviser on how their securities were voted and (ii) describe the adviser’s proxy voting policies and procedures to clients, and upon request, provide clients with a copy of those policies and procedures. SEC issued another final rule in February 2003 that requires investment companies such as mutual funds to disclose how they vote proxies relating to portfolio securities they hold, and file with SEC and make available to shareholders information about specific proxy votes cast. In May 2004 and September 2004, SEC staff issued guidance that, among other things, clarified how an investment adviser could resolve conflicts of interest in voting clients’ proxies and ensure that proxy advisory firms could adequately analyze proxy issues and make recommendations in the best interests of the adviser’s clients. We focus on SEC oversight since 2007 later in this report.\nSEC monitors compliance with the federal securities laws and regulations through risk-based examinations of registered investment advisers. Based on examination findings, SEC may send letters to investment advisers, including proxy advisory firms registered as investment advisers, requesting that they correct identified deficiencies. SEC may take enforcement actions for more serious violations. Proxy voting issues and proxy advisory firms may not be examined on a regularly scheduled basis because SEC uses a risk-based approach to identify examination priorities each year. Among other things, SEC may consider the risk of an entity based on prior examination findings; significant changes in a registrant’s business activities or disclosures regarding regulatory or other action brought against them; and tips, complaints, or other referrals. SEC uses this approach to help allocate its limited resources to focus on those registrants that examination staff believe place the investing public or market integrity most at risk.",
"International regulatory organizations, including the European Securities and Markets Authority and Canadian Securities Administrators, have taken actions to promote increased engagement among market participants and transparency into proxy advisory firms’ processes. In recent years, these organizations conducted reviews of the proxy advisory firm industry and concluded that regulatory intervention was not needed. Specifically, the European Securities and Markets Authority concluded that regulation was not justified because there was no evidence of a market failure in relation to how proxy advisory firms interact with institutional investors and corporate issuers. However, both entities proposed guidance and recommendations for the firms to enhance transparency, among other issues.\nIn a 2013 report, European Securities and Markets Authority officials recommended the creation of an industry code of conduct. Subsequently, a group of proxy advisory firms, including ISS and Glass Lewis, published a set of best practice principles that included disclosing their (1) research methodology and, if applicable, general voting policies; and (2) policies for communication with corporate issuers, shareholder proponents, other stakeholders, media, and the public. In December 2015, European Securities and Markets Authority released a follow-up to its 2013 report responding to the establishment of best practice principles. This report concluded that the best practice principles had a positive impact on the market, mainly in terms of enhanced clarity for different stakeholders on how proxy advisory firms operate. The report also stated that while the majority of the industry is signatory to the principles, including ISS and Glass Lewis, broader sign-up to the principles would contribute to establishing the principles as the prevailing standard in the industry. ISS and Glass Lewis have posted statements of compliance on their websites that describe how they apply the principles in their work.\nIn April 2015, the Canadian Securities Administrators adopted the National Policy 25-201 Guidance for Proxy Advisory Firms. The policy is intended to promote transparency in the process leading to vote recommendations and the development of proxy voting guidelines, and foster understanding among market participants about the activities of proxy advisory firms. The guidance is not intended to be prescriptive but rather encourage proxy advisory firms to consider the guidance in developing and implementing practices that are tailored to their structure and activities.",
"The market for proxy advisory firms has grown, with higher demand stemming from factors including the rise of institutional investing and the effect of some new policies and requirements. Recent studies and the market participants and other stakeholders with whom we spoke agreed that proxy advisory firms influenced shareholder voting and corporate governance practices. But market participants and stakeholders had mixed views about the extent of this influence and some said that influence can vary based on the size of the institutional investor or the voting policies used. Studies we reviewed also did not agree on the extent of the influence or whether it was helpful or harmful.",
"The market for proxy advisory firms has grown over the last 30 years as institutional investors have relied more on firms to provide research, analysis, and vote recommendations. According to academic and industry studies, the increased demand for proxy advisory services stems from several factors, including the growth in the proportion of shares owned by institutional investors, the number and complexity of voting issues, and shareholder activism and the effect of some new policies and requirements. Some of these issues are consistent with themes we identified in 2007.\nInstitutional Ownership. The increased ownership share that institutional investors hold and the high volume of proxy votes they are responsible for casting has increased demand for proxy advisory firms. According to a recent Broadridge and PwC report, in 2016 institutional investors owned 70 percent of shares outstanding in U.S. public companies compared with retail investors (or individual investors) who owned 30 percent of shares outstanding. Institutional investors also have voted at much higher rates; for example, as of June 2016, 91 percent of institutional investors voted their shares compared with 28 percent of retail investors. Because many institutional investors use the services of proxy advisory firms, increased institutional ownership has resulted in a greater demand for these firms.\nNumber and Complexity of Voting Issues. Some institutional investors may lack the resources to consider the many complex proxy issues that come before them for a vote and instead may opt to use the services of a proxy advisory firm, which adds to the demand for the firms. For example, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires a shareholder advisory vote on executive compensation (“say- on-pay”). The act allows shareholders to vote their opinion on executive compensation plans every 1–3 years, thereby increasing the volume of shareholder votes on this issue. Institutional investors also have become more involved in a range of corporate governance and other issues such as board composition and diversity, executive severance agreements (including “golden parachutes”), strategy and growth, and sustainability and climate change that can require extensive analysis. Thus, the growing number and complexity of proxy voting issues has also contributed to the increased demand for proxy advisory firms.\nShareholder Activism and Regulation. Proxy advisory firms also have become more prominent because of continued shareholder activism and the impacts of some regulations. For example, many institutional investors seek the services of proxy advisory firms to assist in their assessments of corporate governance practices and carry out the mechanics of proxy voting. As discussed earlier, in 2003, SEC adopted a final rule that required registered investment advisers, among other things, to adopt policies and procedures reasonably designed to ensure that they vote proxies in the best interests of clients. According to some industry stakeholders, based on certain interpretations of the rule and subsequent SEC staff guidance, some investment advisers determined that they could discharge their duty to vote their proxies and demonstrate that their vote was not a product of a conflict of interest if they voted based on the recommendations of a proxy advisory firm. As a result, institutional investors tended to outsource their research and voting decisions, which helped to increase the demand for proxy advisory services. However, in 2014, SEC staff issued a Staff Legal Bulletin that, among other things, included guidance on investment advisers’ responsibilities in voting client proxies and retaining proxy advisory firms, including notice that investment advisers are not required to vote every proxy, depending on the proxy voting arrangements between advisers and their clients. We discuss other aspects of this guidance later in the report.",
"Recent studies, market participants, and other stakeholders agree that proxy advisory firms have influence on shareholder voting and corporate governance practices, but had mixed views about the extent of their influence. Our review of four recent studies that analyzed the extent to which proxy advisory firms’ recommendations influenced voting decisions and shifted some fraction of the votes shows that proxy advisory firms have influence on shareholder voting. For instance, using a sample of director elections, a 2009 study found that ISS recommendations have an impact on shareholder votes, and directors receiving a negative ISS recommendation receive 19 percent fewer votes. However, a 2010 study concluded that while both ISS and Glass Lewis appear to have a meaningful impact on shareholder voting, media reports often overstate the extent of ISS’s influence on voting. The study found that the impact of an ISS recommendation is reduced once director- and company- specific factors that are important to investors—failure to attend board meetings, financial performance, corporate misconduct, and a lack of responsiveness to shareholders—are taken into consideration. Unlike higher estimates, the analysis showed that an ISS recommendation shifted 6–10 percent of shareholder votes.\nAdditionally, a 2013 study concluded that proxy advisory firm recommendations are the key determinant of voting outcomes in the context of mandatory “say-on-pay” votes. The study found that negative ISS and Glass Lewis recommendations are associated with 25 percent and 13 percent more votes against the compensation plan, respectively. The study also found that the relationship between proxy advisory firm recommendations and shareholder votes varies based on the rationale behind the recommendation and the institutional investor’s ownership structure. For example, the relationship between negative recommendations and shareholder votes is weaker for shareholders with larger holdings and, thus, presumably greater incentives to perform their own internal research. The study concluded that this suggests that at least some shareholders are not directly influenced by the recommendations and take into account the underlying basis for the recommendation and other relevant factors. A 2015 study also found that proxy advisory firms have an effect on voting outcomes related to say-on- pay proposals. Specifically, the study concluded that negative ISS recommendations reduce the percentage of votes in favor of say-on-pay proposals by about 25 percentage points.\nSimilarly, our interviews with market participants and other stakeholders showed mixed views on the extent of influence proxy advisory firms have on voting. Most of the 13 institutional investors,11 corporate issuers, 4 proxy solicitors, and 8 industry association representatives with whom we spoke stated that proxy advisory firms (more specifically, ISS and Glass Lewis—the two firms with the largest number of institutional investor clients) have influence on shareholder voting. However, some investors, solicitors, and investor association representatives said that proxy advisory firms had little influence and that such influence varied based on the size of the institutional investor or whether the institutional investor uses its own or the proxy advisory firm’s research and voting policies. Specifically, they told us that the level of influence that ISS and Glass Lewis have on voting and corporate governance is minimal because large institutional investors cast the majority of proxy votes and do not exclusively rely on the research and vote recommendations offered by proxy advisory firms to help decide how to vote proxies.\nWe previously found in 2007 that large institutional investors, which cast the great majority of proxy votes made by all institutional investors, placed less emphasis on proxy advisory firms’ research and recommendations than smaller institutional investors, and tended to have their own in-house research staffs to conduct research that drove their proxy voting decisions. Some institutional investors and investor association representatives with whom we spoke also said that the firms’ influence has significantly declined in recent years, as some institutional investors—in particular, asset managers (such as investment advisers to mutual funds) and pension funds—have taken a greater interest in proxy voting and developed in-house expertise to address proxy vote-related issues.\nThe institutional investors and investor association representatives also pointed to the growing trend among institutional investors of using their own voting policies as a basis for voting decisions instead of relying on the proxy advisory firms’ policies and vote recommendations. For example, officials from the four large institutional investors told us that they conduct their own research and analyses to make voting decisions and use the research of proxy advisory firms only to supplement their internal research and analyses. Officials from one proxy advisory firm also told us that while firms provide vote recommendations, it is the institutional investor that makes the actual vote decision, which is most often based on the institutional investor’s own voting policies. Moreover, they noted that as clients of the proxy advisory firm, institutional investors always retain the ability to change the vote that the proxy advisory firm casts on their behalf.\nAccording to large institutional investors and a few investor association representatives that we spoke to, some smaller institutional investors who do not have their own in-house research staffs to analyze the many proxy voting issues and companies in their portfolio will obtain such services from proxy advisory firms and rely more on the research and recommendations proposed by the firms. In these cases, the resulting vote recommendation could have more of an influence on the voting, because some of these smaller institutional investors have a tendency to adopt the firms’ recommendations and vote accordingly. One small institutional investor told us that it relies on the research and the vote recommendations of ISS and will consider the firm’s recommendations on certain actions before making voting decisions.\nOther studies that we reviewed showed that proxy advisory firms also have an influence on corporate governance practices. For example, a 2015 study found that to avoid a negative vote recommendation, companies changed their compensation programs before the formal shareholder vote in a manner consistent with the features known to be favored by proxy advisory firms. A 2013 study also found that more than half of companies involved in the study responded to a shareholder vote triggered by a negative recommendation from the proxy advisory firms by making changes to their compensation plan. In addition, a 2012 study found that more than two-thirds of U.S. companies say their executive compensation program is influenced by the policies and voting recommendations of the two largest proxy advisory firms—ISS and Glass Lewis. In particular, a majority of companies say they are likely to make changes to their compensation program to gain a favorable “say-on-pay” recommendation from these firms. Two corporate issuers also told us that proxy advisory firms have some influence on the development of their governance practices and they would generally accept the firms’ advice on corporate governance requirements.\nOfficials from one proxy advisory firm with whom we spoke stated that they agree that proxy advisory firms have influence on corporate governance practices. The proxy advisory firm further indicated that its policy frameworks reflect its institutional investor clients’ preferences for better disclosure, strong shareholders’ rights, and adoption of best practices governance standards. They noted that such influence is good and ultimately they want to have a positive influence on their clients because they view that as part of their responsibility—to promote good governance. Similar to the views expressed by the officials of the proxy advisory firm, investor association representatives also suggested that consideration be given to the context in which influence is often viewed.\nThey noted that most often, influence is viewed negatively. However, the representatives said that proxy advisory firms’ influence can be positive. That is, if the recommendations proxy advisory firms make help to promote good governance, then the firms’ influence on voting is beneficial to shareholders. Additionally, a 2009 study found that proxy advisory firm recommendations—at least for uncontested director elections—appeared to be based on factors that should matter to institutional investors, such as good governance, director attention, and performance.",
"Proxy advisory firms develop their general voting policies and update them through an iterative process involving analysis of institutional investor and corporate issuer input, industry practices, and discussions with other stakeholders. These policies are similar to or in some cases stricter than other standards such as those from the New York Stock Exchange (NYSE) and the NASDAQ Stock Market (NASDAQ). Proxy advisory firms have taken steps to communicate with corporate issuers when developing voting recommendations and have allowed some to review proxy reports for accuracy before they are final. While some corporate issuers said they still do not understand the bases for some vote recommendations and would like to have a dialogue about the proxy reports, proxy advisory firms said that to maintain objectivity and satisfy research reporting timelines for clients they have to limit the breadth of such discussions.",
"Proxy advisory firms’ voting policies outline their approaches for evaluating positions on, and rationales for, recommendations on corporate governance issues. For example, ISS and Glass Lewis officials said they develop three types of policies: general, specialized, and client- customized.\nGeneral policies reflect the firm’s own positions and rationales on various corporate governance issues and are generally used in developing their vote recommendations. The policies may take into account national and international corporate governance codes and practices, as well as the views of institutional investors, corporate issuers, and other stakeholders.\nSpecialized policies reflect the institutional investor clients’ perspective on specific governance issues such as sustainability, socially responsible investing, public funds, labor unions, or mission and faith-based investing. Since these policies reflect specific institutional investor perspectives or needs of different institutional investors, voting recommendations developed under these policies may in some cases differ from recommendations formed under general policies.\nClient customized policies are based on institutional investor clients’ unique corporate governance guidelines, and reflect each investor’s specific philosophies and approaches. For these clients, the proxy advisory firm prepares voting recommendations based on these policies. As a result, the vote recommendations issues under these policies may differ from those issued under general policies.\nSince specialized and client customized policies reflect different perspectives of different institutional investors, voting recommendations developed under these policies in some cases may differ from recommendations formed under general polices. The following discussion focuses on general policies, which represent the general guidelines the firms use for their analyses in developing vote recommendations.\nAccording to the two largest proxy advisory firms—ISS and Glass Lewis—they develop their general voting policies and update them through an iterative process, which recently has included increased engagement with institutional investors, corporate issuers, and other stakeholders. ISS and Glass Lewis have taken steps to obtain input from and communicate with market participants about voting policies. Some corporate issuers we interviewed said that both ISS and Glass Lewis recently have made more of an effort to engage market participants in the general policy development process unlike in the past when their outreach was less frequent or formal. When we spoke to both proxy advisory firms, they also said that they made their processes more transparent than they were in the past. For example, they have begun to conduct engagement meetings, hold roundtables, and post guidelines to their websites. Specifically, Glass Lewis officials said they have created a corporate issuer resource website that offers links to its guidance documents, forms to request engagement meetings, and responses to frequently asked questions. ISS officials said they invite institutional investors, corporate issuers’ management and board directors, and other industry stakeholders to participate in its annual proxy voting policy survey. According to ISS, the survey is designed to provide input on key issues that are factored into the development of ISS’s general policy guidelines, including proposed policy updates as well as new policies. See figure 3 for examples of the types of communication mechanisms used.\nA few corporate issuers told us that although input is obtained from both corporate issuers and institutional investors, it does not necessarily make its way into the final general policy guidelines. One corporate issuer we interviewed said there has been a noticeable increase in outreach (a lack of outreach was evident in the past). But the corporate issuer also said there is a difference between proxy advisory firms soliciting input and using input to modify policies. Another corporate issuer, who said it was not solicited for feedback, said it seemed like policies were sometimes developed in a vacuum. However, Glass Lewis officials said that they have responded to issuer feedback, for example, Glass Lewis changed its approach for selectin issuer peer groups used in its pay for performance analysis. Also, Glass Lewis officials said that they work with an independent advisory council that provides guidance in the development and updating of its voting policies.\nFurther, some have raised concerns about ISS’s policy survey and published results. For example, one market participant we interviewed said that a relatively small number of institutional investors drive ISS’s policy formation process in part because a small number of ISS investor clients participated in the survey. In a February 2013 working paper, the authors also noted that ISS’s policy survey relied on a small number of participants and provided little detail about the composition of the respondent pool. ISS officials said there has been consistency in the relative mix of institutional investors and corporate issuers responding to the survey, with more corporate issuers than institutional investors answering the survey questions.",
"Based on our review of selected general voting policies of proxy advisory firms and other market standards on corporate governance, the firms’ policies were similar to or in some cases stricter than the other standards and covered a broader range of issues. We reviewed selected policies from the five proxy advisory firms, NYSE, NASDAQ, and a large institutional investor, and looked specifically at the issues of director independence, overboarding (number of public company boards for which a director can serve before being considered overextended), independent chairman/chief executive officer (CEO), and proxy access, as illustrated in the following examples:\nBoard independence. Proxy advisory firms and the exchanges (NYSE and NASDAQ) require some level of independence on corporate boards. Specifically, both exchange listing requirements and firm voting policies call for a majority of independent board directors on corporate boards. However, these bodies vary on the “look-back” period required for directors to be deemed independent from the company. The five proxy advisory firms and one institutional investor policy that we reviewed require a 5-year look back, while the exchanges require 3 years. One proxy advisory firm’s rationale for this difference was that 5 years allows enough time for management and board members to settle any conflicts of interest. This firm also notes that it does not automatically apply the 5-year threshold and will consider the type of relationship the nominee has with the company.\nOverboarding. Proxy advisory firms and some institutional investors have policies on overboarding, but the exchanges do not. In 2016, both ISS and Glass Lewis updated their director overboarding policies to reflect concerns about directors overcommitting themselves. Specifically, a few institutional investors expressed the position that if directors served on too many boards, they would not have sufficient time to focus on the issues related to any one company. The institutional investor policy we reviewed—which had a lower threshold than that of the proxy advisory firms—explained that generally it is unlikely that a director will be able to commit sufficient focus to a particular company when a director commits himself or herself to a large number of boards. Both ISS and Glass Lewis’s policies outline a phased transition to a lower board membership threshold for directors. ISS policy states, for example, that it will recommend that shareholders vote against directors who sit on more than six boards, but beginning in 2017, ISS policy states that it plans to make negative recommendations for directors sitting on more than five. Glass Lewis policy also states that it plans to note a concern for these directors in its report, thus providing a transition period before putting the full policy into effect. The current policy cites six boards, but in 2017 Glass Lewis’ policy also recommends voting against a director who serves on more than five boards. Further, a couple of the firms have changed their policy on the number of boards that a CEO should serve on. For example, in 2016, Egan-Jones changed its overboarding policy limiting the number of outside boards a CEO may serve on to one. Glass Lewis plans to make a similar adjustment in 2017. Glass Lewis policy states that during the 2016 proxy season, it plans to note as a concern CEOs serving on more than one outside boards, and then beginning in 2017 it will base its recommendation on this lower threshold. ISS policy recommends a vote against CEOs who sit on more than two outside boards.\nIndependent chairman/CEO. The issue of an independent chairman/CEO is another example of an issue area covered by the proxy advisory firms’ and large institutional investor’s policy, but not addressed by the exchange listing requirements. Specifically, all five proxy advisory firms have independent chairman/CEO policies. One firm said the development of this policy was guided by feedback from institutional investor clients. Similar to the five proxy advisory firms, the large institutional investor policy we reviewed generally supports the separation of chairman and CEO when a company does not have a lead independent director. The institutional investor policy states that support for independent leadership is important given the roles that the chairman plays, such as contributing to oversight of CEO succession planning and serving as an advisor to the CEO.\nProxy access. The issue of proxy access is another area not covered by the exchange listing standards, but addressed by the proxy advisory firm and institutional investor policies. Specifically, the five proxy advisory firms have a proxy access policy. According to market participants, the increased rise of shareholder activism also saw increased attention on the issue of proxy access. One market participant we interviewed said that proxy advisory firm policies have become more complex and nuanced, and the firms have enhanced policies on proxy access as the issues have received more attention. Similarly, the institutional investor policy we reviewed supports proxy access, stating that long-term shareholders should have the opportunity to nominate directors.\nMarket participants with whom we spoke generally viewed proxy advisory firms’ policies on corporate governance as stricter than other industry standards but reflective of institutional investors’ interests. Specifically, for select corporate governance issues, proxy advisory firm policies may call for higher standards of compliance than other industry standards, such as exchange listing requirements. Some market participants said that these stricter standards are a reflection of the higher standards for which some investors look and that in their view help promote better governance practices. They stated that exchange listing standards tend to only serve as a baseline for publicly traded companies. A few institutional investors pointed out that their policies require even higher standards of compliance than the proxy advisory firms have developed. For example, representatives of one institutional investor told us that their company’s overboarding policy is stricter than both ISS’s and Glass Lewis’s policies. The officials added that the issue of overboarding is a case in which institutional investors were ahead of the marketplace and proxy advisory firms were just now “catching up.”",
"Proxy advisory firms’ approaches for developing vote recommendations can be case-by-case or rules based. Policy application may depend on factors such as the type of vote cast or the voting instructions provided by institutional investor clients. A more rules-based approach might be applied with some board of director issues such as board independence, which uses a time period threshold to ensure that directors with previous work history with a company have been separated long enough to be independent. However, such issues may still be subject to a case-by-case review. For example when applying the look-back period for director independence, Glass Lewis’s proxy policy states that it will not automatically recommend voting against former executives of a company who have consulting agreements with the company during the look-back period.\nIn contrast, vote recommendations on mergers and acquisitions would always be applied on a case-by-case approach that considered the facts and circumstances of the companies involved. The proxy advisory firms state in their respective general policies that they consider the benefit that implementation of a proposal would have on shareholders of the company being evaluated. For example, in proxy reports we reviewed of a merger, both ISS and Glass Lewis evaluated the potential benefits of the merger to investors on both sides of the proposed transaction. Both ISS and Glass Lewis found that investors for one company would benefit and thus recommended in favor of the merger for investors of that company, but recommended against the merger for investors of the other company because it would not be to their benefit.\nIn conducting evaluations such as these, ISS and Glass Lewis officials as well as some corporate issuers we interviewed also said that the firms consider new and company-specific information. For example, in 2015 reports on this merger, ISS made adjustments to its original reports to account for company-specific information that clarified two data points, adjusting the estimated fair value of one of the companies. The updates were included in the reports and clients were notified through an alert or note—a process the proxy advisory firms use when they have updated or revised information in their reports. Proxy advisory firm officials also pointed out that while analysts have the discretion to engage with clients as well as with some corporate issuers during each proxy season, the firms only consider new or company-specific information that is publicly available to help ensure their reports and recommendations are based on the same information available to clients and the broader investing public.\nBoth Glass Lewis and ISS officials acknowledged that corporate issuers expressed an interest in reviewing proxy reports for accuracy in advance of proxy meetings. In addition, international regulatory organizations, such as European Securities and Markets Authority and Canadian Securities Administrators, have promoted increased engagement and transparency between corporate issuers and proxy advisory firms. Therefore, the proxy advisory firms have developed specific procedures that corporate issuers or their representatives may use to review or report errors related to the proxy reports prepared by the firms (see fig. 4).\nSpecifically, Glass Lewis developed a new process in 2015 by which companies can receive a draft data-only version of a report for review before the firm completes its analysis. These data-only versions do not contain the firm’s recommendations. Companies interested in receiving a report must submit a request. Corporate issuers are given a 48-hour window to review the draft and provide corrections. ISS offers a similar opportunity to Standard and Poor’s 500 companies and to companies in comparable large capitalization indices in some countries outside the United States. However, unlike the data-only versions of the reports provided by Glass Lewis, these reports contain ISS’s analyses and vote recommendations. Other corporate issuers have the option of requesting a copy of the published report in advance of the company’s annual meeting. Standard and Poor’s 500 companies have the opportunity to review ISS’s draft reports and provide feedback within 1-2 business days. One stakeholder we interviewed said that this time window did not always allow corporate issuers enough time to review. However, Glass Lewis and ISS officials indicated that these time windows allow them to meet their report publishing deadlines. In addition to the draft review process, ISS officials said ISS has a Feedback Review Board that provides a mechanism for stakeholders to communicate with ISS throughout the year regarding the accuracy of data, research, and general fairness of policies.\nISS and Glass Lewis documents state that the opportunity to review advance copies of each company’s specific report is only an opportunity to check data for factual errors and not a mechanism for conveying disagreement with ISS’s or Glass Lewis’s methodologies or analyses. Some corporate issuers stated that there are differences of opinion, conflicting points of view, and misinterpretations of the data. However, ISS documentation indicated that although the review process allows for a verification of data, it has to limit the breadth of the review because it adds operational complexity and significant time to the research production process. Glass Lewis policy states that during proxy season it has to limit discussions on its policies or recommendations to help it remain objective. However, Glass Lewis officials said that it engages with issuers extensively outside of proxy season on issuer-specific issues including specific recommendation as well as general policies. Both corporate issuers and institutional investors we interviewed said that the data errors they found in the proxy reports were mostly minor, but as we discuss below, some errors can lead to negative recommendations.\nSome issuers raised other concerns regarding how policies were applied during recommendation development and that the approaches used did not always account for differences across corporate issuers. For example, ISS’s and Glass Lewis’s general compensation policies lay out a set of criteria they use in evaluating an executive compensation package. Corporate issuers we interviewed expressed concern that firms applied these policies in a one-size-fits-all or rules-based manner. A few corporate issuers said they had to initiate outreach to the firms to explain the corporate issuers’ unique circumstances before the recommendations were reversed. Corporate issuers with whom we spoke pointed to another example of one-size-fits-all application involving overboarding policies. As mentioned earlier, ISS and Glass Lewis general policies provide a threshold (number) for public company boards on which a director can serve before being considered overextended. One small corporate issuer we interviewed said it was unsuccessful in trying to make a case for keeping a highly qualified director who contributed needed expertise but was deemed overboarded. Given the company’s small size, representatives found it very important to have this individual on its board. Although a few corporate issuers with whom we spoke were frustrated that consideration has not been given for special circumstances or the effect the decision would have on the company, one proxy advisory firm’s policy refers to institutional investor concerns about directors being overextended. As previously discussed, a 2013 study found limited evidence of a one-size-fits-all approach in the context of mandatory say- on-pay. The study found that proxy advisory firms take into consideration mitigating company-specific circumstances, severity of the issue, the firm’s rationale, and the overall quality of the compensation plan when policies were applied during recommendation development.\nFurthermore, some corporate issuers and stakeholders would like further insight into how the proxy advisory firms arrived at their vote recommendations. A few stakeholders also told us they hire consultants with expertise on executive compensation and have developed models similar to those used by proxy advisory firms to help them better understand how firms produce their results and recommendations.\nTo further increase transparency into the proxy advisory firm vote recommendation process, stakeholders have proposed making the reports available to the public at some time after the annual meeting. Market participants and other stakeholders told us there are advantages and disadvantages to making proxy advisory firm reports public at an appropriate time. For example, some market participants said a possible advantage to making the reports public is that it would allow for greater scrutiny and the ability to further evaluate the validity of proxy firm recommendations and whether the recommendations have a positive effect on shareholder value. But several stakeholders agreed that making them public would negatively affect proxy advisory firms’ ability to be profitable. Proxy advisory firms did not support the idea of making their reports publicly available at no cost after the relevant shareholder meeting because it would undermine their business model. They noted that their clients use these reports throughout the year and not just as a basis for voting proxies.",
"Since 2007, SEC oversight of proxy advisory firms and the services they provide has included information gathering on issues relating to the firms, issuance of guidance, and examinations of firms registered as investment advisors and of registered investment companies or investment advisers using proxy advisory services (see fig. 5).\nConcept release. Since our last report in 2007, SEC sought public comment on concerns that had been raised by stakeholders in the proxy advisory industry in its 2010 Concept Release on the U.S. Proxy System. According to SEC staff, the agency occasionally publishes concept releases to raise awareness and collect the public’s view on certain securities issues so the agency can better evaluate the need for future rulemaking. The 2010 concept release discusses, among other things, concerns that had been raised by corporate issuers and industry participants about the level of accuracy and transparency in how proxy advisory firms formulate voting recommendations and potential conflicts of interest. Concerns related to accuracy and transparency include that firms’ voting recommendations may be based on inaccurate or incomplete data. Additionally, the 2010 concept release reiterated what we reported on in 2007, that a conflict of interest for a proxy advisory firm could arise if it provided both proxy voting recommendations to institutional investors and consulting services to companies on the same matter. And as we reported in 2007, the most commonly cited potential for conflict of interest involved ISS; specifically, that ISS advises institutional investors on how to vote proxies and provides consulting services through its subsidiary, ISS Corporate Solutions, Inc., to companies seeking to improve their corporate governance. The concept release also discussed other types of potential conflicts of interest on which we reported in 2007, such as when owners or executives of the proxy advisory firm have significant ownership interest in, or serve on the board of directors of companies (corporate issuers) with matters being put to shareholder vote and on which the proxy advisory firm is offering vote recommendations.\nThe concept release also requested public comments on a list of potential regulatory solutions for addressing conflicts of interest and accuracy and transparency issues. For example, SEC asked for comments about revising interpretive guidance or regulations to require more specific disclosure of the presence of a potential conflict and the extent of controls and procedures ensuring the accuracy of proxy research reports provided to institutional investor clients.\nSEC received about 300 comment letters on these and other issues discussed in the release. SEC staff stated these comment letters helped to inform subsequent work on proxy advisory firms (as discussed below). Furthermore, SEC staff stated that they continue to routinely review issues raised in the concept release, and have met with several stakeholders and associations representing corporate issuers, investors, and proxy advisory firms to see if the issues are still prevalent and plan to continue these discussions with various stakeholders.\nRoundtable. In December 2013, SEC held a roundtable to discuss issues facing the proxy advisory industry. Participants included the SEC Chair as well as four SEC Commissioners and various officials and representatives from institutional investors, investment advisers, corporate issuers, academia, law firms, and proxy advisory firms. According to statements by the Chair, the roundtable continued the review of the use of proxy advisory services and related issues that were discussed in the 2010 concept release.\nThe roundtable discussed the use of proxy advisory firms in general and also reviewed key topics of interest, including potential conflicts of interest for proxy advisory firms and users of their services, the transparency and accuracy of the recommendations the firms make, and what the nature and extent of institutional investor reliance on proxy advisor recommendations is and should be. The Chair stated she was particularly interested in the discussion of potential conflicts of interest. One Commissioner also drew attention to these issues in a number of speeches in 2013 and 2014.\nGuidance. SEC staff addressed some of the issues discussed above through guidance. After the concept release and the roundtable, SEC staff took steps to address issues in the proxy system in a 2014 Staff Legal Bulletin. SEC staff stated the bulletin summarized the staff’s views on laws and SEC regulations related to proxy advisory firms. For example, SEC staff provided guidance that spelled out various responsibilities for disclosure of conflicts of interest. The guidance made it clear that proxy advisory firms must provide notice of the presence of a significant relationship or a material interest. In addition, according to the Staff Legal Bulletin, such disclosure should enable the recipient to understand the nature and scope of the relationship or interest, including the steps taken, if any, to mitigate the conflict. The disclosure should also provide sufficient information to allow the recipient to make an assessment about the reliability or objectivity of the recommendation.\nAdditionally, the bulletin clarified and restated responsibilities of investment advisers to demonstrate that proxy votes are cast in accordance with clients’ best interests and the adviser’s proxy voting procedures. Among other things, the guidance states that investment advisers who use proxy advisory firms should ascertain whether the proxy advisory firm has the capacity and competency to adequately analyze proxy issues. In doing so, the guidance states that investment advisers could consider, among other things, the robustness of the proxy advisory firm’s policies and procedures regarding its ability to ensure that proxy voting recommendations are based on current and accurate information and to identify and address any conflicts of interest. The Staff Legal Bulletin further states that investment advisers who use the services of proxy advisory firms could also consider the adequacy and quality of the firm’s staffing and personnel.\nInstitutional investors with whom we spoke told us they perform due diligence on proxy advisory firms in various ways. A few institutional investors reported conducting various types of compliance reviews of firms, including site visits and analyst interviews. For example, one institutional investor has analysts dedicated to conducting ongoing due diligence on the data quality of the proxy advisory firm’s reports. This institutional investor validates the firm’s data and communicates any errors it identifies to the firm. The institutional investor said that the errors found in proxy reports generally were minor and that firms typically were able to update and correct their reports.\nExaminations. SEC staff also considered some of the issues discussed previously through examinations of proxy advisory firms registered as investment advisers and registered investment companies using proxy advisory firms. As discussed, proxy advisory firms that are registered investment advisers under the Advisers Act are subject to examination by SEC. According to SEC staff, proxy voting issues and proxy advisory firms may not be examined on a regularly scheduled basis because SEC uses a risk-based approach to identifying examination priorities each year. As noted previously, all entities, including proxy advisory firms, that meet the statutory definition of an investment adviser (where no exclusion from the definition is available), regardless of whether they are registered with SEC, are subject to the Advisers Act’s antifraud provisions. Legislation that has been proposed would require all proxy advisory firms to register as such, creating a new regulatory framework for the registration of proxy advisory firms.\nIn January 2015, SEC staff announced examination priorities for 2015, which included select proxy advisory firms and how they make recommendations on proxy voting and how they disclose and mitigate potential conflicts of interest. The examination priorities for 2015 also included reviewing investment advisers’ compliance with their fiduciary duty in voting proxies on behalf of investors. SEC staff efforts on this priority were incorporated into an ongoing Never-Before-Examined Investment Company Initiative that launched in April 2015. This initiative involves focused, risk-based examinations in a number of higher-risk areas, including compliance programs. SEC staff announced that as one of the areas to be reviewed within the compliance program, it would review investment companies’ portfolio proxy voting policies and procedures. The examination focus would include the oversight of a proxy advisory firm retained by the investment company’s investment adviser, if applicable.\nIn determining examination priorities through a risk-based approach, SEC staff told us that the decision to examine this issue for this initiative was based on several factors, including the higher risk that these investment companies may have weaker internal controls, including procedures for overseeing proxy advisory services. As of August 2016, the initiative is ongoing. We reviewed 41 percent of the examinations completed as of August 2016 on SEC’s 2015 priorities addressing proxy advisory firm issues and confirmed that SEC examined risk areas related to conflict of interest, proxy voting policies and procedures, and oversight of proxy advisory services, among other issues. None of the examinations we reviewed resulted in serious violations leading to an enforcement action.\nSEC staff stated they may refer to the scope, process, or relevant legal resources used in the initiative for examinations that review portfolio securities proxy voting in the future, although as of August 2016 none were planned. As clarified in the Staff Legal Bulletin, due diligence obligations over proxy advisory firms on a regular basis falls predominately on the investment adviser using their services. Therefore, regardless of persisting perceptions of issues with proxy advisory firms as discussed above, it is the investment adviser’s responsibility to vote the proxy in its clients’ best interest.",
"We provided a draft of this report to the Securities and Exchange Commission for review and comment. We also provided excerpts of the report to proxy advisory firms for technical comment. SEC staff as well as officials from each proxy advisory firm provided technical comments, which we have included, as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Chair of SEC, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions regarding this report, please contact me at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs can be found on the last page of this report. Key contributors are listed in appendix II.",
"This report discusses (1) the demand for proxy advisory services and the extent to which firms may influence proxy voting and corporate governance practices, (2) how proxy advisory firms develop and apply voting policies to make vote recommendations and efforts to increase transparency, and (3) Securities and Exchange Commission’s (SEC) oversight since 2007 related to proxy advisory firms and the services they provide.\nTo address all objectives, we conducted a literature review to obtain background information and identify issues related to proxy advisory firms. We used Internet search techniques and keyword search terms to identify publicly available information about proxy advisory firms, from 2008 – 2016, including the history, number of firms in the United States, types of proxy advisory services, and past or current issues facing the industry. From research databases such as ProQuest and LexisNexis, we obtained information from publicly available documents, such as journals, trade publications, periodicals, studies, white papers, and congressional testimony.\nWe also identified and conducted interviews with various officials and representatives with knowledge of the industry (SEC staff, 5 proxy advisory firms, 13 institutional investors, 11 corporate issuers, 4 proxy solicitation firms, 2 international agencies—European Securities Markets Authority and Canadian Securities Administrators—and 8 industry and advocacy groups). The industry and advocacy groups were the Business Roundtable, Chamber of Commerce’s Center for Capital Markets Competitiveness, Council of Institutional Investors, Investment Company Institute, Mutual Fund Director’s Forum, National Association of Corporate Directors, National Investor Relations Institute, and the Society of Corporate Secretaries and Governance Professionals. We also interviewed other stakeholders from the Stanford Rock Center for Corporate Governance, and the NASDAQ Stock Market and New York Stock Exchange.\nWe conducted the interviews to gain an understanding of issues affecting the proxy advisory industry and to obtain a variety of perspectives, as well as to corroborate the information obtained in our other sources. The views of those interviewed are not representative of all institutional investors, corporate issuers, proxy solicitors, or industry and advocacy groups. Our criteria for selecting the interviewees consisted of several factors such as participation in prior SEC events, including roundtables; recommendations from market participants and other stakeholders; participation in prior congressional hearings; appearance in our literature reviews and Internet searches; and mentions in bibliographies of relevant papers and studies. In selecting corporate issuers (public companies that develop, register, and sell securities to the investing public to finance their operations), we used information from the Standard and Poor’s Smallcap 600, Midcap 400, and Large 500 indexes to randomly select a mix of small, midsize, and large corporate issuers. In selecting institutional investors for our interviews, we obtained information from the Council for Institutional Investors and the Investment Company Institute to judgmentally select a mix of 13 institutional investors (based on asset size) and type (mutual fund companies and pension funds). We based the asset size of institutional investors on the total assets under management (AUM), or the total market value of all financial assets the institution manages for its clients or on its own behalf. To ensure a mix of large and small institutional investors, we ranked institutional investors by the total reported AUM and selected seven institutions with the highest total AUM and six institutions with the lowest total AUM. For purposes of this report, we defined “large” institutional investors as those with an AUM of $600 billion or more and “small” institutional investors as those with an AUM of $200 billion or less.\nThroughout this report, we use certain qualifiers when describing results from interview participants, such as “few,” “some,” and “most.” We define few as a small number but less than some (two or three); some as more than a few relative to the total number possible (at least four or more); and most as nearly all or almost everyone relative to the total number possible (at least seven or more).\nTo address the first objective, we reviewed and summarized literature and analyzed available information on users of proxy advisory firms and the demand for proxy advisory services, factors that may have contributed to demand, and the possible influence of firms on proxy voting and corporate governance practices. Specifically, to describe the demand for services, we identified the services provided by proxy advisory firms, users of such services, and the rationale, if any, for institutional investors, in particular, to acquire proxy advisory services. To the extent that relevant data or literature were available, we summarized information on any trends, linkages, or relationships identified in the literature.\nAdditionally, to address the first objective, we conducted a literature search to identify relevant academic studies and working papers on the influence of proxy advisory firms. Our criteria for selection consisted of factors such as whether the studies and papers were based on original data analysis (including data that may have been gathered by others); published in a refereed medium; written or published in 2009–2016; and contained no serious methodological or other errors (as determined by our quality assessment and based on guidance for using external work in our engagements).We focused our analysis on published academic studies and academic working papers not yet published that involved quantitative analyses of proxy advisory firms’ influence. We analyzed the content of these studies and papers for data or other information on the extent of the firms’ influence. We reviewed whether the author concluded that the proxy advisory firms’ research and recommendations moved at least some fraction of the votes or affected a company’s governance decisions or practices. We also reviewed whether the author concluded that the firms’ influence was positive or negative in the sense that it was potentially helpful or harmful to shareholders or investors.\nFor the second objective, we identified and analyzed available information on how proxy advisory firms develop and apply voting policies to make vote recommendations. We analyzed information on the firms’ voting policies and guidelines, such as their general, custom, and specialty policies. In some instances, we focused our review on Institutional Shareholder Services (ISS) and Glass Lewis and Co. (Glass Lewis) because they have the largest number of clients in the proxy advisory firm market in the United States. We reviewed documentation issued by the SEC and its staff and international regulators such as the European Securities and Markets Authority and Canadian Securities Administrators proposing principles and guidelines related to proxy advisory firm transparency. In addition, we reviewed proxy advisory firm policies, mechanisms, and the transparency of their voting policies, procedures, and processes, including reviewing the firms’ websites and whether they disclosed information about their policies and processes. We also analyzed the views of market participants and other stakeholders on these transparency efforts.\nWe also compared proxy advisory firms’ policies for selected voting issues with related corporate governance standards developed by other entities, such as stock exchanges and institutional investors. Specifically, we reviewed four different voting policies from the five proxy advisory firms and compared them with corporate governance standards developed by the New York Stock Exchange (NYSE), NASDAQ Stock Market, and one large institutional investor. We selected NYSE and NASDAQ because they have corporate governance requirements that corporate issuers must meet to be listed on the exchange and some of these requirements are also addressed by proxy advisory firms. We also selected a large institutional investor that has developed its own voting policies on corporate governance issues to provide an example of how proxy advisory firm policies compare to voting policies of institutional investors. We reviewed voting policies and corporate governance requirements for director independence, overboarding, independent chairman/chief executive officer, and proxy access issues. We selected these four topics based on what we learned from interviews with market participants and other stakeholders and our literature review. Although some of the proxy advisory firms have voting policies for different countries, we focused on the proxy voting policies for the United States.\nLastly, for the second objective, we analyzed the policies firms use in developing vote recommendations and identified different proxy voting issues to illustrate the process. To select voting issues, we made a judgmental selection of voting events occurring after the issuance of the June 2014 SEC Staff Legal Bulletin on proxy voting and during the 2015 proxy season. We selected events that were either discussed in our interviews with market participants or other stakeholders or publicly in the news media. The example events covered the areas of (1) board of directors’ issues, (2) mergers and acquisitions, and (3) executive compensation. We also reviewed available information on the steps conducted to ensure that data used for developing vote recommendations are accurate and looked at the degree of communication between proxy advisory firms and corporate issuers before vote recommendations are finalized. Specifically, we reviewed ISS’s and Glass Lewis’s draft review processes and analyzed the views of market participants who have been involved with the processes.\nFor the third objective, we reviewed and summarized SEC oversight activities since our last report in 2007 regarding proxy advisory firms and their clients. We reviewed the SEC 2010 Concept Release on the U.S. Proxy System related to proxy advisory firms and comment letters industry stakeholders submitted to SEC on the concept release. We reviewed the transcript and comments on a roundtable SEC held about the proxy advisory industry in 2013. We also reviewed the guidance and clarification provided in the 2014 Staff Legal Bulletin of the obligations of proxy advisory firms and their clients who are registered as investment advisers. To determine whether SEC addressed 2015 examination priorities related to proxy advisory firms registered as investment advisers and the services they provide to registered investment companies, we reviewed 41 percent of the examinations related to SEC’s 2015 priorities addressing proxy advisory firm and proxy voting issues completed as of August 2016.\nWe conducted this performance audit from August 2015 to November 2016, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"",
"",
"In addition to the above contact, Kay Kuhlman (Assistant Director), Michelle Bowsky (Analyst-in-Charge), Ria Bailey-Galvis, William Chatlos, Risto Laboski, Patricia Moye, Aku Pappoe, Barbara Roesmann, Jena Sinkfield and Anne Stevens made key contributions to this report."
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{
"question": [
"What is the role of proxy advisory firms?",
"How has their influence changed?",
"To what extent is there a consensus regarding the scale of this influence?",
"How do proxy advisory firms update their voting policies?",
"How has this process changed?",
"What are the issues with this process?",
"How did the firms justify these practices?",
"How has SEC overseen proxy advisory firms?",
"How has SEC advocated for market participants?",
"In what ways has SEC addressed disclosure of conflcit of interest?",
"What other actions has SEC taken?",
"Why has the importance of proxy firms grown?",
"Of what does the proxy firm industry consist?",
"Why have some members of Congress raised issues about proxy advisory firms?",
"What was GAO asked to review?",
"What does GAO's report discuss?",
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"How did GAO select its samples?"
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"summary": [
"Institutional investors, such as pension plans and mutual funds, hire proxy advisory firms to obtain research and vote recommendations on issues, such as executive compensation and proposed mergers that are addressed at shareholder meetings of public corporations (corporate issuers).",
"Market participants and other stakeholders with whom GAO spoke agreed that with the increased demand for their services, proxy advisory firms' influence on shareholder voting and corporate governance practices has increased.",
"But recent studies, market participants, and stakeholders had mixed views about the extent of the influence. For example, some said influence can vary based on institutional investor size (there is less influence on large institutional investors that often perform research in-house and have their own voting policies).",
"Proxy advisory firms, specifically Institutional Shareholder Services and Glass Lewis & Company—the two largest firms—develop and update their general voting policies through an iterative process, involving analysis of regulatory requirements, industry practices, and discussions with market participants. According to the firms, they apply these general voting policies to publicly available company information to develop vote recommendations, which also are based on institutional investor voting instructions and criteria that firm analysts determine are applicable to the issue being voted on.",
"Corporate issuers and institutional investors told GAO that unlike in the past, the firms have made more of an effort to engage market participants in the development and updating of voting policies, such as criteria for assessing the independence of board directors and executive compensation packages. Firms have taken steps to communicate with corporate issuers and allow review of data used to make vote recommendations before they are finalized.",
"However, some corporate issuers told GAO that firms continue to apply policies in a one-size-fits-all manner, which can lead to recommendations not in the best interest of shareholders. Corporate issuers also stated that they often do not understand the rationale for some vote recommendations and would like to discuss them before they are finalized.",
"Proxy advisory firms told GAO that to maintain objectivity and satisfy research reporting timelines for clients, they limit the breadth of such discussions.",
"Securities and Exchange Commission (SEC) oversight of proxy advisory firms and the services they provide has included gathering information, issuing guidance, and examining proxy advisory firms and use of the firms by investment companies, such as mutual funds.",
"In 2010, SEC summarized concerns that market participants raised about conflicts of interest, accuracy, and transparency of proxy advisory firms and requested comments on potential regulatory solutions.",
"In December 2013, SEC held a roundtable to discuss issues facing the proxy advisory industry, and issued guidance in June 2014 on disclosure of conflicts of interest, among other things.",
"According to SEC, it also has continued to address concerns surrounding proxy advisory firms through its examinations of investment advisers and investment companies that retain their services. SEC made these examinations a priority in 2015 and an area of focus in its ongoing initiative for registered investment companies that had not been examined by SEC.",
"As institutional investment has grown over the last 30 years, institutional investors increasingly have relied on proxy advisory firms.",
"The proxy advisory industry in the United States consists of five firms—two of which are the largest and most dominant proxy advisory firms.",
"Some members of Congress, industry associations, and academics have raised issues about proxy advisory firms' influence on voting and corporate governance, the level of transparency in their methods, and the level of regulatory oversight.",
"GAO was asked to review the current state of the proxy advisory industry.",
"This report discusses (1) the influence proxy advisory firms may have on voting and corporate governance, (2) how firms develop and apply policies to make vote recommendations, and (3) SEC's oversight activities.",
"GAO reviewed literature; analyzed the proxy advisory firms' policies and SEC policies and examinations; and interviewed the 5 proxy advisory firms, 13 institutional investors, 11 corporate issuers, SEC officials, and industry stakeholders.",
"GAO randomly selected corporate issuers from Standard and Poor's indexes and judgmentally selected institutional investors (based on size and type of investor) from industry associations' information."
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GAO_GAO-16-625
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{
"title": [
"Background",
"Federal Title IV-E and IV-B Funding for Tribal Child Welfare Programs",
"Title IV-E Funding",
"Title IV-B Funding",
"Another Planned Permanent Living Arrangement as a Case Goal",
"HHS Assistance for Tribes on Titles IV-E and IV-B",
"Data Show That the Use of APPLA Was Lower for Indian Children than Non- Indian Children and Children in Both Groups Had A Similar Number of Foster Care Placements",
"A Lower Percentage of Indian Children Had APPLA as a Case Goal Compared to Non-Indians, though a Higher Percentage of Indians Were Younger than 16",
"Indian and Non-Indian Children with APPLA as a Case Goal Had a Similar Number of Placements while in Foster Care, but a Lower Percentage of Indian Children Were Placed in Institutional Care",
"Most Selected Tribes Did Not Anticipate Challenges Implementing APPLA Changes, yet Some Reported Other Challenges in Establishing Permanency",
"Most Selected Tribes We Interviewed Did Not Anticipate Challenges in Limiting APPLA to Older Children and Reported Using APPLA Infrequently",
"Many Tribes We Interviewed Reported Other Challenges in the Course of Establishing Permanency",
"Definition of a Relative",
"Resource Constraints",
"HHS Has Provided Information and Some Assistance to Tribes on APPLA and on Establishing Permanent Homes, but Tribes Reported Low Participation in GAP",
"HHS Has Provided Information to Tribes on Changes to APPLA and Technical Assistance to Develop Permanency Options",
"Most Tribes We Interviewed Reported They Did Not Participate in Title IV-E GAP",
"Conclusions",
"Recommendation for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: Comments from the Department of Health and Human Services",
"Appendix III: GAO Contact and Staff Acknowledgements",
"GAO Contact",
"Staff Acknowledgements"
],
"paragraphs": [
"A federally recognized tribe is an American Indian or Alaska Native tribal entity that is recognized as having a government-to-government relationship with the United States. Federally recognized tribes and their members are eligible for programs and services the federal government provides to Indians because of their status as Indians.",
"Eligible tribes and certain tribal entities have access to federal resources for child welfare programs under programs administered by HHS. Federal funding provided under titles IV-E and IV-B of the Social Security Act covers a portion of costs for states and participating tribes of operating their foster care, adoption assistance, and kinship guardianship assistance programs (title IV-E) and funding for child welfare services, such as parent support and counseling for children and families (title IV- B). Approximately 20,000 of the 415,000 children in foster care at the end of fiscal year 2014 were identified as American Indian or Alaska Native alone or American Indian or Alaska Native in combination with one or more races.",
"Title IV-E of the Social Security Act is the largest single federal source of child welfare funding, providing nearly $7.5 billion in fiscal year 2015 to child welfare agencies to support foster care and transitional independent living programs for eligible children, adoption assistance for children with special needs, and kinship guardianship assistance. Both states and tribes seeking to operate a title IV-E program must have an approved title IV-E plan. The title IV-E plan provides documentation that state or tribal law, regulations, and policies comply with program requirements. Among other things, the title IV-E program requires that states and tribes: make reasonable efforts, consistent with the health and safety of the child, to preserve and reunify families (1) prior to a child’s placement in foster care, to prevent the need for removing the child; and (2) to make it possible for the child to safely return home; prepare a written case plan for each child receiving foster care maintenance payments and ensure periodic court or administrative review of each such case; and, regularly hold a permanency hearing to determine the case goal for the child (to be held at least every 12 months) and make reasonable efforts to finalize the case goal—reunification, adoption, legal guardianship, placement with a fit and willing relative, or, where appropriate, another planned permanent living arrangement. Case goal options under title IV-E are shown in table 1.\nTitle IV-E funds reimburse participating states and tribes for a portion of their eligible costs of providing foster care, adoption assistance, or kinship guardianship assistance on behalf of eligible children:\nTitle IV-E Foster Care Program: The title IV-E Foster Care Program provides federal funding for state and tribal title IV-E agencies to support out-of-home care for children until the children are safely returned home, placed permanently with adoptive families or placed in other planned arrangements for permanency. Federal funds are available for a portion of monthly maintenance payments for the daily care and supervision of eligible children; administrative costs to manage the program; training of staff and foster care providers; recruitment of foster parents; and costs related to the design, implementation and operation of a state-wide data collection system.\nTitle IV-E Adoption Assistance Program: The Adoption Assistance Program provides funds to state and tribal title IV-E agencies to facilitate the timely placement of children, whose special needs or circumstances would otherwise make placement with adoptive families difficult. Federal funds are available for a one-time payment to families to assist with the costs of adopting an eligible child, and for a portion of monthly subsidies to assist with the care of an eligible adopted child, as well as for certain administrative and other program costs.\nTitle IV-E Guardianship Assistance Program: The Guardianship Assistance Program (GAP) is an optional program under title IV-E that provides funds to support the care of children discharged from foster care to legal guardianship who meet the program’s eligibility requirements. Under the program, state and tribal title IV-E agencies who opt to provide guardianship assistance payments to relatives who have assumed legal guardianship of eligible children receive partial reimbursement from the federal government for the cost of providing these payments. In general, eligible children include those who have been eligible for title IV-E foster care maintenance payments during at least a 6 consecutive month period during which the child resided in the home of the prospective relative guardian who was licensed or approved as meeting the licensure requirements as a foster family home, among other criteria.\nThe reimbursement rate varies by type of expense. The federal share of foster care maintenance payments, adoption assistance payments, and guardianship assistance payments is between 50 percent and 83 percent of costs, with higher federal support going to states and eligible tribes with lower per capita incomes. The federal share of training and administrative costs is 75 percent and 50 percent, respectively.\nEligible tribes may receive federal title IV-E funds either by (1) directly operating a foster care title IV-E program pursuant to an approved title IV- E plan; or (2) administering all or part of a title IV-E program on behalf of a state pursuant to a tribal-state agreement.\nTribal-state agreements: Tribes may enter into cooperative agreements with their state child welfare agency to administer part of the state’s title IV-E program. Through tribal-state agreements, title IV- E funds are generally passed through the state to the tribes. Whether tribes or states have responsibility for activities such as developing a case plan for the child’s placement and care, or reviewing the case plan on a regular basis, can vary depending on the agreement. HHS considers the state to be the grantee for title IV-E funding and as a result, the state has ultimate responsibility for ensuring compliance with title IV-E program requirements.\nDirect title IV-E programs: The Fostering Connections to Success and Increasing Adoptions Act of 2008 (Fostering Connections Act) authorized tribes to directly operate a title IV-E program and obtain federal reimbursement for eligible program costs pursuant to an approved title IV-E plan. As of October 2015, there were seven tribes approved to directly operate a title IV-E program. The provisions of title IV-E apply to tribes that operate their own programs in the same manner as they apply to states, with limited exceptions. HHS is responsible for oversight and monitoring of states and tribes that are approved to directly operate a title IV-E program.",
"Tribes also have access to federal funding provided under title IV-B, subparts 1 and 2 of the Social Security Act for various child welfare services—$664 million in fiscal year 2015. These programs fund a range of child welfare services and activities generally aimed at preventing abuse and neglect; preserving and reunifying families; and promoting safety, permanency, and well-being of children in foster or adoptive placements. To receive title IV-B funding, states and tribes must submit a 5-year plan—the Child and Family Services Plan—that sets forth the vision and goals to be accomplished to improve the state’s or tribe’s coordinated child and family service delivery system. It also includes, among other things, the state’s or tribe’s plans for use of funding from title IV-B. Tribes that receive title IV-B funding and operate foster care programs must also comply with certain title IV-E requirements, including those related to case goals. State and tribal title IV-B agencies must submit annual updates—Annual Progress and Service Reports—on the progress made toward accomplishing the goals and objectives in the Child and Family Services plan, which are reviewed by HHS regional office staff. Tribes must also be operating a program under title IV-B, subpart 1 to be eligible to directly administer a title IV-E program. The main mechanism for oversight of title IV-B tribal agencies is HHS’s review of the tribe’s Child and Family Service Plan and annual updates. This review is conducted by HHS regional office staff as part of the joint planning process.\nIn addition, tribes or families involved with tribal child welfare programs may receive other state or federal funding outside of titles IV-E or IV-B to support child welfare services, or they may be supported only through tribal funds.",
"The Adoption and Safe Families Act of 1997 (ASFA) added APPLA as an option for a child’s case goal if none of the other case goals enumerated in the statute would be in the best interests of the child. In addition, ASFA removed language allowing a child to be “continued in foster care on a permanent or long-term basis” because of his or her special needs or circumstances. Under title IV-E, APPLA is permitted as a case goal in cases where the child welfare agency has documented to the court a “compelling reason” for determining that the other case goals would not be in the best interests of the child. The Preventing Sex Trafficking and Strengthening Families Act, enacted in 2014, restricted the use of APPLA as a case goal to children age 16 and older, although it delayed implementation for children in foster care under the responsibility of an Indian tribe. For older children with a case goal of APPLA, the Act places additional requirements on states and tribes. Among other things, at each permanency hearing (to be held at least every 12 months), the child welfare agency is required to (1) document its intensive, ongoing, and unsuccessful efforts to return the child home or secure a placement with a relative, legal guardian, or adoptive parent; and (2) implement procedures to ensure that the court re-determines whether APPLA is the appropriate case goal for the child and asks the child about his or her desired permanency outcome.",
"ACF’s Children’s Bureau is responsible for providing program guidance under titles IV-B and IV-E to grantees. ACF is also responsible for pro- viding technical assistance to tribes on title IV-B and IV-E program requirements through nine of its regional offices. In 2014, HHS consolidated its training and technical assistance provided to states and tribes. The Center for Tribes (the Center), one of the three centers in HHS’s Child Welfare Capacity Building Collaborative, serves as a technical assistance resource for tribes. All tribes that receive title IV-E or title IV-B funds are eligible to receive assistance from the Center. The Center also develops products that all tribes can access from the Children’s Bureau website, including ones that have information on practices such as customary adoption and family group decisionmaking. It also offers services to tribes that are tailored to their particular needs; tribes are responsible for requesting these services from the Center.",
"",
"Available data from HHS show that a lower percentage of Indian children were assigned APPLA as a case goal at the end of fiscal year 2014 compared to non-Indian children. According to AFCARS data, about 6.1 percent of Indian children were assigned APPLA as a case goal (approximately 1,200 children) compared to 8.3 percent of non-Indian children (approximately 33,000 children). The percentage of Indian and non-Indian children assigned other case goals also differed (see table 2). However, in part because these children could be in either state or tribal foster care, these data cannot be used to identify children covered by the 3-year delay for the APPLA age restriction. While data on all children in foster care under the responsibility of a state agency are included in AFCARS, data on some children under the responsibility of a tribal agency are not included in AFCARS. In addition, children identified as Indian in AFCARS are not necessarily enrolled members of a federally-recognized tribe.\nWhile a slightly lower percentage of Indian children were assigned APPLA as a case goal than non-Indian children, a higher percentage of Indian children than non-Indian children who were assigned this case goal were younger than 16. Specifically, about 41 percent of Indian children with APPLA were younger than 16 (about 500 children), while about 23 percent of non-Indian children with this case goal were younger than 16 (about 7,500 children) (see fig. 1).\nOf Indian children assigned APPLA as a case goal, about 9 percent were ages 6 through 10, while 29 percent were ages 11 through 15, compared to approximately 3 percent and 19 percent of non-Indian children assigned APPLA, respectively. A much smaller percentage of both Indian and non-Indian children assigned this case goal were age 5 or younger (see fig. 2).",
"On average, Indian and non-Indian children with APPLA as a case goal moved among foster care homes about the same number of times (see table 3). Both Indian and non-Indian children who were assigned APPLA as a case goal had an average of about six different placements during their most recent stay in foster care. In contrast, both Indian and non-Indian children who were assigned other case goals had an average of around three placements. In AFCARS the number of placements is defined as the number of places the child has lived, including the current setting, during the current removal episode and does not include the number of places a child may have lived during a previous episode in foster care or trial home visits.\nOur analysis shows that a higher percentage of all children with APPLA as a case goal were placed in either institutions or group homes (about 30 percent) than children with other case goals (between 7 and 11 percent). However, some differences exist between Indian and non-Indian children with APPLA. Although Indian and non-Indian children with APPLA moved among foster homes about the same number of times, a slightly lower percentage of Indian than non-Indian children with APPLA as a case goal were placed in institutional care. While 13.1 percent of Indian children with this case goal were placed in institutional care, 16.8 percent of non-Indian children with APPLA were placed in institutions. Some additional differences exist between the percentage of Indian and non-Indian children placed in group homes, but these differences were small (13.5 percent of Indian compared to 13.9 percent of non-Indians). Data also showed that a higher percentage of Indian children with APPLA were placed in family-style foster homes, either with relatives or non- relatives, than non-Indian children with APPLA (see fig. 3).",
"",
"Most tribal officials we interviewed reported that they did not anticipate challenges associated with limiting the use of the APPLA case goal to children aged 16 and older. Specifically, officials from 27 of 32 tribes said they did not anticipate that the restriction would pose challenges for their foster care programs. Tribal officials we interviewed also did not anticipate challenges with implementing the related provisions in the Preventing Sex Trafficking and Strengthening Families Act that introduced additional case review requirements for foster children to whom the APPLA case goal is assigned.\nOf the 27 tribes that said they did not anticipate challenges with limiting the use of the APPLA case goal to children aged 16 and older, 17 tribes told us they use APPLA as a case goal for some children under tribal custody. However, these tribes told us that they assign APPLA rarely and only after determining that other case goals, such as reunification, adoption, or guardianship—which are required to be considered before APPLA is used—were not possible or appropriate. Tribal officials reported that most children in their foster care programs are initially assigned reunification as a case goal and are often reunified with their parents. These officials told us that if they determine that reunification is not possible, they will assign adoption or guardianship as a case goal, depending on the specific case. However, some tribal officials also noted certain instances in which these case goals were not possible or appropriate and that they had determined that APPLA was the most appropriate goal. These examples included:\nOlder children—Officials from 8 tribes said they use APPLA as a case goal either primarily or exclusively for older children or teenagers in foster care. Tribes reported that it was often more difficult to achieve permanency for older children due to a number of challenges, such as a lack of services tailored to older children or greater difficulty in recruiting adoptive families. Some tribes reported that they use APPLA as a last resort when they cannot find a permanent home for older children in foster care; officials told us that they use APPLA to allow the child to continue to receive foster care maintenance payments while preparing to age out of the system. The challenges facing older children in foster care in general are well-documented.\nChildren who do not want to be adopted or placed into guardianships—Officials from 5 tribes reported assigning APPLA as a case goal in cases in which older foster children indicated that they did not want to be adopted or placed into guardianships. For example, 1 tribe reported assigning APPLA in the case of two children who were under age 16 for whom reunification was unlikely, but who did not want to be adopted. According to tribal officials, the children were initially placed in a family-like foster care home, briefly transferred to a residential facility, and ultimately placed in an independent living arrangement.\nChildren with severe health issues—Officials from 4 tribes reported using APPLA as a case goal primarily for foster children with significant mental, behavioral, or physical health issues. For example, officials from one tribe told us that they sometimes assign APPLA as a case goal while providing additional services to help foster children through a crisis due to behavioral or mental health issues. These cases could include foster children who might need to stay in residential care for a certain amount of time. These tribal officials told us that APPLA is sometimes used for children who are placed in therapeutic foster homes where they receive specialized care. Some other tribes reported that they believe this case goal could be, in some cases, an appropriate case goal for younger children who need long- term, intensive medical treatment in therapeutic foster homes or residential facilities. Another tribe told us the tribe has recently experienced an influx of tribal children entering the child welfare system who have a number of significant health issues due to prenatal exposure to drugs, for whom APPLA could be the most appropriate case goal.\nSome tribes we contacted—5 of 32—said they anticipated that the APPLA change would present challenges for their foster care programs. Of these tribes, two reported using the APPLA case goal extensively for children in tribal foster care. One tribe reported that the majority of children in foster care under their custody, most of whom are younger than 16, are assigned long-term foster care as a case goal. A tribal official told us that while some of these children are in family-like foster homes, most move around between residential facilities based on their behavioral needs or that have specific age or gender restrictions. This official noted that the tribe was concerned about the impact of the APPLA age restriction given the number of their children in long-term foster care arrangements. However, this official said that tribal officials had not discussed the restriction in detail with their tribal attorney, given the 3- year delayed implementation period. The second tribe told us that of the approximately 50 children under tribal custody, the majority are assigned long-term foster care and are placed in stable, family-like foster care homes in the care of extended family members. The tribal official we spoke with said that when the APPLA restriction takes effect, they will have to pursue guardianships for children younger than 16 who had previously been assigned an APPLA case goal. However, the official said that the tribe has faced challenges establishing guardianships. She told us that guardianships limit families’ ability to access other resources, such as educational and training vouchers in some cases, and that the tribe has a number of foster families who would participate in guardianship arrangements but do not want to be licensed for a variety of reasons.",
"While most tribes we contacted did not anticipate challenges in limiting the use of APPLA as a case goal to older children in foster care, many tribal officials reported other challenges that made finding permanent homes for children under tribal custody difficult. Specifically, tribes reported facing challenges regarding cultural opposition to termination of parental rights and differences between state and tribal definition of a relative; licensing requirements; and resource constraints (see fig. 4). Each of these challenges potentially limits the use of adoption, living with a relative, and guardianship as alternative case goals for younger children who have been assigned APPLA when the age limitation on APPLA takes effect.\nSeveral tribes we contacted reported that the federal foster care requirements related to termination of parental rights were in conflict with their cultural values and presented challenges to their efforts to establish permanency for children in foster care. Specifically, 7 tribes we spoke with reported that termination of parental rights is not acceptable in their tribal culture. We previously reported that tribes developing title IV-E plans encountered challenges associated with incorporating required language on termination of parental rights into their tribal codes or policies, which made it difficult to obtain internal approval and successfully complete the title IV-E plan. HHS officials acknowledged that termination of parental rights may not align with Indian tribes’ cultural values and in April 2015, HHS updated its Child Welfare Policy Manual to modify its interpretation of the statute to clarify that tribal title IV-E agencies may develop an alternative to termination of parental rights, such as a modification of parental rights, so long as the alternative satisfies other applicable requirements. Several tribes we interviewed practice tribal customary adoptions, which, unlike traditional adoptions, modify but do not terminate parental rights and also maintain family connections. Of the 29 tribes that discussed their use of customary adoption, 9 tribes reported using such adoptions, 12 tribes reported that they did not, and 8 tribes reported that they did not practice customary adoptions currently but might pursue them in the future. HHS officials told us that they support customary adoption as a culturally-appropriate method of achieving permanency for children. According to HHS officials, families that adopt a child through customary adoption are eligible for title IV-E adoption subsidies.",
"Several tribal officials we contacted told us that another challenge facing their foster care programs were state definitions of who is considered a “relative” for purposes of foster care; these definitions can contradict tribes’ cultural traditions. Specifically, officials from 9 tribes we spoke with in individual and group interviews said their tribes broadly defined the term relative and that the tribe’s definition was not always compatible with state definitions. For tribes administering title IV-E on behalf of the state pursuant to a tribal-state agreement, this difference could affect tribes’ use of the case goal of “placement with a fit and willing relative” or whether tribal guardianships with relatives would qualify for GAP payments under a state’s definition of “relative.” For example, officials from one tribe told us that tribal children are born into an extensive clan system and that a tribal member’s “extended family” is very large, and their clan affiliation is a permanent and necessary component to their identity. Another tribe reported that nearly all of their children in foster care are placed with individuals who are considered to be relatives under the tribe’s broad definition, which encompasses not only blood relatives but also fictive kin—tribal members who may not be blood related but who have a close relationship with the child. Tribal officials told us that they believed federal title IV-E requirements did not provide for such a broader definition of “relative” and that some tribal members who would be considered relatives under the tribe’s definition may not qualify for certain services, such as GAP. According to HHS policy, there is no federal definition of “relative” for the purpose of the title IV-E GAP. Tribes that administer title IV-E on behalf of the state pursuant to a tribal-state agreement generally follow the state title IV-E plan. HHS officials acknowledged that tribes frequently define “relative” differently than states. However, in some cases, a state’s definition of a relative could be more restrictive than a tribe’s, and this narrower definition could be included in the tribe’s title IV-E agreement with the state. According to HHS, tribes approved to directly operate a title IV-E program have discretion to define the term relative for the purposes of the title IV-E GAP. HHS officials told us that HHS will accept a title IV-E plan or amendment that contains a reasonable interpretation of a relative, including a plan that limits the term to include biological and legal familial ties or a plan that more broadly includes tribal kin, extended family and friends, or other “fictive kin”.\nMore than one-third of tribes we contacted—15 of 36 tribes—told us that satisfying federal and state licensing requirements often made it more difficult to license potential foster care homes and in some cases also prevented tribes from establishing potential permanent placements for their children. For example, in order to be eligible for GAP payments, a child must have resided with a licensed relative foster caretaker for at least 6 continuous months. Several tribal officials we interviewed said that licensing requirements regarding the number of family members living in a home, the size of the home, or the availability of separate bedrooms presented challenges when attempting to license potential foster homes, given the prevalence of multi-generational homes in tribal communities. An official from one tribe also told us that background checks conducted as part of the licensing process will sometimes disqualify otherwise suitable relatives from becoming licensed and therefore a possible permanent caregiver. For example, some tribal officials noted that an otherwise qualified relative may not pass a background check because of a past drug offense. Participants in a 2011 survey by the National Child Welfare Resource Center for Tribes reported that substance abuse not only contributed to difficulties some families had when they tried to reunify with their children but also created challenges in finding suitable foster homes.\nHowever, other tribes we interviewed reported that they have been able to incorporate some flexibility into their tribal licensing requirements to address licensing challenges or account for other circumstances unique to tribal communities. For example, some tribes we interviewed said that their tribe’s licensing requirements provide more flexibility with regard to the size of a home or the number of bedrooms available. The Fostering Connections Act authorized states to waive, on a case-by-case basis, non-safety licensing standards for relative foster family homes and gave states discretion to determine what constitutes a non-safety standard. According to HHS officials, tribes approved to directly operate title IV-E programs are allowed to define and waive non-safety standards for relative foster family homes, as are states. However, some officials we spoke with from tribes approved to directly operate title IV-E programs were not aware that they were able to waive non-safety licensing standards. In addition, two of the six states we reviewed for our study— Michigan and New Mexico—were not among those that reported in 2014 allowing waivers of non-safety licensing standards for relative foster family homes and defining such standards in state law, regulations, or agency policy, while four states—Arizona, Montana, Oklahoma, and Washington—reported in 2014 that they did allow such waivers. According to HHS, tribes operating programs under title IV-E tribal-state agreements are bound by the terms in those agreements, which could include licensing requirements. HHS officials we spoke with said that tribes have not expressed to them any questions or concerns about challenges they have experienced with non-safety licensing standards.",
"More than half of tribes we spoke with—21 of 36 tribes—told us that resource constraints presented challenges for their foster care programs and for establishing permanency for children under their custody. These constraints include a lack of foster care homes, limited availability of needed services, and limited financial support for permanent guardianships. Officials from 7 tribes reported that a significant challenge for their programs is a shortage of licensed foster care homes, particularly those that are willing and capable of caring for children with special needs. Similarly, officials from 4 tribes told us that they had limited access to therapeutic foster homes or inpatient care facilities because their tribes were located in rural areas far from these homes and facilities or because these resources were already being used by state foster care programs. Tribal officials also reported that the financial assistance available to foster care providers or permanent caregivers for children in foster care is often insufficient to fully cover all of the associated costs. Officials from one tribe reported that the majority of tribal members struggle to make ends meet and feed members of their current households. While the tribe offers financial assistance to foster families, tribal officials said that amount is insufficient to fully cover the costs of fostering a child. In addition, several tribes told us that tribal foster care programs generally do not have access to the range of services available to states, such as independent living services that can help children in foster care transition to permanency or resources and services for children with special needs. HHS officials we spoke with acknowledged that there is great demand among tribes for resources for these high-needs children. Some tribal officials also told us that families entering into guardianships did not receive any financial assistance, such as title IV-E GAP, which, according to tribal officials, made it more difficult to establish permanency through guardianships.",
"HHS has provided information and some assistance to tribes on implementing the change to APPLA, including policy guidance and technical assistance through HHS regional offices, and some support for establishing permanency for children in tribal foster care. Despite reporting resource constraints, however, most tribes we interviewed reported that they did not participate in title IV-E GAP to receive federal funding to support their use of guardianship as a permanent placement. Without greater tribal participation in GAP, tribes may not be receiving available funding that could help them encourage the use of and support guardianship, particularly for older children or those with special needs for whom finding permanent placements may be difficult.",
"The Children’s Bureau has sent guidance to regional offices, state child welfare agencies, and tribal organizations concerning the provisions in the Preventing Sex Trafficking and Strengthening Families Act, including the change to the APPLA case goal. For example, the Children’s Bureau used a listserv to disseminate program instructions and information memoranda on changes related to the Act. Staff in the five regions that serve the tribes we interviewed told us that they discussed the guidance with their respective tribal child welfare agencies. Staff in three of these regions reported that because of frequent changes in tribal staff, they maintain an up-to-date listserv of tribal social services directors, who will be responsible for implementing the APPLA change. They used the listserv to disseminate guidance, including program instructions and information memoranda about the change in APPLA. Some tribal officials told us that they were aware of the APPLA change and had received information from HHS, while others were uncertain whether they had received information, and some in our group interviews did not specify whether they had received it.\nThe regional offices and the Center for Tribes also provide technical assistance to tribes that can include help in implementing the APPLA change and developing other permanency options. Staff in the five regional offices reported that as part of the joint planning process for assisting tribes with developing their 5-year title IV-B plans, regional officials worked with the tribes on how the tribes could address the change in APPLA. An official with the Center for Tribes told us that as of March 2016, one tribe had requested assistance with incorporating all of the elements of the Preventing Sex Trafficking and Strengthening Families Act into their policies and procedures. In addition, officials from one regional office and the Center told us that they help tribes with developing other permanency options such as kinship guardianship (which may be supported by title IV-E GAP) and customary adoption. One regional official reported helping tribes develop provisions on customary adoption that could be added to their tribal code. A Center official also said that they have received inquiries about GAP and have had requests for assistance with customary adoption and licensing.",
"Despite the resource constraints reported by many of the tribes we interviewed, most tribal officials we spoke with that use guardianship as a case goal reported that their tribes do not participate in title IV-E GAP, which provides federal funding for a portion of assistance payments paid to relative guardians on behalf of eligible children. Of the 27 tribes that reported using guardianship as a case goal, 20 tribes reported that they do not participate in GAP and do not receive federal funding to support those guardianships. Of these 20 tribes, 6 do not participate because they are located in states that do not offer the program. According to HHS officials, tribes in states that do not offer GAP would need to directly operate a title IV-E program in order to receive federal guardianship assistance. As of March 2016, 33 states and 6 tribes had been approved to operate GAP, according to HHS (see fig. 5).\nHowever, 14 tribes who use guardianship as a case goal are in states that offer GAP, but tribal officials told us they did not participate in GAP for several reasons. Officials from 5 tribes reported that because GAP was not included as an option in their title IV-E tribal-state agreements, families with guardianship arrangements do not receive GAP payments. Officials from 3 other tribes said they did not receive title IV-E funding so their tribes were not eligible for GAP payments. Officials from an additional 5 tribes told us that they did not participate due to access challenges at the state level, such as age restrictions or difficulty meeting state requirements. For example, in one state, according to tribal officials, a child must be 12 years old before a guardianship would be approved. Finally, officials from 1 tribe said that they were unaware of title IV-E GAP (see fig. 6). Given that tribes cited different reasons for not participating in GAP, HHS, states, and tribes may need to take different actions to address those reasons. In addition, there may be other reasons why tribes that we did not interview may not be participating in GAP.\nHHS officials said that because the program provides additional support for foster children’s transition to permanency, participating in title IV-E GAP and providing tribes GAP payments is in a state’s interest. However, we previously reported that some states opted not to participate in GAP because of limited funding for the state’s portion of the GAP payment to relative guardians. HHS officials told us that they were not aware of any instances in which a state participated in GAP but did not provide access to tribes through title IV-E agreements. However, officials also noted that HHS generally does not have information on the contents of title IV-E tribal-state agreements, as these agreements are not required to be submitted as part of a state’s title IV-E plan. Officials said that it is the responsibility of tribes and states to discuss GAP and whether to include the program in their IV-E agreements. They noted that Title IV-E calls on states to negotiate in good faith with tribes to develop a tribal-state agreement to administer the IV-E program, including GAP assistance payments. They also told us that the lack of guardianship funding to tribes means that tribes may be forced to rely on long-term foster care to fund permanent placements.\nACF’s strategic plan provides a basis for the Children’s Bureau to support tribes’ participation in GAP. As part of its overarching goal to support underserved and underrepresented populations, ACF’s 2015-2016 strategic plan includes a goal for working with tribes to increase their capacity to promote child safety, permanency, and well-being. It also includes a goal to promote and facilitate improved tribal-state relations and policy at the regional and state levels to improve outcomes for Indian children. In addition, federal standards for internal control state that an agency’s management system should assure that monitoring is performed continually as part of agency operations. Without more awareness by HHS on why tribes may not be participating in GAP, including why some tribal-state agreements do not include GAP as an option for tribes, some tribes that could benefit from GAP may not participate in the program. The limited participation in GAP among the tribes selected for our study suggests that tribes may not be making use of available financial support for guardianships that could assist them in establishing permanency for their children and preventing them from remaining in long-term foster care. In 2012, a collaborative project of six child welfare organizations identified title IV-E GAP as one method of helping child welfare agencies establish permanency for children in foster care, particularly for older or other children for whom finding permanent placements may be difficult. Several states surveyed by the project mentioned that they were targeting, although not exclusively, special groups of children through GAP, including children with the APPLA case goal. The project report noted that financial assistance for guardians raising children who were in foster care is an essential component of the supports relatives need to offer these children permanent families. By taking steps that might increase tribal participation in GAP, HHS could better support tribes’ efforts to find secure and stable homes for their children in foster care.",
"Changes made by the Preventing Sex Trafficking and Strengthening Families Act to the use of the APPLA case goal were expected by child welfare advocates to help ensure permanent adult connections for older children. While most tribal officials we spoke with did not consider the restriction on the use of APPLA to older children as a challenge, more than half noted that they faced resource constraints—including limited financial resources—which affect their ability to find permanent placements for children under their care. In 2008, title IV-E GAP was established to provide federal dollars to assist states and tribes with payments to relatives who are willing to provide permanent homes for children. However, most tribes we interviewed were not participating in the program. Some reported that their tribal-state title IV-E agreements did not include access to GAP while other tribes faced access challenges at the state level. Others did not receive any title IV-E funding or were unaware of the program, and tribes may have additional reasons for not participating. Guardianship arrangements can be a useful case goal to pursue in situations where reunification is not possible and adoption conflicts with tribal cultural values. GAP could help tribes by providing the financial assistance that tribal relatives need in order to provide a home for a child in their care. When the APPLA restriction takes effect, it can also provide an alternative to APPLA for those tribes trying to place a younger child who has special needs and requires more resources for care and for whom other permanency goals are not viable. As our analysis of the fiscal year 2014 AFCARS data indicated, some of these younger children may now be in institutional care and may need placement in a family setting if they are assigned a new case goal instead of APPLA. In addition, the program can provide needed resources for relatives willing to provide a stable home for children over the age of 16 who might otherwise be assigned APPLA. Without greater tribal participation in title IV-E GAP, some tribes may not have critical financial support to help children exit foster care to homes with relatives. By taking steps to increase participation in GAP, HHS could better support tribes’ efforts to care for their children.",
"To help improve tribes’ ability to maintain safe, stable, and permanent care for children, the Secretary of Health and Human Services should direct the Children’s Bureau to explore the reasons for low tribal participation and identify actions to increase this participation in the title IV-E Guardianship Assistance Program.",
"We provided a draft of this report to HHS for review and comment. HHS provided written comments that are reproduced in appendix II. HHS also provided technical comments that we incorporated, as appropriate.\nHHS concurred with our recommendation that the Children’s Bureau explore the reasons for low tribal participation and identify actions to increase participation in the title IV-E GAP. HHS noted that some tribal- state agreements might predate 2008, when GAP was established. HHS also said that regional office staff participate annually in joint planning for the title IV-B and IV-E programs with their respective states and tribes and that participation in GAP is a topic covered in joint planning activities. In addition, HHS said that regional office staff are available to assist states and tribes with discussions about GAP participation when tribal- state agreements are renegotiated and that technical assistance is available to tribes, if needed. According to HHS, the agency plans to add information to the Children’s Bureau website about direct federal funding for tribal title IV-E agencies and about tribal-state partnership agreements and plans to distribute issue briefs on GAP and best practices for tribal- state agreements.\nWe agree that HHS has the planning process, technical assistance resources, and regional staff in place to discuss GAP participation with title IV-E state and tribal agency officials. However, our review found that tribal participation in GAP remains low, which suggests that HHS needs to identify actions to increase participation in this program. We believe that the additional actions HHS plans to take—providing information on the Children’s Bureau website about direct funding and distributing issue briefs on GAP and best practices for tribal-state partnerships and agreements—could support tribes’ participation in GAP either by helping tribes to directly operate a title IV-E program or to negotiate a tribal-state agreement that includes a provision for GAP participation. Because some tribes reported challenges at the state level to participating in GAP and several tribes reported that the state where they are located does not participate in the program, we encourage HHS to engage title IV-E state agency officials in discussions about tribal participation in GAP during the annual review of the their title IV-E state plan. As HHS noted in its response, regional office staff are a resource to states and tribes as they renegotiate agreements to help them explore participation in GAP. Through such discussions, HHS could identify ways that regional office staff might help state agencies resolve any challenges to GAP participation that tribes experience at the state level. HHS has taken several steps over the past few years to help tribes with their title IV-E programs, including hiring a tribal coordinator to facilitate communication between regional offices and tribal title IV-E agencies. Taking additional steps to ensure that tribes have the opportunity to participate in GAP could go a long way toward helping tribes gain more resources for children under their care and better support tribes’ efforts to care for children exiting foster care to permanent homes.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees, the Secretary of the Department of Health and Human Services, and other interested parties. We will also make copies available to others on request. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-7215 or [email protected]. Contact points for our Office of Congressional Relations and Public Affairs can be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.",
"This report examines: (1) what available data show about Indian children in foster care compared to all other children in foster care; (2) the extent to which selected tribal child welfare agencies face challenges in addressing recent changes to APPLA and in establishing permanent homes for children in tribal foster care; and (3) the extent to which HHS has assisted tribal child welfare agencies in implementing the APPLA change and addressing any challenges to establishing permanent homes.\nTo determine what available data show about Indian children in foster care compared to all other children in foster care, we analyzed relevant national data on foster care case plans from HHS’s Adoption and Foster Care Analysis and Reporting System (AFCARS) for fiscal year 2014, the most recent year for which data are available. Through AFCARS, state title IV-E agencies are required to report to HHS semi-annually data on (1) all children in foster care for whom the agency has responsibility for placement, care, or supervision, and (2) all adopted children who were placed by the agency or for whom the agency is providing adoption assistance, care, or services. HHS in 2012 issued regulations that generally apply the same requirements for data collection and reporting to tribal title IV-E agencies. AFCARS contains information on placement settings, case plans, and length of time in foster care, among other information. Currently, AFCARS provides the following options for reporting the child’s most recent “case plan goal” (referred to in this report as a “case goal”): reunify with parent(s) or principal caretaker(s); live with other relative(s); long-term foster care; Options for reporting the child’s current placement setting in foster care include: foster family home (relative); foster family home (non-relative); trial home visit.\nSpecifically, we reviewed AFCARS data for the 415,129 children who were in foster care on the last day of the fiscal year. Our analysis included a number of key data elements, including sex, whether the child was an American Indian/Alaska Native, number of placement settings during current foster care episode, current placement setting, case goal, and length of stay of latest removal episode. For the purposes of our data analysis discussion, we used the term Indian for children identified as American Indian/Alaska Native in AFCARS. Because the fiscal year 2014 AFCARS dataset does not have a measure for the APPLA case goal, we used long-term foster care and emancipation as proxy measures for APPLA. The AFCARS regulations were first issued in 1993, and HHS published a proposed rule in February 2015 to revise AFCARS to, among other things, incorporate statutory changes made since then.\nAFCARS contains data on children under the responsibility of tribal title IV-E agencies operating under tribal-state title IV-E agreements but does not yet contain data for the 7 tribes approved to directly operate title IV-E programs. Therefore, some children under the responsibility of tribal title IV-E agencies—and covered by the 3-year delayed implementation period for the APPLA restriction—are not represented in AFCARS. Data for certain other children under the care and custody of tribal child welfare agencies are not submitted into AFCARS. In addition, while AFCARS provides data on most children in foster care in the United States, there are several limitations to using the data available to study Indian children in foster care, particularly those under the care and placement responsibility of Indian tribes. In general, in AFCARS a person’s race is determined by how they define themselves or by how others define them; in the case of young children, parents determine the race of the child. In AFCARS, “American Indian or Alaska Native” (AI/AN) is defined as “a person having origins in any of the original peoples of North or South America (including Central America), and who maintains tribal affiliation or community attachment.” Children identified as Indian in AFCARS are not necessarily enrolled members of a federally-recognized tribe or eligible for enrollment.\nBefore deciding to use the data provided by HHS, we conducted a data reliability assessment. We assessed the reliability of the data file that HHS provided by (1) performing electronic data testing for obvious errors in accuracy and completeness, (2) reviewing existing information about the data and the system that produced the data, and (3) interviewing agency officials and child welfare experts knowledgeable about these data. We determined that the data were sufficiently reliable for the purposes of this report.\nTo obtain the perspectives of tribal officials, we conducted semi- structured interviews (2 in person and 13 by telephone) with tribal child welfare officials from 15 federally recognized tribes and held six group interviews with representatives from 21 other federally recognized tribes. We selected the 15 tribes for individual interviews from six states that have high numbers of tribes receiving title IV-E or title IV-B funding: Arizona, Michigan, Montana, New Mexico, Oklahoma, and Washington. Tribes in these states were selected to achieve variation in tribal population under age 21 and type of title IV funding—via a direct title IV-E program, a title IV-E tribal-state agreement, or a title IV-B program only. We conducted one telephone group interview and convened five in- person group interviews with officials from 21 additional tribes who were assembled for regional or national meetings at the following venues:\nSession convened by Casey Family Programs prior to a tribal consultation session with the Administration for Children and Families, Washington, D.C., September 2015.\nOklahoma Indian Child Welfare Association Conference, Norman, OK, November 2015 - two discussion groups.\nCasey Family Programs National Title IV-E Summit, Denver, CO, December 2015.\nMichigan Quarterly Tribal-State Partnership meeting, Lansing, MI, January 2016.\nAll tribes in attendance at these events were invited to participate in our group interviews. In total, our tribal interviewees included representatives of 6 tribes that were approved to operate a title IV-E program directly through HHS; representatives of 15 tribes that received title IV-E funding through a tribal-state agreement as well as title IV-B funding; and representatives of 13 tribes that received title IV-B funding only. The information obtained in our interviews is not generalizable to the population of federally recognized tribes, but provides examples of tribes’ experience using the APPLA case goal and any challenges they may face establishing permanency for children in their care when the changes go into effect.\nIn addition, in the report we use qualifiers, such as “some” and “several” in some cases to quantify responses from tribal officials across our individual and group interviews with officials from 36 tribes in total. These qualifiers are defined as follows: “Most” more than 18 tribes “Many” represents 11-17 “Several” represents 6-10 “Some” represents 2-5 We also reviewed relevant federal laws, regulations and HHS guidance to states and tribes. In addition, we interviewed state child welfare officials from the six selected states, as well as officials from the Administration on Children and Families’ (ACF) Children’s Bureau at HHS; officials from five of HHS’s regional offices that work with the states where the selected tribes were located; and the Center for Tribes, an HHS-funded technical assistance provider.",
"",
"",
"Kay E. Brown, Director, (202) 512-7215 or [email protected].",
"In addition to the contact named above, Elizabeth Morrison (Assistant Director), Sara Edmondson (Analyst-in-Charge), Kelly Snow, and Kate Blumenreich made key contributions to this report. Also contributing to this report were Ed Bodine, James Bennett, David Chrisinger, Sarah Cornetto, Jean McSween, and Daren Sweeney."
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"question": [
"How do agencies receive child welfare funding?",
"Why might a child be assigned an APPLA case goal?",
"What typically happens to children assigned an APPLA case?",
"How did GAO study APPLA cases?",
"What did the data reveal?",
"What did GAO learn in its interview process?",
"What concerns did the tribal officials offer?",
"To what extent do tribal officials use APPLA?",
"To what extent does HHS support tribes in using APPLA?",
"In what circumstances are guardianships a good option?",
"In what circumstances do tribes not use APPLA?",
"Why is it important that HHS better support tribes' participation in the Guardianship Assistance Program?",
"What did the Preventing Sex Trafficking and Strengthening Families Act do to APPLA?",
"What concerns did experts raise about this change?",
"What was GAO's role in this process?",
"What does this report examine?",
"What process did GAO use in assembling this report?"
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"To receive federal child welfare funding, state and tribal child welfare agencies must comply with certain requirements, including developing a permanency plan for the child that identifies how the child will exit the foster care system to a permanent home (“case goal”).",
"If other case goals, such as reunifying with parents, adoption, or guardianship are not possible or appropriate, a child may be assigned “another planned permanent living arrangement” (APPLA) as a case goal.",
"Unlike other case goals, children assigned an APPLA case goal are normally expected to remain in foster care until they reach adulthood, which could result in young children remaining in foster care for many years.",
"Because available foster care data do not include a measure for the APPLA case goal, GAO used long-term foster care and emancipation as proxy measures for this case goal.",
"These data show that in 2014 about 6.1 percent of Indian children had APPLA as a case goal, compared to 8.3 percent of non-Indian children. Of the approximately 1,200 Indian children who were assigned an APPLA case goal, 41 percent were younger than 16, while of the approximately 33,000 non-Indian children with this case goal, 23 percent were younger than 16. These data also show, on average, that Indian and non-Indian children with APPLA as a case goal moved among foster homes about the same number of times.",
"Most tribal officials GAO interviewed reported that they did not anticipate challenges in implementing the limitation on the use of APPLA to children age 16 and older, but many reported other challenges to establishing permanent homes for children in tribal foster care.",
"Some organizations expressed the view that the APPLA age restriction would compel tribes to pursue other arrangements with non-Indian homes if they could not allow a child to remain in foster care with an Indian family.",
"However, tribal officials GAO interviewed said that they rarely use APPLA and instead pursue reunification with family members or other case goals, such as guardianship. At the same time, tribal officials reported challenges with licensing foster family homes and resource constraints that may make establishing permanent homes—including guardianships—difficult.",
"The Department of Health and Human Services (HHS) has provided information on APPLA through a listserv and information memoranda and some assistance to tribes in establishing permanent homes for children in foster care. However, many tribes GAO interviewed indicated that they were not receiving Guardianship Assistance Program funds under title IV-E of the Social Security Act which provide support for children exiting foster care to relative guardianships.",
"Guardianship can be a useful alternative to APPLA when reunification and adoption are not viable options.",
"Of the 36 tribes that GAO contacted, 14 reported that they did not participate in the program because it was not included in their title IV-E tribal-state agreements or the tribe faced challenges at the state level, among other reasons.",
"One of HHS's strategic goals is to work with tribes to increase their capacity to promote child safety, permanent homes, and well-being. By taking actions to support tribes' participation in the Guardianship Assistance Program, HHS could help them receive funds to help establish permanent homes for children in tribal foster care, including those who might be affected by the APPLA change.",
"The Preventing Sex Trafficking and Strengthening Families Act, enacted in 2014, limited the use of APPLA as a case goal to children aged 16 and older. The Act made this provision effective 3 years after enactment for children under tribal responsibility.",
"Some experts raised concerns that tribes may use the APPLA case goal to retain tribal connections for hard-to-place children, such as younger children with special needs.",
"GAO was asked to explore tribes' views on these matters.",
"This report examines: (1) data comparing Indian and non-Indian children in foster care; (2) challenges selected tribal child welfare agencies may face in addressing changes to APPLA and establishing permanent homes for children in tribal foster care; and (3) HHS assistance to tribes in implementing the APPLA change and addressing any challenges to establishing permanent homes.",
"GAO reviewed relevant federal laws, regulations, and HHS guidance; analyzed HHS's fiscal year 2014 data on child welfare agencies' foster care case plans; and interviewed officials from 36 tribes that receive federal child welfare funding from six states with high numbers of tribes receiving this funding. GAO also interviewed HHS officials and officials at six state child welfare agencies."
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GAO_GAO-19-50
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{
"title": [
"Background",
"Becoming a Military Dentist",
"Roles and Responsibilities for the Recruitment and Retention of Military Dentists",
"GAO’s Prior Work on Military Treatment Facility Staffing Models and Tools",
"Two of Three Services Use Validated Dental Clinic Staffing Models, and None of the Models Incorporate Cross- Service Standards",
"The Army and the Air Force Use Validated Dental Clinic Staffing Models, and the Navy’s Proposed Model Is under Review",
"The Services Have Not Developed Cross-Service Staffing Standards for Dental Care",
"The Services Generally Have Met Goals for Recruiting Dental Students, but Not for Fully Qualified Dentists and Do Not Know the Extent to Which Certain Programs Are Effective at Helping Recruit and Retain Dentists",
"The Services Generally Met Recruitment Goals for Dental Students, but Faced Challenges Recruiting Fully Qualified Dentists",
"The Services Have Maintained Overall Staffing Levels for Military Dentists, but Have Experienced Challenges Retaining Certain Specialties",
"The Services Monitor Their Recruitment and Retention Programs, but Do Not Know Whether The Programs Are Effective",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments",
"Appendix I: Military Dentist Accession Programs and Incentives",
"Appendix II: The Services’ Mechanisms to Monitor Qualifications and Performance of Military Dentists",
"Appendix III: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Acknowledgments",
"Related GAO Products"
],
"paragraphs": [
"The Military Health System is responsible for, among other things, assuring the overall oral health of all uniformed DOD personnel. As part of this health system, each service’s dental corps provides dental care for its servicemembers. The Army, the Navy, and the Air Force Dental Corps include approximately 3,000 active duty dentists and approximately 247 (200 in the United States) dental clinics to serve over 1.3 million servicemembers.\nUnlike their medical counterparts, the services’ dental corps rarely provide beneficiary care, according to service officials. The primary role of military dentists is to ensure the oral health and readiness of servicemembers. Servicemembers’ oral health is evaluated using standardized measures to determine the extent to which they are deployable. Generally, servicemembers with identified urgent, emergent, or unknown dental treatment needs are not considered to be worldwide deployable until their oral health is adequately addressed.",
"Most military dentists enter service through the Armed Forces’ Health Professions Scholarship Program (AFHPSP), a scholarship program available to students enrolled in or accepted to dental school. Under the services’ AFHPSP program, DOD pays for tuition, books, and fees, and provides a monthly stipend. In return, the students incur an obligation to serve 6 months of active duty service for each 6 months of benefits received, with a 2-year minimum obligation. AFHPSP dental students can pursue either a Doctor of Dental Surgery or Doctor of Dental Medicine degree to become a general dentist.\nIn addition to the AFHPSP program, the services recruit fully qualified licensed dentists. For example, individuals may become military dentists through direct accessions, either by entering the service as a fully trained, licensed dentist or through the Financial Assistance Program, which provides stipends for dentists accepted or enrolled in a residency program. For additional information on these and other recruitment programs, see appendix I.\nRegardless of the recruitment program, dentists may begin to practice after obtaining a degree and completing licensure requirements. Military dentists may pursue postgraduate training through a general dentistry program, such as the Advanced Education in General Dentistry Program, a general practice residency, or a specialty dental program offered through the Uniformed Services University of the Health Sciences Postgraduate Dental College. Postgraduate dental college includes training and/or residency within a specific specialty and typically requires between 1 to 6 years of additional training. While in a postgraduate dental college program, participants incur an additional 6 months of active duty service obligation for each 6 months in training, with a minimum of 2 years active duty service obligation. However, this obligation can be served concurrently with obligations already incurred through AFHPSP if incurred through sponsored postgraduate education in a military or affiliated program. Figure 1 portrays the path to becoming a military dentist and the active duty obligation incurred for AFHPSP dental students.\nEach service takes steps to validate whether the military dentist has the appropriate professional qualifications and clinical abilities. Validation includes ensuring the dentist is credentialed and privileged to practice.\nSee appendix II for more details on service processes for monitoring qualification and performance of dentists.",
"The Assistant Secretary of Defense for Health Affairs (ASD(HA)) serves as the principal advisor for all DOD health policies and programs. The ASD(HA) issues DOD instructions, publications, and memorandums that implement policy approved by the Secretary of Defense or the Under Secretary of Defense for Personnel and Readiness and governs the management of DOD medical programs. The ASD(HA) also exercises authority, direction, and control over the President of the Uniformed Services University of the Health Sciences (USUHS). Further, ASD(HA) sets the special and incentive pay amounts for all military dentists. The ASD(HA) reports to the Under Secretary of Defense for Personnel and Readiness, who in turn reports to the Secretary of Defense.\nThe Army, the Navy, and the Air Force medical commands and agencies report through their service chiefs to their respective military department secretaries and then to the Secretary of Defense. The Army, the Navy, and the Air Force have the authority to recruit, train, and retain dentists. Each military service has its own organizational structure and responsibilities. See figure 2.\nIn September 2013, the Defense Health Agency was established to support greater integration of clinical and business processes across the Military Health System. The Defense Health Agency, among other things, manages the execution of policies issued by the ASD(HA) and manages and executes the Defense Health Program appropriation, which funds the services medical departments. By no later than September 30, 2021, the Director of the Defense Health Agency will assume responsibility for the administration of each military treatment facility, to include budgetary matters, information technology, and health care administration and management, among other things. Although military treatment facilities include dental clinics, DOD initially intended to exclude dental care (except oral and maxillofacial surgery), from the transfer to the Defense Health Agency. However, as of September 2018, DOD stated it is assessing the extent to which dental care will fall under the Defense Health Agency’s administration.",
"In July 2010, we found that the services’ collaborative planning efforts to determine staffing of medical personnel working in fixed military treatment facilities, including dentists, were limited, and that their staffing models and tools had not been validated and verified in all cases as DOD policy requires. Specifically, we found that some Army specialty modules contained outdated assumptions, and that only a portion of the models had been completely validated. We also found that the Navy did not have a model, but instead employed a staffing tool that used current manning as a baseline and adjusted its requirements based on emerging needs or major changes to its mission. However, the Navy’s tool was not validated or verified in accordance with DOD policy. Further, we found that the Air Force may not know its true medical requirements because the model it relied on also was not validated or verified.\nWe made several recommendations in our 2010 report, two of which were aimed at improving staffing of MTFs. Specifically, we recommended that the services identify common medical capabilities shared across military treatment facilities and develop and implement cross-service medical staffing standards for these capabilities as appropriate. We also recommended that each service update or develop medical personnel requirements determination tools as needed to ensure that they use validated and verifiable processes.\nThe Army, the Navy, and the Air Force have implemented our recommendation related to the development and implementation of validated and verifiable tools for developing medical personnel requirements. Additionally, they identified and developed standardized cross-service staffing standards for over 40 medical specialties and incorporated them into their individual MTF staffing tools.",
"",
"The Army and the Air Force have validated the dental clinic staffing models that they use, and the Navy’s draft model is under review. In the absence of a validated model, the Navy uses a general ratio to staff its dental clinics. See table 1 for a description of each of the services’ methodology for staffing dental clinics.\nThe Army and the Air Force models, which were developed in accordance with DOD guidance and service-specific requirements, are subject to the following validation processes:\nArmy. Since 2011, the Army has used the Army Dental Clinic Model, which, according to officials, is intended to determine the minimum number of dentists necessary, by location, to ensure the medical readiness of soldiers. Army staffing models are subject to validation by the U.S. Army Manpower Analysis Agency, which validated the Army’s Dental Clinic Model when it was developed in 2011. According to an Army official, the model’s validation expired in 2014, and was not re-validated until May 2018 due to limited resources. Additionally, Army officials stated that the data used in the model are updated on an annual basis and that the model is subject to revalidation every 5 years.\nAir Force. Since 2014, according to Air Force officials, the Air Force has used its Dental Manpower Model to determine the minimum number of dentists required, by clinic, to ensure the medical readiness of servicemembers served by Air Force dental clinics. According to Air Force officials, the Air Force Dental Manpower Model is subject to review and validation that includes input from the Air Force Medical Service; Surgeon General’s Manpower, Personnel, and Resources office; Air Force Personnel Center; and consultants. Officials told us the model is reviewed and validated annually and presented to the Dental Operations Panel and Air Force’s medical service corporate structure. The model was most recently validated in April 2018.\nAccording to Navy Bureau of Medicine and Surgery (BUMED) officials, the Navy does not yet have a model and therefore instead uses a general ratio of one dentist for every 1,000 sailors as a baseline to initially determine the staffing requirements of its dental clinics. This ratio is adjusted based upon emerging needs or major changes to mission. In 2013, according to Navy officials, BUMED began developing a Dental Services Model that could be used to determine dental clinic staffing needs. In November 2016, BUMED internally released a draft report recommending that the dental corps approve and implement the Dental Services Model as the staffing standard for dental clinics. According to a Navy official, this report was provided to dental corps leadership for review in July 2018 and they are expected to complete their review in October 2018. According to BUMED officials, if the dental corps leadership approves the model for use as an official staffing standard, the model would be subject to official Navy validation processes which, in accordance with DOD policy, would entail verification and validation throughout the model’s lifecycle. Conversely, if the dental corps decides to use the model as an informal staffing tool to supplement its current processes, a BUMED official stated that it will be subject to an ad-hoc internal review every 3 years that mirrors the Navy’s review of its validation process.",
"Currently, the Army, the Navy and the Air Force each use different service-specific standards and other factors to determine the number of dentists needed at their respective dental clinics. As previously discussed, the services have developed and are in the process of implementing cross-service staffing standards—that is, a standardized approach to staffing the common day-to-day health needs of the patient population—for certain medical specialties. In response to DOD policy and our 2010 recommendation, the services established a working group to identify and develop common cross-service staffing standards, and in 2017, the tri-service working group established such standards for 42 different medical specialties. These standards are based on actual workload data for common capabilities within selected medical specialties and were incorporated into each service’s staffing tools to provide consistent values for the minimum number of staff required to meet patient needs. However, according to an official involved in the development of the standards, the services have not collaborated to develop a plan to establish a similar set of standards for dental care.\nDOD guidance directs modeling and simulation management to develop plans and procedures and to pursue common and cross-cutting modeling tools and data across the services. Also, the ASD(HA) has supported the effort to establish consistent workload drivers across services for determining personnel requirements for MTFs.\nAccording to a tri-service working group co-chair, they did not develop cross-service staffing standards for dental care because at the time, the quality of available data on dental procedure frequency and duration varied across the services. The same official stated that these data have been improved, but they still do not have plans to develop cross-service staffing standards for dental care. Additionally, service officials maintained that they must operate their respective dental clinics autonomously and in a manner that best supports their service-specific needs and unique command structures. Specifically, officials from each service’s dental corps stated that their primary mission is focused on the medical readiness of servicemembers and generally does not involve beneficiary care. As such, they have not collaborated on staffing efforts with the other services.\nWhile we recognize that each service operates under a different command structure, readiness requirements for oral health are standardized across DOD, and all servicemembers are required to meet the same level of oral health in order to be deployable. Additionally, since DOD is currently assessing whether it will consolidate the services’ dental corps staff under the Defense Health Agency’s administration, it remains unclear to us why dental care has been excluded from cross- service efforts to develop a common set of standards for staffing military dental clinics—especially because the services have developed common staffing standards for42 other medical specialties.",
"The Army, the Navy, and the Air Force have generally met their recruitment goals for dental students, but generally have not met their recruitment goals for fully qualified dentists to address oral health needs of the services. Overall, we found that the services maintained their staffing levels for military dentists during fiscal years 2012 through 2016, but experienced gaps within certain specialties. Further, the services rely on various programs and special pays and incentives, to recruit and retain military dentists, but they do not know the extent to which some of these programs are effective at helping them to do so.",
"Our analysis of Army, Navy, and Air Force data found that in fiscal years 2012 through 2016, the services generally met their goals for dental students recruited through the Armed Forces Health Professions Scholarship Program (AFHPSP). From fiscal year 2012 through fiscal year 2016, the Army met 94 percent of its goals, the Navy met 100 percent of its goals, and the Air Force met 97 percent of its goals. Figure 3 shows the AFHPSP recruitment goals and achievements, by service for fiscal years 2012 through 2016.\nTo address their immediate need for dental providers, the services also recruit fully qualified general dentists or specialists. However, the services have experienced challenges meeting their recruitment goals for fully qualified dentists. Figure 4 below shows the recruitment goals and achievements for fully qualified dentists from fiscal years 2012 through 2016. As shown in the figure, the Army did not meet its recruitment goals for 5 consecutive years, the Navy did not meet its goals for 2 of these 5 years, and the Air Force did not meets its goals for 3 of these 5 years.\nWhile the services have experienced challenges in recruiting fully qualified dentists, the challenges are most pronounced in certain specialties. For example, based on our analysis of service data from fiscal years 2012 through 2016, the Army and the Navy were unable to recruit any oral surgeons and the Air Force recruited 50 percent of the oral surgeons it needed. Service officials cited various reasons for not being able to meet their recruitment goals for certain specialties, including the availability of more lucrative careers in the private sector and quality of life concerns associated with military service, such as frequent moves. Additionally, Air Force officials stated that they are not always able to offer accession bonuses consistently, which has caused challenges in recruiting. Table 2 shows the recruitment goals and percentage achieved for fully qualified dentists, by specialty, from fiscal years 2012 through 2016.",
"While the services maintained overall staffing levels for military dentists, they have experienced some challenges retaining certain specialties. Overall, military dentist end strengths—the actual number of dentists on board at the end of the fiscal year—have generally met or exceeded dental authorizations. Specifically, between fiscal years 2012 and 2016, the Army’s dental authorizations were filled, on average, at about 109 percent, the Navy’s at about 101 percent, and the Air Force’s at about 97 percent. Further, DOD data show that average overall gain rates are equal to average overall loss rates for the services’ dental corps in fiscal years 2012 through 2015 at approximately 10 percent for the Army, 9 percent for the Navy, and 11 percent for the Air Force. Additionally, according to our analysis of Army and Navy data, on average, approximately 73 percent of Army dentists continue on active duty after 5 years of service, and approximately 63 percent of Navy dentists continue on active duty after 5 years of service. According to Air Force officials, the Air Force does not routinely track data on the number of dentists that continue on active duty after 5 years of service.\nAlthough the services have been able to maintain their overall numbers for the total number of dentists in their respective dental corps, we found, based on the data the services provided us, that each service experienced gaps in certain dental specialties, including critically short wartime specialties. For example, all of the services experienced gaps in comprehensive dentistry from fiscal years 2012 through fiscal year 2016. In addition, for the same time period, all of the services experienced gaps in prosthodontists and oral surgeons. Officials from all three services cited family concerns, frequent moves, and competition from the private sector as reasons why these and other dentists choose to leave the military. Additionally, Army and Navy officials cited limited training and education opportunities and limited scope of practice as reasons why specialists such as oral surgeons leave the military.",
"The services rely on programs, such as AFHPSP, the Critical Wartime Skills Accession Bonus (CWSAB), and special pay and incentives, to attract and retain military dentists, but they do not know the extent to which some of these programs are effective at helping them meet their recruiting and retention goals. Our prior work on effective strategic workforce planning principles concluded that agencies should periodically measure their progress toward meeting human capital goals. These principles state that measuring the extent that human capital activities contribute to achieving programmatic goals provides information for effective oversight by identifying performance shortfalls and appropriate corrective actions. Further, according to these principles, agencies should develop use of flexibilities and other human capital strategies that can be implemented with the resources that can be reasonably expected to be available, and should consider how these strategies can be aligned to eliminate gaps. Additionally, Standards for Internal Control in the Federal Government states that management should monitor internal control systems, through ongoing monitoring and evaluations. According to these standards, evaluations should be used to provide feedback on the effectiveness of ongoing monitoring and should be used to help design systems and determine effectiveness. The standards also provide that management should determine the appropriate corrective actions to address any identified deficiencies upon completing its evaluation.\nAccording to Army, Navy, and Air Force officials, the services have taken various actions to monitor their recruitment and retention programs. For example, officials told us that they review recruitment goals, achievements, and retention rates; conduct workforce planning and modeling; and participate in recruitment and retention working groups. Specifically, Army officials stated that they use forecasts from a 5-year management plan to determine the Army’s recruiting mission and review its continuation rates to assess retention of dentists. Navy officials told us that they review annual recruitment goals and track whether they are meeting those goals on a weekly basis. Air Force officials stated that they participate in the Medical Accessions Working Group three times per year to assess ongoing recruitment activities. While the services monitor their progress toward recruitment and retention goals, they do not know the extent to which the programs designed to help them meet their goals affect their ability to recruit and retain dentists because they have not evaluated their effectiveness.\nFor example, DOD Directive 1304.21 allows the services to use accession bonuses to meet their personnel requirements and specifies that bonuses are intended to influence personnel inventories in specific situations in which less costly methods have proven inadequate or impractical. The services have the discretion to issue up to $20,000 as an accession bonus under the AFHPSP—in addition to paying full tuition, education expenses, and a monthly stipend. In fiscal years 2012 through 2016, the Army and the Navy offered the accession bonus and generally met their recruitment goals—an achievement that Army officials credit, in part, to their use of the incentive. Specifically, Army officials told us that prior to using the bonus in 2009, they were not meeting their recruitments goals. They also expressed concern that, if they were to discontinue use of the bonus, they would not be able to meet their current goals. Conversely, Air Force officials told us that they stopped offering the bonus in 2012 because the number of AFHPSP applicants had exceeded the number of AFHPSP positions; the Air Force has continued to meet its recruiting goals without the use of the bonus. An Air Force official acknowledged that not offering the bonus could result in their losing potential applicants to the services that do offer the bonus, but Air Force officials also recognized that money is not always a deciding factor for those who choose to serve as a dentist in the military. The uncertainty described by the Army and Air Force officials demonstrates their lack of information about what factors motivate individuals to join the military. Moreover, the differing use of the accession bonus by the two services with similar outcomes indicates that the services do not know when it is necessary to use the recruiting tool because they have not evaluated the effectiveness of this program.\nAnother bonus the services can offer is the CWSAB, which ranges from $150,000 for general dentists to $300,000 for comprehensive dentists, endodontists, prosthodontists, and oral maxillofacial surgeons, to individuals entering the military as a dentist in a critically short wartime specialty. While a bonus can be offered to any dental specialty designated as a critically short wartime specialty, data that we analyzed indicate that the bonus may be disproportionately effective in recruiting for these specialties. For example, from fiscal years 2012 through 2016, the Navy used this type of bonus and was able to meet or exceeded its recruitment goals for critically short wartime specialty general dentists and staffed this specialty at between 108 and 122 percent. However, our analysis of the Navy’s data also found that, even after offering this bonus, the Navy was unable to recruit any oral surgeons during the same time period. However, like with the accession bonus, service officials do not know the extent to which the CWSAB bonus is an effective recruitment incentive for some or all of the critically short wartime specialties because they have not evaluated the effectiveness of this program.\nIn addition, the services offer special pay and incentives, which vary by specialty, to qualified dentists. Special pay and incentives include incentive pay, retention bonuses, and board certification pay. Each bonus and incentive, except board certification pay, requires an additional service obligation, thus creating a retention tool for the services. The services and officials from the Office of the ASD(HA) participate in the Health Professions Incentives Working Group to review recruitment and retention special pay and incentives and recommends adjustment to amounts offered as necessary. Service and officials from the Office of the ASD(HA) told us that there are no ways to evaluate the effectiveness of these incentives because they cannot account for the emotional or non- monetary decisions that contribute to whether servicemembers stay in the military, and money is not always an effective incentive for getting people to train in certain specialties or to continue their service. However, in our recent review of DOD’s special pay and incentive programs in 2017, we recommended that DOD take steps to improve the effectiveness of its special pay and incentive programs. Additionally, in February 2018, through our review of gaps in DOD’s physician specialties, we recommended that the services develop targeted and coordinated strategies to alleviate military physician gaps. An official from the Office of the ASD(HA) stated that they have started discussing measures with the services to evaluate the effectiveness of DOD’s medical and dental recruitment and retention programs, including special pay and incentives. Additionally, Office of ASD(HA) and service officials stated that they will begin reviewing the dental special pays and incentives in fiscal year 2019. Because these reviews are in the early stages, it is too soon to know how effective they will be in evaluating pay and incentive programs.\nAlthough service officials also told us that they believe their recruitment and retention programs are effective because they have generally met their overall recruiting and retention goals, until the services evaluate the effectiveness of their recruitment and retention efforts, they will not have the information to know which programs are the most efficient and cost- effective.",
"DOD continues to implement several major initiatives to support the mission of its health system maintaining the medical readiness of servicemembers while operating as efficiently as possible. The dental corps plays a critical role in these efforts by ensuring the oral health and dental readiness of all servicemembers. Ensuring dental readiness requires, in part, that the services are able to staff dentists adequately and consistently across DOD’s dental clinics. However, the Army, the Navy, and the Air Force have not collaborated in their approaches to staffing dental clinics, and have not developed cross-service staffing standards for dental clinic staffing. As DOD progresses in its efforts to implement efficiencies across its Medical Health System and assesses the scope of medical care to be transferred to the Defense Health Agency, it could be of benefit to the dental corps to develop cross-service standards that could result in improvements to the consistency and efficiency of dental clinic staffing.\nIn addition to ensuring the appropriate number of dentists at each clinic to support the dental corps’ mission, recruiting and retaining fully qualified dentists has been an ongoing challenge for the services. However, the services have not evaluated whether their existing programs have been effective at helping them recruit and retain dentists, and therefore do not know whether they are effectively targeting their resources to address the most significant recruitment and retention challenges.",
"We are making a total of six recommendations, including two to the Army, two to the Navy, and two to the Air Force. Specifically: The Secretary of the Army should ensure that the Surgeon General of the Army Medical Command (1) collaborate with the Navy Bureau of Medicine and Surgery and the Air Force Medical Service to develop a common set of planning standards to be used to help determine dental clinic staffing needs, and (2) incorporate these standards into the Army’s dental corps staffing model. (Recommendation 1)\nThe Secretary of the Navy should ensure that the Surgeon General of the Navy Bureau of Medicine and Surgery (1) collaborate with the Army Medical Command and the Air Force Medical Service to develop and implement a common set of planning standards to be used to help determine dental clinic staffing needs, and (2) incorporate these standards into the Navy’s dental corps staffing model. (Recommendation 2)\nThe Secretary of the Air Force should ensure that the Surgeon General of the Air Force Medical Service (1) collaborate with the Army Medical Command and the Navy Bureau of Medicine and Surgery to develop and implement a common set of planning standards to be used to help determine dental clinic staffing needs, and (2) incorporate these standards into the Air Force’s dental corps staffing model. (Recommendation 3)\nThe Secretary of the Army should ensure that the Surgeon General of the Army Medical Command evaluates the effectiveness of its recruitment and retention programs for military dentists, including the need for and effectiveness of the recruitment and retention incentives currently offered. (Recommendation 4)\nThe Secretary of the Navy should ensure that the Surgeon General of the Navy Bureau of Medicine and Surgery evaluates the effectiveness of its recruitment and retention programs for military dentists, including the need for and effectiveness of the recruitment and retention incentives currently offered. (Recommendation 5)\nThe Secretary of the Air Force should ensure that the Surgeon General of the Air Force Medical Service evaluates the effectiveness of its recruitment and retention programs for military dentists, including the need for and effectiveness of the recruitment and retention incentives currently offered. (Recommendation 6)",
"We provided a draft of this report to DOD for review and comment. DOD did not provide comments. DOD did provide us with technical comments, which we have incorporated, as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, the Under Secretary of Defense for Personnel and Readiness, the Office of the Assistant Secretary of Health Affairs, the Secretaries of the Army, the Navy, the Air Force, and the President of the Uniformed Services University of the Health Sciences. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3604 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.",
"In addition to the Department of Defense’s (DOD) Armed Forces Health Professions Scholarship Program, DOD uses several other programs and incentives to recruit military dentists. Table 3 includes a selection of DOD’s military dentist accession programs and incentives.",
"DOD policy requires that all military dentists must be credentialed and privileged to practice dentistry. Credentialing is the process of inspecting and authenticating the documentation to ensure appropriate education, training, licensure, and experience. Privileging is the corresponding process that defines the scope and limits of practice for health care professionals based on their relevant training and experience, current competence, peer recommendations, and the capabilities of the facility where they are practicing.\nAccording to officials, the services have developed and implemented processes to continuously monitor dentist performance in accordance with DOD policy. According to officials, the services monitor military dentist performance through On-Going Professional Practice Evaluations (OPPE) and Focused Professional Practice Evaluations (FPPE). The OPPE is a continuous evaluation of dentist performance that reviews six dimensions of performance: (1) patient care, (2) medical knowledge, (3) professionalism, (4) practice-based learning and improvement, (5) interpersonal and communication skills, and (6) systems-based practice. The FPPE is a process of periodic evaluation by the dental clinic of the specific competence of a dentist performing procedures and administering care. FPPEs are conducted during a dentist’s initial appointment, when granting new privileges, or if a question arises about a dentist’s ability to provide, safe, high quality patient care.\nIn addition to the performance monitoring required by DOD, according to officials, the Army and the Air Force have instituted their own mechanisms for monitoring the quality and performance of their dentists.\nArmy: According to officials, the Army monitors dental quality through its quarterly Continuous Quality Management Program. This program includes the review of data related to records audits, infection control, radiation protection, utilization management, implant reports, drug utilization reports, patient safety events, and risk management. According to officials, these reviews are intended to identify and address any errors or trends in dental care.\nAir Force: According to officials, annually, Air Force dentists must document that they have reviewed and will follow the Air Force Medical Service Dental Clinical Practice Guidelines. According to officials, this ensures that all dentists are following the same standard of care for dental treatment. Additionally, according to officials, Air Force dentists participate in a peer review process known as Clinical Performance Assessment and Improvement. According to officials, in this process, a licensed peer dentist preferably of the same specialty reviews the dentist’s practice and procedures. Further, according to officials, depending on the nature of issues found during the review, corrective actions—ranging from refresher courses to a loss of license and credentials—may be taken.",
"",
"",
"In addition to the contact named above, Kimberly Mayo, Assistant Director; Nicole Collier; Alexandra Gonzalez; Amie Lesser; Tida Barakat Reveley; Rachel Stoiko; John Van Schaik; Lillian Yob; and Elisa Yoshiara made key contributions to this report.",
"Defense Health Care: Additional Assessments Needed to Better Ensure an Efficient Total Workforce. GAO-18-102, Washington, D.C.: Nov. 27, 2018.\nDefense Health Care: DOD Should Demonstrate How Its Plan to Transfer the Administration of Military Treatment Facilities Will Improve Efficiency. GAO-19-53, Washington, D.C.: Oct. 30, 2018.\nDefense Health Care: Expanded Use of Quality Measures Could Enhance Oversight of Provider Performance. GAO-18-574, Washington, D.C.: Sept. 17, 2018.\nMilitary Personnel: Additional Actions Needed to Address Gaps in Military Physician Specialties. GAO-18-77. Washington, D.C.: Feb. 28, 2018.\nDefense Health Reform: Steps Taken to Plan the Transfer of the Administration of the Military Treatment Facilities to the Defense Health Agency, but Work Remains to Finalize the Plan, GAO-17-791R. Washington, D.C.: Sept. 29, 2017.\nMilitary Compensation: Additional Actions Are Needed to Better Manage Special and Incentive Pay Programs. GAO-17-39. Washington, D.C.: Feb. 3, 2017.\nDefense Health Care Reform: DOD Needs Further Analysis of the Size, Readiness, and Efficiency of the Medical Force. GAO-16-820. Washington, D.C.: Sept. 21, 2016.\nDefense Health Care: Additional Information Needed about Mental Health Provider Staffing Needs. GAO-15-184. Washington, D.C.: Jan. 30, 2015.\nHuman Capital: Additional Steps Needed to Help Determine the Right Size and Composition of DOD’s Total Workforce. GAO-13-470. Washington, D.C.: May 29, 2013 Defense Health Care: Actions Needed to Help Ensure Full Compliance and Complete Documentation for Physician Credentialing and Privileging. GAO-12-31. Washington, D.C.: Dec. 15, 2011.\nMilitary Cash Incentives: DOD Should Coordinate and Monitor Its Efforts to Achieve Cost-Effective Bonuses and Special Pays. GAO-11-631. Washington, D.C.: June 21, 2011.\nMilitary Personnel: Enhanced Collaboration and Process Improvements Needed for Determining Military Treatment Facility Medical Personnel Requirements. GAO-10-696. Washington, D.C.: Jul. 29, 2010.\nMilitary Personnel: Status of Accession, Retention, and End Strength for Military Medical Officers and Preliminary Observations Regarding Accession and Retention Challenges. GAO-09-469R. Washington, D.C.: Apr. 16, 2009.\nMilitary Personnel: Better Debt Management Procedures and Resolution of Stipend Recoupment Issues Are Needed for Improved Collection of Medical Education Debts, GAO-08-612R. Washington, D.C.: Apr. 1, 2008.\nPrimary Care Professionals: Recent Supply Trends, Projections, and Valuation of Services. GAO-08-472T. Washington, D.C.: Feb. 12, 2008.\nMilitary Physicians: DOD’s Medical School and Scholarship Program. GAO/HEHS-95-244. Washington, D.C.: Sept. 29, 1995.\nDefense Health Care: Military Physicians’ Views on Military Medicine. GAO/HRD-90-1. Washington, D.C.: Mar. 22, 1990."
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"question": [
"What are the officials' plan in developing the standards for dental care?",
"What are the benefits of cross-service staffing in standardizing clinic staffing?",
"What is the operating model for clinic staffing required by service officials?",
"How are these requirements contrasting DOD's oral health requirements?",
"How do the Army, the Navy, and the Air Force meet their needs for military dentists?",
"How were the goals for recruiting dental students and fully qualified dentists met between fiscal years 2012 and 2016?",
"What were the challenges of recruiting fully qualified dentists for the Army, the Navy and the Air Force respectively?",
"Where challenges appear to be most pronounced?",
"What are the reasons for not meeting recruitment goals?",
"How do the services attract and retain military dentists?",
"What did GAO find about some services?",
"What are the negative consequences for the services if they do not evaluate their programs?",
"What was the goal for DOD in modernizing its Military Health System?",
"What was one step DOD took in realizing this goal?",
"What are required for the services that are essential to this effort?",
"What was the provision included in the Senate Report for GAO?",
"What did GAO assess about the services?",
"What did GAO do apart from assessing service dental clinic models?"
],
"summary": [
"While the services have developed and implemented cross-service staffing standards for 42 medical specialties, according to a key official involved in developing these standards, they currently do not plan to develop a similar set of standards for dental care.",
"Cross-service staffing standards help the services standardize clinic staffing to address the common day-to-day health needs of patients.",
"Service officials maintain that they must operate their respective dental clinics autonomously and in a manner that best supports their service-specific needs and unique command structures.",
"However, as oral health requirements for servicemembers are standardized across the Department of Defense (DOD), it is unclear why dental care has been excluded from the staffing standardization effort—especially because the services have implemented cross-service staffing standards for 42 other medical specialties.",
"The Army, the Navy, and the Air Force meet their needs for military dentists by recruiting both dental students and fully qualified dentists.",
"The services generally met their recruitment goals for dental students between fiscal years 2012 and 2016, but faced challenges recruiting and retaining fully qualified dentists during that period.",
"For example, the Army missed its recruitment goals for fully qualified dentists in all 5 years, the Navy missed its goals in 2 out of 5 years, and the Air Force missed its goals in 3 out of 5 years.",
"These challenges are most pronounced for certain specialties. For example, service data indicate that the Army and the Navy were unable to recruit any oral surgeons, while the Air Force recruited 50 percent of the oral surgeons it needed.",
"Service officials cited various reasons for not meeting recruitment goals, including the availability of more lucrative careers in the private sector and quality of life concerns associated with military service.",
"The services rely on various programs, including scholarships and special pay and incentives, to attract and retain military dentists, and service officials stated that they monitor their programs by reviewing their goals, among other actions.",
"However, GAO found that some services continue to provide incentive bonuses for positions that are overstaffed and have met or exceeded recruitment goals, but they do not know whether this is necessary because they have not evaluated the effectiveness of their programs.",
"Without evaluating their programs, the services lack the information necessary to ensure that they are using recruitment and retention incentives effectively and efficiently for attracting and retaining dentists.",
"DOD has taken steps to modernize its Military Health System to ensure that it operates efficiently.",
"For example, in September 2013, the Defense Health Agency was created, in part, to implement common clinical and business processes across the services.",
"Essential to this effort are the services' ability to effectively staff their medical facilities, including the processes used for staffing dental clinics and the services' ability to recruit and retain military dentists.",
"Senate Report 115-125 included a provision for GAO to review the services' processes for determining requirements for dentists and its programs for recruiting and retaining military dentists, among other things.",
"GAO assessed the extent to which the services (1) use validated dental clinic staffing models that also incorporate cross-service staffing standards, and (2) have recruited and retained military dentists and measured the effectiveness of their recruitment and retention programs.",
"GAO assessed service dental clinic models, analyzed recruitment and retention data from fiscal year 2012 through 2016, and interviewed DOD and service officials."
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CRS_RL30785
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{
"title": [
"",
"Introduction",
"A Brief Legislative History",
"Child Care Programs Prior to 1996",
"Child Care Reforms of 1996",
"Authorization Status of Child Care Programs",
"Recent CCDBG Reauthorization Efforts",
"Recent HHS Regulatory Proposal",
"HHS Office of Child Care",
"Program Rules and Benefits",
"Goals",
"Eligible Children and Families",
"Methods of Payment for Child Care Subsidies",
"Parental Co-payments",
"Provider Payment Rates",
"Activities to Improve Child Care Quality and Availability",
"Limitations on Use of Funds",
"State Application and Plan",
"Parental Choice",
"Parental Access",
"Parental Complaints",
"Consumer Education Information",
"Licensing and Regulation",
"Health and Safety Requirements",
"Criminal Background Checks for Child Care Providers",
"Restriction Against Supplanting State Funds",
"Funding24",
"FY2015 Appropriations Status",
"FY2015 President's Budget",
"Proposed Discretionary and Mandatory Funding Levels",
"Reauthorization Proposal",
"FY2014 Appropriations",
"Discretionary Funding",
"Mandatory Funding",
"FY2013 Appropriations",
"Discretionary Funding",
"Mandatory Funding",
"American Recovery and Reinvestment Act",
"Additional Funding History",
"Allocation of Funds",
"Discretionary Funds",
"Mandatory Funds",
"Transfer of Funds from TANF",
"Federal Enforcement",
"Program Integrity and Accountability",
"State Error Rate Reporting",
"Error Rate Methodology and Recent Findings",
"What Happens When Erroneous Payments Are Uncovered?",
"2007 Final Rule on State Match Requirements",
"Data Collection",
"Religious Providers",
"Indian Tribes and Tribal Organizations",
"Quality Rating and Improvement Systems",
"Appendix. FY2009 CCDF Allocations (Including ARRA)",
""
],
"paragraphs": [
"",
"The Child Care and Development Block Grant (CCDBG) provides subsidies to assist low-income families in obtaining child care so that parents can work or participate in education or training activities. Discretionary funding for this program is authorized by the CCDBG Act, which is currently due for reauthorization. Mandatory funding for child care subsidies, authorized in Section 418 of the Social Security Act (sometimes referred to as the \"Child Care Entitlement to States\"), is also due for reauthorization. In combination, these two funding streams are commonly referred to as the Child Care and Development Fund (CCDF). While this term is not found in statute, it can serve as a useful catch-all when discussing the complex financing structure underlying federal support directly targeted to child care subsidies. For the purposes of this report, the term CCDBG will refer specifically to the discretionary funding stream, while the term CCDF will refer to the jointly administered funding streams.\nThe CCDF is administered by the Department of Health and Human Services (HHS) and provides block grants to states, according to a formula, which are used to subsidize the child care expenses of working families with children under age 13. In addition to providing funding for child care services, funds are also used for activities intended to improve the overall quality and supply of child care for families in general. The CCDF is the primary source of federal funding dedicated solely to child care subsidies for low-income working and welfare families. The FY2014 funding level for the CCDF is nearly $5.3 billion, which includes about $2.4 billion in discretionary funds and $2.9 billion in mandatory funds.",
"The current structure of federal child care programs and funding is most easily understood by tracing its evolution from the system that existed prior to 1996, when the welfare reform law ( P.L. 104-193 ) simultaneously repealed, created, and consolidated federal child care programs (see Figure 1 ).",
"Before 1996, four separate federal programs specifically supported child care for low-income families. Three were associated with the cash welfare system, then Aid to Families with Dependent Children (AFDC). At that time, families on AFDC were entitled to free child care. In addition, families who had left the AFDC rolls with employment were entitled to 12 months of \"transitional\" subsidized child care. The third AFDC-related child care program targeted families who, without a child care subsidy, would be \"at risk\" of qualifying for AFDC. These three programs operated under three separate sets of rules, and targeted three separate populations. Critics argued that mothers navigating their way through the welfare system faced unnecessary complexity that could be alleviated with a more unified child care program.\nAll three of the AFDC-related child care programs were funded with mandatory money, and fell under the same congressional committee jurisdiction (the Ways and Means Committee in the House, and the Finance Committee in the Senate). AFDC Child Care and Transitional Child Care were both open-ended federal entitlements (i.e., there was no limit on program funding), with the federal share of payments to states based on the state's Medicaid matching rate. The AFDC At-Risk program, on the other hand, was not open-ended, but was instead authorized as a \"capped entitlement\" to the states at an annual level of $300 million.\nThe fourth pre-1996 child care program for low-income families was the CCDBG. Established in the CCDBG Act of 1990 (a component of the Omnibus Budget Reconciliation Act, P.L. 101-508 ), the CCDBG was designed to support child care for low-income families who were not connected to the AFDC welfare system. The CCDBG subsidized child care for children under age 13 whose working family income did not exceed 75% of state median income (SMI), adjusted for family size. In addition, it provided funds for activities to improve the overall quality and supply of child care. Unlike the AFDC-related programs, the CCDBG was funded with discretionary funds appropriated as part of the annual appropriations process. Authorizing legislation fell under the jurisdiction of the Education and Labor Committee in the House (later renamed the Committee on Education and the Workforce) and the Labor and Human Resources Committee in the Senate (later renamed the Committee on Health, Education, Labor and Pensions).",
"The 1996 welfare reform law ( P.L. 104-193 ) repealed AFDC and its three associated child care programs. Like cash welfare, child care was no longer an individual entitlement to welfare families. Instead of preserving three separate programs, the new law created a consolidated block of mandatory funding under Section 418 of the Social Security Act. Like the earlier three programs, this new block of funding was largely targeted toward families on, leaving, or at risk of receiving welfare (now Temporary Assistance for Needy Families, or TANF). However, unlike the three AFDC-related child care programs, each of which was administered under its own set of rules, the 1996 law instructed that the new mandatory funding be transferred to each state's lead agency managing the CCDBG, and be administered according to CCDBG rules. The law authorized and appropriated funding for the new mandatory child care program through FY2002.\nIn addition to creating the new block of mandatory child care funding, the 1996 welfare reform law reauthorized the CCDBG through FY2002. This law also substantially amended the CCDBG by modifying program rules such as income eligibility requirements, which were expanded from 75% of SMI (under pre-1996 law) to 85% of SMI (under the 1996 law).\nThe child care provisions in the 1996 law were designed to achieve several purposes. As a component of welfare reform, the child care provisions were intended to support the overall goal of promoting self-sufficiency through work. However, separate from the context of welfare reform, the legislation attempted to address concerns about the effectiveness and efficiency of child care programs. The previous four separate child care programs (the original CCDBG and the three AFDC programs) had different rules regarding eligibility, time limits on the receipt of assistance, and work requirements. Consistent with other block grant proposals considered in the 104 th Congress, the child care provisions in P.L. 104-193 were intended to streamline the federal role, reduce the number of federal programs and conflicting rules, and increase the flexibility provided to states.",
"The CCDBG Act has not been reauthorized since the 1996 welfare reform law ( P.L. 104-193 ), which authorized the program through the end of FY2002. Although the program's authorization has expired, the CCDBG has continued to receive discretionary funding in each year since FY2002 through the annual appropriations process. Over the years, Congress has undertaken a number of efforts to reauthorize the CCDBG Act (e.g., H.R. 4 and S. 880 from the 108 th Congress, and H.R. 240 and S. 525 from the 109 th Congress). More recently, both the House and Senate have approved CCDBG reauthorization bills in FY2014. For more information, see the section on \" Recent CCDBG Reauthorization Efforts .\"\nThe 1996 welfare reform law ( P.L. 104-193 ) authorized and directly appropriated (or pre-appropriated) mandatory child care funding for each of FY1997 through FY2002. Temporary extensions provided mandatory child care funding into FY2006, when a spending budget reconciliation bill was enacted into law ( P.L. 109-171 ), reauthorizing and increasing mandatory child care funding by $1 billion over five years (for a total amount of $2.917 billion for each of FY2006 to FY2010). The authorization and pre-appropriations for mandatory child care funding were set to expire at the end of FY2010, but a series of short-term extensions maintained mandatory child care funding at the same level ($2.917 billion) for FY2011-FY2013. No extension legislation was enacted prior to the start of FY2014, resulting in a 16-day funding gap. However, mandatory child care funding has since been restored at the $2.917 billion level via temporary extensions, the most recent of which (in P.L. 113-76 ) provides mandatory child care funding through the end of FY2014.",
"On September 15, 2014, the House approved the Child Care and Development Block Grant Act of 2014 ( S. 1086 , as amended) by voice vote. This is an amended version of the CCDBG reauthorization bill that was agreed to in the Senate, by a vote of 96-2, on March 13, 2014 ( S. 1086 , S.Rept. 113-138 ). The Senate would need to approve the amended bill as is, in order for it to be presented to the President for signature.\nBoth the House- and Senate-passed versions of S. 1086 would reauthorize the CCDBG through FY2020. While the Senate version would authorize appropriations at \"such sums as may be necessary,\" the House version would authorize specific appropriations levels for each year, increasing from $2.360 billion in FY2015 to $2.759 billion in FY2020. Both versions of the bill would significantly amend the CCDBG Act, adding new requirements related to state health and safety standards, pre-licensure and annual unannounced on-site monitoring visits for certain child care providers, criminal background checks and professional development for child care providers, activities to improve the quality and availability of child care, continuity of care for participating children, and increased consumer education for parents and the public.",
"On May 20, 2013, HHS published a Notice of Proposed Rulemaking (NPRM) in the Federal Register . The proposed rule would provide a comprehensive update of CCDF regulations, which were first published in 1998. The proposed rule calls for changes to current regulatory policy related to state health and safety standards, state monitoring practices, consumer education for parents, linking payment rates to quality of care, continuity of care, state contracts for direct services, and program integrity and accountability. The public comment period on the NPRM ended on August 23, 2013. HHS is required to take all comments into consideration before publishing a final rule.",
"At the federal level, the CCDF is administered by the Administration for Children and Families (ACF) within HHS. In October 2010, HHS announced the creation of a new Office of Child Care at ACF with responsibility for administering the CCDF. The office reports directly to the Assistant Secretary for Children and Families. According to an ACF press release, this reorganization was intended to \"elevate child care issues within ACF\" and to \"facilitate direct collaboration\" with other key early childhood programs and agencies (e.g., Head Start). In the press release, then-Acting Assistant Secretary for Children and Families David A. Hansell noted that early childhood development is a \"key priority\" for the Obama Administration. Hansell stated, \"The creation of an Office of Child Care will strengthen the quality of child care and maximize the program's effectiveness in achieving its dual goals of supporting employment for low-income families and promoting healthy development and school success for children.\"\nPrior to the October 2010 reorganization, the CCDF was administered by the Child Care Bureau as a subcomponent of the larger Office of Family Assistance at ACF, which administers the federal TANF program. The Child Care Bureau had been part of the Office of Family Assistance since 2006. When moving the Child Care Bureau into the Office of Family Assistance in 2006, an ACF publication noted that this organizational decision reflected the \"close coordination necessary\" between child care programs and TANF. Previously, the Child Care Bureau had been part of the Administration for Children, Youth, and Families (ACYF) since 1995.",
"Federal law requires states to designate a lead agency to administer the CCDF. The responsibilities of the lead agency are to administer federal funds, develop a state plan, and coordinate services with other federal, state, or local child care and early childhood development programs. States have tremendous flexibility in the design and operation of their child care policies, but federal law establishes program goals and a set of requirements that states must meet in order to receive CCDF funds.",
"The 1996 law established five goals for the CCDF. They include (1) allowing states maximum flexibility in developing their child care programs; (2) promoting parental choice; (3) encouraging states to provide consumer education information to parents; (4) helping states to provide child care to parents trying to become independent of public assistance; and (5) helping states to implement health, safety, licensing, and registration standards established in state regulations.",
"Federal law states that children eligible for services under the CCDF are those whose family income does not exceed 85% of the state median. However, states have the discretion to adopt income eligibility limits below this federal maximum, and generally do. At the beginning of FY2013, initial income eligibility estimates for a family of three were expected to range from about 35% to 83% of SMI, depending on the state. Because child care funding is not an entitlement for individuals, states are not required to aid families even if their incomes fall below the state-determined eligibility threshold. Federal law does, however, require states to give priority to families defined in their state plan as \"very low income.\"\nTo be eligible for CCDF funds, children must be less than 13 years old and be living with parents who are working or enrolled in school or training, or be in need of protective services. States must use at least 70% of their total mandatory CCDF funds for child care services for families who are receiving public assistance under TANF, families who are trying to become independent of TANF through work activities, and/or families who are at risk of becoming dependent on public assistance. In their state plans, states must demonstrate how they will meet the specific child care needs of these families. Of their remaining child care funds (including discretionary CCDBG funds), states must ensure that a substantial portion is used for child care services to eligible families other than welfare recipients or families at risk of welfare dependency.\nPreliminary HHS program data (the most recent available) indicate that about 1.5 million children received child care subsidies funded by the CCDF in an average month in FY2012. This would represent a decrease of about 116,400 children (-7%) compared to FY2011, should the preliminary FY2012 report hold constant after all data are finalized.",
"Parents of children eligible to receive subsidized child care must be given maximum choice in selecting a child care provider. Parents must be offered the option to enroll their child with a provider that has a grant or contract with the state to provide such services—to the extent that such services are available —or parents may receive a certificate that can be used to purchase child care from a provider of the parents' choice. A child care certificate (also sometimes referred to as a voucher) is an authorization form, letter, voucher, or other disbursement document authorizing child care payments for the provider of the parents' choice. The certificate may be in the form of a check or other disbursement directly to the parent, but must be used for child care services only. Under limited circumstances, payments can also be provided in the form of cash. The 1996 law expanded the definition of \"child care certificate\" to allow the vouchers or disbursements to be used as a deposit for child care services, if such deposits are required for other children cared for by the same provider.",
"The CCDBG Act generally requires that families contribute to the cost of care on a sliding fee scale basis. However, federal regulations allow states to waive child care fees for families with incomes at or below the poverty guidelines. In addition, federal regulations allow states to waive, on a case-by-case basis, contributions from eligible families whose children are in protective services or in foster care (or whose children may need such services). HHS has suggested that a family's fee should be no more than 10% of its income. States may use this 10% limit as a guide in deciding the amount of the fee, but are not required to do so. Federal statute requires that states take family size and income into account when establishing co-payments, but states may also take other factors into account, such as the number of children in care, whether care is full-time or part-time, or cost of care. States have flexibility in establishing rules for counting income.",
"States must establish payment rates for child care services that are sufficient to ensure equal access for eligible children to comparable child care services provided to children whose families are not eligible for subsidies. Essentially, payment rates are reimbursement rate ceilings (that is, the maximum rate providers can receive for child care services through CCDF). Providers are paid either the state's established payment rate (i.e., reimbursement rate ceiling) or the actual fee that providers charge to nonsubsidized parents, whichever is the lesser of the two. When determining payment rates, states are not required to consider variations in costs based on child care settings, age groups, and special needs (this was required prior to the 1996 law); however many state plans do link payment rates to such characteristics and/or to regional variation. Some state plans also link payment rates to quality of care provided. That is, some states may pay a higher rate to a provider with a better quality rating than they pay to providers who fail to meet specified quality standards.\nStates are required to conduct a local market rate survey every two years to assess the price of child care being charged. Federal regulations suggest that states establish payment rates equal to at least the 75 th percentile of the market rate to ensure equal access for eligible families. (That is, HHS recommends that states set their payment rate ceiling at a level that, on average, equals or exceeds the rate charged by three out of every four providers who responded to the local market rate survey.) However, federal law does not require that payments be set at this rate, nor that states use the most current market survey when setting rates. Instead, states must include a summary of the facts they used in determining the sufficiency of their payment rates to ensure equal access when they submit their state plans. Traditionally, state payment rates vary based on setting, age of child, and other characteristics. In addition, many states use tiered reimbursement systems, meaning that they issue higher reimbursement rates to providers based on certain criteria, such as meeting high quality standards, offering care during non-traditional hours, or serving special populations.",
"Federal law requires that no less than 4% of expenditures made from states' CCDF allotments (discretionary and mandatory) be spent on activities designed to (1) provide consumer education to parents and the public, (2) increase parental choice, and (3) otherwise improve the quality and availability of child care (such as resource and referral services). States use quality funds for a variety of activities, including professional development, licensing and monitoring, and improving provider compensation. In addition, federal appropriations frequently target portions of discretionary CCDBG funds toward quality improvement activities, including specific quality set-asides in areas such as infant and toddler care, school-aged child care, and child care resource and referral services.",
"Although the CCDF is a fairly flexible funding source for states, there are some limitations on use of funds. For instance, federal law and regulations prohibit states from expending more than 5% of aggregate CCDF funds from each fiscal year's allotment on administrative costs. However, regulations also specify that costs considered to be an \"integral part of service delivery\" should be excluded from the 5% administrative cap. These activities include eligibility determination (and redetermination), the establishment and maintenance of computerized child care information systems, and determination of erroneous payments (including case reviews and the preparation of error rate reports).\nIn addition, the CCDBG Act prohibits the use of federal funds for the purchase or improvement of land or buildings, with a limited exception for sectarian organizations. The amendments of 1996 also added an exception for Indian tribes and tribal organizations with respect to construction, though this is subject to the Secretary's approval. Finally, the law states that, in general, no federal CCDF funds may be used for any sectarian purpose or activity, including sectarian worship or instruction (more detail on this in the section on \" Religious Providers \").",
"To receive federal funding for child care, states must submit an application and plan to HHS. After an initial three-year plan, required by the original CCDBG Act in 1990, states are now required to submit plans that cover a two-year period. State plans include detailed information on many components of CCDF program administration, including state decisions about child and family income eligibility criteria, state priorities in children served, sliding fee scales, provider payment rates, and specific quality improvement initiatives. In addition, state plans must certify or assure that their programs will include certain elements related to parental choice, parental access, parental complaints, consumer education information, licensing and regulation, and health and safety requirements.\nIn 2011, HHS issued a new state plan \"preprint\" (i.e., the form used by states to meet biennial application and plan requirements) that included major changes in structure and content compared to prior years. These changes have generally been maintained in subsequent preprints. The preprints are now divided into three main sections: (1) Administration (e.g., roles and responsibilities at the state level), (2) CCDF Subsidy Program Administration (e.g., state rules governing the subsidy program, including eligibility criteria and payment rates), and (3) Health and Safety and Quality Improvement Activities.\nThe changes initiated in 2011 also required states to conduct a detailed self-assessment and goal-setting process in four \"component\" areas: (1) licensing and health and safety standards, (2) early learning guidelines, (3) quality improvement activities, and (4) professional development systems and workforce initiatives. As part of this process, states were required to identify goals in the four component areas and report on progress toward achieving these goals in an annual Quality Performance Report (QPR). The first round of QPRs (on activities conducted in FY2012) were due to HHS on December 31, 2012. FY2013 QPRs were due in December 2013.",
"Parents of children eligible to receive subsidized child care must be given the option to enroll their child with a provider that has a grant or contract with the state program to provide such services (when available), or to receive a child care certificate or voucher that can be used with a provider of the parents' choice. State plans must include a detailed description of how this parental choice provision is implemented. In addition, they must assure that the value of child care certificates will be commensurate with the subsidy value of child care services provided under a grant or contract, and that their payment rates for all subsidies will be sufficient to ensure equal access for eligible children to comparable child care services provided to children whose families are not eligible for subsidies. States may not significantly restrict parental choice among the various types of child care providers, which range from child care centers to family homes. Under the CCDBG Act, eligible child care providers can include individuals, age 18 and older, who provide child care services for their grandchildren, great grandchildren, siblings (if the provider lives in a separate residence), nieces, or nephews.\nIn recent years, some questions have arisen about how parental choice protections in the CCDBG Act interact with certain state initiatives that may require child care providers who receive federal subsidies to meet minimum quality standards. Such requirements may be wrapped into state Quality Rating and Improvement Systems (QRIS), which are used by a growing number of states to systematically assess, improve, and communicate about the quality of early childhood care and education programs (see additional information on such systems in the section of this report entitled \" Quality Rating and Improvement Systems \"). For instance, a state might require child care providers to meet a specified minimum QRIS score in order to be eligible to receive CCDF subsidies. In January 2011, in response to concerns about whether such policies might interfere with parental choice protections, HHS issued a program instruction on parental choice and QRIS initiatives. The program instruction stated that HHS would not consider parental choice requirements violated by such policies unless a given state's policy \"significantly restricts or will clearly have the effect of restricting parental choice.\" However, HHS also reiterated that state CCDF lead agencies must continue to ensure that families are able to choose from providers of all types and in all settings.",
"States must have procedures to ensure that child care providers receiving subsidies will give parents unlimited access to their children and to providers while the children are in care. State plans must include a detailed description of these procedures.",
"States are required to maintain a record of substantiated complaints made by parents, and to make information about these complaints publicly available upon request. The state plan must include a detailed description of how this record is maintained and made available.",
"Under the CCDBG Act, states must collect and disseminate, to parents of eligible children and to the general public, consumer education information that will promote informed child care choices. At a minimum, the information must include information about the full range of providers available, and health and safety requirements.",
"States must have in effect licensing requirements applicable to child care services provided within the state, and state plans must include a detailed description of these requirements and how they are effectively enforced. Federal law does not dictate what these licensing requirements should be or what types of providers they should cover. The 1996 law specifies that this provision shall not be construed to require that licensing requirements be applied to specific types of providers. The conference report on the 1996 law further states that the legislation is not intended to either prohibit or require states to differentiate between federally subsidized child care and nonsubsidized child care with regard to the application of specific standards and regulations.",
"States must have in effect, under state or local law, health and safety requirements that are applicable to child care providers; and states must have procedures in effect to ensure that subsidized child care providers (including those receiving child care certificates) comply with applicable health and safety requirements. States must have health and safety requirements in the following areas: prevention and control of infectious diseases (including immunization), building and physical premises safety, and health and safety training. In addition, state plans must assure that children receiving services under the CCDF are age-appropriately immunized, and that the health and safety provisions regarding immunizations incorporate (by reference or otherwise) the latest recommendation for childhood immunizations of the state public health agency.",
"Current CCDF law and regulations do not explicitly require that criminal background checks be included as part of a state's health and safety requirements. However, on September 20, 2011, HHS released an information memorandum recommending that all CCDF lead agencies institute comprehensive criminal background checks for child care providers receiving CCDF subsidies, as part of their minimum health and safety requirements. The memorandum characterizes a \"comprehensive\" criminal background check as one that includes (1) fingerprints checks of state criminal history records; (2) fingerprints checks of Federal Bureau of Investigation (FBI) criminal history records; (3) checks of state child abuse and neglect registries; and (4) checks of sex offender registries. Separately, tribal lead agencies for the CCDF may be subject to certain requirements in the Indian Child Protection and Family Violence Prevention Act (ICFVP). This law requires background checks for federal and tribal agency employees who have regular contact with, or control over, American Indian children.\nIn practice, all states subject certain child care providers to some type of background check. However, there is great variation across states in terms of which providers are required to undergo background checks (e.g., center-based staff, staff in child care family homes, relative caregivers) and in terms of the stringency of the background check that is required (e.g., child abuse registry check, state or federal fingerprint check, FBI background check). For instance, HHS reported that as of February 2012, 40 states and territories required FBI fingerprint checks for center-based child care providers, while only 31 states and territories required such checks for providers in group child care homes.\nOn September 19, 2011, before HHS issued the information memorandum on background checks, the Government Accountability Office (GAO) released a report on federal and state laws related to the employment of sex offenders at child care facilities. This report also examined 10 cases in which individuals who had been convicted of serious sexual offenses were subsequently employed or present at child care facilities. GAO found that in at least seven of these cases, the offenders used their access to child care facilities to offend again. (GAO notes that these cases focus only on individuals who were convicted of serious sexual offenses and cannot be generalized to all child care facilities.)\nIn recent years, Congress has demonstrated some interest in requiring criminal background checks for certain child care providers. For instance, several related bills with related provisions were introduced in the 113 th Congress, including H.R. 1925 , S. 624 , S. 1086 .",
"HHS requires states to assure that discretionary CCDBG funds will be used to supplement, not supplant, state general revenue funds for child care assistance for low-income families. While this is not a requirement in the CCDBG Act or accompanying regulations, federal appropriation laws typically make this stipulation. For instance, this stipulation was included in the FY2014 Consolidated Appropriations Act ( P.L. 113-76 ).",
"Discretionary CCDBG funds are subject to the annual appropriations process. The 1996 amendments to the CCDBG Act authorized funding through FY2002 at an annual authorization level of $1 billion. Actual appropriations have typically surpassed the authorized level, most recently reaching roughly $2.358 billion for FY2014 (see Table 1 ). In years since FY2002, appropriations have been made without an authorization level.\nMeanwhile, the 1996 welfare reform law provided pre-appropriated mandatory CCDF funding to states from FY1997 to FY2002. The annual amounts of mandatory funding were $1.967 billion in FY1997; $2.067 billion in FY1998; $2.167 billion in FY1999; $2.367 in FY2000; $2.567 billion in FY2001; and $2.717 billion in FY2002. Because these funds were directly appropriated by the welfare reform law, the mandatory CCDF funding does not generally go through the annual appropriations process. Mandatory CCDF funding was provided through FY2005 (at the FY2002 rate of $2.717 billion annually) via a series of extensions; welfare reauthorization legislation was debated in each of these years, without reaching fruition. Finally, on February 8, 2006, a budget reconciliation bill ( S. 1932 , the Deficit Reduction Act), which included mandatory child care funding provisions, was passed into law ( P.L. 109-171 ). The law pre-appropriated $2.917 billion annually for each of FY2006-FY2010. Since FY2010, mandatory funds have again been provided through a series of extensions, as discussed throughout this section.\nThe remainder of this section provides a detailed funding history for FY2013-FY2015, a summary of the American Recovery and Reinvestment Act of 2009 (ARRA), and a brief overview of other notable CCDF funding issues from FY1997 forward. Table 1 shows the amounts provided in discretionary and mandatory funding for each of FY1997-FY2014.",
"On June 10, 2014, the Senate Appropriations Subcommittee for the Departments of Labor, HHS, Education, and Related Agencies (L-HHS-ED) approved an FY2015 appropriations bill by voice vote. The bill has not been marked up by the full committee. However, on July 23, the Senate Appropriations Committee released a copy of the subcommittee-approved bill and draft subcommittee report. These materials indicate that the subcommittee-approved bill would provide $2.458 billion in discretionary CCDBG funding. The House Appropriations Committee has not taken action on an FY2015 L-HHS-ED appropriations bill.",
"",
"On March 4, 2014, the Obama Administration released its initial FY2015 budget materials, requesting $2.417 billion for the discretionary CCDBG, an increase of $59 million (+2.5%) from the final FY2014 funding level of $2.358 billion. The FY2015 President's Budget proposed to maintain funding set-asides typically provided within CCDBG appropriations (e.g., child care resource and referral and school-aged child care activities, a national toll-free hotline and website, and other quality activities, including those to improve the quality of care for infants and toddlers). In addition, the FY2015 President's Budget proposed to reserve $200 million for new formula state grants to improve the quality of child care, including the child care workforce and measures of health and safety.\nThe FY2015 President's Budget also requested a $750 million (+26%) increase in mandatory child care funds, for a proposed FY2015 mandatory funding level of $3.667 billion. Combined, the discretionary and mandatory funding levels requested in the FY2015 President's Budget totaled $6.084 billion, an increase of $809 million (+15%) from FY2014 actual. HHS estimated that this combined funding level would be sufficient for the CCDF to serve roughly 1.4 million children in FY2015. Notably, the FY2015 President's Budget called for additional increases in mandatory CCDF funds in future years, reaching an annual funding level of $5.917 billion by FY2024.",
"The FY2015 President's Budget called for a reauthorization of the mandatory and discretionary CCDF funding streams, with the following broad principles for reform:\nstrengthen health and safety standards and monitoring of child care providers, improve the quality of early childhood and afterschool settings, serve more low-income children in high-quality programs, support parent employment and parental choice, promote continuity of care, strengthen program integrity and accountability, and improve coordination and alignment across early childhood programs.",
"",
"On January 17, 2014, President Obama signed into law the Consolidated Appropriations Act, 2014 ( H.R. 3547 , P.L. 113-76 ), which provided $2.360 billion in discretionary CCDBG funding for FY2014. The final operating level for FY2014 was later reduced to $2.358 billion as a result of HHS transfers. The final discretionary operating level for FY2014 represents an increase of roughly $153 million (+7%) from the FY2013 post-sequester funding level of $2.206 billion. The FY2014 appropriations law retained set-asides within the CCDBG for certain quality activities, including activities to improve the quality of care for infants and toddlers. The law also reserved nearly $1 million for a competitive grant to operate a national toll-free hotline and website designed to provide consumer education and support to parents looking for child care in their communities. Funding for such a hotline has been provided (in one form or another) in every year since FY2000, with the exception of FY2011.\nPrior to the enactment of P.L. 113-76 , prorated FY2014 funding for the discretionary CCDBG was provided by two short-term continuing resolutions ( P.L. 113-46 and P.L. 113-73 ). Notably, however, Congress did not enact an FY2014 continuing resolution (CR) prior to the start of the fiscal year on October 1, 2013. This resulted in a funding gap and shutdown of the federal government that lasted until the first CR was signed into law on October 17, 2013. Anticipating the possibility of a funding gap, the Acting Assistant Secretary for Children and Families at HHS released a letter to state child care officials, clarifying that unspent CCDF funds from prior years would remain available for expenditure in accordance with existing obligation and liquidation timeframes. The letter also indicated that state matching and maintenance-of-effort funds spent on child care during a potential funding gap would likely count toward CCDF requirements once an FY2014 appropriation was provided, unless specified otherwise by Congress.\nBefore the start of the fiscal year, the Senate Appropriations Committee approved an FY2014 appropriations bill ( S. 1284 , S.Rept. 113-71 ) for the Departments of Labor, HHS, Education, and Related Agencies (L-HHS-ED) on July 11, 2013. The L-HHS-ED bill provides annual discretionary funding for the CCDBG. The Senate Committee-reported bill proposed $2.500 billion in discretionary CCDBG funds for FY2014. The House Appropriations Committee did not take action on an FY2014 L-HHS-ED appropriations bill prior to the start of the fiscal year.",
"Like discretionary CCDBG funding, mandatory child care funds were also subject to a funding gap at the beginning of FY2014. However, subsequent CRs ( P.L. 113-46 and P.L. 113-73 ) and the full-year consolidated appropriations act ( P.L. 113-76 ) ultimately extended mandatory child care funding at $2.917 billion through September 30, 2014.",
"",
"According to HHS, the FY2013 operating level for the discretionary CCDBG was $2.206 billion. This amount was $73 million less than the FY2012 funding level of $2.278 billion. The FY2013 operating level reflected amounts provided in the final FY2013 appropriations law ( P.L. 113-6 ), an across-the-board rescission of 0.2% required by Section 3004 of the final FY2013 appropriations law (as interpreted by the Office of Management and Budget (OMB)), reductions required by the sequestration ordered on March 1, and any transfers or reprogramming of funds pursuant to the authority of the HHS Secretary.\n\"Sequestration\" is an automatic across-the-board spending reduction process under which budgetary resources are permanently canceled to enforce budget policy goals. Under the Budget Control Act of 2011 ( P.L. 112-25 ), OMB was directed to implement a sequestration of FY2013 funding to enforce certain deficit reduction goals. The sequestration was originally scheduled to occur on January 2, 2013, but was postponed by the American Taxpayer Relief Act ( P.L. 112-240 ). OMB ultimately issued the sequester order on March 1.\nBefore the passage of the first CR, both the House and Senate had initiated the FY2013 L-HHS-ED appropriations process. On July 18, 2012, the House Appropriations L-HHS-ED Subcommittee approved a bill for full committee consideration. As passed by the subcommittee, the bill would have provided $2.303 billion in discretionary CCDBG in FY2013. However, the bill was not taken up by the full committee. Meanwhile, on June 14, 2012, prior to action in the House, the Senate Appropriations Committee reported a bill to provide full-year FY2013 L-HHS-ED appropriations ( S. 3295 , S.Rept. 112-176 ). This bill would have provided $2.438 billion in discretionary CCDBG funds for FY2013. The Senate Appropriations Committee-reported bill included a new reservation of $90 million for activities to improve the quality of the early childhood care and education workforce.",
"For FY2013, the authorization and appropriations for mandatory child care were extended via two temporary extensions: P.L. 112-175 extended funding through March 27, 2013, and P.L. 113-6 extended funding through September 30, 2013. Both extensions maintained mandatory child care funding at $2.917 billion, the same amount the program has received annually since FY2006. Unlike discretionary CCDBG funds, mandatory child care funds are exempt from sequestration.",
"In FY2009, in addition to $2.127 billion in discretionary CCDBG funds provided by the FY2009 Omnibus Appropriations Act ( P.L. 111-8 ), the CCDBG received a further $2.0 billion in discretionary funds from the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). The ARRA was signed into law by President Obama on February 17, 2009. The ARRA specified that the CCDBG funds should be used to supplement, not supplant, state general revenue spending on child care assistance for low-income families. The ARRA also specified that a sum of approximately $255 million be reserved, out of the total appropriated to CCDBG, for activities designed to (1) provide comprehensive consumer education to parents and the public, (2) increase parental choice, and (3) improve quality and availability of child care (such as resource and referral services). This sum augmented the amount that states were already required by law to use for such activities (not less than 4% of the total amount received by each state). Of the $255 million, nearly $94 million was reserved for activities designed to improve the quality of infant and toddler care.\nCCDF funding appropriated in the ARRA was made available for obligation by HHS through the end of FY2010. However, HHS opted to provide states with their full allocations in FY2009, nearly doubling discretionary CCDF allotments to states for that fiscal year. (The Appendix includes state-by-state funding allocations from both the FY2009 Omnibus and the ARRA in Table A-1 .) CCDF grantees were required to obligate, or commit, their ARRA funds by the end of FY2010 (September 30, 2010), but had until the end of FY2011 (September 30, 2011) to expend their ARRA awards. HHS reported that states and territories had spent roughly 95% of their ARRA allocations as of June 30, 2011.\nStates reported spending the majority of CCDF ARRA funding on direct services (roughly 81% as of June 2011). For instance, states used these funds to lower parental co-payments, increase payment rates to child care providers, expand income eligibility thresholds, and add or extend eligibility to parents searching for jobs. Some states also reported using ARRA funds to avoid, shorten, or eliminate waiting lists for eligible children. According to HHS, cumulative state spending on direct services for children (using ARRA funds) was sufficient to provide services for an estimated 336,000 children. (This estimate includes both children who were already receiving subsidies—but who may have lost their subsidies in the absence of ARRA—and new children who were added to the caseload with ARRA funds.) In addition to spending on direct services, states used ARRA funds to expand investments in quality activities. For instance, states used ARRA funds to create or expand Quality Rating and Improvement Systems, support programs targeted to infants and toddlers, and improve state and local health and safety standards.",
"Beginning in FY1997, the treatment of CCDBG funding in the appropriations process was changed to reflect states' actual obligation of money for the program. Prior to FY1997, the funds appropriated for the CCDBG only became available for obligation by the states in the last month of the year in which they were appropriated. As a result, most of a given year's appropriation was actually obligated during the next fiscal year. With the enactment of the FY1997 appropriations law, that practice was changed so that the CCDBG was officially advance funded by an entire year. In other words, the FY1997 appropriation became available for obligation at the beginning of FY1998 (rather than the end of FY1997). As a result of this change, only $19 million was appropriated in FY1997 specifically for FY1997; this amount was added to funds previously appropriated and available for obligation at the end of FY1996. The bulk of the FY1997 appropriation—$937 million—was to become available in FY1998. This practice of advance funding continued in FY1999-FY2001, and is shown in Table 1 , which displays discretionary and mandatory funds appropriated to the CCDF for FY1997-FY2014.",
"",
"Discretionary CCDBG funds are allocated among states according to a formula that is based on each state's share of children under age five, the state's share of children receiving free or reduced-price lunches, and state per capita income. Statute requires that 0.5% of appropriated funds be reserved for the territories, and between 1% and 2% be reserved for payments to Indian tribes and tribal organizations. In addition, regulations allow HHS to reserve up to 0.25% for the provision of technical assistance. States are not required to match these discretionary funds. Funds must be obligated in the year they are received or in the subsequent fiscal year, and the law authorizes the Secretary to reallocate unused funds. Table 2 displays the FY2014 discretionary CCDBG allocations.",
"Federal law requires the Secretary of HHS to reserve between 1% and 2% of mandatory funds for payments to Indian tribes and tribal organizations. In addition, federal regulations allow HHS to reserve up to 0.25% for the provision of technical assistance. Once these amounts have been reserved, the remaining mandatory funds are allocated to states in two components.\nFirst, each state receives a fixed amount each year, equal to the funding received by the state under the child care programs previously authorized under AFDC in FY1994 or FY1995, or the average of FY1992-FY1994, whichever is greater. This amount equals $1.2 billion each year, and is sometimes referred to as \"guaranteed mandatory\" funds. No state match is required for these funds, which may remain available for expenditure by states with no fiscal year limitation.\nSecond, remaining mandatory funds (after distribution of the \"guaranteed\" portion) are allocated to states according to each state's share of children under age 13. States must meet maintenance-of-effort and matching requirements to receive these funds. Specifically, states must spend all of their \"guaranteed\" federal entitlement funds for child care described above, plus 100% of the amount they spent of their own state funds in FY1994 or FY1995, whichever is higher, under the previous AFDC-related child care programs. Further, states must provide matching funds at the Medicaid matching rate to receive these additional entitlement funds for child care. If the Secretary determines that a state will not spend its entire allotment for a given fiscal year, then the unused amounts may be redistributed among other states according to those states' shares of children under age 13. Table 2 displays the FY2014 CCDF allocations for both the \"guaranteed\" mandatory and the federal share of mandatory matching.",
"In addition to amounts provided to states specifically for CCDF, states may also transfer up to 30% of their TANF block grant allotment to the CCDF. Transferred funds must be spent according to the CCDBG Act rules. The net transfer from the FY2013 TANF allotment to the CCDF totaled nearly $1.4 billion (representing roughly 8% of the FY2013 TANF allotment). Nothing precludes a state from using TANF funds for child care services without formally transferring them to the CCDF, in which case the CCDBG Act rules do not necessarily apply. HHS has reported that in FY2013, states spent about $1.1 billion in federal TANF money on child care within the TANF program. (In addition, states reported spending $2.5 billion in FY2013 on child care through state TANF and separate state program (SSP) MOE funds.)",
"The Secretary must coordinate child care activities within HHS, and, to the extent practicable, with similar activities in other federal agencies. The Secretary is also required to publish a list of child care standards every three years, and to provide technical assistance to states. The Secretary must monitor state compliance with the statute and state plans, and must establish procedures for receiving and assessing complaints against a state.\nUpon finding that a state is out of compliance with either the statute, regulation, or state plan, the Secretary is authorized to require that the state reimburse the federal government for any misspent funds, or to withhold the amount from the state's CCDF allotment for the next fiscal year, or to take a combination of these steps.\nStates also must arrange for independent audits of their programs, and must repay the federal government for any funds that are found to have been misspent, or the Secretary may offset these amounts against future payments due to the state. In addition, states are now required to complete a case review every three years to check for improperly authorized payments. This new mandate is tied to \" State Error Rate Reporting \" requirements added to CCDF regulations in 2007.",
"In September 2010, the Government Accountability Office (GAO) released a report on fraud in five state child care assistance programs. GAO investigators posing as parents and child care providers successfully billed for $11,702 in child care assistance for fictitious children. In addition, GAO examined closed case studies of fraud and abuse and interviewed parents waitlisted for child care assistance. GAO concluded that the five states under investigation lacked controls over billing and child care assistance processes when dealing with unregulated providers, leaving the programs vulnerable to fraud and abuse. However, GAO also noted that these results cannot be generalized beyond the five states included in the investigation or beyond unregulated child care providers. According to HHS administrative data, unregulated child care providers constituted roughly 19% of all providers receiving CCDF support in FY2010.\nIn August 2010, prior to the release of the GAO report, HHS issued guidance regarding program integrity and financial accountability under CCDF. The program instruction provided state lead agencies with recommendations and resources for strengthening program integrity. It covered topics such as the verification and documentation of child and family eligibility, mechanisms for monitoring child care providers, and processes for recovering payments resulting from fraud. The program instruction also highlighted state responsibilities in conducting case records reviews to detect and reduce errors associated with eligibility determination, pursuant to the new regulation on state error rate reporting issued by HHS in September 2007.",
"Following the enactment of the Improper Payment Information Act of 2002 ( P.L. 107-300 ), the Office of Management and Budget (OMB) identified CCDF as a program at risk of significant improper payments. As with other \"high risk\" programs, HHS was required to complete erroneous payment risk assessments for CCDF every three years. HHS took a number of steps to respond to this mandate, culminating in the publication of new regulations, effective October 1, 2007, on state requirements for error rate reporting.\nThe new regulations specify that states must calculate, prepare, and submit to HHS a report of errors occurring in the administration of CCDF grant funds. In this report, states must establish target error rates (i.e., goals for reducing future errors) and discuss strategies for reducing error rates. In addition, states must report on\nstate error rates (defined as the percentage of cases with an error and expressed as the total number of cases with an error compared to the total number of cases); percentage of cases with an improper payment (expressed as the total number of cases with an improper payment compared to the total number of cases); percentage of improper payments (expressed as the total amount of improper payments in the sample compared to the total dollar amount of payments made in the sample); average amount of improper payment; and estimated annual amount of improper payments.",
"The CCDF error rate methodology requires that states conduct a comprehensive review of a random sample of case records to determine whether child care subsidies were properly authorized to eligible families. The methodology focuses on administrative errors and improper authorizations for payment made during the client eligibility determination process. States must conduct these reviews and report their findings to HHS once per every three-year reporting cycle. States are required to provide federal staff with access to, and the opportunity to participate and provide oversight in, case reviews and calculations of error rates.\nHHS uses a three-year rotation for measuring CCDF improper authorizations for payments. A stratified random sampling method was used for selecting states, with approximately one-third of the total of 52 states (50 states plus the District of Columbia and Puerto Rico) selected to participate in each year of a three-year cycle.\nCCDF error rate data are released annually by HHS in the department's Agency Financial Reports . Annual error rates actually represent three-year weighted national averages comprised of both over- and under-authorizations for payment. Most recently, HHS reported an FY2013 error rate of 5.9% ($306 million), down from 9.2% ($474 million) for FY2012. When netting out over- and under-payments, the net error rate for FY2013 was 5.0% ($260 million). Notably, the amount of improper authorizations for payment is not the same as actual improper payments rendered . HHS has indicated that, in general, the amount of actual improper payments rendered is about 17% lower, on average, than improper authorizations.",
"Regulations state that improper payments identified during the case reviews are subject to federal disallowance procedures for misspent funds (that is, funds identified as having been improperly spent will be disallowed for the purposes of federal reimbursement). Improperly spent funds are subject to disallowance regardless of whether the state pursues recovery of such funds. Federal rules require states to recover improper child care payments that occur as the result of fraud. However, if the improper payment was not the result of fraud, as in cases of administrative error, federal rules give states discretion as to whether or not to recover misspent funds. Recovered funds may be used for activities specified in approved state plans, provided funds are recovered within the applicable obligation period. If, however, funds are not recovered until after the end of the applicable obligation period, recoveries must be returned to the federal government.",
"In 2007, HHS published a final rule (effective October 1, 2007) that revised existing CCDF regulations on state match requirements. The purpose of the new rule was to increase state flexibility in making expenditures toward state CCDF match requirements. To this end, the rule amended requirements related to the use of public pre-kindergarten and privately donated funds.\nFirst, the final rule increased the amount of public pre-kindergarten expenditures that may be used as state match for CCDF. Previous regulations allowed that no more than 20% of a state's match requirement be fulfilled by public pre-kindergarten expenditures. Under the final rule, up to 30% of a state's CCDF match may come from public pre-kindergarten expenditures.\nSecond, the rule amended requirements related to the use of privately donated funds. Prior to the new rule, CCDF regulations specified that privately donated funds would only qualify as state match for CCDF if they had been transferred to (or were under the control of) the state's lead agency or a single entity designated by the state to receive donated funds. The new rule amended previous regulations to permit states to designate multiple public and/or private entities as eligible to receive donated funds. However, the rule required that donated funds be certified by both (1) the state's lead agency for CCDF and (2) either the donor or the entity designated by the state to receive privately donated funds, as appropriate. In addition, the final rule maintained previous requirements related to private donations, which specify that such funds (1) must be donated without any restriction that would require their use for a specific individual, organization, facility, or institution; (2) may not revert to the donor's facility or use; (3) may not be used to match other federal funds; and (4) shall be subject to audit.",
"Federal law specifies a set of data reporting requirements for states and territories administering CCDF programs. States and territories must submit quarterly reports to HHS with disaggregated data on children and families receiving CCDF assistance; aggregated data must be submitted to HHS annually. Federal law does not impose the same data reporting requirements on tribes and tribal organizations. However, federal regulations do require participating tribal lead agencies to submit aggregated data to HHS on an annual basis. Separately, the law also requires the Secretary of HHS to submit a report to Congress once every two years. This report is expected to contain a summary and analysis of the data submitted to HHS by lead agencies (including tribal lead agencies), as well as recommendations for Congress concerning efforts that should be undertaken to improve the access of the public to quality and affordable child care. The most recently released report to Congress is for both FY2006 and FY2007. Select program data and statistics for states and territories are available for FY1998 through FY2010 (preliminary) on the HHS website.\nFederal law specifically requires states and territories to collect, on a monthly basis, the following information on each family unit receiving assistance: family income; county of residence; gender, race, and age of children receiving assistance; whether the family includes only one parent; sources of family income, separately identified and including amounts; number of months the family has received benefits; the type of child care received; whether the child care provider was a relative; the cost of child care; and the average hours per week of care. States and territories report these disaggregated data to HHS on a monthly or quarterly basis (at grantee option), using the ACF-801 data collection form.\nHHS recently revised the ACF-801 to incorporate new data elements on child care providers, including unique provider identification numbers, quality rating scores, accreditation status, applicability of state or local pre-kindergarten standards, and other state quality measures. The revised data collection form was released for two rounds of public comments in 2011, before being finalized in spring 2012. The new form became mandatory for all states and territories beginning in October 2013.\nSeparately, federal law requires states and territories to submit aggregated data to HHS every 12 months. The law requires these aggregated data reports to include the number of child care providers that receive funding under this program, separately identified by type; the monthly cost of child care services, and the portion that is subsidized by this program, identified by type of care; the number of payments made by the state through vouchers, contracts, cash, and disregards under public benefit programs, identified by type of child care provided; the manner in which consumer education information was provided and the number of parents to whom it was provided; and the total unduplicated number of children and families served by the program. States and territories submit these aggregated data to HHS annually on the ACF-800 form, which is due to HHS by December 31 st each year.",
"Under the CCDBG Act, religious providers may receive assistance on the same basis as nonsectarian providers. However, religious providers may use funds for construction assistance, which is generally prohibited for other providers, to the extent such efforts are deemed necessary to bring facilities into compliance with health and safety requirements. Use of funds for religious activities, including sectarian worship or instruction, is generally prohibited under the CCDBG Act. However, this prohibition does not apply to funds received by child care providers in the form of child care certificates, if such sectarian child care services are freely chosen by the parent.\nChild care providers that receive CCDF funding may not discriminate in their admissions policy against a child on the basis of religion, with the exceptions of family child care providers (i.e., individuals who are the sole caregiver for children in a private home) or providers who receive assistance through child care certificates. However, sectarian providers may reserve unsubsidized slots for children whose families regularly participate in their organization's activities, unless 80% or more of their operating budget comes from federal or state funds, including child care certificates.\nIn their employment practices, child care providers receiving assistance under the act may not discriminate on the basis of religion if the employee's primary responsibility is working directly with children in the delivery of child care services. However, in considering two or more qualified candidates, sectarian providers may select an individual who regularly participates in their organization's activities. In addition, sectarian organizations may require employees to adhere to their religious tenets or teachings and to rules forbidding the use of drugs or alcohol, unless 80% or more of their operating budget comes from federal or state funds, including child care certificates.\nThe welfare reform law of 1996 ( P.L. 104-193 ) included a section on services provided by charitable, religious or private organizations under the TANF program. This provision also applies to child care services funded under TANF. The provision, commonly referred to as \"charitable choice,\" is intended to allow states to provide services through charitable and religious organizations, without impairing the religious character of these organizations or the religious freedom of individuals who participate in the programs.",
"The Secretary is required by law to reserve between 1% and 2% of all child care funds (both discretionary and mandatory), for payments to Indian tribes and tribal organizations. The Secretary is required to allocate among other tribes and organizations any funds that an Indian tribe or tribal organization does not use in a manner consistent with the statute.\nIndian tribes and tribal organizations are required to submit applications to receive these reserved funds. Applications must show that the organization seeking funds will coordinate with the lead agency in the state, that activities will benefit Indian children on reservations, and that reports and audits will be prepared. The Secretary, in consultation with the tribes and tribal organizations, bears the responsibility for developing minimum child care standards that reflect tribal needs and available resources that will apply in lieu of licensing and regulatory requirements otherwise applicable under state or local law.\nNotably, while the CCDBG Act generally prohibits use of funds for construction or renovation of facilities, the law does allow Indian tribes and tribal organizations to submit a request to the Secretary to use funds for these purposes. The Secretary may approve the request after a determination that adequate facilities are not otherwise available and that the lack of such facilities will inhibit the operation of child care programs in the future. The Secretary may not approve the request if it will reduce the level of child care services provided from the level provided by the tribe or organization in the previous year.",
"A growing number of states use CCDF quality funds to create or support Quality Rating and Improvement Systems (QRIS). These systems are designed to assess, report, and improve the quality of early childhood programs. A QRIS can be used to rate providers against a set of measures selected to determine program quality. Data collected by a QRIS may be used to hold programs accountable for the quality of care they provide, to target technical assistance to programs in need of support, and to increase parental understanding of the quality of different child care programs. These systems often use simple three- or four-star rating scales to denote program quality on specific measures, such as child/staff ratios and staff credentials.\nWhile the key components (and benchmarks) of quality measured by QRIS can vary across states, five common elements of these systems include the following:\nStandards: Research-based indicators of quality in early childhood settings (e.g., health and safety requirements, staff qualifications, staff-child ratios). Standards are often linked to licensing and accreditation requirements. Accountability: Regular inspections are usually completed by trained observers. Research-based assessments such as an Environment Rating Scale (ERS) and the Classroom Assessment Scoring System (CLASS) may be used. Program Support: Providers may receive training, mentoring, or other forms of technical and financial assistance to encourage providers to participate in the rating system and to help their programs achieve higher levels of quality. Parent Education: Systems typically use simple rating scales (e.g., three- or four-star scales or a point-based scale) that are easily understood by parents seeking information on the quality of child care programs in their communities. Incentives: Financial incentives may be used to encourage providers to achieve higher levels of quality. These may include tiered subsidy reimbursement (i.e., paying a higher reimbursement rate to providers meeting higher standards of care), professional development grants to increase staff training and qualifications, and tax credits for parents who enroll children in rated programs.",
"The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ), appropriated $2.0 billion in discretionary child care funds in FY2009. Although the ARRA made these funds available for obligation through the end of FY2010, HHS opted to provide states with their full allocations from the ARRA in FY2009, nearly doubling discretionary CCDF allotments to states for that fiscal year. Table A-1 displays FY2009 CCDF allocations from all federal funding sources, including the funds allocated to states from the ARRA.",
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{
"question": [
"What were Congress and the Obama Administration both interested in?",
"What bill did the House approve?",
"What effect would this bill take?",
"Which bill does this bill amend?",
"What is the current situation for the proposed rule issued by HHS?",
"What are discretionary child care funds subject to?",
"What was the result for Congress' failure to enact FY2014 appropriations prior to the start of the fiscal year?",
"What were the subsequent remedies?",
"How was the funding provided for CCDBG reduced?",
"How is the funding level compared to the discretionary CCDBG's post-sequester FY2013 operating level and the FY2014 President's Budget request?",
"How were mandatory child care funds appropriated between 1997 and 2006?",
"What was the effect of the budget reconciliation?",
"How was mandatory child care funding maintained at the same level?",
"What was Congress' action towards mandatory child care funding?",
"How was mandatory child care funding restored despite the fact that Congress did not extend it?"
],
"summary": [
"In recent years, both Congress and the Obama Administration have demonstrated an interest in reauthorizing or otherwise reforming the CCDF.",
"On September 15, 2014, the House approved, by voice vote, the Child Care and Development Block Grant Act of 2014 (S. 1086, as amended).",
"This bill would reauthorize the CCDBG Act through FY2020.",
"It is an amended version of the CCDBG reauthorization bill (S. 1086, S.Rept. 113-138) that was approved by the Senate last March, by a vote of 96-2.",
"Previously, in May 2013, HHS issued a proposed rule intended to overhaul existing regulations on the CCDF. A final rule has not yet been published.",
"Discretionary child care funds are subject to the annual appropriations process.",
"Congress did not enact FY2014 appropriations prior to the start of the fiscal year on October 1, 2013. This resulted in a funding gap and 16-day shutdown of the federal government.",
"Subsequently, two short-term continuing resolutions (P.L. 113-46, P.L. 113-73) provided discretionary funding for the CCDBG until January 17, when the President signed into law a full-year consolidated appropriations act (P.L. 113-76).",
"This law provided $2.360 billion in discretionary CCDBG funding for FY2014, which was reduced to $2.358 billion due to transfers within HHS.",
"This funding level is about 7% more than the discretionary CCDBG's post-sequester FY2013 operating level of $2.206 billion and nearly 5% less than the FY2014 President's Budget request of $2.478 billion.",
"Mandatory child care funds are not typically included in annual appropriation bills. Mandatory funds were directly appropriated (or pre-appropriated) for fiscal years 1997 through 2002 by the 1996 welfare reform law (P.L. 104-193), which created the mandatory component of the CCDF. Temporary extensions provided mandatory CCDF funding into FY2006.",
"On February 8, 2006, a budget reconciliation bill was enacted into law (P.L. 109-171), increasing mandatory child care funding by $1 billion over five years (for a total of $2.917 billion for each of FY2006-FY2010).",
"The authorization and pre-appropriations for mandatory child care funding were set to expire at the end of FY2010, but a series of six short-term extensions maintained mandatory child care funding at the same level ($2.917 billion) for FY2011-FY2013.",
"Congress did not extend mandatory child care funding prior to the 16-day federal shutdown at the beginning of FY2014.",
"However, mandatory child care funding has since been restored at the $2.917 billion level via temporary extensions, the most recent of which (in P.L. 113-76) provides mandatory child care funding through the end of FY2014."
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CRS_R44460
|
{
"title": [
"",
"Introduction",
"Administration Actions",
"Supplemental Request",
"Reprogrammings",
"Uses of Reprogrammed Funds",
"Congressional Actions",
"House Bill (H.R. 5243)",
"Senate Bill (H.R. 2577)",
"Conference Report (H.Rept. 114-640)",
"FY2017 Continuing Resolution Vehicle (H.R. 5325)",
"For More Information"
],
"paragraphs": [
"",
"In its second session, the 114 th Congress has considered whether and how to provide funds to control the spread of the Zika virus throughout the Americas. Zika infection, primarily spread by Aedes mosquitoes and sexual contact, has been linked to severe birth defects and other health concerns. Local transmission of the Zika virus has occurred in American Samoa, Puerto Rico, the U.S. Virgin Islands, and south Florida. Travel-associated cases of Zika infection have been reported in nearly every state, with the largest numbers of cases reported in California, Florida, New York, and Texas.\nFederal efforts to address the outbreak include research on the infection and its effects, mosquito control measures, efforts to develop a vaccine, and public service messaging about preventing infection. The public health focus, both domestically and elsewhere in the Americas, is to protect pregnant women from infection and, thereby, to prevent potentially severe birth defects. Administration officials and some in Congress are concerned about the resources needed to prevent the spread of Zika infections as the number of imported cases in the United States grows.\nThis report discusses the Administration's actions on Zika response funding, including its request for FY2016 supplemental appropriations for the Zika response, and reprogramming of existing funds to pay for response activities. It also discusses the supplemental appropriations measures for Zika response that were considered by Congress, and the funding ultimately enacted. A detailed summary of the Administration's supplemental request is provided in Appendix A . Information about unobligated Ebola supplemental funds is presented in Appendix B . Appendix C provides a glossary of acronyms used in tables in this report.\nThis report incorporates all information from CRS Report R44549, Supplemental Appropriations for Zika Response: The FY2016 Conference Agreement in Brief , with no substantive changes. That CRS report is no longer available.",
"",
"On February 22, 2016, the Obama Administration requested more than $1.89 billion in supplemental funding to respond to the Zika outbreak. The Administration called for all these funds to be provided as an emergency requirement, which would therefore effectively exempt them from the discretionary spending limits. The emergency request included $1.509 billion for HHS, $335 million for the U.S. Agency for International Development (USAID), and $41 million for the Department of State. The request also sought authority to transfer some of those supplemental emergency appropriations to other federal agencies such as the Department of Defense, the Environmental Protection Agency, and the U.S. Department of Agriculture, to allow greater flexibility as circumstances change. It also sought to provide HHS, the Department of State, and USAID with authority for direct hiring and personal services contracting, not limited to positions related to Zika response efforts. A detailed summary of the supplemental request is provided in Appendix A of this CRS report.",
"A major theme in congressional debates was whether unobligated (generally, uncommitted for expenditure) FY2015 funds that had been provided to respond to the Ebola virus outbreak should be used to fund part of the Zika response, either temporarily or permanently. On April 6, 2016, the White House Office of Management and Budget (OMB) and the Secretary of HHS announced that they had identified $589 million—$510 million of it from \"existing Ebola resources within the Department of Health and Human Services and Department of State/USAID\"—that could quickly be redirected and spent on immediate efforts to control and respond to the spread of the Zika virus in the Americas.\nAs part of the reprogramming, on April 8, 2016, USAID notified Congress of its intent to redirect $295 million of the $510 million from FY2015 unobligated Ebola Economic Support Funds (ESF) to be used for Zika response and other purposes. Of that amount, USAID transferred $158 million to the Centers for Disease Control and Prevention (CDC), including $78 million for international Zika response efforts and $80 million for Ebola response. The remaining $137 million, also from FY2015 ESF, was to be redirected to fund various USAID Zika response activities.\nOn August 11, 2016, the HHS Secretary notified Congress of her intent to redirect an additional $81 million in unobligated HHS funds for Zika vaccine development activities. Of this amount, $34 million was drawn from accounts at the National Institutes of Health (NIH), and $47 million in total was drawn from unspecified accounts at three other HHS agencies: the Administration for Children and Families (ACF), the Centers for Medicare and Medicaid Services (CMS), and the Substance Abuse and Mental Health Services Administration (SAMHSA).",
"Information about the use of reprogrammed funds is limited, and is drawn largely from two letters sent by Sylvia M. Burwell, the HHS Secretary, to Congress.\nAccording to HHS, out of the $589 million identified for reprogramming on April 6, $374 million was repurposed for domestic Zika control activities. HHS reports that almost all of this funding ($354 million) was distributed to three HHS agencies as follows:\n$222 million to CDC for various activities including field staff, state response teams, Zika virus testing, tracking of pregnant women who were infected with Zika, and grants for mosquito control and other Zika prevention activities. $47 million to NIH for Zika vaccine development, including clinical trials on the leading Zika vaccine candidate. $85 million to the Biomedical Advanced Research and Development Authority (BARDA) for private sector development of Zika vaccines, treatments, and technologies to protect the blood supply, and other countermeasures.\nFrom the second reprogramming in August, $34 million (i.e., the amount drawn from other NIH accounts) is to be used by NIH to continue clinical trials on its lead Zika vaccine candidate. The additional $47 million is to be used by BARDA for continued private sector Zika vaccine development.",
"Between May and September 2016, supplemental funding for Zika response received floor consideration in both the House and the Senate. Congress resolved its consideration of Zika funding on September 28, 2016, when the Senate and House passed H.R. 5325 , the \"Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Response and Preparedness Act.'' This vehicle incorporated appropriations for Military Construction, Veterans Affairs, and Related Agencies (Division A); $1.1 billion in FY2016 Zika supplemental funding (Division B); a short-term continuing resolution (CR) for FY2017 that would fund remaining government operations through December 9, 2016 (Division C); and a number of rescissions (Division D). The President signed the bill on September 29, 2016.\nCongress considered and advanced several Zika supplemental funding proposals before passing H.R. 5325. This section presents the key legislative proposals, including the following:\nH.R. 5243 , the Zika Response Appropriations Act, 2016, as passed in the House on May 18, 2016; H.R. 2577 , Division B, the Zika Response Appropriations Act, 2016 as passed in the Senate on May 19, 2016; H.Rept. 114-640 , the conference report filed on June 22, 2016, which was adopted in the House but not the Senate, and which included the Zika Response and Preparedness Appropriations Act, 2016 (Division B) and associated proposed rescissions (Division D). (Division A, Military Construction and Veterans Affairs and Related Agencies Appropriations for FY2017, is not discussed in this CRS report. Also, Division C, the Environmental Protection Agency's regulation of water pollution and pesticides, is not discussed this CRS report. ); and H.R. 5325 , as passed by both chambers on September 28, 2016, specifically Zika funding in Division B, and certain rescissions in Division D. This CRS report does not discuss Military Construction, Veterans Affairs, and Related Agencies Appropriations for FY2017 (Division A) or the short-term CR for FY2017 (Division C).\nThis CRS report does not track proposals for Zika response spending in FY2017 regular appropriations bills, which may still receive congressional consideration.\nTable 1 , below, compares amounts for response to the Zika outbreak proposed in the Administration's supplemental request, and in each of the four legislative vehicles listed above. Table 2 compares selected provisions in these measures that affect the timing, purpose, and use of the funds, or provide other related authorities. These tables incorporate Tables 1 and 2 from CRS Report R44549, Supplemental Appropriations for Zika Response: The FY2016 Conference Agreement in Brief , with no substantive changes.",
"On May 16, 2016, the chairman of the House Appropriations Committee introduced the Zika Response Appropriations Act, 2016 ( H.R. 5243 ). The bill would have provided $622.1 million, to be available until September 30, 2016, for domestic and international Zika response efforts. Nearly half of the funds were designated as an emergency requirement. The bill also included rescissions of certain Ebola-related appropriations and the HHS nonrecurring expenses fund. The bill provided that its appropriations would be subject to the same requirements for funds that applied to the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ). This would include any restrictions on the use of funds that were contained therein, such as the applicable prohibitions on the use of funds for abortions. The House passed the measure on May 18, 2016, without amendment.",
"Senate action on Zika funding initially occurred as an amendment to the FY2017 Military Construction-Veterans Affairs and Transportation-Housing and Urban Development appropriations bills. The texts of these bills were combined for the purposes of initial consideration in the Senate and offered as a substitute amendment to H.R. 2577 . On May 19, 2016, the Senate adopted H.R. 2577 , as earlier amended to include $1.1 billion in funds for Zika response and preparedness. These Zika funds would generally be available until September 30, 2017, with the exception of Global Health Funds, which would be available until expended. The bill included a smaller rescission of Ebola-related appropriations than the House bill, and no rescissions affecting HHS accounts. Like the House bill above, provisions in H.R. 2577 would be subject to the same requirements for funds that applied to the Consolidated Appropriations Act, 2016 (P.L. 114-113).",
"On June 22, 2016, Harold Rogers, chairman of the House Appropriations Committee, filed a conference agreement. (See the \"conference report,\" H.Rept. 114-640 , to accompany H.R. 2577 .) Division B of the conference agreement would have provided $1.1 billion in Zika response funding. Amounts to HHS and State/USAID accounts were somewhat similar to those in the Senate proposal. Like the House and Senate bills, provisions in the conference report would be subject to the same requirements for funds that applied to the Consolidated Appropriations Act, 2016, including applicable prohibitions on the use of funds for abortions. However, other aspects of the agreement generated some controversy. Two provisions received particular attention: one specifying the purposes of funding provided to the Social Services Block Grant (SSBG), and another rescinding certain funds provided by the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended).\nThe conference agreement (Division B) would have provided that the $95 million in SSBG funds were \"for health services provided by public health departments, hospitals, or reimbursed through public health plans.\" Some expressed concern that designating funds for only these specific entities could prevent states or territories from directing SSBG funds to other types of entities that offer family planning and women's health services, such as certain Planned Parenthood affiliated health centers. It is not clear whether public health departments or hospitals could have subcontracted with Planned Parenthood or other entities. Under the terms of the conference agreement, it might have been possible for some states or territories to provide these funds to Planned Parenthood affiliated health centers that are eligible providers in a public health plan, such as Medicaid. However, there are cases in which this would not be possible. For instance, Puerto Rico's International Planned Parenthood Federation affiliate, Profamilias, does not receive Medicaid funding.\nSeparately, the agreement (Division D) would have rescinded $750 million in budget authority, the majority of it from unspent funds in the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended) intended to establish health exchanges in the territories.\nThe conference agreement was agreed to by the House on June 23, 2016. On June 28, the Senate voted not to invoke cloture on the measure. Subsequent discussions among Members of Congress and the Administration did not yield an alternative agreement. The Administration sent a letter to congressional leaders on July 12, urging them to provide Zika supplemental funding, and citing examples of activities that could be affected without it. Some Members were concerned, however, that much of the funds reprogrammed by the Administration in April had not yet been obligated, and urged the Administration to make use of funds already available to it. On July 14, before adjourning for a seven-week recess, the Senate again voted not to invoke cloture on the conference agreement. On September 6, upon its return, the Senate voted a third time not to invoke cloture.",
"On September 22, 2016, the Senate voted to proceed to H.R. 5325, a legislative vehicle that was to be used to address a number of pending appropriations issues prior to the start of FY2017. That same day, Senator McConnell offered a substitute amendment ( S.Amdt. 5082 to H.R. 5325), titled the \"Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Response and Preparedness Act.\" It included Division B, which would provide $1.1 billion in FY2016 funding for Zika response. Division D of the amendment included rescissions, which are discussed below. On September 28, that substitute amendment was adopted by a voice vote, and the bill, as amended, was passed by the Senate, by a vote of 72-26. The House agreed to the Senate amendment later that same day, by a vote of 342-85. The President signed the bill on September 29, 2016.\nTitle I of Division B appropriates $933.0 million for HHS. Title II of Division B appropriates $175.1 million for the Department of State and USAID. Both amounts (and, therefore, the total) are identical to the funding levels in the conference report that accompanied H.R. 2577, though there are some differences in how these funds may be used.\nFor instance, Division B provides $75 million to the Public Health and Social Services Emergency Fund (PHSSEF) to reimburse Zika-related health care costs that are not otherwise covered by private insurance plans. This provision does not specify or limit the types of providers that may receive reimbursement. These funds are to be provided to states, territories, Indian Tribes, or Tribal Organizations with CDC-confirmed cases of the Zika virus or in locations where the CDC confirms that there is local transmission of the virus. Of the $75 million, not less than $60 million is to be reserved for territories with the highest rates of Zika transmission.\nProvisions in Division B are subject to the same requirements for funds that applied to the Consolidated Appropriations Act, 2016, including applicable prohibitions on the use of funds for abortions.\nAll of the funding in Division B is designated as an emergency requirement, and that division contains no rescissions offsetting the funding for the Zika response. Division D rescinds $400 million in budget authority, $231.9 million of which is designated as an emergency. Similar to the conference report accompanying H.R. 2577, Division D also rescinds unspent funds in the ACA intended to establish exchanges in the territories. However, this proposal rescinds a lesser amount of ACA funds than would the conference report—$168 million rather than $543 million of the original $1 billion ACA appropriation. It is unclear the extent to which these rescissions are directly related to Zika or other purposes.\nH.R. 5325, as passed, does not include provisions from the House-passed version of H.R.2577 that would have temporarily waived requirements of a Clean Water Act permit for discharges of pesticide used to control mosquitos or mosquito larvae for prevention or control of the Zika virus.\nAlthough the Zika response package in H.R. 5325 reportedly reflected a congressional agreement on this funding and associated provisions, the Senate voted twice on September 27 not to invoke cloture on the measure. Some Members expressed concern that other portions of the bill did not provide funding to address the contaminated water problem in Flint, Michigan. Subsequently, an agreement was reached to address assistance for Flint during congressional consideration of a different vehicle, a water resources authorization bill ( H.R. 5303 ). H.R. 5325 then passed in both chambers on September 28, 2016.",
"For more information about the Zika virus outbreak, see CRS Report R44595, Zika Virus in the Western Hemisphere: CRS Products .\nSee also the following web pages on the Zika outbreak:\nCenters for Disease Control and Prevention (CDC), https://www.cdc.gov/zika/ ; World Health Organization (WHO), http://www.who.int/topics/zika/en/ ; and Pan American Health Organization (PAHO), http://www.paho.org/hq/index.php?option=com_content&view=article&id=11585&Itemid=41688&lang=en .\nAppendix A. Summary of the Emergency Supplemental Appropriations Request for Zika Response Efforts\nThe following describes the Administration's February 2016 Zika emergency supplemental request components by agency.\nIt was reported on April 18 that the Administration submitted a revised Zika supplemental request to Congress, which would maintain departmental request totals, while redirecting some of the HHS funds requested for contingency use to vaccine research and development at the National Institutes of Health (NIH). Detailed information about this is not publicly available, and the following narrative does not reflect this revision.\nHealth and Human Services\nThe Administration's emergency supplemental appropriations request to respond to the Zika outbreak seeks for HHS a total of $1.509 billion. Each HHS agency request includes the statement that funds would be \"to prevent, prepare for, and respond to Zika virus, other vector-borne diseases, or other infectious diseases and related health outcomes, domestically and internationally....\" Most of the requested funds would support research, surveillance, vaccine and test development, and various domestic preparedness activities. A portion would support international response activities. The request proposes that all supplemental appropriations to HHS be designated as emergency spending, and remain available until expended.\nCenters for Disease Control and Prevention (CDC)\nA total of $828 million of the February 2016 request is for the CDC-Wide Activities and Program Support account. Proposed request language would, among other things, authorize the CDC Director to transfer funds between CDC accounts, and authorize funds to be used for real property acquisition and improvements to non-federal facilities. Funds would be used as follows:\nGrants and technical assistance to Puerto Rico and U.S. Territories —$225 million to, among other purposes, monitor pregnant women and establish a registry of women infected while pregnant; expand mosquito control activities; and enhance laboratory testing capacity. Domestic Response —$453 million to provide grants to southern and other U.S. states with Aedes mosquitoes for surveillance, improved test methods and testing capacity, public education and outreach, mosquito control measures in areas at risk, and additional federal and state response activities. International Response Activities —$150 million to expand the public health workforce, and enhance infectious disease surveillance and emergency response activities, in Zika-affected countries; and to support the laboratory network of the Pan American Health Organization (PAHO), the regional arm of the World Health Organization (WHO) for the Americas.\nPublic Health and Social Services Emergency Fund (PHSSEF)\nThe PHSSEF is a fund used by appropriators to provide the HHS Secretary with ongoing or one-time emergency funding, such as for the response to disease epidemics. The emergency supplemental request seeks $295 million for the PHSSEF for the following:\nseveral maternal and child health and home visitation programs for low-income pregnant women at risk of Zika infection, and families that have children born with birth defects related to Zika infection; several health care workforce assistance programs for Puerto Rico and other territories; and compensation for persons harmed by the use of tests or vaccines used under emergency authority.\nThe requested PHSSEF funds could, in consultation with OMB, be transferred to other agencies within HHS or across the federal government. The request stated that this transfer authority is to provide flexibility in response to changing needs. No congressional notification requirement is included.\nNational Institutes of Health (NIH)\nThe emergency supplemental request seeks $130 million for the NIH National Institute of Allergy and Infectious Diseases (NIAID) to expand research efforts to characterize the progression and effects of Zika infection and other vector-borne diseases, and to develop vaccines against them. Proposed request language would authorize the NIH Director to transfer funds between NIH accounts. No congressional notification requirement is included.\nFood and Drug Administration (FDA)\nThe emergency supplemental request seeks $10 million for FDA's role in reviewing the safety and effectiveness of medical countermeasures (such as test methods, vaccines, and treatments), and post-market monitoring of such countermeasures if and when they become available.\nMedicaid Funding for Territories\nThe emergency supplemental request would temporarily increase the federal matching rate for Medicaid in the territories. The territories operate Medicaid programs under different rules from those that apply to the 50 states and the District of Columbia. Federal Medicaid funding to the states and the District of Columbia is open-ended, but the territories receive capped annual allotments (i.e., the maximum amount of federal funds available in a year). In addition, the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended) provides the territories with additional federal Medicaid funding to use by September 30, 2019. The territories have a federal medical assistance percentage (FMAP) rate (i.e., federal matching rate) for Medicaid of 55%.\nThe supplemental request includes a provision that would increase the FMAP rate for the territories to 65% for one year beginning with the first day of the fiscal quarter following enactment. This increased FMAP rate would be available for all Medicaid expenditures, not limited to those provided to treat Zika infection. The federal funding for the increased FMAP rate would not count against the territories' annual federal spending caps or additional ACA funding. The Administration estimates this FMAP rate increase would cause federal Medicaid expenditures to grow by $246 million.\nThere is some question about how this provision would affect Puerto Rico if it were to exhaust its additional ACA funding prior to FY2019. Depending on the timing of enactment, Puerto Rico might not have access to its full annual Medicaid allotments or additional ACA funding for a portion of the time the provision would be in effect.\nRetroactive Reimbursement\nThe request proposes language that would allow funds provided in the act to be used to reimburse HHS accounts for Zika response expenses incurred prior to enactment.\nTransfer Authority\nThe request proposes language that would allow funds appropriated to HHS in the act to be transferred to other federal accounts, including the Department of Defense, the Environmental Protection Agency, and the Department of Agriculture, \"to prevent, prepare for, and respond to Zika virus, other vector-borne diseases, or other infectious diseases and related health outcomes, domestically and internationally....,\" following consultation with OMB. No congressional notification requirement is included.\nExpanded Definition of \"Security Countermeasure\"\nThe request proposes language that would allow the government to support the advanced development and procurement of medical countermeasures against Zika virus through Project BioShield. Currently, Project BioShield supports only countermeasures against specific chemical, biological, radiological, and nuclear terrorist threats. The proposed expansion is not limited to countermeasures against the Zika virus or vector-borne diseases, but rather is stated broadly as a \"countermeasure to diagnose, mitigate, prevent, or treat harm from any infectious disease that may pose a threat to the public health.\"\nInternational Assistance Programs\nThe Administration's February 2016 emergency supplemental appropriations request to respond to the Zika outbreak seeks for the Department of State and USAID a total of $376.1 million. This includes funds for control of the disease, prevention, surveillance, evacuating U.S. employees and American citizens, vaccine development, and diagnostic research, among other things. Specifically within the International Assistance section of the request is a request for transfer authority (without a requirement for congressional notification) with certain limitations, reimbursement authority, and hiring of personal services contractors, as well as authorization to use unobligated Ebola balances to combat Zika and other infectious diseases. Also worth noting is that, unlike HHS, funds for international assistance programs have varying periods of availability, as specified below.\nDepartment of State\nA total of $41.1 million is requested for the Department of State operations, multilateral assistance within International Organizations and Programs (IO&P), and international security assistance (nuclear research and techniques) as follows:\nDiplomatic and Consular Programs account (D&CP) —$14.6 million to remain available until September 30, 2017. Of this amount $8.4 million is to support the Office of Medical Services for medical support and possible evacuation under the Chief of Mission authority of at-risk U.S. employees in Zika-affected countries; and $6.2 million is to support regional coordination efforts and public diplomacy outreach, among other activities. Emergencies in the Diplomatic and Consular Service —$4 million to remain available until expended to support response efforts, including potential evacuation of U.S. citizens. Repatriation Loans Program —$1 million to remain available until expended to finance repatriation loans to U.S. citizens who may seek to leave Zika-affected areas or who have been exposed to or have contracted Zika. Nonproliferation, Anti-Terrorism, Demining and Related Programs (NADR) —$8 million to remain available until September 30, 2017, for additional voluntary U.S. contributions to the International Atomic Energy Agency (IAEA), an autonomous intergovernmental organization related to the United Nations that promotes the safe, secure, and peaceful use of nuclear technologies. Funds would support Zika research to develop and deploy nuclear techniques to help accelerate diagnosis, provide related specialized training, and to implement sterile insect projects to suppress mosquito populations. International Organizations and Programs (IO&P)— $13.5 million to remain available until September 30, 2017, to support Zika response actions taken by UNICEF, the Food and Agriculture Organization, the WHO, and PAHO.\nUSAID\nFor the U.S. Agency for International Development, the Administration is requesting $335 million to cover USAID's health programs and implementation expenses:\nUSAID Operating Expenses (OE )—$10 million to remain available until September 30, 2017, to support Zika response efforts. Global Health Programs (GHP) —$325 million to remain available until expended to prevent, treat, or respond to the Zika virus and related health concerns, other vector-borne diseases, or other infectious diseases. Multi-year funding commitments are requested to provide incentives for the development of global technologies such as vaccines, diagnostics equipment, and vector control innovations. Anticipated allocations include $100 million to implement vector management and control activities in Zika-affected countries; $100 million to stimulate private sector research and development of vaccines, diagnostics, and vector control innovations through public-private partnerships; $50 million for maternal and child health support in affected and at-risk countries, including training of health care workers; ensuring access to family planning information, services, and methods; providing support for children with microcephaly; and helping pregnant women and their partners have access to personal protection, including condoms and repellant to protect against mosquitoes; $25 million for public health communication and behavior change campaigns for affected communities and countries to take actions to protect themselves from Zika and other vector-borne diseases; and $50 million to issue Global Health Security Grand Challenges that would call for groundbreaking innovations in diagnostics, vector control, personal protection, community engagement and surveillance, and other tools to address Zika and other infectious diseases, as well as to develop public-private partnerships to accelerate development of innovative tools and practices.\nUse of Ebola Balances for Other Infectious Diseases\nWithin the Department of State and Other International Programs General Provisions (in addition to the General Provisions for the entire request), the supplemental request would authorize the use of unobligated Ebola Funds (Title IX, Div. J, P.L. 113-235 ), stating: \"[Unobligated Ebola funds] shall also be available to respond to the Zika virus and related health outcomes, other vector-borne diseases, or other infectious diseases.\"\nAs of January 1, 2016, the Department of State/USAID's unobligated Ebola funds totaled nearly $1.3 billion. Of that total, about $600 million is available until September 30, 2016, and about $694 million is available until expended. (See the subsequent section, \" HHS, State/USAID, and DOD Unobligated Ebola Response Funds .\")\nTransfer Authority\nThe Department of State and Other International Programs General Provisions in the supplemental request would allow transfer of State Department-related funds in the request only among State Department-related accounts within the request and transfer of USAID-related funds in the request only among USAID-related accounts. No congressional notification requirement is included.\nNotwithstanding Authority\nThe supplemental's request for notwithstanding authority could allow funds from this or prior acts supporting the U.S. Zika virus response to be expended despite any previously enacted restrictions and conditions on U.S. foreign aid. For example, if enacted, this authority could allow foreign aid to be provided to states that are otherwise restricted by law: those designated as sponsors of terrorism, those with debt arrearage, human rights violators, or states that practice coercive family planning. The Department of State has indicated in the Global Health Program (GHP) section, however, that funds will provide support for \"ensuring access to voluntary family planning information, services, and methods.\"\nDirect Hiring Authority/Personal Services Contractors\nThe General Provisions Title in the request, and also the General Provisions Title for the Department of State and Other International Programs, allows for expedited hiring authority to directly hire staff during critical public health threats, such as Zika, and to enter into contracts with individuals who are experts in Zika-related fields. This measure does not limit direct hiring or personal services contractors only for Zika-related purposes. This authority for direct hiring and personal services contractors could be used in a broader set of public health circumstances than the Zika virus.\nAppendix B. HHS, State/USAID, and DOD Unobligated Ebola Response Funds\nIn December 2014, the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ), provided $5.4 billion in emergency supplemental appropriations to HHS, the Departments of State and Defense, and USAID to address the Ebola outbreak that began in West Africa in January 2014. Because these funds were designated as emergency appropriations, they are effectively exempt from spending limits in the Budget Control Act of 2011 (BCA, P.L. 112-25 ).\nOn April 6, 2016, the Obama Administration announced its plan to reprogram $510 million of unobligated FY2015 Ebola funding to respond to the Zika virus. HHS Ebola funds may be reprogrammable without additional congressional action (subject to existing restrictions on reprogramming, including notification). This is because the relevant appropriations measures stated the funds are available for Ebola and other infectious diseases. Some have debated whether congressional action is necessary to provide the Department of State and USAID with the authority to reprogram the unobligated Ebola funds, as much of the funding was appropriated with specific language to be used to \"prevent, prepare for, or respond to the Ebola disease outbreak.\"\nTable B-1 provides, by account, the original appropriated Ebola funds, remaining (unobligated) amounts, the period of funding availability, and purpose of the funds, based on quarterly reports to Congress as required by the law. As of January 1, 2016, unobligated Ebola funds totaled $2.77 billion: $1.46 billion for HHS, $1.29 billion for State/USAID, and $17.3 million for Defense. A portion of the total, $652.9 million—most of which is USAID funding—expires September 30, 2016. Nearly all of the remaining unobligated funds expire September 30, 2019, or are available until expended. Table B-1 does not incorporate the Administration's announced plans to reprogram $510 million of unobligated Ebola funds.\nAppendix C. Glossary"
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"question": [
"What was the funding requested by the Obama Administration that would be exempted from discretionary spending limits?",
"What were the details of the request?",
"What did the request seek if circumstances change?",
"What were the other goals the request sought to achieve?",
"What did the OMB and HHS do on April 6, 2016 to control the spread of Zika?",
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"How would USAID respond to this action?",
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"What are the details of the Senate's bill for Zika?",
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"What was the funding agreed to by the House?",
"What part of the agreement generated consensus?",
"What parts of the agreement generated controversy?",
"What was the Senate's response towards this agreement?"
],
"summary": [
"On February 22, 2016, the Obama Administration requested more than $1.89 billion in supplemental funding for the Zika response, all of which it asked to be designated as an emergency requirement, which would effectively exempt the funds from discretionary spending limits.",
"The request included $1.509 billion for the Department of Health and Human Services (HHS), $335 million for the U.S. Agency for International Development (USAID), and $41 million for the Department of State.",
"The request sought authority to transfer the requested funds to other federal agencies to allow greater flexibility as circumstances change.",
"It also sought to provide HHS, the Department of State, and USAID with authority for direct hiring and personal services contracting, not limited to positions related to Zika response efforts.",
"On April 6, 2016, the White House Office of Management and Budget (OMB) and the Secretary of HHS announced that they had identified $589 million—$510 million of it from \"existing Ebola resources\" within HHS and Department of State/USAID—that could be redirected and spent on immediate efforts to control the spread of Zika in the Americas.",
"On April 8, 2016, the Administration notified Congress of the transfer of $295 million (included in the $510 million) from FY2015 unobligated USAID Ebola Economic Support Funds (ESF) to be used for Zika response efforts and other purposes.",
"Of that amount, USAID would provide $158 million to the Centers for Disease Control and Prevention (CDC)—$78 million for Zika response and $80 million for Ebola response. The remaining $137 million would fund various USAID Zika response activities.",
"In May, both the House and the Senate passed supplemental appropriations measures for Zika response.",
"On May 18, the House passed a stand-alone bill (H.R. 5243) to provide $622.1 million, which would be available until September 30, 2016. It did not designate these funds as an emergency requirement, but instead rescinded an equal amount of budget authority.",
"On May 19, as the Senate was considering a bill to provide regular FY2017 appropriations for Military Construction-Veterans Affairs and Transportation-Housing and Urban Development, it amended that bill so that it also would provide $1.1 billion for Zika response, to be available, depending on the account, either until September 30, 2017, or until expended (S.Amdt. 3900 to H.R. 2577).",
"The Senate bill did not contain any rescissions and instead designated the Zika-related appropriations as emergency requirements.",
"A conference agreement to provide $1.1 billion in Zika response funding (H.Rept. 114-640, to accompany H.R. 2577) was filed on June 22 and agreed to by the House on June 23.",
"Amounts to HHS and Department of State/USAID were generally similar to those in the Senate proposal.",
"However, other aspects of the agreement generated some controversy. These included a provision associated with health care funding that would be provided through the Social Services Block Grant (SSBG), and a provision that would rescind a total of $750 million, most of it from unspent funds provided by the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) intended to establish health exchanges in the territories.",
"The Senate voted three times (in June, July, and September) not to invoke cloture on the measure."
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GAO_GAO-15-221
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{
"title": [
"Background",
"Many Networked Information Systems Support NAS Operations",
"Information Security Is Critical to the Nation’s Critical Infrastructures, Including Air Traffic Control Systems",
"Several Organizations within FAA Are Responsible for Information Security",
"Requirements for Ensuring the Security of Federal Information Systems Are Established in Law and Guidance",
"Security Weaknesses Place Air Traffic Control Systems at Risk",
"FAA Did Not Consistently Control Access to NAS Systems",
"Although Control Mechanisms Were Put in Place, FAA Did Not Always Adequately Protect the Boundary of NAS Systems",
"FAA Did Not Consistently Implement Controls for Identifying and Authenticating Users of NAS Systems",
"FAA Did Not Always Ensure Users Were Properly Authorized to Access NAS Systems",
"Sensitive Data Were Not Always Sufficiently Encrypted",
"FAA Did Not Consistently Implement Sufficient Audit and Monitoring Controls",
"While Background Investigations Were Conducted in Accordance with Policy, Changes to Network Systems and Software Were Not Always Properly Controlled",
"FAA Conducted Background Investigations in Accordance with Policy",
"FAA Did Not Always Properly Control Changes to Network Devices or Ensure Key Systems Were Fully Patched",
"FAA Did Not Fully Implement Its Information Security Program, Limiting the Effectiveness of Information Security Controls",
"Policies and Procedures Were Not Always Complete",
"Users with Significant Security Responsibilities Had Not Always Received Required Security Training",
"Security Controls Were Not Always Tested Sufficiently",
"Identified Security Weaknesses Were Not Always Addressed in a Timely Fashion",
"NAS Incident Detection and Response Activities Were Limited",
"Contingency Plans Were Not Always Complete or Adequately Tested",
"Inadequate Agency-Wide Information Security Risk Management Processes Contribute to Weaknesses in Security Controls and Security Management",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Objective, Scope, and Methodology",
"Appendix II: Comments from the Department of Transportation",
"Appendix III: GAO Contacts and Staff Acknowledgments",
"GAO Contacts",
"Staff Acknowledgments"
],
"paragraphs": [
"The FAA, an agency of the Department of Transportation, is primarily responsible for the advancement, safety, and regulation of civil aviation, as well as overseeing the development of the air traffic control system. Its stated mission is to provide the safest, most efficient aerospace system in the world. This system, known as the National Airspace System (NAS), includes air traffic control systems, ATC procedures, operational facilities, aircraft, and the people who certify, operate, and maintain them. According to FAA, the system includes more than 19,000 airports, nearly 600 air traffic control facilities, and approximately 65,000 other facilities, including radar, communications nodes, ground-based navigation aids, computer displays, and radios, intended to provide safe and efficient flight services for the public. Over 46,000 FAA personnel and approximately 608,000 pilots operate about 228,000 aircraft within the NAS, including up to 2,850 flights at any given moment. The system operates on a continuous basis, 24 hours a day, every day of the year.\nAs aircraft move across the NAS, controllers at several types of air traffic control facilities manage their movements during each phase of flight. According to FAA, these facilities include the following:\nMore than 500 air traffic control towers supervise flights within about 5 miles from the airport runway. They give pilots taxiing and take off instructions, air traffic clearance, and provide separation between landing and departing aircraft.\nOne hundred sixty Terminal Radar Approach Control facilities provide air traffic control services for airspace that is located within approximately 40 miles of an airport and generally up to 10,000 feet above the airport. These facilities handle sequencing and separation of aircraft as they approach major metropolitan areas.\nTwenty-two Air Route Traffic Control Centers (ARTCC) control and monitor airplanes over the continental United States and between airports. Controlling traffic usually at or above 17,000 feet, the typical center has responsibility for more than 100,000 square miles of airspace generally extending over a number of states. Three of the centers also control air traffic over the oceans. Controllers at these facilities work with pilots to ensure the flight path is smooth and free of other traffic.\nThe Air Traffic Control System Command Center manages the flow of air traffic within the United States. This facility regulates air traffic when weather, equipment, runway closures, or other conditions place stress on the national airspace system. In these instances, traffic management specialists at the command center take action to modify traffic demands in order to keep traffic within system capacity.\nFigure 1 provides a visual summary of air traffic control across the different phases of flight.",
"The FAA’s ability to fulfill its mission depends on the adequacy and reliability of its air traffic control systems, a vast network of computer hardware, software, and communications equipment. The agency relies on more than 100 air traffic control systems to process and track flights around the world. These complex and highly automated systems process a wide range of information, including radar, weather, flight plans, surveillance, navigation/landing guidance, traffic management, air-to- ground communication, voice, network management, and other information—such as airspace restrictions—that is required to support the agency’s mission. In order to successfully carry out air traffic control operations, it is essential that these systems interoperate, functioning both within and across facilities as one integrated system of systems. According to FAA data available at the time of our review, about one-third of air traffic control systems rely on Internet Protocol (IP)-based networking technologies for communication.\nFAA’s ongoing effort to modernize the ATC system is referred to as the Next Generation Air Transportation System (NextGen). NextGen involves changes to many aspects of air transportation, including the acquisition of new integrated systems (both software and hardware), flight procedures, aircraft performance capabilities, and supporting infrastructure to transform the current air transportation system into one that uses satellite- based surveillance and navigation operations instead of ground-based radar. These changes are intended to increase the efficiency and capacity of the air transportation system while maintaining safety and accommodating anticipated future growth. As demand for the nation’s increasingly congested airspace continues to grow, NextGen improvements are intended to enable the FAA to guide and track aircraft more precisely on more direct routes, reduce delays, save fuel, and reduce aircraft exhaust emissions.\nThe following five key air traffic control systems perform critical air traffic control functions:\nFAA Telecommunications Infrastructure (FTI) forms the basic telecommunications infrastructure for NextGen, replacing the agency’s legacy networks to provide consolidated telecom services for the NAS. The FTI is also intended to reduce costs, improve bandwidth, and offer improved information security services, such as encryption, so that an enterprise-wide approach to information security assurance can be achieved.\nSurveillance and Broadcast Service System (SBSS) provides surveillance services to FAA and the aviation community. Most notably, SBSS provides the Automatic Dependent Surveillance- Broadcast service—one of the six NextGen transformational programs—which is FAA’s satellite-based successor to radar. This service makes use of Global Positioning System technology to determine and share precise aircraft location information, and streams additional flight information to the cockpits of properly equipped aircraft.\nEn Route Automation Modernization (ERAM) replaces the legacy en route Host computer and backup system, developed more than 40 years ago. According to FAA, much of the system has already been deployed. ERAM is designed to be at the heart of NextGen and is key to advancing FAA’s transition from a ground-based system of air traffic control to a satellite-based system of air traffic management. As ERAM evolves, it is intended to provide benefits for users and the flying public by increasing air traffic flow and improving automated navigation and conflict detection services, both of which are vital to meeting future demand and preventing gridlock and delays.\nEn Route Communications Gateway (ECG) is a communications system that receives data from sources outside the ARTCC, such as flight plan information and weather data, and passes it to other systems, including ERAM.\nTraffic Flow Management-Infrastructure (TFM-I) provides information processing support for FAA traffic management personnel as they coordinate the use of the NAS and respond to conditions of excess demand. TFM-I receives information on planned and active flights, generates forecasts of demand up to several hours ahead, presents this information to Traffic Management Personnel, and provides automation support for traffic management initiatives to resolve or ameliorate congestion.\nEach of these systems, in conjunction with many others that make up the NAS computing infrastructure, works to ensure safe flight passageways for aircraft in U.S. airspace from takeoff to landing.",
"Safeguarding federal computer systems and the systems supporting the nation’s critical infrastructures, including the NAS, is essential to protecting national and economic security, and public health and safety. For government organizations information security is also a key element in maintaining the public trust. Inadequately protected systems may be vulnerable to insider threats as well as the risk of intrusion by individuals or groups with malicious intent who could use their illegitimate access to obtain sensitive information, disrupt operations, or launch attacks against other computer systems and networks. Accordingly, since 1997, we have designated information security as a government-wide high-risk area. In 2003, we expanded this high-risk area to include protecting systems supporting our nation’s critical infrastructure.those of agency inspectors general, describe persistent information security weaknesses that place a variety of federal operations at risk of disruption, fraud, and inappropriate disclosure.\nOur previous reports, and Recent federal guidance demonstrates that securing critical infrastructures from internal and external threats is a national priority. For example, in February 2013, the President signed Executive Order 13636, “Improving Critical Infrastructure Cybersecurity,” to address concerns about better securing critical infrastructure from cyber threats. This order, among other things, directed executive branch agencies to promote the adoption of cybersecurity practices; increase the volume, timeliness and quality of cyber threat information sharing; incorporate privacy and civil liberties protections into every initiative to secure critical infrastructure; and explore the use of existing regulation to promote cybersecurity. The order also directed the National Institute of Standards and Technology (NIST) to develop a technology-neutral voluntary framework for improving critical infrastructure cybersecurity. The framework, issued in February 2014, with business requirements, risk tolerances, and resources. is designed to help organizations align their cybersecurity activities Although many legacy air traffic control systems continue to rely on point- to-point communications, NAS systems, including NextGen systems, increasingly use IP technologies to communicate over interconnected computer networks. With the increased use of such technologies, however, comes increased risk: integrating critical infrastructure systems with information technology networks provides significantly less isolation from the outside world than predecessor systems, creating a greater need to secure these systems from remote, external threats.\nNIST, Framework for Improving Critical Infrastructure Cybersecurity, Version 1.0 (Gaithersburg, Md.: Feb. 12, 2014).",
"The operational arm of the FAA is the Air Traffic Organization (ATO), which is responsible for providing safe and efficient air navigation services to the nation’s airspace. ATO is led by a Chief Operating Officer who reports directly to the FAA Administrator. The ATO includes seven service units: Air Traffic, Management, Mission Support, Program Management Organization, Safety and Technical Training, Systems Operations, and Technical Operations.\nSeveral entities within ATO share responsibility for information security- related activities over air traffic control systems. The NAS Security Risk Executive is the individual with overall responsibility for overseeing all information security-related activities across ATO, including the security of air traffic control systems. ATO’s Information Security Systems Group, within Technical Operations Services, includes NAS Cyber Operations (NCO), ISS Engineering, and an Authorization Team. Ensuring that each air traffic control system is properly secured and protected is the responsibility of an Information Systems Security Officer (ISSO), and the system owner is responsible for planning, directing, and managing resources for the system, including ensuring that the system meets all security requirements throughout its life cycle. The Security Risk Executive, Authorization Team, NCO, system owners, and ISSOs are jointly responsible for carrying out security program activities for NAS systems, including conducting system risk assessments, documenting system security plans, testing security controls, managing remedial action plans, monitoring and responding to incidents, and planning for contingencies.\nThe FAA Office of Information and Technology (AIT) is responsible for the security of FAA’s non-NAS information systems. The office resides within FAA’s Office of Finance and Management and is headed by the Chief Information Officer (CIO), who has overall responsibility to oversee the security of the agency’s information and information systems. The FAA Chief Information Security Officer is responsible for developing, documenting, and implementing an agency-wide information security program and for assisting the CIO in ensuring compliance with federal law pertaining to information security and other applicable policies, standards, requirements and guidelines.",
"Federal law and guidance specify requirements for protecting federal information and information systems. The Federal Information Security Management Act of 2002 (FISMA) requires each agency to develop, document, and implement an agency-wide information security program to provide security for the information and information systems that support operations and assets of the agency, including those provided or managed by another agency, contractor, or another organization on behalf of an agency.\nFISMA assigns certain responsibilities to NIST, which is tasked with developing, for systems other than national security systems, standards and guidelines that must include, at a minimum, (1) standards to be used by all agencies to categorize all of their information and information systems based on the objectives of providing appropriate levels of information security, according to a range of risk levels; (2) guidelines recommending the types of information and information systems to be included in each category; and (3) minimum information security requirements for information and information systems in each category.\nNIST, Contingency Planning Guide for Federal Information Systems, SP 800-34, Revision 1 (Gaithersburg, Md.: May 2010).\nNIST, Managing Information Security Risk: Organization, Mission, and Information System View, SP 800-39 (Gaithersburg, Md.: March 2011).\nNIST, Information Security Handbook: A Guide for Managers, SP 800-100 (Gaithersburg, Md.: October 2006). provides guidance for facilitating a more consistent approach to information security programs across the federal government.",
"Although FAA has taken steps to safeguard its air traffic control systems, significant security control weaknesses remain in NAS systems and networks, threatening the agency’s ability to adequately fulfill its mission. FAA established policies and procedures for controlling access to NAS systems and for configuring its systems securely, and it implemented firewalls and other boundary protection controls to protect the operational NAS environment. However, a significant number of weaknesses remain in the technical controls—including access controls, change controls, and patch management—that protect the confidentiality, integrity, and availability of its air traffic control systems. Additionally, significant interconnectivity exists between non-NAS systems and the NAS operational environment, increasing the risk from these weaknesses. Further, the agency had not yet fully implemented an agency-wide information security program to ensure that controls are appropriately designed and operating effectively. A key reason for both the technical control weaknesses and the security management weaknesses is that FAA had not fully established an integrated, organization-wide approach to managing information security risk that is aligned with its mission. These shortcomings put NAS systems at increased and unnecessary risk of unauthorized access, use, or modification that could disrupt air traffic control operations.",
"A basic management objective for any agency is to protect the resources that support its critical operations and assets from unauthorized access. An agency can accomplish this by designing and implementing controls that are intended to prevent, limit, and detect unauthorized access to computer resources (e.g., data, programs, equipment, and facilities), thereby protecting them from unauthorized disclosure, modification, and loss. Specific access controls include boundary protection, identification and authentication of users, authorization restrictions, cryptography, and audit and monitoring procedures. Without adequate access controls, unauthorized users, including intruders and former employees, can surreptitiously read and copy sensitive data and make undetected changes or deletions for malicious purposes or for personal gain. In addition, authorized users could intentionally or unintentionally modify or delete data or execute changes that are outside of their authority.\nAlthough FAA had issued security policies, it did not consistently protect its network boundary from possible intrusions; identify and authenticate users; authorize access to resources; ensure that sensitive data are encrypted; or audit and monitor actions taken on NAS systems and networks.",
"Boundary protection controls are used to restrict connections into and out of networks and to control connections between network-connected devices. Implementing multiple layers of security to protect an information system’s internal and external boundaries can reduce the risk of a successful cyber attack. For example, multiple firewalls can be deployed to prevent both outsiders and insiders from gaining unauthorized access to systems. NIST Special Publication 800-53 recommends organizations monitor and control communications both at the external boundary of the system and at key internal boundaries within the system. NIST also recommends information systems connect to external networks or systems only through managed interfaces such as gateways, routers, or firewalls. FAA policy states that connections between NAS systems/networks and any non-NAS network or non-NAS information systems must occur through the NAS Enterprise Security Gateway.\nWhile FAA implemented numerous controls to separate NAS systems from non-NAS systems, it did not always sufficiently protect connections between external partners and NAS operational systems or limit interconnectivity between operational and mission support environments. The excessive interconnectivity between NAS and non-NAS environments increased the risk that FAA’s mission-critical air traffic control systems could be compromised.",
"Information systems need to be managed to effectively control user accounts and identify and authenticate users. Users and devices should be appropriately identified and authenticated through the implementation of adequate logical access controls. Users can be authenticated using mechanisms such as a password and user ID combination. NIST SP 800- 53 recommends, and FAA policy requires, strong password controls for authentication, such as passwords that are at least eight alphanumeric characters in length, contain at least one upper- and one lower-case letter, contain numbers and special characters, and expire after a predetermined period of time.\nHowever, FAA did not consistently implement identification and authentication controls in accordance with its security policies and NIST guidance. For example, certain servers and applications supporting NAS systems did not implement sufficiently strong password controls. As a result, FAA is at increased risk that accounts could be compromised and used by unauthorized individuals to access sensitive information or systems.",
"Authorization encompasses access privileges granted to a user, program, or process. It is used to allow or prevent actions by that user based on predefined rules. Authorization includes the principles of legitimate use and least privilege.implement controls to ensure that only authorized users can access the system. This includes, but is not limited to, uniquely identifying all users, periodically reviewing access to the system, disabling accounts that no longer need access to the system, and assigning the lowest level of permission necessary for a task. NIST also recommends that systems and devices be configured so that only the functionality necessary to support organizational operations is enabled in order to prevent unauthorized connection of devices, unauthorized transfer of information, or unauthorized network connectivity.\nNIST guidance recommends that organizations FAA did not always ensure that users’ access to key air traffic control systems was authorized in accordance with FAA policies and NIST guidance. In several cases, FAA and its contractors did not properly document that system users were authorized to access NAS systems. Additionally, FAA did not always ensure that periodic reviews of user access to NAS systems were performed in accordance with FAA policies and NIST guidance. As a result, users of these air traffic control systems may have greater access than they need to fulfill their responsibilities, increasing the risk that these systems could be compromised, either inadvertently or deliberately.",
"Cryptographic controls can be used to help protect the integrity and confidentiality of data and computer programs by rendering data unintelligible to unauthorized users and/or protecting the integrity of transmitted or stored data. Cryptography involves the use of mathematical functions called algorithms and strings of seemingly random bits called keys to (1) encrypt a message or file so that it is unintelligible to those who do not have the secret key needed to decrypt it, thus keeping the contents of the message or file confidential; (2) provide an electronic signature that can be used to determine if any changes have been made to the related file, thus ensuring the file’s integrity; and (3) link a message or document to a specific individual’s or group’s key, thus ensuring that the “signer” of the file can be identified. NIST guidance states that the use of encryption by organizations can reduce the probability of unauthorized disclosure of information. NIST Special Publication 800-53 recommends that organizations employ cryptographic mechanisms to prevent unauthorized disclosure of information during transmission, encrypt passwords while being stored and transmitted, and establish a trusted communications path between users and security functions of information systems. Additionally, when federal agencies employ cryptography, NIST standards require them to use Federal Information Processing Standard (FIPS) 140-2-validated algorithms.\nFAA did not always ensure that sensitive data were encrypted when transmitted or stored, as called for by its policies and NIST guidance. For example, certain network devices supporting NAS systems did not always encrypt authentication data when transmitting them across the network, and other systems did not always encrypt stored passwords using sufficiently strong encryption algorithms in compliance with FIPS 140-2. Due to these weaknesses, FAA faces an increased risk that attackers could compromise accounts or intercept, view, and modify transmitted data, thereby threatening the confidentiality, integrity, and availability of the NAS.",
"Audit and monitoring involves the regular collection, review, and analysis of auditable events for indications of inappropriate or unusual activity, and the appropriate investigation and reporting of such activity. Automated mechanisms may be used to integrate audit monitoring, analysis, and reporting into an overall process for investigation of and response to suspicious activities. Audit and monitoring controls can help security professionals routinely assess computer security, perform investigations during and after an attack, and even recognize an ongoing attack. Audit and monitoring technologies include network- and host-based intrusion detection systems, audit logging, security event correlation tools, and computer forensics. Network-based intrusion detection systems capture or “sniff” and analyze network traffic in various parts of a network. FISMA requires that each federal agency implement an information security program that includes procedures for detecting, reporting, and responding to security incidents.\nFAA did not consistently implement sufficient audit and monitoring controls. For example, FAA did not always have sufficient capability to monitor network traffic or ensure that NAS systems were sufficiently logging security-relevant events. As a result of these weaknesses, FAA faces an increased risk that it will be unable to detect and respond to unauthorized or malicious activities on its systems.",
"In addition to access controls, other important controls should be in place to ensure the confidentiality, integrity, and availability of an agency’s information. These controls include policies, procedures, and techniques for implementing personnel security and securely configuring information systems. While FAA conducted background investigations in accordance with its policy, weaknesses in its configuration management processes increase the risk of unauthorized use, disclosure, modification, or loss of sensitive information and information systems supporting FAA’s mission.",
"Policies related to personnel actions, such as hiring, termination, and maintaining employee expertise, are important considerations in securing information systems. If personnel policies are not adequate, an entity runs the risk of (1) hiring unqualified or untrustworthy individuals; (2) providing terminated employees opportunities to sabotage or otherwise impair entity operations or assets; (3) failing to detect continuing unauthorized employee actions; (4) lowering employee morale, which may in turn diminish employee compliance with controls; and (5) allowing staff expertise to decline. Hiring procedures should include contacting references, performing background investigations, and ensuring that periodic reinvestigations are consistent with the sensitivity of the position, in accordance with criteria from the Office of Personnel Management. FAA policy requires positions to be designated by sensitivity and risk level, and describes requirements for conducting background investigations for employees and contractors, including periodic reinvestigations of individuals in positions of higher risk or sensitivity.\nFAA ensured that the employees and contractors we sampled on the TFM-I, ERAM, SBSS, and FTI programs had appropriate background investigations. Specifically, all of the employees and contractors we sampled had up-to-date background investigations that were consistent with the risk designation of their positions. As a result, FAA reduced its risk that it has employed or contracted for unqualified or untrustworthy individuals on these programs.",
"Configuration management is an important control that involves the identification and management of security features for all hardware and software components of an information system at a given point and systematically controls changes to that configuration during the system’s life cycle. Configuration management involves, among other things, (1) verifying the correctness of the security settings in the operating systems, applications, or computing and network devices and (2) obtaining reasonable assurance that systems are configured and operating securely and as intended. In addition, establishing controls over the modification of information system components and related documentation helps to prevent unauthorized changes and ensure that only authorized systems and related program modifications are implemented. This is accomplished by instituting policies, procedures, and techniques that help make sure that all hardware, software, and firmware programs and program modifications have been properly authorized, tested, and approved. Patch management, a component of configuration management, is important for mitigating the risks associated with software vulnerabilities. When a software vulnerability is discovered, the software vendor may develop and distribute a patch or work-around to mitigate the vulnerability. Without the patch, an attacker can exploit the vulnerability to read, modify, or delete sensitive information; disrupt operations; or launch attacks against other systems. Outdated and unsupported software is more vulnerable to attack and exploitation because vendors may no longer provide updates, including security updates.\nAccording to NIST SP 800-53, configuration management activities should include documenting approved configuration-controlled changes to information systems, retaining and reviewing records of the changes, auditing those records, and coordinating and providing oversight for configuration change control activities through a mechanism such as a change control board. Additionally, NIST Special Publication 800-128states that patch management procedures should define how the organization’s patch management process is integrated into configuration management processes, how patches are prioritized and approved through the configuration change control process, and how patches are tested for their impact on existing secure configurations. FAA policy describes detailed requirements for controlling changes to NAS systems.\nFAA did not always ensure that changes to network devices supporting air traffic control systems were managed in accordance with FAA policies for configuration change control. Specifically, significant changes were made to a key network device on one NAS system without following the system’s defined change control process, which requires that changes be documented, analyzed for potential security impacts, tested, and approved before being implemented. Without adequately controlling configuration changes to network devices, an increased risk exists that changes could be unnecessary, may not work as intended, or may result in unintentional side effects that could impact mission-critical operations.\nAdditionally, the agency did not always ensure that security patches were applied in a timely manner to servers and network devices supporting air traffic control systems, or that servers were using software that was up-to- date. For example, certain systems were missing patches dating back more than 3 years. Additionally, certain key servers had reached end-of- life and were no longer supported by the vendor. As a result, FAA is at an increased risk that unpatched vulnerabilities could allow its information and information systems to be compromised.",
"An entity-wide information security program is the foundation of a security control structure and a reflection of senior management’s commitment to addressing security risks. The security program should establish a framework and continuous cycle of activity for assessing risk, developing and implementing effective security procedures, and monitoring the effectiveness of these procedures. Without a well-designed program, security controls may be inadequate; responsibilities may be unclear, misunderstood, or improperly implemented; and controls may be inconsistently applied. FISMA requires each agency to develop, document, and implement an information security program that, among other things, includes policies and procedures that (1) are based on risk assessments, (2) cost-effectively reduce information security risks to an acceptable level, (3) ensure that information security is addressed throughout the life cycle of each system, and (4) ensure compliance with applicable requirements; security awareness training to inform personnel of information security risks and of their responsibilities in complying with agency policies and procedures, as well as training personnel with significant security responsibilities for information security; periodic testing and evaluation of the effectiveness of information security policies, procedures, and practices, to be performed with a frequency depending on risk, but no less than annually, and that includes testing of management, operational, and technical controls for every system identified in the agency’s required inventory of major information systems; a process for planning, implementing, evaluating, and documenting remedial actions to address any deficiencies in information security policies, procedures, or practices; procedures for detecting, reporting, and responding to security plans and procedures to ensure continuity of operations for information systems that support the operations and assets of the agency.\nTo its credit, FAA has taken steps to implement an information security program and manage information security risks for its air traffic control systems. FAA produced system security plans for the systems we reviewed which specified the systems’ operational contexts, relationships with others systems, general security requirements, and security controls. Additionally, FAA policy requires the periodic testing and evaluation of the controls on agency systems, and the agency has a process for planning, implementing, evaluating and documenting remedial actions to address deficiencies in those controls. FAA also documented a risk assessment policy and conducted risk assessments on the major systems we reviewed. However, FAA did not always consistently document incident response policies, ensure that contractors took required training, adequately test security controls, mitigate security weaknesses in a timely manner, ensure that incident response capabilities for NAS systems were adequate, or fully document and test contingency plans for its air traffic control systems.",
"A key element of an effective information security program is to develop, document, and implement risk-based policies, procedures, and technical standards that govern the security over an agency’s computing environment. Regarding incident response activities, NIST Special Publication 800-53 recommends agencies create an incident response policy and procedures to facilitate the implementation of the policy and associated incident response controls.\nAlthough FAA had developed and documented many information security policies and procedures, incident response policies and procedures were not always complete or approved. For example, although the NCO security group operates as the focal point for NAS incident response activities, ATO’s incident response policy establishing NCO as the incident response focal point was still in draft at the time of our review.\nAdditionally, although system-level incident response policies had been finalized for four of the NAS systems we reviewed, they did not always specify incident reporting timeframes or the need for all incidents to be reported. Without finalized and harmonized incident response policies, FAA faces an increased risk that incident response authorities and responsibilities will not be clearly understood by all stakeholders, impeding the agency’s ability to efficiently and effectively respond to incidents or to do so in a timely manner.",
"According to FISMA, an agency-wide information security program must include security awareness training for agency personnel, contractors, and other users of information systems that support the agency’s operations and assets. This training must cover (1) information security risks associated with users’ activities and (2) users’ responsibilities in complying with agency policies and procedures designed to reduce these risks. FISMA also includes requirements for training personnel who have significant responsibilities for information security. Additionally, NIST Special Publication 800-53 recommends that agencies provide incident response training to information system users consistent with their assigned roles and responsibilities.\nFAA officials were unable to tell us when the policy would be finalized. individuals with significant information system security responsibilities must receive role-based training specific to their responsibilities. For both security awareness and role-based training, FAA policy also states that records must be kept documenting the name and title of the individual receiving training, their security responsibilities, the type of training received, and the training date.\nHowever, FAA did not always ensure that its employees and contractors took required information security training, including specialized security training and system-specific training, in a timely manner. For example:\nFAA contractors supporting certain NAS systems did not take the required security awareness training.\nAdditionally, FAA did not provide periodic refresher security training to individuals with significant security responsibilities on two NAS systems. Although FAA stated that the Department of Transportation security awareness training, combined with on-the-job training, was sufficient, the Department of Transportation training does not cover security topics specific to these systems, and FAA did not define required content for on-the-job training or keep training records, as required by FAA policy.\nFAA had also not sufficiently documented that persons with incident response roles and responsibilities for one of the NAS systems we reviewed had taken required training, and did not provide formal incident response training for personnel on another NAS system.\nWithout adequately ensuring that personnel take required security training, FAA faces an increased risk that employees may not recognize and respond appropriately to potential security threats and vulnerabilities. Further, without sufficiently documenting that incident responders have taken required training, FAA faces an increased risk that employees will not receive training on performing their roles and responsibilities on a regular basis.",
"FAA policy, in accordance with NIST guidance, states that security control assessments are to determine the extent to which controls are implemented correctly, operate as intended, and produce the desired outcome with respect to meeting the security requirements of the system. NIST Special Publication 800-53A notes that while a high-level examination of a limited body of evidence can support an assessor’s determination that a control is implemented and free of obvious errors, determining whether a control is implemented correctly and operating as intended requires an in-depth analysis of a substantial body of relevant evidence.\nWhile FAA prepared assessments of the security controls for the NAS systems we reviewed, its control assessments were not always comprehensive enough to identify weaknesses that we found in user account management, configuration management, and security awareness training controls. For example, FAA concluded that the account review control for one system was implemented based on examining the system security plan and interviewing officials, but the testers did not examine artifacts such as audit reports to determine if reviews were being conducted as described in the security plan. FAA also concluded that configuration change control had been implemented for another system after examining the system security plan and interviewing personnel; however, artifacts such as change tickets and approval documents were not examined to determine if system changes were controlled in accordance with procedures. Further, FAA’s test results indicated that the security awareness training common control was defined, but the testers did not examine training records to verify that personnel on the systems that rely on the control were taking the training as required. ATO officials stated that control assessments were often supported by additional documentation not described in the security control assessment reports; however, the agency was unable to provide evidence to corroborate this statement.\nBy not conducting more comprehensive tests of security controls, FAA has decreased assurance that controls are implemented correctly and operating as intended. Additionally, because security control assessments are used by agencies to evaluate whether contractors are implementing information security controls effectively, FAA had reduced assurance that its contractors were adequately securing and protecting air traffic control systems.",
"FISMA requires that agency-wide information security programs include a process for planning, implementing, evaluating, and documenting remedial actions to address any deficiencies in the information security policies, procedures, and practices of the agency. Agencies must establish procedures to reasonably ensure that all information security control weaknesses, regardless of how or by whom they are identified, are addressed through the agency’s remediation processes. For each identified control weakness, the agency is required to develop and implement a plan of actions and milestones (POA&M) based on findings from security control assessments, security impact analyses, continuous monitoring of activities, audit reports, and other sources. When considering appropriate corrective actions to be taken, the agency should, to the extent possible, consider the potential agency-wide implications and design appropriate corrective actions to systemically address the deficiency.\nWhile FAA established POA&Ms for addressing identified security control weaknesses, it did not always complete remedial actions in accordance with established deadlines. For example, of the 147 POA&Ms we reviewed on 4 NAS systems, 58 were not completed by their planned completion dates, and the planned completion dates for 50 had been extended from between 8 months to more than 3 years past the dates that they were originally scheduled to be completed. According to ATO officials, one reason that original deadlines are often missed is that the programs lack sufficient resources and funding to address weaknesses by their original due dates. Without resolving identified vulnerabilities in a timely manner, FAA faces an increased risk, as continuing opportunities exist for unauthorized individuals to exploit these weaknesses and gain access to sensitive information and systems.",
"Comprehensive monitoring and incident response controls are necessary for rapidly detecting incidents, minimizing loss and destruction, mitigating the weaknesses that were exploited, and restoring computing services. While strong controls may not prevent all incidents, agencies can reduce the risks associated with these events by detecting and promptly responding before significant damage is done. NIST Special Publication 800-53 recommends that agencies test incident response capabilities for effectiveness. NIST guidance also notes that the ability to identify incidents using appropriate audit and monitoring techniques enables an agency to initiate its incident response plan in a timely manner. Further, NIST guidance also recommends that once an incident has been identified, an agency’s incident response processes and procedures should provide the capability to correctly log the incident, properly analyze it, and take appropriate action. NIST guidance also recommends that agencies test their information technology plans, including incident response plans, and document the test results in an after action report. FAA’s ATO assigned responsibility for incident handling on NAS systems to NCO, although NAS system owners and operators also have a responsibility to coordinate with NCO in responding to incidents affecting their systems.\nFAA has notable shortcomings in security monitoring and incident detection over air traffic control systems. For example:\nNCO does not have sufficient access to effectively monitor the NAS operational environment. For example, there was no full network packet capture and anomaly detection capability for network traffic at major network interface points at FAA operational facilities. Additionally, network traffic flow session data was not integrated into the ad-hoc query systems used by the NCO. Further, NCO lacked access to data from sensors on key network gateways, including intrusion detection, network packet capture, and network flow data, and so cannot adequately monitor the gateways for security-relevant events.\nAlthough NCO has been given responsibility for incident response for the NAS environment, 26 of the 35 IP-connected NAS systems did not provide security event logs to NCO, including 3 of the systems we reviewed, severely limiting the ability of NCO to effectively monitor the NAS environment.\nThe NCO database system containing centralized security logs collected from various NAS systems was ineffective due to weaknesses in its searching function. Specifically, the system could not search past any gaps in the log data. To compensate, NCO personnel would manually parse the data from multiple queries together, but there was not sufficient assurance that all data needed for incident investigations had been retrieved.\nNCO did not have a formal process in place to review and document the potential impact to NAS operations from significant incidents identified internally or by FAA’s Cyber Security Management Center. Specifically, NCO did not formally assess the potential risks to the NAS for any of the incidents we reviewed.\nTesting of the NAS incident response capability has been limited.\nSpecifically, while one system had conducted and documented tests of its incident response capability, NCO has not developed after- action reports for all phases of its incident response capability tests, and officials with three systems all indicated they do not test their incident response capabilities.\nAs a result, there is an increased risk that FAA will not be able to adequately detect, contain, eradicate, or recover from incidents affecting air traffic control systems.",
"Losing the capability to process, retrieve, and protect electronically maintained information can significantly affect an agency’s ability to accomplish its mission. If contingency planning controls are inadequate, even relatively minor interruptions can result in lost or incorrectly processed data, which can cause financial losses, expensive recovery efforts, and inaccurate or incomplete information. NIST Special Publication 800-34 recommends that contingency plans include procedures for diagnosing and addressing problems, notifying recovery personnel when the plan needs to be activated, and procedures to be followed in the event that specific personnel cannot be contacted. NIST also recommends that contingency plans include procedures for notifying users when a system has been reconstituted and normal operations have resumed. Additionally, NIST Special Publication 800-53 notes that contingency plans should be tested to determine the plan’s effectiveness and the organization’s readiness to execute the plan.\nFAA did not always ensure that contingency plans for air traffic control systems were complete or that tests of the plans were adequate. Although FAA documented contingency plans for three systems, it did not always include important information in these plans. For example, the contingency plans for two systems did not sufficiently document the means by which key personnel were to be contacted in the event of a disaster or define procedures to follow in the event that specific personnel could not be contacted. Although separate notification procedures were developed for one of the systems, they were not included in the contingency plan either explicitly or by reference. Also, although procedures had been established for notifying users when two of the systems had been reconstituted and normal operations had resumed, the contingency plans for those systems did not include or reference the procedures. Further, the contingency plan for another system did not contain the actual assessment and recovery procedures for the system. Also, FAA tested the contingency plans for three NAS systems, but the tests did not always address key elements of the plans, including notification procedures, recovering the system on an alternate platform, and system performance on alternate equipment.\nWithout including important information in its contingency plans for air traffic control systems or sufficiently testing its contingency plans, FAA is at an increased risk of employees or contractors not following the correct procedures to appropriately recover systems in a timely manner from service disruptions.",
"One important reason for many of the weaknesses in security controls as well as the security program shortcomings identified in our review is that FAA has not yet fully established an integrated, organization-wide approach to managing information security risk. According to NIST, effective risk management requires organizations such as the FAA to operate in highly complex, interconnected environments using state-of- the-art and legacy information systems—systems that organizations depend on to accomplish their missions and to conduct important business-related functions. The complex relationships among missions, mission/business processes, and the information systems supporting those missions and processes require an integrated, organization-wide view for managing risk. Effective management of information security risk is also critical to the success of organizations in achieving their strategic goals and objectives.\nFISMA requires the head of each federal agency to ensure that information security management processes are integrated with agency strategic and operational planning processes. NIST SP 800-39 provides agencies with guidance for developing and implementing an integrated, organization-wide program for managing information security risk to agency operations (i.e., mission, functions, image, and reputation), organizational assets, individuals, other organizations, and the nation resulting from the operation and use of federal information systems. It describes an integrated approach for addressing information security risk at the organization level, the mission/business process level, and the information system level. NIST SP 800-39 states that, in managing information security risk at the organizational level, agencies should establish and implement information security governance, a risk executive function, and risk management strategy in order to ensure that risk management decisions are aligned strategically with the agency’s missions and business functions consistent with the organizational goals and objectives. The publication also states that an organization’s mission/business processes should be designed to manage risk in accordance with the organizational information security risk management strategy.\nFurther, NIST SP 800-100 notes that agencies should have a strategic plan for information security, which identifies goals and objectives related to the agency’s mission, specifies a plan for achieving those goals, and establishes short- and mid-term performance targets and measures that allow the agency to track manage and monitor its progress towards those goals and objectives. Also, in February 2014, NIST established its Framework for Improving Critical Infrastructure Cybersecurity, which presents a set of industry standards and best practices to help organizations manage cybersecurity risks to critical infrastructure systems, and contains a methodology for organizations to evaluate and strengthen information security programs for critical infrastructure.\nWhile it has taken initial steps, the FAA has not yet implemented an effective, organization-wide program for managing information security risk to its mission and operations. Specifically, the FAA Chief Information Security Officer stated that in November 2013, the agency established a risk executive function at the agency level in the form of a Cyber Security Steering Committee. The committee includes representatives from across FAA, including ATO, NextGen, and FAA’s office of security. However, FAA has not yet fully established the governance structures and practices necessary for ensuring that its information security risk management decisions are aligned strategically with its mission. Specifically: FAA has not clearly and consistently established roles and responsibilities for information security for NAS systems. FISMA requires the head of an agency to (1) ensure that senior agency officials provide security for information and information systems that support operations and assets under their control, and (2) delegate to the agency CIO the authority to ensure compliance with FISMA requirements. Further, according to NIST Special Publication 800-39, one of the tasks of the risk executive is to establish risk management roles and responsibilities. However, existing FAA practices, policies, and documentation are inconsistent in establishing responsibility for NAS information security. While FAA’s security management program policy states that primary responsibility for NAS information security rests with the CIO, ATO officials stated that primary responsibility for NAS information security lies with ATO rather than the CIO. FAA’s portion of the President’s Fiscal Year 2014 Budget Submission states only that the CIO is responsible for non-NAS systems. The steering committee has defined updated roles and responsibilities for information security, which state that executive-level responsibility for the organization-wide information security program lies with the CIO. However, these roles and responsibilities have not yet been implemented. Additionally, AIT officials and ATO officials disagreed about whether the roles and responsibilities had been approved.\nBetter defining roles and responsibilities is important because FAA officials in AIT and ATO expressed diverging opinions about how information security controls should be implemented in the NAS environment. For example, AIT officials stated that ATO and AIT should collaborate to identify and reduce duplicative incident response activities between NCO and FAA’s existing Cyber Security Management Center, but ATO officials stated that the NCO capability should remain separate from the Cyber Security Management Center because of the unique security requirements of the NAS critical infrastructure.\nFAA does not have a strategic plan for information security that is up to date and reflects current conditions. FAA’s Information Systems Security Program Policy requires a multiyear information security strategic plan to be developed, maintained, and updated annually. Additionally, NIST SP 800-100 states that agencies should revisit the information security strategic plan when a major change in the agency information security environment occurs. However, the FAA information security strategic plan has not been updated since 2010. Significant changes in the NAS environment, such as the increased reliance on IP networks, increased connectivity between systems, the introduction of NextGen systems, and the designation of the NAS as part of the nation’s critical infrastructure, have changed the level and nature of the information security risks facing air traffic control systems. The evolution of connectivity for NAS systems substantially increases risks of Internet- based intrusions and disruptions. AIT officials told us that the Cyber Security Steering Committee plans to revise the information security strategic plan during fiscal year 2015.\nBecause FAA lacks an up-to-date information security strategic plan, the ATO organization does not have a clear set of goals, objectives, and performance measures around which it can organize its information security program. Responsibility for NAS information security in ATO is distributed across different entities and programs, and ATO officials stated that variation in emphasis on security goals and priorities across the organization makes it challenging to manage information security activities in the NAS environment. For example, according to ATO officials, the NAS incident response organization, NCO, has limited capabilities and available staff because it is required to obtain funding from other program units within ATO, which have different priorities. Additionally, ATO officials stated that remedial actions are often delayed because the program units do not hold system owners accountable for addressing information security weaknesses in a timely manner.\nIn the absence of clearly defined roles and responsibilities or an updated strategic plan, ATO has begun moving forward with strategic planning activities separately from the steering committee’s risk management responsibilities. During our review, ATO evaluated its information security processes and capabilities against the guidance in the NIST Framework for Improving Critical Infrastructure Cybersecurity, with plans to use the results of the evaluation to develop an information security strategic plan for ATO. However, other organizations represented on the steering committee are not involved in this process. Although ATO officials told us that they plan to inform the members of the committee about the results of the review, it is not clear whether the committee intends to use the results in its efforts, or whether ATO’s planned information security strategic plan will reflect the priorities of FAA as a whole.\nUntil it fully establishes an integrated, organization-wide approach to managing information security risk and ensures that federal guidance for securing critical infrastructure is incorporated into its risk management processes, FAA is likely to continue to face challenges in ensuring that risk management decisions are aligned strategically with the its mission and effectively implementing information security controls for air traffic control systems. As a result, the weaknesses we identified are likely to persist.",
"A large, complex, interconnected system like the NAS inherently faces many security risks. Although FAA took many steps to address these risks, weaknesses remain that challenge the FAA in fulfilling its mission of ensuring the safety and efficiency of the nation’s airspace operations. Many weaknesses in access controls and configuration management pose risks to the security of the NAS. The effect of these weaknesses is increased by the significant interconnectivity that exists between the FTI NAS operational environment and the FTI mission support network. Additionally, significant shortcomings limit NCO’s ability to detect and respond to security incidents across NAS systems. These weak controls are mirrored in weak security management processes, such as incomplete policies and procedures for incident response and insufficient testing of security controls. Additionally, actions to mitigate identified security weaknesses are often delayed—sometimes for years. All of these weaknesses combine to pose increased risks to the confidentiality, integrity, and availability of NAS systems and thus put the safe and uninterrupted operation of the nation’s air traffic control system at risk.\nA fundamental cause for these various weaknesses is that FAA has not yet implemented an effective program for managing organizational information security risk to its mission. Although FAA established a cyber security steering committee, roles and responsibilities remain unclear, and AIT and ATO officials continue to disagree on who should be responsible for the security of NAS systems. Likewise, an out-of-date information security strategic plan contributes to the lack of an adequate risk-based structure to guide implementation of security controls. Further, due in part to the lack of an up-to-date strategic plan for the agency, ATO lacks a clear set of goals, objectives, and performance measures around which it can organize its information security program for NAS systems, making it challenging to manage information security activities such as ensuring that controls are effectively implemented and that system owners address identified security weaknesses in a timely manner.\nUntil FAA establishes stronger agency-wide information security risk management processes, fully develops its NAS information security program, and ensures that remedial actions are addressed in a timely manner, the weaknesses that we identified are likely to continue, placing the safe and uninterrupted operation of the nation’s air traffic control system at increased and unnecessary risk.",
"To fully implement its information security program and ensure that unnecessary risks to the security of NAS systems are mitigated, we recommend that the Secretary of Transportation direct the Administrator of FAA to implement the following 14 recommendations:\nFinalize the incident response policy for ATO and ensure that NAS system-level incident response policies specify incident reporting timeframes and the need for all incidents to be reported in accordance with FAA guidance.\nEstablish a mechanism to ensure that all contractor staff complete annual security awareness training as required by federal law and FAA policy.\nEstablish a mechanism to ensure that all staff with significant security responsibilities receive appropriate role-based training.\nEstablish a mechanism to ensure that personnel with incident response roles and responsibilities take appropriate training, and that training records are retained.\nTake steps to ensure that testing of security controls is comprehensive enough to determine whether security controls are in place and operating effectively, by, for example, examining artifacts such as audit reports, change tickets, and approval documents.\nTake steps to ensure that identified corrective actions for security weaknesses are implemented within prescribed timeframes.\nProvide NCO with full network packet capture capability for analyzing\nProvide NCO with access to network sensors on key network network traffic and detecting anomalies at major network interface points at FAA operational facilities. Integrate network traffic flow data into NCO’s ad-hoc query systems. gateways for reviewing intrusion detection, network traffic, and network session data.\nProvide NCO with security event log data for all IP-connected NAS systems.\nAddress identified weaknesses in the search function of the NCO database event query system to eliminate the need for manual workarounds and ensure that all data relevant for security investigations can be retrieved.\nDevelop a formal process for NCO to assess significant identified incidents for potential impact to NAS operations.\nEnsure that NAS incident response capabilities are adequately tested, and that test results are sufficiently documented.\nEnsure that contingency plans for NAS systems are sufficiently documented, and that tests of contingency plans address key elements of the contingency plans, including notification procedures, recovering the system on an alternate platform, and system performance on alternate equipment.\nFurther, to establish an integrated organization-wide approach to managing information security risk and to ensure that risk management decisions are aligned strategically with the FAA’s mission, we recommend that the Secretary of Transportation direct the Administrator of FAA to take the following three actions:\nClearly define organizational responsibilities for information security for NAS systems, and ensure that all relevant organizations, including AIT and ATO, are in agreement with them.\nUpdate the FAA information security strategic plan to reflect current conditions, including the increased reliance on IP networking and the designation of the NAS as one of the nation’s critical infrastructures.\nCreate an agency-wide commitment to strategic planning for information security by ensuring that planning activities are coordinated with all relevant organizations represented on the Cyber Security Steering Committee.\nWe are also making 168 recommendations to address 60 findings in a separate report with limited distribution. These recommendations consist of actions to implement and correct specific information security weaknesses related to access controls and configuration management.",
"In written comments (reprinted in appendix II) on a draft of this report, the Department of Transportation stated that FAA concurred with our recommendations. The department also stated that FAA recognizes the need to secure the NAS environment as part of the nation’s critical infrastructure, and that FAA has taken several steps to improve NAS information security. Additionally, the department stated that FAA recognizes that mission assurance requires the integration of all agency cyber capabilities to support operations and is continuing its efforts to establish an integrated organization-wide approach to managing information security risk. We agree that these actions are important steps for FAA to take, and we also believe that addressing our recommendations will result in valuable improvements in information security over air traffic control systems.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to appropriate congressional committees, the Secretary of Transportation, and other interested parties. In addition, this report will be available at no charge on the GAO website at http://www.gao.gov.\nShould you or your staffs have questions on matters discussed in this report, please contact Gregory C. Wilshusen at (202) 512-6244, Dr. Nabajyoti Barkakati, Ph.D., at (202) 512-4499, or Gerald L. Dillingham, Ph.D., at (202) 512-2834. We can also be reached by e-mail at [email protected], [email protected] and [email protected].\nGAO staff who made major contributions to this report are listed in appendix III.",
"The objective of our review was to evaluate the extent to which the Federal Aviation Administration (FAA) has effectively implemented appropriate information security controls to protect the confidentiality, integrity, and availability of its existing air traffic control (ATC) systems.\nTo determine the effectiveness of the FAA’s security controls, we gained an understanding of the overall National Airspace System (NAS) control environment and examined controls for the agency’s systems and facilities. Specifically, we reviewed controls over the network infrastructure and systems that support the FAA’s mission to provide the safest, most efficient aerospace system in the world. We performed our work at FAA headquarters in Washington, D.C. and other locations supporting key systems, specifically: the Air Traffic Control System Command Center in Warrenton, Virginia; the FAA’s William J. Hughes Technical Center in Egg Harbor Township, New Jersey; and at contractor facilities in Herndon, Virginia; Egg Harbor Township, New Jersey; and Melbourne, Florida.\nTo select the information systems for our audit, we evaluated each NAS information system based on several factors, including its relative importance in supporting FAA’s mission, expected lifetime, and how widely it is used. Further, we selected only systems that use Internet Protocol (IP)-based communications. Based on this evaluation, we for review: FAA selected a non-generalizable sample of five systemsTelecommunications Infrastructure (FTI), Surveillance and Broadcast Service System (SBSS), Traffic Flow Management-Infrastructure (TFM-I), En Route Automation Modernization (ERAM), and En Route Communications Gateway (ECG).\nGAO, Federal Information System Controls Audit Manual (FISCAM), GAO-09-232G (Washington, D.C.: February 2009). and procedures; and standards and guidelines from relevant security and IT security organizations, such as the National Security Agency and the Center for Internet Security. reviewed network access paths to determine if boundaries had been adequately protected; reviewed the complexity and expiration of password settings to determine if password management was being enforced; analyzed users’ access authorizations for four systems to determine whether system access had been approved and properly documented; observed configurations for transmitting data across the network to determine whether sensitive data were being encrypted. For the ERAM and ECG systems, we reviewed configuration settings for network devices by reviewing the network device builds that are distributed to Air Route Traffic Control Centers (ARTCC) by the William J. Hughes Technical Center; reviewed system security settings to determine if sufficient audit and monitoring controls had been implemented; evaluated configuration change control processes for selected systems to determine whether changes were sufficiently documented, tested, and approved in accordance with system procedures; and inspected key network devices and servers to determine if critical patches had been installed and/or were up to date.\nAdditionally, our review of boundary protection controls focused on interconnections between NAS and non-NAS systems.\nUsing the requirements identified by the Federal Information Security Management Act of 2002, which establishes key elements for an effective agency-wide information security program, and associated NIST guidelines and agency requirements, we evaluated the FAA’s information security program by analyzing processes and documentation that were part of FAA’s information security risk management processes to determine the extent to which the process sufficiently supported the agency’s mission and operations; examining system security plans to determine whether they described the security controls in place or planned for meeting the security requirements of the system; examining security awareness training records to determine whether employees and contractors had received training according to FAA policy and federal guidance; analyzing security testing and evaluation results for four systems to determine whether testing of management, operational, and technical controls was sufficient to conclude that controls were in place and operating effectively; examining remedial action plans for four systems to determine whether FAA addressed identified vulnerabilities in a timely manner; examining contingency plans and contingency test results for selected systems to determine whether those plans were appropriately documented and had been sufficiently tested; and reviewing FAA’s processes for identifying and responding to information security incidents to determine whether FAA has implemented an effective incident response capability for its air traffic control systems.\nAs part of our review of the FAA’s information security program, we reviewed several sources of computer-generated data. These included FAA’s employee background investigation data. inventory of NAS information systems, IT security training completion data, and To verify the reliability of these data, we examined them for obvious outliers, omissions, errors, and consulted with FAA officials to resolve any identified anomalies. We also interviewed knowledgeable officials regarding controls on the security training and employee background investigation data, including how and by whom it is input and used. We determined that these sources of data were sufficiently reliable for our purposes.\nWe conducted this performance audit from August 2013 to January 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective.",
"",
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"In addition to the contacts named above, Gary Austin, Lon Chin, West Coile, John de Ferrari, Wilfred Holloway, Nick Marinos, and Chris Warweg (assistant directors); Sher’rie Bacon; Chris Businsky; William Cook; Saar Dagani; Jennifer Franks; Lee McCracken; John Ockay; Justin Palk; Krzysztof Pasternak; Monica Perez-Nelson; Eugene Stevens; Michael Stevens; and Adam Vodraska made key contributions to this report."
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{
"question": [
"What is the threat for FAA brought by its security control weaknesses?",
"What are these weaknesses?",
"What are the shortcomings that increase the risk from these weaknesses?",
"What has FAA also not done?",
"What is required by the Federal Information Security Management Act of 2002?",
"How was FAA's performance in implementing its security program?",
"What are the details of FAA's defects?",
"Why did the weaknesses in FAA's security controls and implementation of its security program exist?",
"What does National Institute of Standards and Technology guidance call for?",
"What action has FAA taken?",
"What is yet to be done by FAA?",
"Specifically, what has FAA not clearly established regarding information security for the NAS?",
"What was GAO asked to do?",
"What was the objective of GAO's action?",
"What did GAO do in this process?",
"What has happened to certain information in the report?"
],
"summary": [
"While the Federal Aviation Administration (FAA) has taken steps to protect its air traffic control systems from cyber-based and other threats, significant security control weaknesses remain, threatening the agency's ability to ensure the safe and uninterrupted operation of the national airspace system (NAS).",
"These include weaknesses in controls intended to prevent, limit, and detect unauthorized access to computer resources, such as controls for protecting system boundaries, identifying and authenticating users, authorizing users to access systems, encrypting sensitive data, and auditing and monitoring activity on FAA's systems.",
"Additionally, shortcomings in boundary protection controls between less-secure systems and the operational NAS environment increase the risk from these weaknesses.",
"FAA also did not fully implement its agency-wide information security program.",
"As required by the Federal Information Security Management Act of 2002, federal agencies should implement a security program that provides a framework for implementing controls at the agency.",
"However, FAA's implementation of its security program was incomplete.",
"For example, it did not always sufficiently test security controls to determine that they were operating as intended; resolve identified security weaknesses in a timely fashion; or complete or adequately test plans for restoring system operations in the event of a disruption or disaster. Additionally, the group responsible for incident detection and response for NAS systems did not have sufficient access to security logs or network sensors on the operational network, limiting FAA's ability to detect and respond to security incidents affecting its mission-critical systems.",
"The weaknesses in FAA's security controls and implementation of its security program existed, in part, because FAA had not fully established an integrated, organization-wide approach to managing information security risk that is aligned with its mission.",
"National Institute of Standards and Technology guidance calls for agencies to establish and implement a security governance structure, an executive-level risk management function, and a risk management strategy in order to manage risk to their systems and information.",
"FAA has established a Cyber Security Steering Committee to provide an agency-wide risk management function.",
"However, it has not fully established the governance structure and practices to ensure that its information security decisions are aligned with its mission.",
"For example, it has not (1) clearly established roles and responsibilities for information security for the NAS or (2) updated its information security strategic plan to reflect significant changes in the NAS environment, such as increased reliance on computer networks.",
"GAO was asked to review FAA's information security program.",
"Specifically, the objective of this review was to evaluate the extent to which FAA had effectively implemented information security controls to protect its air traffic control systems.",
"To do this, GAO reviewed FAA policies, procedures, and practices and compared them to the relevant federal law and guidance; assessed the implementation of security controls over FAA systems; and interviewed officials.",
"This is a public version of a report containing sensitive security information. Information deemed sensitive has been redacted."
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CRS_R40142
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{
"title": [
"",
"Background",
"COBRA Coverage",
"General Requirements",
"Covered Employers",
"Qualified Beneficiaries",
"Qualifying Events",
"The Nature of COBRA Coverage",
"Duration of Coverage",
"COBRA Coverage and Medicare",
"Notice Requirements",
"Election of Coverage",
"Paying for COBRA",
"Conversion Option",
"Penalties for Noncompliance",
"Issues",
"Cost Issues",
"COBRA and the Affordable Care Act",
"Number of Beneficiaries and Duration of Coverage",
"Coverage Issues",
"Employer Size",
"Retirees",
"Recent Legislation"
],
"paragraphs": [
"",
"Most Americans with private group health insurance are covered through an employer, or through the employer of a family member. In 2012, about 61% of private employers offered health insurance coverage to their full-time employees, and most employers extended those health benefits to the families of their workers. A recent study by the Robert Wood Johnson Foundation found that in 2012, 59.5% of insured Americans had their insurance through an employer. When workers lose their jobs, they can also lose their health insurance. If that health insurance is family coverage, then a worker's family members can also become uninsured.\nTitle X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA; P.L. 99-272 ) requires employers who offer health insurance to continue coverage for their employees under certain circumstances. Congress enacted the legislation to expand access to coverage for at least those people who became uninsured as a result of changes in their employment or family status. Although the law allows employers to charge 102% of the group plan premium, this can be less expensive than similar coverage available in the individual insurance market. The law affects private sector employer group health plans through amendments to the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. COBRA continuation coverage for employees of state and local governments is required under amendments to the Public Health Service Act. Continuation coverage similar to COBRA is provided to federal employees and employees of the Washington, DC, district government through the law authorizing the Federal Employees Health Benefits program under Title 5 of the U.S. Code .\nBefore enactment of COBRA, if an employee's job was terminated (voluntarily or involuntarily), the insurance offered by the employer also ceased, usually within 30 to 60 days. Women were especially vulnerable to loss of insurance coverage if they became unemployed, widowed, or divorced. Although some employers offered the option of buying into the group plan, there was no certainty of that option. In 1985, 10 states had laws requiring insurance policies sold in their states to include a continuation of coverage option for laid-off workers. However, self-insured employers (employers that assume the risk of the health care costs of their employees rather than using private insurers) were not regulated by these state-mandated benefit laws; self-insured plans were regulated at the federal level under ERISA. Health insurance coverage for these affected workers and their families was not consistently available.",
"\"COBRA\" refers to Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, P.L. 99-272 . The regulations for COBRA are written by the Department of Labor (DOL) and the Internal Revenue Service (IRS).\nThis section provides a simplified explanation of who qualifies and how, what the responsibilities of the employer are, and what the employee is responsible for. More detailed information is available from DOL's COBRA Continuation Coverage, Employee Benefits Security Administration, at http://www.dol.gov/ebsa/cobra.html .",
"Under COBRA, employers who provide health insurance benefits must offer the option of continued health insurance coverage at group rates to qualified employees and their families who are faced with loss of coverage due to certain events. Coverage generally lasts 18 months but, depending on the circumstances, can last for longer periods. COBRA requirements also apply to self-insured firms. An employer must comply with COBRA even if it does not contribute to the health plan; it needs only maintain such a plan to come under the statute's continuation requirements.",
"COBRA covers all employers, with the following exceptions:\nSmall employers. Employers with fewer than 20 employees are not covered under COBRA. An employer is considered to meet the small employer exception during a calendar year if on at least 50% of its typical business days during the preceding calendar year it had fewer than 20 employees. Church plans. Federal, state, and local governments. Although federal employees are not covered under COBRA, they and employees of the Washington, DC, district government have been entitled to temporary continuation of coverage (TCC) under the Federal Employees Health Benefits Program (FEHB) since 1990. Continuation coverage for state and local employees is mandated under the Public Health Service Act with provisions very similar to COBRA's protections. See 42 U.S.C. Section 300bb-1 et seq.",
"In general, a qualified beneficiary is\nan employee covered under the group health plan who loses coverage due to termination of employment or a reduction in hours; a retiree who loses retiree health insurance benefits due to the former employer's bankruptcy under Chapter 11; a spouse or dependent child of the covered employee who, on the day before the \"qualifying event\" (see below), was covered under the employer's group health plan; or any child born to or placed for adoption with a covered employee during the period of COBRA coverage.",
"Circumstances that trigger COBRA coverage are known as \"qualifying events.\" A qualifying event must cause an individual to lose health insurance coverage. Losing coverage means ceasing to be covered under the same terms and conditions as those available immediately before the event. For example, if an employee is laid off or changes to part-time status resulting in a loss of health insurance benefits, this is a qualifying event. Events that trigger COBRA continuation coverage include\ntermination (for reasons other than gross misconduct) or reduction in hours to the point where the employee no longer qualifies for the benefit.\nSpouses and dependent children can experience the following qualifying events leading to their loss of health insurance coverage:\nthe death of the covered employee, divorce or legal separation from the employee, the employee's becoming eligible for Medicare, and the end of a child's dependency under a parent's health insurance policy.\nUnder the following circumstances, a covered employer must offer a retiring employee access either to COBRA or to a retiree plan that satisfies COBRA's requirements for benefits, duration, and premium:\nIf a covered employer offers no retiree health plan, the retiring employee must be offered COBRA coverage. If the employer offers a retiree health plan but it is different from the coverage the employee had immediately before retirement the employer must offer the option of COBRA coverage in addition to the offer of the alternative retiree plan. If the retiring employee opts for the alternative coverage and declines COBRA coverage, then she or he is no longer eligible for COBRA. If the employer's retiree health plan satisfies COBRA's requirements for benefits, premium, and duration, the employer is not required to offer a COBRA option when the employee retires, and the coverage provided by the retiree plan can be counted against the maximum COBRA coverage period that applies to the retiree, spouse, and dependent children. If the employer terminates the plan before the maximum coverage period has expired, COBRA coverage must be offered for the remainder of the period. The only other access a retiree has to COBRA coverage is when a former employer terminates the retiree health plan under Chapter 11 bankruptcy reorganization. This option would be available only to those retirees who are receiving retiree health insurance. In this case, the coverage can continue until the death of the retiree. The retiree's spouse and dependent children may purchase COBRA coverage from the former employer for 36 months after the retiree's death.",
"The continuation coverage must be identical to that provided to \"similarly situated non-COBRA beneficiaries.\" The term similarly situated is intended to ensure that beneficiaries have access to the same options as those who have not experienced a qualifying event. For example, if the employer offers an open season for non-COBRA beneficiaries to change their health plan coverage, the COBRA beneficiary must also be able to take advantage of the open season. By the same token, COBRA continuation coverage can be terminated if an employer terminates health insurance coverage for all employees.",
"The duration of COBRA coverage can vary, depending on the qualifying event.\nIn general, when a covered employee experiences a termination or reduction in hours of employment, the continued coverage for the employee and the employee's spouse and dependent children may continue for 18 months. Retirees who lose retiree health insurance benefits, due to the bankruptcy (a reorganization under Chapter 11) of their former employer, may elect COBRA coverage that can continue until their death. The spouse and dependent children of the retiree may continue the coverage for an additional 36 months after the death of the retiree. For all the other qualifying events listed above (death of employee, divorce or legal separation from employee, employee becoming eligible for Medicare, the end of a child's dependent status under the parents' health policy), the coverage for the qualified beneficiaries may be continued for 36 months.\nDifferent provisions apply to disabled individuals. If the Social Security Administration (SSA) makes a determination that the date of an individual's onset of disability occurred during the first 60 days of COBRA coverage or earlier, the employee and the employee's spouse and dependents are eligible for an additional 11 months of continuation coverage. This is a total of 29 months from the date of the qualifying event (which must have been a termination or reduction in hours of employment). This provision was designed to provide a source of coverage while individuals wait for Medicare coverage to begin. After a determination of disability, there is a five-month waiting period for Social Security disability cash benefits and another 24-month waiting period for Medicare benefits. See the section below regarding the premium for this additional 11 months.\nUnder some conditions, COBRA coverage can end earlier than the full term. Although coverage must begin on the date of the qualifying event, it can end on the earliest of the following:\nthe first day for which timely payment of the premium is not made (payment is timely if it is made within 30 days of the payment due date and payment cannot be required before 45 days after the date of election (see below)); the date on which the employer ceases to maintain any group health plan; the first day after the qualified beneficiary becomes actually covered (and not just eligible to be covered) under another employer's group health plan, unless the new plan excludes coverage for a preexisting condition; or the date the qualified beneficiary is entitled to Medicare benefits, if this condition is specified in the group health plan.\nIf a COBRA-covered beneficiary receiving coverage through a region-specific plan (such as a managed care organization) moves out of that area, the employer is required to provide coverage in the new area if this can be done under one of the employer's existing plans. For example, if the employer's plan is through an insurer licensed in the new area to provide the same coverage available to the employer's similarly situated non-COBRA employees. Further, if this same coverage would not be available in the new area, but the employer maintains another plan for employees who are not similarly situated to the beneficiary (such as a plan offered to management or another group within the firm) that would be available in the new area, then that alternative coverage must be offered to the beneficiary. If, however, the only coverage offered by the employer is not available in the new area, the employer is not obliged to offer any other coverage to the relocating beneficiary.",
"COBRA coverage varies for Medicare beneficiaries depending on whether they become eligible for COBRA before or after they become eligible for Medicare. Medicare law requires that certain employers (those with 20 or more employees) provide their employees who are Medicare beneficiaries with the same coverage offered to their other employees. This includes family coverage, if it is offered.\nIf a working Medicare beneficiary experiences a qualifying event (e.g., retirement, job termination), he or she becomes eligible for 18 months of COBRA coverage from the date of the qualifying event. If the beneficiary's family members lose coverage because of the qualifying event, they would be eligible for COBRA coverage for up to 36 months from the date on which the employee became eligible for Medicare . For example, if an employee becomes eligible for Medicare in January 2013 and then retires 12 months later in January 2014, the covered family members would be eligible for 24 months of COBRA coverage, rather than 36 months. However, no matter when the second qualifying event occurs, COBRA coverage for qualified family members can never be less than 18 months.\nOn the other hand, if an individual is receiving COBRA benefits and becomes eligible for Medicare during the 18 month period, COBRA coverage can be terminated early (see above, under \" Duration of Coverage \"). In this case, the individual's covered family members can continue their COBRA coverage for up to 36 months from the date of the original qualifying event.",
"Employers, employees, and the employer's health plan administrators all have to meet requirements for notifying each other regarding COBRA.\nAt the time an employee first becomes covered under a health plan, the plan administrator must provide written notification to the employee and his or her spouse regarding COBRA rights if a qualifying event should occur.\nIf a qualifying event occurs, other notices are required.\nThe employer must notify the plan administrator of the event within 30 days of the death of the employee, a termination, or reduction in hours, the employee's becoming entitled to Medicare, or the beginning of bankruptcy proceedings. Within 14 days of receiving the employer's notice, the plan administrator must notify, in writing, each covered employee and his or her spouse of their right to elect continued coverage. The employee must notify the employer or plan administrator within 60 days of a divorce or legal separation of a covered employee or a dependent child's ceasing to be a dependent of the covered employee under the policy. COBRA beneficiaries who are determined by the SSA to have been disabled within the first 60 days of COBRA coverage must notify the plan administrator of this determination to be eligible for the additional 11 months of coverage. They must provide this notice within 60 days of receiving the SSA's decision.",
"A qualified individual must choose whether to elect COBRA coverage within an election period. This period is 60 days from the later of two dates: the date coverage would be lost due to the qualifying event or the date that the beneficiary is sent notice of his right to elect COBRA coverage. The beneficiary must provide the employer or plan administrator with a formal notice of election. Coverage is retroactive to the date of the qualifying event. The employee or other affected person may also waive COBRA coverage. If that waiver is then revoked within the election period, COBRA coverage must still be provided. However, coverage begins on the date of the revocation rather than the date of the qualifying event. The Trade Act of 2002 ( P.L. 107-210 ) provided a temporary extension of the election period for those individuals who qualified for the Health Coverage Tax Credit (HCTC). Under the provision, qualified individuals who did not elect COBRA coverage during the regular election period can elect continuation coverage within the first 60-day period beginning on the first day of the month when they were determined to have met the qualifications.",
"Employers are not required to pay for the cost of COBRA coverage. They are permitted to charge the covered beneficiary 100% of the premium (both the portion paid by the employee and the portion paid by the employer, if any), plus an additional 2% administrative fee. For disabled individuals who qualify for an additional 11 months of COBRA coverage, the employer may charge 150% of the premium for these months. The plan must allow a qualified beneficiary to pay for the coverage in monthly installments, although alternative intervals may also be offered.",
"Some states require insurers to offer group health plan beneficiaries the option of converting their group coverage to individual coverage. Conversion enables individuals to buy health insurance from the employer's plan without being subject to medical screening. Under the Health Insurance Portability and Accountability Act (HIPAA; P.L. 104-191 ), a person moving from the group to individual insurance market is guaranteed access to health insurance coverage either under federal requirements or an acceptable alternative state mechanism. The beneficiary must have exhausted all COBRA coverage before moving to the individual market. Although the policy must be issued, the premium might be higher than the premium under a group plan. Despite the higher premiums, the conversion option may be attractive to a person who would otherwise have difficulty obtaining health insurance because of a major illness or disability.",
"Private group health plans are subject to an IRS excise tax for each violation involving a COBRA beneficiary. In general, the tax is $100 per day per beneficiary for each day of the period of noncompliance. ERISA also contains civil penalties of up to $100 per day for failure to provide the employee with the required COBRA notifications. State and local plans covered under the Public Health Service Act are not subject to the same financial penalties provided under the tax code or ERISA. However, state and local employees have the right to bring an \"action for appropriate equitable relief\" if they are \"aggrieved by the failure of a state, political subdivision, or agency or instrumentality thereof\" to provide continuation health insurance coverage as required under the act.",
"",
"COBRA was enacted to provide access to group health insurance for people who lose their employer-sponsored coverage, and thus to help reduce the number of uninsured. However, the law has limitations in its effectiveness in covering persons leaving the workforce and, from the point of view of both employees and employers, has costs that can be burdensome.\nMany COBRA beneficiaries are concerned about the cost of COBRA coverage. A Kaiser study provides figures for the average premiums for employer-sponsored health insurance coverage. The average annual premium for employer-sponsored health insurance in 2012 was $5,615 for single coverage and $15,745 for family coverage. Covered-current employees contribute on average 18% of the premium for single coverage and 28% of the premium for family coverage. Under COBRA, former employees may be required to pay up to 102% of the premium. This can be a hardship for newly unemployed individuals.\nEmployers also express concerns about costs. Spencer & Associates, in its 2009 survey, reported that average claim costs for COBRA beneficiaries exceeded the average claim for an active employee by 53%. The average annual health insurance cost per active employee was $7,190, and the COBRA cost was $10,988. The Spencer & Associates analysts contend that this indicates that the COBRA population is sicker than active-covered employees and that the 2% administrative fee allowed in the law is insufficient to offset the difference in actual claims costs.\nIt could be that the monthly expense of COBRA benefits contributes to \"adverse selection\" among the pool of potential beneficiaries. Healthy individuals may decide against COBRA benefits, while sicker individuals, anticipating medical expenses that would exceed the monthly premium, opt in.",
"The Affordable Care Act (ACA) did not eliminate COBRA, and it made no direct changes to COBRA benefits. However, effective in 2014, ACA enacts health insurance reforms, establishment of newly established health insurance exchanges, and premium credits for certain individuals.\nWhen the newly established health insurance exchanges are operational in 2014, it is expected that higher-quality health insurance will be available to uninsured individuals for purchase. If that is the case, will COBRA benefits still be relevant, or will the newly unemployed prefer to purchase policies on the exchange?\nHow the ACA provisions will impact demand for COBRA coverage may vary by individual. In the absence of premium credits, some young and healthy individuals may find COBRA coverage more affordable than coverage in the exchange, whereas the opposite might occur for older workers. In addition, access to premium credits for individuals with income up to 400% of the federal poverty level may improve affordability of coverage.\nEmployers, health care policy groups, and benefit advisors see an ongoing role for COBRA. They expect that employees will see value in continuing their employer benefits, despite the cost:\nCOBRA will still provide a ready bridge for those who expect to be re-employed with new health benefits. People with pre-existing conditions and a network of health care providers may feel better served by their COBRA coverage. The Affordable Care Act requires employers to provide \"Summaries of Benefits and Coverage\" to their employees. This will make it easier for employees to compare their health benefits under COBRA with the other options available to them. The status of the exchanges and the quality/cost of the products sold on the exchanges are still unknown.",
"Statistical data on COBRA beneficiaries are sparse; however, some data are collected. The Medical Expenditure Panel Survey, Agency for Healthcare Research and Quality, U.S. Department of Health and Human Services, provides an annual estimate of COBRA beneficiaries based on survey data:\n2011: 2,616,000 2010: 3,443,000 2009: 3,190,000 2008: 2,832,000\nCharles D. Spencer & Associates, a company that provides employee benefits analysis, surveyed 120 employers who subscribe to its service regarding COBRA, capturing information on the 2008 plan year for about 1.6 million workers. Its 2009 COBRA survey found that less than 10% of those who were eligible for COBRA benefits elected to take them, down significantly from the 2006 survey that showed about 27% of those eligible elected coverage. Average length of COBRA coverage was the lowest since the survey started in 1994. The average beneficiary under an 18-month qualifying event kept COBRA coverage for 7.5 months, down from 8.3 months in 2006 and 10.1 months in 1999. The average beneficiary under a 36-month qualifying event kept coverage for 14.2 months, down from 16.6 months in 2006 and 23.4 months in 1999.",
"COBRA is a method for retaining health insurance coverage, but many workers are excluded:\nIndividuals who declined their employer-sponsored benefits do not qualify for COBRA. Workers who did not qualify for their employer-sponsored benefits, hourly and seasonal employees for example, do not qualify for COBRA benefits. The small employer exception exempts employers with fewer than 20 employees from providing COBRA coverage. COBRA coverage is not extended to individuals who work for an employer, regardless of size, that does not offer group health insurance. COBRA does not provide for continuation of coverage for family members unless an employer offers a family option. If an employer declares bankruptcy under Chapter 7 or simply discontinues operation, COBRA is not an option for employees who might otherwise have been eligible for COBRA benefits.\nIn 2009, The Commonwealth Fund estimated that about 66% of currently working Americans, or about 79 million workers, would qualify for COBRA benefits if they became unemployed.",
"Currently, COBRA provides an exception for employers with fewer than 20 employees. According to the Census Bureau's Statistics of U.S. Business , in 2010, approximately 5.2 million firms employed 20.5 million people, or about 18% of employees covered in the survey. These workers would not be covered by COBRA because their employer had fewer than 20 employees at that firm. According to The Commonwealth Fund, in 2007, 5% of insured adults aged 19 to 64 were ineligible for COBRA because their employer-sponsored insurance was provided through a firm with fewer than 20 employees. Forty states and the District of Columbia have attempted to address this issue through \"mini-COBRA\" laws, which require that continuation coverage be offered to employees in smaller firms. However, in some states, the continuation coverage may be offered for a shorter period or provide fewer benefits than federal COBRA law requires.",
"Almost all Americans over the age of 65 qualify for Medicare—the federal health insurance program for the elderly. But many people retire before age 65. In 2012, the Social Security Administration reported that nearly 60% of Social Security beneficiaries retired before the age of 65. These retirees, separated from employment, are often separated from their former source of health insurance.\nSome retirees obtain health insurance coverage through retiree plans offered by their former employers, but the number of employers who offer retiree plans has been falling. In 2008, 22% of workers were employed at a private establishment that offered health benefits to early retirees, down from 31% in 1997, and 17% of workers were employed at a private establishment that offered health benefits to Medicare-eligible retirees, down from 28% in 1997. The 2010 Kaiser annual employer survey reported that the percentage of employers with 200+ employees who offered retiree health benefits had dropped from 66% in 1988 to 28% in 2010. Small firms are even less likely to offer such coverage: 3% of firms with 3 to 199 workers offered retiree plans in 2010.\nFor retirees who are under the age of 65, and the near-elderly, those aged 55 to 65, separated from employment, COBRA coverage can be an important source of health insurance: the 18 months of COBRA benefits provide a bridge to Medicare for those who are close to the age of 65. When COBRA benefits run out, the near-elderly can have unique problems finding health insurance coverage on the individual market.",
"Currently, there is no legislation in the 113 th Congress to amend COBRA. In the 112 th Congress, legislation to extend COBRA coverage to additional people, domestic partners for example, or expand COBRA coverage, to span the time between retirement and Medicare eligibility for example, was introduced, but no major action was taken.\nThroughout 2008-2009, the unemployment rate in the United States climbed from 5% to a peak of 10% in October 2009. A slow recovery was predicted and many who lost their jobs anticipated a long period of being either underemployed or unemployed. As a result, many who were eligible to continue their employer-sponsored health insurance did not elect coverage under COBRA, leaving their families at risk.\nThe 111 th Congress addressed this problem by creating a temporary COBRA premium subsidy under Title III of the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ). The subsidy was limited to 15 months and covered 65% of the COBRA premium. The individuals had to pay the remaining balance. This provision has since expired. The COBRA subsidy, as amended by subsequent laws, was available to individuals who met the income test and who were involuntarily terminated on or after September 1, 2008, and before June 1, 2010."
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{
"question": [
"What happens to the employer-sponsored health insurance when an employee is terminated?",
"What would happen if that health insurance is family coverage?",
"How would the family situation change if the worker finds another job with health benefits?",
"Besides losing employment, how else might families lose insurance?",
"What did Congress do in 1985 for the unemployed?",
"What is the detail of that action?",
"What is the former employee responsible for?",
"What would happen if employers violate the legislation?",
"How does COBRA benefit the public?",
"How are spouses and dependent children benefited by COBRA, specifically?",
"What is the overall impact of COBRA benefits?"
],
"summary": [
"When an employee is terminated, his or her employer-sponsored health insurance usually ends within 30 to 60 days.",
"If that health insurance is family coverage, then a worker's family members can also become uninsured.",
"Even if the worker finds another job with health benefits, a family can experience long periods of uninsurance, as they wait to qualify for the new benefit.",
"This same problem is also faced by families that experience a reduction in hours in the workplace, the death of a worker, or a divorce.",
"In 1985, Congress passed legislation to provide the unemployed temporary access to their former employer's health insurance.",
"Under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA; P.L. 99-272), an employer with 20 or more employees who provided health insurance benefits must provide qualified employees and their families the option of continuing their coverage under the employer's group health insurance plan in the case of certain events.",
"The former employee is responsible for paying the entire premium.",
"Employers who fail to provide the continued health insurance option are subject to penalties.",
"COBRA can be an important source of health insurance for the recently unemployed, but it also benefits the disabled, the retired, the divorced, and their families.",
"For example, spouses and dependent children can also qualify for COBRA benefits in the event of divorce or the death of the family member with employer-sponsored health coverage.",
"Since 2009, about 3 million individuals and families have used COBRA benefits each year."
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CRS_RL31931
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{
"title": [
"",
"Introduction",
"Background to Federal Climate Change Policy: From \"No Regrets\" Back to \"No Regrets\"",
"The International Framework",
"Developing Programs: EPACT and Climate Action Plans",
"Rejection of the Kyoto Protocol",
"Regulatory Programs Affecting Emissions of Greenhouse Gases",
"Energy and Environmental Programs Related to Emissions Reductions",
"Emissions Reductions from Landfills",
"Significant New Alternatives Policy (SNAP) Determinations",
"Residential Appliance Standards",
"Updating State Commercial Building Codes",
"Corporate Average Fuel Economy (CAFE)",
"Renewable Fuel Standard",
"Distributed Energy Resources",
"Monitoring Rules—Carbon Dioxide Monitoring by Electric Generating Facilities",
"Regulatory Program Promoting Renewable Energy Through PURPA Eliminated by P.L. 109-58",
"The Energy Policy Act of 2005",
"The Energy Independence and Security Act of 2007",
"Conclusion"
],
"paragraphs": [
"",
"Climate change is viewed as a global issue, but proposed responses generally require action at the national level. In 1992, the United States ratified the United Nations Framework Convention on Climate Change (UNFCCC) which called on industrialized countries to take the lead in reducing greenhouse gases. Over the past 16 years, a variety of voluntary and regulatory actions have been proposed or undertaken in the United States, including monitoring of utility carbon dioxide emissions, improved appliance efficiency, and incentives for developing renewable energy sources.\nIn 2001, President George W. Bush rejected the Kyoto Protocol to the UNFCCC, which called for legally binding commitments by developed countries to reduce their greenhouse gas emissions. He also rejected the concept of mandatory emissions reductions. Since then, the Bush Administration has focused U.S. climate change policy on voluntary initiatives to reduce the growth in greenhouse gas emissions. This focus was particularly evident in the Administration's 2006 Climate Action Report (CAR) submitted under the provisions of the UNFCCC. Of the roughly 50 programs summarized in the 2006 CAR, only seven were described as \"regulatory.\" These regulatory programs were generally implemented to achieve energy or environmental goals other than the reduction of greenhouse gas emissions, but produced a concomitant emissions reduction. In this sense, they could be considered the results of a \"no regrets\" policy in which climate change effects resulting from related air quality and energy policies are included in the decision-making process on new or modified rules.\nHowever, indirect regulation and \"no regrets\" policies may be supplanted by direct regulation of greenhouse gas emissions. In its 2007 decision in Massachusetts v. EPA , the Supreme Court found that the Environmental Protection Agency has the authority to regulate greenhouse gas emissions from motor vehicles under the Clean Air Act. Further, the court directed EPA to begin the process of determining whether greenhouse gases endanger public health and welfare. If EPA finds that they do, then EPA would be required under the Clean Air Act to regulate their emission. However, it is also possible that EPA would find that greenhouse gases do not endanger public health and welfare, or that there is insufficient evidence to make a finding either way.\nFurther, in June 2008, the Senate considered legislation ( S. 3036 ) to enact an economy-wide cap-and-trade system to reduce U.S. greenhouse gas emissions. However, a cloture motion on this bill failed, and the bill was ultimately tabled. A cap-and-trade system is the favored approach of the incoming Administration, and similar legislation may have a better chance of passage in the 111 th Congress.\nThis report provides background on the evolution of U.S. climate change policy from ratification of the UNFCCC to the George W. Bush Administration's rejection of the Kyoto Protocol programs, to the present. Current major regulatory programs that monitor or reduce greenhouse gas emissions are identified, along with their estimated effect on greenhouse gas emissions. Finally, energy legislation enacted in the 109 th and 110 th Congresses that could directly or indirectly reduce greenhouse gases is discussed.",
"",
"U.S. policy toward global climate change evolved from a \"study only\" to a \"study and action\" orientation in 1992 with completion of the UNFCCC in Rio de Janeiro. Both nationally and internationally, much of the debate over policies to address climate change has focused on energy use, because fossil fuel consumption is the main source of greenhouse gas emissions in most countries. During the deliberations on the UNFCCC, the National Academy of Sciences (NAS) released a report on global warming. In this report, Policy Implications of Greenhouse Warming , the NAS stated, \"The United States could reduce or offset its greenhouse gas emissions by between 10 and 40 percent of 1990 levels at low cost, or at some net savings, if proper policies are implemented.\" The NAS's energy policy recommendations focused on increasing energy conservation and efficiency, incorporating global warming as a factor in future energy planning, and studying and eventually implementing \"full social cost pricing\" of energy.\nAlthough the report was widely publicized, many of its recommendations were not applied. Driven by concerns about scientific uncertainty and the potential costs to the economy of measures to reduce greenhouse gas emissions, the George H. W. Bush Administration refused to agree to the negotiation of a binding agreement to reduce the nation's carbon dioxide (CO 2 ) emissions by a specific date. The UNFCCC reflects the negotiating position of the United States and many other countries in that it called only for voluntary control measures. Senate floor debate on ratification of the UNFCCC brought out concerns by some Senators about the cost of compliance, its impact on the country's economic competitiveness , and the comprehensiveness with respect to the omission of reduction commitments for developing countries—concerns that were lessened because of the non-binding nature of the reduction goals. Those arguing for emissions controls argued that controls could create jobs and enhance economic health, and that high emissions indicated inefficiency.\nAsserting that \"the developed country Parties should take the lead\" in reducing emissions, the UNFCCC set the goal that developed countries aim to return their greenhouse gas emissions to 1990 levels by the year 2000. In line with this goal, developed countries agreed in principle to adopt national plans and policy options to mitigate climate change by reducing anthropogenic emissions and enhancing sinks. The United States submitted such plans in 1992, 1994, 1997, 2002, and 2006, as discussed below.",
"The Energy Policy Act of 1992 (EPACT) is the principal statutory basis for programs that constitute the U.S. response to the UNFCCC. Programs developed pursuant to EPACT, including appliance energy efficiency standards and updated building codes, are discussed below. Primarily crafted as part of an energy policy response to the Persian Gulf War of 1991, its energy conservation, renewable energy, and other titles were also seen as having a beneficial effect on global climate change concerns being debated at that time in international circles. In its 1992 submission to the UNFCCC, the George H. W. Bush Administration listed 11 different titles of EPACT as \"extremely important\" to its overall strategy of reducing greenhouse gases.\nSome of the previously referenced recommendations of the NAS were embodied in several sections of EPACT. These sections included provisions to establish energy-efficiency standards, promote dissemination of energy-saving information, establish several national research and development programs related to deployment of energy-efficiency technologies, and authorize the Department of Energy (DOE) to evaluate cost-effective energy efficiency technologies. In addition to these activities to improve energy efficiency, EPACT Title XVI aimed to incorporate global warming concerns in energy policy planning. Title XVI authorized DOE to collect, analyze, and report information on climate change. Resulting DOE activities included a report on the various economic, energy, social, environmental, and competitive implications of reducing greenhouse gas emissions; the development of a least-cost energy strategy designed to achieve \"the stabilization and eventual reduction in the generation of greenhouse gases\"; the creation of a Director of Climate Change; and the development of an inventory of greenhouse gas emissions and early reductions in such emissions.\nIndeed, EPACT's authors anticipated that it would help stabilize or even reduce emissions of greenhouse gases at little cost, in line with the 1991 NAS report. As stated by the House report:\nThe committee expects that, if fully implemented, H.R. 776 will result in a substantial reduction in U.S. greenhouse gas emissions relative to forecasted levels. The bulk of these reductions result from the programs that will demonstrate and transfer advanced clean coal and renewable technologies abroad, and from the domestic energy efficiency and renewable energy initiatives. The provisions on electric utilities, alternative fuels and coalbed methane are also significant.\nThe notion that the United States could meet modest CO 2 emission reduction goals at little or no cost underlies many of the global climate change initiatives during the previous Bush and Clinton Administrations, including the George H. W. Bush Administration's \"No Regrets\" policy and 1992 Climate Action Plan, and the Clinton Administration's 1994 and 1997 Climate Action Plans. Using such an approach to climate change policy, neither of these administrations requested regulatory authority from Congress to implement a climate change policy. Both advocated strategies of undertaking governmental implementing actions that could be done administratively (unless Congress legislated otherwise) and of creating incentives for private industry to voluntarily undertake emissions reduction initiatives.\nThe Clinton Action Plans were similar to the plan developed under the George H. W. Bush Administration. Both were designed to foster market choices that would conserve energy, increase energy efficiency, and encourage natural gas use. Both were also designed to strengthen selected regulatory standards that concomitantly reduced greenhouse gas emissions—such as landfill regulations that curtail methane releases. Several actions in the 1994 Clinton plan expanded programs listed in the George H. W. Bush Administration's plan by augmenting funding or technical support to increase anticipated reductions. Other Clinton proposals were new: Examples included a \"Golden Carrot\" program to induce efficiency improvements of industrial equipment; a renewable energy consortium; a program to encourage employers to replace parking subsidies with cash incentives to ride transit, car pool, or find other ways to commute; and a program to promote more efficient nitrogen fertilizer use.",
"As it became clear that the voluntary 1992 greenhouse gas emission reduction goals would not be met, parties to the UNFCCC began negotiations that culminated in the 1997 Kyoto Protocol to the UNFCCC. This protocol outlined legally binding emissions reductions for developed countries to specified amounts below 1990 levels, averaged over the years 2008 to 2012. The Clinton Administration committed to a 7% reduction below 1990 levels. The Kyoto Protocol, if it had been submitted to the Senate and ratified, would have changed the U.S. commitment from a voluntary one to a binding commitment. Critics of the Kyoto Protocol raised concerns similar to those debated in connection with the UNFCCC in 1992: concerns about cost, comprehensiveness, and competitiveness. The possibility of failing to comply with a binding commitment intensified the focus on potential costs of the U.S. global climate change policy. The United States, along with most of the world, failed to meet the goal set at Rio of returning 2000 emissions to the level that existed in 1990, a fact that raises questions about the premise that significant greenhouse gas reductions can be achieved at little or no costs. For those who believe substantial reductions in greenhouse gas emissions would entail substantial costs, the Kyoto Protocol's potential costs led to concerns about its effects on the country's competitiveness and its exclusion of developing countries from mandatory emission reductions (comprehensiveness).\nThat cost, competitiveness, and comprehensiveness remain pivotal factors in climate change policy is illustrated by the George W. Bush Administration's rejection of the Kyoto Protocol early in 2001. In his June 11, 2001, speech on global climate change, the President stated that the Kyoto Protocol was \"fatally flawed in fundamental ways.\" A primary flaw outlined by the President is the exemption of China and other large developing countries from its emissions reduction provisions. This \"comprehensiveness\" concern was closely followed by \"cost\" and \"competitiveness\" concerns. President Bush stated:\nKyoto is, in many ways, unrealistic. Many countries cannot meet their Kyoto targets. The targets themselves are arbitrary and not based upon science. For America, complying with those mandates would have a negative economic impact with layoffs of workers and price increases for consumers. And when you evaluate all these flaws, most reasonable people will understand that it's not sound public policy.\nTo respond to global climate change, President Bush called for a new approach focused on science and on flexible control mechanisms that employ market-based incentives. Among the principles that the President argued should guide such a program were the following:\nWe must always act to ensure continued economic growth and prosperity for our citizens and for citizens throughout the world.... And finally, our approach must be based on global participation, including that of developing countries whose net greenhouse gas emissions now exceed those in the developed countries.\nThe Administration's 2001 proposal initiated a new voluntary greenhouse gas reduction program, similar to ones introduced in previous administrations. The plan focuses on improving the carbon intensity of the economy, reducing current emissions of 183 metric tons of carbon equivalent per million dollars of GDP to 151 metric tons per million dollars of GDP by 2012. The plan proposed several voluntary initiatives, along with increased spending and tax incentives, to achieve this goal. However, the Administration stated that three-quarters of the projected reduction would be achieved through current efforts underway, not by new initiatives. The Administration projected that by 2010, the program could result in an emissions reduction of approximately 4.5% relative to \"business as usual.\" However, this level would still be approximately 28% higher than the 1990 level defined by the UNFCCC. Further, without explicit requirements, it is unclear whether the targets set by the Administration will be met.\nA key piece of the Administration's proposal was announced on February 12, 2003. Climate, Voluntary Innovative Sector Initiatives: Opportunities Now (Climate VISION) was created in response to President Bush's goal of reducing greenhouse gas intensity of the U.S. economy. Climate VISION aims to assist energy-intensive sectors in developing plans to reduce greenhouse gas intensity, and to publicly recognize the efforts of those sectors.\nAnother Administration initiative, the Asia-Pacific Partnership on Clean Development and Climate, focuses on international efforts to reduce greenhouse gas emissions outside of the Kyoto Protocol. Of the six countries, the United States and Australia have rejected Kyoto; three countries—China, India, and Korea—are not subject to binding limits under Kyoto. Only one member of the partnership, Japan, has ratified the Kyoto Protocol. The partnership is focused on development and trade of clean energy technologies as well as emissions reductions from key sectors.\nThis international initiative was followed in May 2007 by the President's announcement that the United States would convene a meeting of the world's \"major economies\" that are responsible for most greenhouse gas emissions. Held in September 2007, the final statements of the \"Major Economies Meeting on Energy Security and Climate Change\" emphasized the need to integrate such meetings into the overall UNFCCC negotiations. The U.S. summary of the meeting focused on the \"aspirational\" nature of reduction goals, reflecting the Administration's rejection of mandatory reduction targets.",
"As described above, current federal actions that directly address greenhouse gases focus on research, information, and voluntary programs. Each of the Climate Action Reports submitted by the United States to the UNFCCC has included a compilation of the several dozen programs that various administrations have felt are relevant to reducing U.S. greenhouse gas emissions. Regulatory measures that have reduced greenhouse gas emissions are a small subset of the total U.S. effort numerically, but are responsible for a proportionally larger share of greenhouse gas emission reductions. In general, these regulatory programs were established and implemented primarily for reasons other than climate change concerns. It should be noted that reductions from these programs combined represent about 3% of year 2000 greenhouse gas emissions, and total U.S. emissions have continued to grow: emissions increased approximately 3% between 2000 and 2005; emissions have grown approximately 17% since 1990.\nThe list of federal regulatory programs discussed here is primarily drawn from activities listed by the George W. Bush Administration in its most recent (2006) submission to UNFCCC. The submission to UNFCCC focused on mandatory programs, but numerous voluntary programs have also been implemented over the past 16 years. This section discusses the seven regulatory programs listed in the Climate Action Report, as well as two additional regulatory programs, carbon dioxide monitoring by electricity generators, and renewable electricity generation requirements (eliminated by P.L. 109-58 ) not included in the list. These programs' estimated effects on greenhouse gas emissions are summarized in Table 1 .",
"",
"Section 305 of the 1990 Clean Air Act Amendments requires EPA to control emissions of a variety of air pollutants from new and existing large solid waste landfills. Specifically, the section requires EPA to promulgate New Source Performance Standards (NSPS) for new municipal solid waste landfills, and emissions guidelines for existing landfills to reduce emissions of non-methane organic compounds (NMOCs), including ozone-producing volatile organic compounds (VOCs) and air toxics. Regulations promulgated in 1996 require large landfills that emit landfill gases in excess of 50 metric tons per year to control emissions.\nThe primary driver for the landfill regulations was reducing formation of ground/surface level ozone (smog), and air toxics. However, in promulgating the rule, the Clinton Administration noted that landfills were the largest U.S. source of emissions of the greenhouse gas methane (40%), and that the rule would have the indirect benefit of reducing methane emissions by 50%. In its 2006 Climate Action Report, the current Administration estimated that the year 2002 methane emissions reductions achieved by the rule were 8.7 million metric tons of carbon dioxide equivalent, predicted to increase to 9.9 million metric tons by 2020.",
"Many ozone-depleting substances are also greenhouse gases (such as perfluorocarbons). Therefore, efforts to protect the ozone layer also tend to reduce greenhouse gas emissions. There is a complex scientific relationship between ozone depletion, ozone-depleting chemicals and climate change.\nTitle VI of the 1990 Clean Air Act Amendments represents the United States' primary response on the domestic front to the ozone depletion issue. It also implements this country's international responsibilities under the Montreal Protocol to Reduce Ozone-Depleting Substances. Section 612 requires EPA to develop a program to identify alternatives to ozone depleting substances banned under the Montreal Protocol.\nIn determining the acceptability of an alternative, EPA is to assess the overall risk to human health or the environment that the alternative poses, compared with other alternatives. In promulgating the implementing regulation for the program in 1994, EPA identified increased global warming as one of the risk criteria that it would use in determining the acceptability of an alternative.\nSNAP determinations focus on the global warming potential of various substitutes used in place of the ozone-depleting chemicals banned under the Montreal Protocol, not on the global warming potential of the banned ozone-depleting chemicals themselves.\nUnder the regulation, EPA has restricted or narrowed the use of hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs) where alternatives with lower global warming potentials exist. EPA estimates that the restrictions reduced greenhouse gas emissions by 26 million metric tons of carbon dioxide equivalent in 2002, and projects a further reduction of nearly 200 million metric tons (for a total of 223 million metric tons) by 2020.",
"The 1987 National Appliance Energy Conservation Act (NAECA) set minimum efficiency standards for many major appliances. The Energy Policy Act of 1992 (EPACT) expanded the list of covered appliances and allowed for future standards development for other products. Under NAECA and EPACT, the Department of Energy must develop mandatory energy efficiency standards for these appliances, and review them in accordance with a statutorily set schedule to determine whether they are sufficiently stringent. DOE is required to set standards designed to achieve the maximum improvement in energy efficiency it believes is \"technically feasible and economically justifiable.\"\nThe primary driver for residential appliance standards has been energy conservation. In 1997, the Clinton Administration estimated that the appliance standards would save almost a quad (1 quadrillion Btu) of energy, resulting in a 21.6 million metric ton reduction in carbon emissions by the year 2010. For the 2006 Climate Action Report, DOE estimates reductions of 5 million metric tons of carbon dioxide in 2012, increasing to 17 million metric tons in 2020.",
"Section 101 of EPACT requires DOE to review and update provisions of the commercial building code with respect to energy efficiency. Specifically, DOE is directed to determine whether revisions to the ASHRAE Standard 90.1—1989 (and any future revisions) would improve energy efficiency in commercial buildings. If DOE determines that revisions would improve energy efficiency, states are required to review and update their commercial building codes accordingly, with respect to improving energy efficiency. In July 2002, DOE determined that ASHRAE/IESNA Standard 90.1—1999 would save energy in commercial buildings. Thus, states were required to review and update their commercial building codes by July 15, 2004. The Energy Policy Act of 2005 requires further updates to state commercial building standards.\nIn announcing its July 2002 determination, the DOE focused on the energy savings that state adoption of the standard would entail, estimated at 130 million barrels of oil equivalent over 10 years. The DOE announcement does not mention any carbon dioxide reduction that could result from the improved energy efficiency. In the 2006 Climate Action Plan, DOE estimates that the new requirements will save 0.5 million metric tons of carbon dioxide in 2012, increasing to 3.1 million metric tons in 2020.",
"Federal fuel economy standards directly affect greenhouse gas emissions from the transportation sector. The Energy Policy and Conservation Act of 1975 (EPCA) established corporate average fuel economy (CAFE) standards for new passenger cars, and gave the Department of Transportation (DOT) the authority to set standards for other vehicles, including \"light trucks,\" which consist of pickups, vans, and sport utility vehicles. The goal of EPCA was to reduce the dependence on foreign oil after the Arab oil embargo of the 1970s.\nIncreasing CAFE standards would lead to reductions in fuel consumption and greenhouse gas emissions as older, less efficient vehicles were replaced with more efficient models. However, concerns associated with increased CAFE standards include questions of occupant safety and vehicle choice. In 1994, the Clinton Administration considered raising the CAFE standard for light trucks. However, Congress included language in the annual FY1996-FY2001 DOT Appropriations Acts prohibiting the use of appropriated funds for any rulemaking on CAFE, effectively freezing the standards. However, the Senate conferees on the FY2001 appropriations insisted upon a study of CAFE by the National Academy of Sciences (NAS). That study, released on July 30, 2001, concluded that it would be possible to achieve a more than 40% improvement in light truck fuel economy over a 10- to 15-year period at costs that would be recoverable over the lifetime of vehicle ownership, without compromising safety.\nOn April 7, 2003, DOT announced a final rule increasing light truck CAFE standards to 22.2 miles per gallon by model year 2007. For the 2006 Climate Action Report, DOT estimated that in total, the regulations would save 42 million metric tons of carbon dioxide in 2012.\nOn April 6, 2006, DOT announced further changes to the light truck CAFE standards starting in model year 2008. By model year 2011, all light truck manufacturers will be subject to new standards based on a vehicle's size. DOT estimates that the new rule will save an additional 4.4 billion gallons of gasoline over the life of the vehicles produced between model years 2008 and 2011 (relative to the MY2007 standard). This would mean an additional greenhouse gas reduction of roughly 10 million to 12 million metric tons. Both rulemakings combined would lead to an estimated reduction of between 18 million and 22 million metric tons of greenhouse gases. However, on November 15, 2007, the U.S. Court of Appeals for the Ninth Circuit remanded the MY2008 standards back to DOT because the agency did not explicitly value greenhouse gas reductions in its estimates of the costs and benefits of the rulemaking.\nOn December 19, 2007, President Bush signed the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ). Among other provisions, the new law requires a significant increase in combined passenger car/light truck fuel economy. By 2020, the combined new vehicle fleet must meet a combined CAFE average of 35 mpg, up from roughly 25 mpg in 2007. This fuel economy increase could lead to a significant reduction in greenhouse gas emissions from projected levels. In its Preliminary Regulatory Impact Analysis on proposed regulations for Model Years 2011-2015, DOT estimates that proposed rules for those years would save 521 million metric tons of CO 2 over the life of those vehicles. The American Council for an Energy-Efficient Economy estimates that the new CAFE standards could save roughly 400 million metric tons per year and 3,800 million metric tons total by 2030. EISA is discussed in greater detail below.",
"The Energy Policy Act of 2005 established a renewable fuel standard (RFS) requiring the use of renewable fuels in gasoline. EISA further expanded this requirement, and for the first time set requirements for the lifecycle greenhouse gas emissions of motor fuels. For the 2006 Climate Action Report, EPA did not estimate emissions reductions from the program. However, it is likely that the program could lead to lower emissions, especially with the new requirements of EISA.",
"A final program that the George W. Bush Administration describes as regulatory is the Distributed Energy Program at the Department of Energy. While most of the program is focused on R&D and commercialization of new technologies, the program also aims to eliminate regulatory barriers to the use of distributed energy. For all facets of the program, DOE estimates that the program saved 12.1 million metric tons of carbon dioxide in 2002, and will save 57 million metric tons in 2020.",
"Section 821 of the 1990 Clean Air Act Amendments requires electric generating facilities affected by the acid rain provisions of Title IV to monitor carbon dioxide in accordance with Environmental Protection Agency (EPA) regulations. This provision was enacted for the stated purpose of establishing a national carbon dioxide monitoring system. As promulgated by EPA, regulations permit owners and operators of affected facilities to monitor their carbon dioxide emissions through either continuous emission monitoring (CEM) or fuel analysis. The CEM regulations for carbon dioxide are similar to those for the acid rain program's sulfur dioxide CEM regulations. Those choosing fuel analysis must calculate mass emissions on a daily, quarterly, and annual basis, based on amounts and types of fuel used.\nAlthough this regulation does not actually reduce carbon dioxide emissions, it does expressly target the global climate change issue. Also, it represents a necessary first step toward any future market-oriented greenhouse gas reduction program. Whether a market-oriented control program were to be based on tradable emissions credits or a carbon tax, accurate emissions data would be the foundation for developing the allocation systems, reduction targets, and enforcement provisions.",
"The 1978 Public Utility Regulatory Policies Act (PURPA) is designed to encourage the development of cogeneration and small power production (called \"qualifying facilities\" or QFs). In particular, Section 210 contained a mandatory purchase clause requiring utilities to buy power from QFs at the utilities' avoided cost. PURPA exempted from the full breadth of federal and state regulation certain small power producers, including those using geothermal, solar, wind, and waste energy. This regulatory exemption, along with the mandatory purchase requirement contained in Section 210, has proven to be a strong incentive for development of renewable energy, particularly biomass. QF renewable capacity represents a substantial majority of U.S. non-hydroelectric renewable energy capacity. The Energy Policy Act of 2005 repealed the Section 210 purchase requirement for new contracts (see the section below on \" The Energy Policy Act of 2005 \").\nPURPA was enacted to promote energy security through energy conservation and the development of alternative energy sources in the aftermath of the 1974 oil crisis. As events have unfolded, the effort to reduce dependence on fossil fuels has had the additional perceived benefit of reducing carbon dioxide emissions. In 1997, the Clinton Administration estimated that its renewable energy commercialization efforts with respect to biomass, geothermal, and wind would reduce greenhouse gas emissions by 17.6 million metric tons of carbon equivalent by the year 2010. For the 2002 Climate Action Report, the George W. Bush Administration provided no specific estimate of reductions from the use of renewable electricity. However, for the general category of energy supply, the Administration estimated the year 2000 effect to have been a saving of 14.7 million metric tons of carbon dioxide equivalent.\nWith the passage of the Energy Policy Act of 2005, Section 210 was amended, subject to a FERC determination of market conditions. In October 2006, FERC adopted a final rule delineating those conditions, finding that utilities operating within regional transmission organizations (RTOs) met the conditions for repeal, while the market conditions for non-RTO utilities would be determined on a case-by-case basis.",
"On August 8, 2005, President Bush signed the Energy Policy Act of 2005 ( P.L. 109-58 ), with provisions directly and indirectly related to greenhouse gas emissions. Title XVI establishes a voluntary national program designed to encourage voluntary reductions in greenhouse gases. The effort is led by an Interagency Committee, with DOE playing a key supporting role. Title XVI attempts to support actions focused on reducing U.S. carbon intensity, but does not establish a requirement to reduce emissions. The title also establishes a program to encourage exports of carbon intensity-reducing technologies to developing countries. This program is led by the Secretary of State.\nIn addition to Title XVI, Section 1253 repeals the mandatory purchase requirement under Section 210 of PURPA for new contracts if FERC finds that a competitive electricity market exists and if other conditions are met. The debate over the bill included proposals to increase CAFE standards and to establish a renewable portfolio standard, although these changes were not included in the final law.\nAlso not included in P.L. 109-58 was Section 1612 of the Senate bill ( H.R. 6 , as amended by S.Amdt. 866 ), which expressed the Sense of the Senate that human activities are a substantial cause of greenhouse gas accumulation in the atmosphere, causing average temperatures to rise. Further, the resolution called for a mandatory, market-based program to limit greenhouse gas emissions. Also, a bill to establish a mandatory, market-based greenhouse gas reduction program ( S. 1151 ) was debated on the Senate floor as S.Amdt. 826 and defeated by a 38-60 vote.",
"On December 19, 2007, President Bush signed the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ). EISA contains many energy provisions that could lead to reductions in greenhouse gas emissions. In addition to these indirect reductions, EISA also directly addresses climate change issues in several ways.\nFirst, EISA expands the renewable fuel standard (RFS) established in P.L. 109-58 . The RFS requires that a minimum amount of renewable fuels be blended into transportation fuels each year. The EISA amendments to the RFS significantly expand the mandated level. Further, they require that an increasing share of the RFS be met with \"advanced biofuels\" defined as having 50% lower lifecycle greenhouse gas emissions than petroleum fuels. This is the first time that Congress has enacted national policy addressing the carbon content of motor fuels.\nSecond, Title VII of the new law focuses on research, development, and demonstration of technologies to capture and store carbon dioxide. DOE research and development is expanded and will include large-scale demonstration projects. The Department of the Interior must develop a methodology to assess the national potential for geologic and ecosystem storage of carbon dioxide, and must recommended a regulatory framework for managing geologic carbon sequestration on public lands.\nIn addition to the above programs, EISA also requires the establishment of an Office of Climate Change and Environment in the Department of Transportation. This office will plan, coordinate, and implement research at DOT on reducing transportation-related energy use, mitigating the causes of climate change, and addressing the impacts of climate change on transportation.\nEnergy provisions not directly addressing climate change, but that could lead to lower greenhouse gas emissions, include\nmore stringent fuel economy (CAFE) standards for passenger cars and light trucks; higher-efficiency standards for appliances and lighting; higher-efficiency requirements for government buildings; and research and development on renewable energy.",
"Energy policy was a key issue in the 110 th Congress, as it was in earlier Congresses. High energy prices and international instability motivated passage of the 2005 Energy Policy Act and the 2007 Energy Independence and Security Act. Given that energy consumption is the dominant source of carbon dioxide emissions in this country, and a substantial source of overall greenhouse gas emissions, any reduction in energy consumption will likely lead to lower emissions. As indicated below ( Table 2 ), energy-related activities are responsible for about 86% of the country's greenhouse gas emissions, and 98% of its carbon dioxide emissions.\nAs noted in this report, climate change was an integral part of the debate on the 1992 Energy Policy Act (EPACT), occurring as it did during the signing and ratifying of the UNFCCC. Indeed, EPACT became the implementing legislation for the UNFCCC, and, as discussed in this report, those programs are responsible for much of the reduced growth in greenhouse gases achieved since 1992. Most federal policies and regulations that have resulted in greenhouse gas reductions were, in fact, promulgated as energy policy initiatives. However, these policies have not reversed growth in overall U.S. emissions.\nClimate change—as a specific issue needing a regulatory response—was debated during deliberations on the Energy Policy Act of 2005 (EPAct 2005) and recognized in passage of Senate Amendment 866 expressing the Sense of the Senate that Congress should enact a comprehensive and effective national program of mandatory, market-based limits and incentives on greenhouse gases that slow, stop, and reverse the growth of such emissions. The Energy Independence and Security Act (EISA) of 2007 directly addresses some climate change issues, but still generally focuses on energy supply and consumption. The overall effect of EPAct 2005 and EISA on future greenhouse gas emissions is unclear, and specific action on the issue will depend on efforts to enact the national program called for in Senate Amendment 866. An attempt to pass an economy-wide greenhouse gas cap-and-trade program in the Senate was unsuccessful in the 110 th Congress.\nWhile some provisions in energy laws enacted over the past 16 years have led to lower greenhouse gas emissions or addressed climate change directly, other provisions in those same laws have almost certainly resulted in higher emissions. To date, no energy law has had reducing greenhouse gas emissions as the main organizing principle. Comprehensive climate change policy directed at reducing greenhouse gas emissions should address energy supply and consumption and, thus, be integrated with energy policy. This will be a pivotal challenge to the 111 th Congress's and the incoming Administration's anticipated efforts to enact legislation to limit greenhouse gas emissions."
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{
"question": [
"How should climate change be addressed?",
"What actions have the United States taken in response to climate change?",
"What does this report provide?",
"What issue have recent federal court decisions raised?",
"What does this report focus on in the aspect of the raised issue?",
"What did the recent three Administrations rely on in reducing greenhouse gas emissions?",
"Where was this focus particularly evident?",
"What was the proportion of regulatory programs?",
"How significant were these programs in reducing greenhouse gas emissions?",
"What were these efforts originally established and implemented for?",
"What was the Energy Policy Act of 2005 about?",
"What issues does the Energy Independence and Security Act of 2007 address?",
"What are the provisions specifically?",
"What did the Senate do in June 2008?",
"What was the outcome of this bill?"
],
"summary": [
"Climate change is viewed as a global issue, but proposed responses generally require action at the national level.",
"In 1992, the United States ratified the United Nations Framework Convention on Climate Change (UNFCCC), which called on industrialized countries to take the lead in reducing greenhouse gases. Over the past 16 years, a variety of voluntary and regulatory actions have been proposed or undertaken in the United States, including monitoring of electric utility carbon dioxide emissions, improved appliance efficiency, and incentives for developing renewable energy sources.",
"This report provides background on the evolution of U.S. climate change policy, from ratification of the UNFCCC to the George W. Bush Administration's 2001 rejection of the Kyoto Protocol to the present.",
"Recent federal court decisions—most notably the Supreme Court's 2007 decision in Massachusetts v. EPA that the Environmental Protection Agency has the authority to regulate motor vehicle greenhouse gas emissions under the Clean Air Act—have raised the issue of whether EPA should directly regulate greenhouse gases.",
"This report focuses on major regulatory programs that monitor or reduce greenhouse gas emissions, along with their estimated effect on emissions levels.",
"The George H. W. Bush, Clinton, and George W. Bush Administrations largely relied on voluntary initiatives to reduce the growth of greenhouse gas emissions.",
"This focus was particularly evident in the current Administration's 2006 Climate Action Report (CAR), submitted under the provisions of the UNFCCC.",
"Of roughly 50 programs summarized in the 2006 CAR, seven were described as \"regulatory.\"",
"However, this small subset of the total U.S. effort accounts for a large share of greenhouse gas emission reductions achieved over the past decade-and-a-half.",
"In general, these efforts were established and implemented in response to concerns other than climate change, such as energy efficiency and air quality.",
"The Energy Policy Act of 2005 (P.L. 109-58) included provisions indirectly related to greenhouse gas emissions, such as energy efficiency and renewable energy.",
"The Energy Independence and Security Act of 2007 (P.L. 110-140) addresses renewable energy and conservation, but also includes provisions specifically on climate change.",
"These include a requirement for the use of renewable fuels with lower lifecycle greenhouse gas emissions than petroleum fuels, and the establishment of an Office of Climate Change and Environment in the Department of Transportation to implement research on mitigating the causes and addressing the effects of climate change on transportation.",
"In June 2008, the Senate considered a bill (S. 3036) to establish an economy-wide cap-and-trade system to reduce greenhouse gas emissions.",
"However, after discussion, a cloture motion on this bill failed, and the bill was tabled."
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GAO_GAO-13-606
|
{
"title": [
"Background",
"DOD’s Emphasis on Initiatives to Build the Defense Capacity of Partner Nations",
"DOD Regional Centers’ Mission",
"Regional Centers’ Programs and Activities Share Some Similarities with Those Offered by Other DOD Organizations, but There Are Notable Differences",
"DOD Organizations Administer Various Types of Training and Educational Programs and Activities",
"Regional Centers’ Programs and Activities Share Similarities and Differences with Those Offered by Other DOD Institutions",
"DOD Has Taken Steps to Enhance Oversight of the Regional Centers Plans and Activities but Its Ability to Assess Their Progress Remains Limited",
"DOD Has Taken Steps to Enhance Oversight of Regional Centers’ Plans and Activities",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Scope and Methodology",
"Appendix II: The Department of Defense’s (DOD) Regional Centers for Security Studies",
"About the Center",
"Founded: 1998",
"About the Center",
"Founded: 1995",
"Appendix II: The Department of Defense’s (DOD) Regional Centers for Security Studies",
"About the Center",
"Founded: 1997",
"About the Center",
"Founded: 1993",
"About the Center",
"Founded: 2000",
"Appendix III: Reimbursement Waivers",
"Multiple Authorities Exist",
"Use of Other Authorities",
"Appendix IV: Comments from the Department of Defense",
"Appendix V: GAO Contacts and Staff Acknowledgments",
"GAO Contacts",
"Staff Acknowledgments",
"Related GAO Products"
],
"paragraphs": [
"",
"According to the 2010 Quadrennial Defense Review Report, a component of DOD’s strategy to prevent and deter conflict is to help build the capacity of partners to maintain and promote stability, and such an approach requires working closely with U.S. allies and partner nations to leverage existing alliances and create conditions to advance common interests. Such “building partner capacity initiatives” comprise a broad range of security cooperation and security assistance activities.\nSecurity cooperation is the broad term used by DOD for those activities taken to build relationships that promote specified U.S. interests, build partner nation capabilities for self-defense and coalition operations, and provide U.S. forces with access both in peacetime and during contingencies. These activities are carried out under various statutory authorities. For example, DOD may conduct activities with partner nations, such as sending out military liaison teams, exchanging military personnel between units, or conducting seminars and conferences in theaters of operations under Title 10 U.S. Code. DOD also conducts security cooperation activities through security assistance programs authorized by Title 22 U.S. Code. These Title 22 programs are a part of U.S. efforts to provide foreign assistance through military assistance and sales.",
"The five Regional Centers for Security Studies (Regional Centers) support DOD’s objective to build the defense capacity of partner nations. The Regional Centers’ activities include education, exchanges, research, and information sharing. The Regional Centers conduct in-residence courses, in-country seminars, and conferences, among other activities, that address global and regional security challenges such as terrorism and maritime security. DOD policy states that a core Regional Center mission is to assist military and civilian leaders in the region in developing strong defense establishments and strengthening civil-military relations in a democratic society.coordinate with the department’s geographic combatant commands in developing and implementing activities for their region. Table 1 lists the five Regional Centers, the year in which each was established, their locations, and their corresponding geographic combatant commands.",
"DOD provides training and education opportunities to U.S. and foreign participants by means of various institutions, among which are the five Regional Centers; professional military education and degree-conferring institutions; and professional development institutions. For our review, we analyzed training and educational programs and activities administered by 17 selected DOD institutions, and compared them with those administered by the Regional Centers for the following three attributes: curriculum topics, targeted audience, and program format. (See appendix I for a full list of institutions in our review.) The main similarities and differences we observed in comparing them are described below.",
"DOD provides U.S. and foreign participants with a variety of training and educational programs and activities through its five Regional Centers, its professional military education and advanced degree-conferring institutions, and its professional development institutions. For example, the Regional Centers, in accordance with DOD Directive 5200.41, support departmental policy objectives with activities designed to enhance security, foster partnerships, improve national security decision making, and strengthen civil-military relationships through education, exchanges, research, and information sharing. Professional military education and advanced degree-conferring institutions aim to develop U.S. military personnel (enlisted and officer) with expertise and knowledge appropriate to their grade, branch, and military professional specialty. Examples of professional military education and advanced degree-conferring institutions include the National Defense University and the Naval Postgraduate School, respectively. DOD also administers training and educational programs and activities to U.S. and foreign participants through various professional development institutions for the purpose of providing developmental opportunities and enhancing their mission- related knowledge, skills, and experience. Examples of DOD’s professional development institutions include the Defense Acquisition University and the Center for Civil-Military Relations.",
"Programs and activities administered by the Regional Centers and other DOD professional military education and advanced degree-conferring institutions as well as professional development institutions have similar features in that they all offer curriculum topics intended to help participants enhance knowledge and skills on security and military matters; target members of the military; and feature program formats that include in-residence courses; seminars, conferences, workshops; distance learning; and in-country instruction.\nHowever, some differences exist among the Regional Centers and the other programs administered by DOD organizations. Specifically:\nRegional Centers focus on bringing participants together for courses intended to foster understanding of regional security challenges and to strengthen the professional skills needed to develop effective strategies. In contrast, professional military education institutions generally focus on military operations and leadership; and advanced degree-conferring institutions and professional development institutions generally focus on professional knowledge, skills, and experiences.\nThe Regional Centers’ audience is generally civilian and military officials from other countries. In contrast, professional military education institutions and advanced degree-conferring institutions target U.S. military officials.\nThe Regional Centers’ program format is generally shorter than an academic year, and its completion does not count toward an academic degree. In contrast, professional military education institutions and advanced degree-conferring institutions offer degree and certificate programs that can take over a year to complete.\nTable 2 summarizes a comparison of programs and activities administered by DOD’s Regional Centers, professional military education and advanced degree-conferring institutions, and professional development institutions, in terms of curriculum topics, targeted audience, and program format. The checkmarks in the table indicate that we found the attribute is generally descriptive of the category, as we found exceptions to the attribute in some cases.\nTo further elaborate on the information in table 2, the following paragraphs describe similarities and differences for each of the attributes we reviewed.\nWe found that the Regional Centers, professional military education and advanced degree-conferring institutions, and professional development institutions are similar in that they all offer programs and activities to help a participant understand security and military matters and to enhance his or her knowledge and skills.\nThe Regional Centers focus their programs and activities on addressing OUSD Policy and geographic combatant command priorities and bringing participants together to understand regional security challenges and to develop cooperative strategies to address them. For example, the Asia- Pacific Center for Security Studies administers a Comprehensive Security Responses to Terrorism course designed to broaden knowledge and improve skills in assessing terrorism threats in the Asia-Pacific region and to develop a community of professionals to collaborate on regional and global issues. Another example is the Africa Center’s African Executive Dialogue, which brings together African and U.S. senior officials to discuss how African countries can work together and with external stakeholders on Africa’s key security challenges. A further example is the Marshall Center’s Seminar on Trans-Atlantic Civil Security, which is designed to improve the homeland defense capacity and skills, across the whole of government, needed to prevent and respond to natural or man- made disasters or terrorist attacks.\nMoreover, each of the Regional Centers devotes significant programmatic effort to establishing, developing, and sustaining alumni networks. For example, officials at the Asia-Pacific Center told us that they track the progress of and provide support for the establishment of alumni chapters in Asia-Pacific countries, as well as helping to coordinate alumni events sponsored by these chapters. According to its program plan for fiscal year 2013, the Near East South Asia Center plans to conduct 10 alumni events in the region to promote continual engagement with and among participants who have attended the center’s core programs and promote collaboration on current regional security issues.\nIn contrast, professional military education institutions’ programs and activities focus on instructing U.S. servicemembers in military operations and leadership in support of the U.S. national security strategy. For example, the National Defense University administers a Combating Terrorism Strategies and Policies course in which students examine the ongoing challenge to U.S. national security posed by the threat of international terrorism and the ways in which the United States is attempting to prevent future terror attacks. The advanced degree- conferring institutions focus on instructing U.S. military professionals on security-related knowledge and skills, such as operations research, logistics, and information system management. For example, the Naval Postgraduate School administers an Applied Mathematics Course in which students learn advanced mathematical techniques applicable to game theory and network design. The professional development institutions address professional security-related knowledge, skills, and experiences, such as consequence management, law enforcement, and decision making. For example, the Defense Acquisition University administers a variety of training courses that members of the defense acquisition workforce can use toward certification in various acquisition fields, such as systems acquisition, cost analysis, and contracting. In another example, the Defense Institute for Medical Operations administers an Emergency Management Strategies for Senior Leaders course to review and exercise executive-level principles for emergency management, disaster planning, and corrective action plan implementation.\nIn terms of target audience, we found that the Regional Centers, professional military education and advanced degree-conferring institutions, and professional development institutions are similar in that all of them include institutions that target programs and activities to members of the military.\nWe found that the Regional Centers are distinct in that participants in their programs and activities are generally from other countries, either civilians or members of the military. In 2012, 82 percent of the participants at the five Regional Centers were civilians or members of the military from other countries. According to officials and participants with whom we spoke, the preponderance of foreign participants provide U.S. participants with the unique experience of being in the minority during the discussion of U.S. security policy decisions and their impacts around the world. Further, officials stated that the Regional Centers intentionally invite executive- level civilian officials as well as representatives from nongovernmental organizations, international organizations, and the private sector to ensure a broad, whole-of-government audience. Past participants of the Africa Center for Strategic Studies have included six current and former heads of state.\nBy contrast, professional military education and advanced degree- conferring institutions are primarily attended by members of the U.S. military at all career levels. For example, about 85 percent of the students enrolled in 2012 at the Air University were U.S. servicemembers, while foreign military students made up less than 2 percent of the student body.\nSimilarly, U.S. servicemembers comprise the majority of the student population at other DOD professional military education institutions. One notable exception is the Western Hemisphere Institute for Security Cooperation, which provides professional military education to Latin American military officers and noncommissioned officers.\nIn terms of program format, the Regional Centers, professional military education and advanced degree-conferring institutions, and professional development institutions all offer programs and activities in the form of in- residence courses; seminars, conferences, and workshops; distance learning; and in-country instruction.\nThe key distinctions between the Regional Centers and the other organizations in program format is that professional military education and advanced degree-conferring institutions offer degrees and certificates programs that are accredited by an independent accrediting institution.\nProfessional military education or advanced degree-conferring programs generally entail completion of academic courses of instruction over a longer period for which a participant can earn credit toward a degree or certificate. For example, participants at the Army Command and General Staff College can earn a Master of Military Art and Science degree. Further, the Army Command and General Staff College and the three other services’ Command and General Staff Colleges are accredited institutions. In another example, Naval Postgraduate School certificate, Master’s, and Ph.D. programs can take up to 4 years to complete.\nIn contrast, Regional Centers and some professional development institutions’ programs and activities are generally not creditable toward an academic degree and are generally shorter than an academic year, ranging from a few days to a few weeks. For example, a William J. Perry Center for Hemispheric Defense Studies course on homeland security entails a 3-week online phase, a 3-week in-residence phase, and a 3- week paper-writing phase.\nAlthough the Regional Centers generally offer shorter-duration courses on a range of security topics, some centers provide participants with opportunities to obtain credit for their attendance. For example, the George C. Marshall European Center for Security Studies offers two programs that can earn participants credit toward advanced degrees. U.S. and foreign officers completing coursework at the center can earn credit toward a Master’s in International Security Studies from the Bundeswehr University in Munich, Germany, and the center also administers a Senior Service Fellows program whereby U.S. servicemembers can earn credit toward graduate degrees at their respective service’s war college. In addition, although the Perry Center for Hemispheric Defense Studies does not award degrees, some Latin American institutions of higher learning, such as the Universidad Francisco Marroquin, located in Guatemala City, Guatemala, award credit for successful completion of the center’s courses.\nThe professional development institutions also generally offer shorter- duration courses. For example, the majority of Defense Institute for Medical Operations courses are 4 to 7 days in length, and Defense Institute of International Legal Studies courses range from 1 to 4 weeks.",
"DOD has taken some steps to enhance its oversight of the Regional Centers’ plans and activities, but it does not have a sound basis to evaluate their progress in achieving DOD priorities because it has not developed an assessment approach that includes measurable goals and objectives with metrics or established a methodology for using the performance information it collects. Our prior workhas found that achieving results in government requires a comprehensive oversight framework that includes clear goals, measurable objectives, and metrics for assessing progress, consistent with the framework established in the Government Performance and Results Act.",
"Since 2005, DOD has taken several specific steps to enhance oversight of the Regional Centers, including defining roles and responsibilities, issuing guidance, and establishing a governance body and planning process. Specifically:\nRoles and Responsibilities: OUSD Policy, according to DOD Directive 5200.41, is responsible for providing policy guidance and oversight and conducting reviews of the effectiveness of the Regional Centers in achieving DOD objectives, including resource allocation, management practices, and measures of effectiveness. In 2005, DOD designated the DSCA director as the executive agent for the Regional Centers and assigned it the responsibility for programming, budgeting, and management of the resources necessary to support their operation and providing them with needed staffing.\nGuidance: OUSD Policy issues guidance to the Regional Centers that assigns priorities to them reflecting national security and departmental objectives. For example, in January 2013, OUSD Policy issued fiscal year 2013 guidance incorporating policy priorities identified in DOD’s January 2012 Defense Strategic Guidance, and instructing the Regional Centers to address those priorities as they plan and execute programs. DSCA issues planning guidance that requires the Regional Centers to develop program plans to meet the OUSD Policy priorities within their projected funding baseline and existing authorities. The fiscal year 2014-2015 guidance states that each Regional Center’s program plan, among others requirements, should include a cover letter signed by the Regional Center director or program manager, background and concept papers for core program and significant events, a completed 2-year budget submission, and a list of efficiency initiatives to be implemented. Further, DOD Directive 5200.41 states that the Regional Centers are required to develop and implement their activities according to guidance from the geographic combatant commanders.\nGovernance body and planning process: In December 2011, DOD established a governance body within OUSD Policy, called the Principal Deputy Assistant Secretary of Defense Board, that provides guidance for and monitoring of the Regional Centers’ activities and plans. According to DOD officials, OUSD Policy established the board intending to facilitate coordination and information sharing among different OUSD Policy offices, and to achieve more integrated decision making on policies, plans, programs, and budgets. DOD officials told us that before the board’s establishment, each Regional Center reported to its respective OUSD Policy stakeholders, and the opportunity for broader information sharing was minimal. The board’s activities include, in 2011, establishing a 16-month planning process to guide how the board and OUSD Policy stakeholders will provide guidance and oversee the development of plans and activities of the Regional Centers. As shown in figure 2, key steps in the planning cycle include identifying priorities and providing guidance to the Regional Centers; providing a means with which the Regional Center directors can update stakeholders on prior-year activities and future-year plans; coordinating proposed Regional Center program plans with OUSD Policy offices, the geographic combatant commands, and the board; and reviewing Regional Centers’ budgets and program plans.\nIn 2010, OUSD Policy tasked the Regional Centers with developing a comprehensive set of measures of effectiveness by which progress toward objectives could be assessed. In November 2010 the Regional Centers submitted a plan.\nThereafter, OUSD Policy contracted with the RAND Corporation to review the November 2010 plan. In September 2011, RAND concluded that the measures of effectiveness identified in the plan had some weaknesses. RAND recommended that the Regional Centers develop a more comprehensive set of metrics and proposed a framework for developing them.\nOn the basis of the results, the Principal Deputy Assistant Secretary of Defense Board concluded that further study was needed. Therefore, in July 2012, OUSD Policy contracted with RAND to conduct a study to evaluate the effect of the Regional Centers and to determine their contribution toward fulfilling OUSD Policy strategy objectives. DOD expects RAND to publish a final report in September 2013. According to OUSD Policy officials, they believe the RAND study will provide additional insights into the metrics or indicators that could be used to evaluate the Regional Centers’ performance.\nWe recognize and have previously reported that it is difficult to establish performance measures for outcomes that are not readily observable and that in some cases systematic, in-depth program evaluation studies may be needed in addition to performance measures. Such program evaluation studies are conducted periodically and include context in order to examine the extent to which a program is meeting its objectives. Further, our prior work has shown that performance measures should focus on core activities that would help managers assess whether they are achieving organizational goals.\nOUSD Policy has not established a methodology for assessing the Regional Centers’ progress in achieving DOD priorities, to include clarifying how it will use performance data provided by the Regional Centers and clearly identifying the role of its governance board in the assessment process. We found that, individually, the Regional Centers collect data on their programs and activities, and while their efforts vary, they all generally capture output and anecdotal data, such as summaries of activities, events, attendee demographics, and participant days, as well as the results of program surveys they conduct. For example:\nOne Regional Center summarized its assessment efforts as conducting after-action reports, class evaluations, before and after program surveys, and trip reports.\nOne Regional Center sends surveys to the attendees’ supervisors to collect data on the attendee’s work performance and, if applicable, any improvement in job performance subsequent to their attendance at Regional Center programs, as well as to elicit the supervisors’ perspectives on the utility of the courses and its applicability to their careers. Additionally, the center has developed an internal, searchable database to store useful data and outcomes collected from surveys, e-mails, and personal anecdotes.\nTwo Regional Center use a crosswalk that identifies how its programs and activities support stakeholder priorities, as well as the effects of its activities.\nThe Regional Centers provide data to OUSD Policy and DSCA on both their expected achievements and their past activities. For example, as required by DOD, the Regional Centers include in their program plans expected achievements of their specific programs and a discussion of how they expect their programs will support OUSD Policy priorities. Additionally, as discussed earlier in this report, the Regional Center directors brief the Principal Deputy Assistant Secretary of Defense Board on their past activities. In our review of the board presentations in January 2013, we found that the board members had the opportunity to ask questions as well as request additional information on specific aspects of their activities.\nHowever, OUSD Policy has not established a methodology or clarified how it will use this performance information to assess the Regional Centers’ performance against expected outcomes or in achieving DOD priorities. Furthermore, although DOD established a governance body to assist in monitoring the Regional Center’s plans and activities, DOD officials acknowledge that the role of the governance body in assessing the Regional Centers’ performance is not clearly defined. For example, the governance body has not identified how it will consider the performance information provided by the Regional Centers in making decisions or demonstrated how the newly established planning process will integrate the performance information to assess the Regional Centers’ progress towards OUSD Policy strategic goals and priority objectives.\nConducting routine assessments using measurable goals and objectives with metrics to evaluate progress would provide DOD with a sounder basis for determining whether the Regional Centers are achieving results, as well as for allocating resources. Until measurable program goals and objectives linked with performance metrics are implemented, DOD cannot fully assess or adequately oversee the Regional Centers. Moreover, with clearly defined roles and responsibilities for assessing the Regional Centers, oversight mechanisms such as the governance body could prove beneficial in evaluating the Regional Centers’ performance in achieving DOD priorities, as well as the performance of other DOD initiatives to build partner nations’ capacity.",
"Effective management of efforts to build the defense capacity of foreign partners will help DOD steward its resources to achieve its strategic priorities and will likely better position the U.S. government to respond to changing conditions and future uncertainties around the world. As a component of DOD’s broader effort, the Regional Centers provide an opportunity for the U.S. government to strengthen cooperation with foreign countries. While DOD has expressed challenges entailed in establishing metrics to capture the effects of a program premised on relationship-building and has taken steps to study the matter, it has yet to establish an initial set of metrics. We note the importance for DOD to have measurable goals and objectives linked with performance metrics, which would form the foundation for an oversight framework. While DOD has taken positive steps by establishing a new governance body and updating DOD guidance applying to the Regional Centers for fiscal year 2013, DOD does not yet have a process to assess the Regional Centers’ progress. Conducting routine assessments using measurable goals and objectives, with metrics to evaluate progress, and a methodology for using performance information to include defining the role of the governance board, would provide DOD a sounder basis for assessing the Regional Centers’ progress in achieving results and better determining the allocation of resources. Moreover, DOD’s ability to assess the Regional Centers’ performance would provide Congress with the information it needs as it evaluates current and similar programs and considers future funding levels.",
"To enhance DOD’s ability to determine whether the Regional Centers are achieving departmental priorities, we recommend that the Secretary of Defense direct the Under Secretary of Defense for Policy to develop an approach to assess the Regional Centers’ progress in achieving DOD priorities, including identifying measurable goals and objectives, metrics, or other indicators of performance, and develop a methodology for using performance information, to include defining the role of the governance board in the process.",
"We provided a draft of this report to DOD and State for comment. DOD provided written comments which are reprinted in appendix IV. In its written comments, DOD partially concurred with our first recommendation and concurred with our second recommendation. DOD also provided technical comments, which we have incorporated into the report, as appropriate. State did not provide any comments on the draft.\nDOD partially concurred with our first recommendation that the Secretary of Defense direct the Under Secretary of Defense for Policy to develop an approach to assess the Regional Centers’ progress in achieving DOD priorities, including identifying measurable goals and objectives, metrics, and other indicators of performance. In its comments, DOD noted that our recommendation should take into account that a process already exists for Regional Center program development and approval, which requires the Regional Centers to identify specific program goals that meet policy objectives. DOD further noted that the department recognized the need to improve the identification of measurable goals and objectives, metrics, or other indicators of performance, and is already taking steps to address this issue. DOD suggested that we revise our recommendation to state that DOD should bolster the current approach to assess the Regional Centers' progress in achieving DOD priorities, including identifying measurable goals and objectives, metrics, and other indicators of performance that appropriately measure the essential aspects of the Regional Centers' mission.\nAs noted in our report, we recognize that DOD has a process for developing and reviewing Regional Center programs and that the department has established policy priorities for the Regional Centers. The report also notes that the Regional Centers include in their program plans expected achievements of their specific programs and a discussion of how they expect their programs will support OUSD Policy priorities. However, we note that DOD’s January 2013 guidance to the Regional Centers contained priority objectives that were not measurable in many cases. Further, our report describes past and current DOD efforts that could be useful toward identifying metrics to assess Regional Center progress in achieving DOD priorities. However, DOD has not yet established an initial set of metrics. Without those key elements, we do not believe that DOD has a sound approach to assess the Regional Centers’ progress. Therefore we believe our recommendation is stated appropriately.\nWe are sending copies of this report to the appropriate congressional committees. We are also sending copies to the Secretary of Defense; the Under Secretary of Defense for Policy; and the Secretary of State. In addition, the report will also be available on our website at http://www.gao.gov.\nIf you or your staff have questions about this report, please contact Sharon L. Pickup at (202) 512-9619 or [email protected], or Charles Michael Johnson, Jr. at (202) 512-7331. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributors to this report are listed in appendix V.",
"To assess how the Regional Centers for Security Studies’ (Regional Centers) programs and activities compared with those of other DOD organizations that provide training and educational programs and activities, we completed the following steps. First, we researched U.S. government programs, activities, and initiatives providing training and education to foreign civilian and military individuals. We reviewed two U.S. government reports that provided comprehensive information on training and education provided to foreign civilian and military professionals: the Interagency Working Group on U.S. Government- Sponsored International Exchanges and Training fiscal year 2011 Annual Report; and the Foreign Military Training Fiscal Years 2010 and 2011 Joint Report to Congress. The Interagency Working Group Annual Reports provide a review of activities over a given fiscal year and they include the previous fiscal year’s inventory of programs detailing the scope of federal international exchanges and training. The Foreign Military Training Report is jointly completed by DOD and the Department of State (State) and provides information on all military training provided to foreign military personnel by DOD and State during the previous fiscal year and all such training proposed for the current fiscal year. In addition, we reviewed the Defense Institute of Security Assistance Management’s The Management of Security Cooperation (Green Book); the Defense Security Cooperation Agency’s fiscal year 2013 Budget Request; and Army Regulation 12-15, Joint Security Cooperation Education and Training. The Defense Institute of Security Assistance Management Green Book is the publication employed by the institute for instruction covering the full range of security cooperation and security assistance activities. The Defense Security Cooperation Agency’s fiscal year 2013 Budget Request identifies specific security cooperation activities administered by the agency. The Joint Security Cooperation Education and Training regulation prescribes policies, procedures, and responsibilities for training international personnel. By reviewing these documents, we identified a comprehensive inventory of U.S. security cooperation and security assistance programs that provide training and education to foreign nationals. Second, we excluded programs that: (1) did not have national security and policy as their primary focus, or (2) taught specific skill- or tactical-level training, such as language or flight training. We then compared these programs against the legislation establishing the Regional Centers and the DOD directive governing their activities. On the basis of this comparison, we focused our selection on the subset of training and education programs and building partner capacity initiatives that, like the Regional Centers, support DOD priorities by enhancing security, fostering partnerships, and assisting regional leaders to develop strong defense establishments. We learned that the programs identified in these first two steps of our selection process could be classified in two categories: (1) DOD institutions that provide training and education and (2) DOD and State programs and authorities that provide funds for U.S. citizens and foreign nationals to attend these institutions. Because one of the Regional Centers’ activities is to provide for education and exchanges by conducting in-residence courses, in- country seminars, and conferences, among other activities, we focused our next selection step on identifying training and educational program providers. Third, we completed additional research on DOD institutions that provide training and education. We conducted a preliminary review of each institution by reading a description of it, and we again excluded those that provide tactical-level training on skills not addressed by the Regional Centers. The team collected additional information about these institutions by completing online research, reviewing documentation collected during the engagement, and requesting data and information from each institution. On the basis of this research and review, we identified and selected 17 organizations for this analysis; the organizations are DOD institutions that provide training and education, but U.S. citizens and foreign nationals that attend these institutions are, in some instances, funded by DOD and State programs and authorities. Where applicable, we also analyzed the various schools under each institution. 1. Air Force Institute of Technology (part of Air University) 3. Army Command and General Staff College 4. Army JFK Special Warfare School 5. Army War College 6. Center for Civil Military Relations 7. Defense Acquisition University 8. Defense Institute for Medical Operations 9. Defense Institute of International Legal Studies 10. Defense Resource Management Institute 11. Joint Special Operations University 12. Marine Corps War College 13. National Defense University 14. NATO School 15. Naval Postgraduate School 16. Naval War College 17. Western Hemisphere Institute for Security Cooperation Fourth, we identified which attributes to examine. For this engagement, we selected three similar areas for comparison—curriculum topics, target audience, and program type and format. In prior work, GAO has compared programs by examining various program attributes, such as the populations targeted, the types of services provided, or the program’s geographic focus. As the analysis entailed comparing the Regional Centers to the above 17 selected training and educational providers, we concluded a review should examine the curriculum offered by each provider and that the populations targeted and program format attributes were applicable. We determined that these attributes we selected were appropriate for comparing training and educational providers because they explain the curriculum focus of each organization’s primary training and educational efforts, who they engage in these efforts, and their method of engagement. The results of our analysis are not generalizable to DOD training and education programs and activities outside of those included in the scope of our work.\nTo determine the extent to which DOD has developed and implemented an approach to oversee the Regional Centers and assess their progress in achieving DOD priorities, we evaluated relevant documentation and interviewed knowledgeable officials. Specifically, we reviewed the legislation establishing the Regional Centers, DOD guidance governing their activities, and the 2010 and 2011 DOD annual reports to Congress on Regional Center activities; the Office of the Under Secretary of Defense (OUSD) Policy fiscal year 2011-2012 and 2013-2014 policy guidance and DSCA Fiscal Year 2014-2015 program planning guidance to the Regional Centers, and the Regional Centers’ program plans submitted in response; and briefing documents concerning the establishment of the Principal Deputy Assistant Secretary of Defense Board. In January 2013 we attended and observed the fourth meeting of this board. We also reviewed a prior study conducted by the RAND Corporation, contracted by OUSD Policy, to evaluate the Regional Centers’ measures-of-effectiveness plan, and met with RAND officials. In completing site visits to the Regional Centers, we reviewed documentation relating to their missions, anticipated outcomes, scheduled and proposed activities, program development processes, and outreach to alumni. We also observed classes and conferences in progress and met with international attendees. Additionally, to identify oversight mechanisms for the Regional Centers, we reviewed key geographic combatant command documents to include guidance issued to Regional Centers and theater planning documents, and we interviewed key command officials. We also referred to our prior work that identifies elements that constitute a comprehensive oversight framework, and to prior work that identifies the relationship between performance management and program evaluation.\nTo provide information about the process used by DOD and State to approve and monitor Regional Center requests to waive reimbursement of costs for nongovernmental and international organizations that participate in the Regional Centers’ activities, we reviewed relevant legislation and DSCA guidance identifying the procedures for submitting requests and the criteria applied to consideration of waivers for nongovernmental and international organizations. We discussed the process with DSCA and State officials and obtained information on the various waivers requested, as well as the amounts waived, between fiscal years 2009 and 2012.\nTo address all of our objectives, we collected information by interviewing or communicating with officials in (1) the Office of Under Secretary of Defense for Policy (OUSD Policy), specifically the following subordinate offices: a) b)\nPrincipal Deputy Assistant Secretary of Defense for Partnership Strategy and Stability Operations, Principal Deputy Assistant Secretary of Defense for International Security Affairs, c) d) e) f) g) h)\nDeputy Assistant Secretary of Defense African Affairs, Principal Deputy Assistant Secretary of Defense for Russia, Ukraine & Eurasia, Principal Deputy Assistant Secretary of Defense for Western Hemispheres Affairs, Principal Deputy Assistant Secretary for Defense—Asia Pacific Security Affairs, Deputy Assistant Secretary of Defense for Strategy, and Principal Deputy Assistant Secretary of Defense for Special Operations & Low-Intensity Conflict; (2) (3) the Defense Security Cooperation Agency; each of the five Regional Centers: a) b) c) d) e) the Africa Center for Strategic Studies, the Asia-Pacific Center for Security Studies, the George C. Marshall European Center for Security Studies, the Near East South Asia Center for Strategic Studies, and the William J. Perry Center for Hemispheric Defense Studies; (4) (5) (6) (7) (8) each of the six geographic combatant commands: a) U.S. Africa Command, b) U.S. Central Command, c) U.S. European Command, d) U.S. Northern Command, e) U.S. Pacific Command, and f) U.S. Southern Command; the Global Center for Security Cooperation; the following State bureaus: a) Bureau of African Affairs, b) Bureau of East Asian and Pacific Affairs, c) Bureau of Political-Military Affairs, and d) Bureau of Western Hemisphere Affairs; the U.S. Agency for International Development; and the RAND Corporation.\nWe conducted this performance audit from August 2012 through June 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
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"Mission: The Africa Center for Strategic Studies supports U.S. foreign and security policies by strengthening the strategic capacity of African states to identify and resolve security challenges in ways that promote civil-military cooperation, respect democratic values, and safeguard human rights.\nTotal personnel: 79 (as of September 2012)\nAlumni: 5,193 (as of September 2012)",
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"Total personnel: 127 (as of November 2012)",
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"Mission: Conduct educational activities for civilians and the military in the Western Hemisphere to enhance partner capacity and foster trust, mutual understanding, and regional cooperation.\nPriorities: Encourage whole-of-government coordination and support hemispheric coordination mechanisms to enhance information-sharing. Facilitate bilateral and multilateral cooperation to build common perspectives on regional challenges and greater capacity. Promote a strategic dialogue and communicate U.S. defense priorities to regional leaders. Promote partner nation defense planning and strategy development (peacekeeping, humanitarian assistance and disaster relief, stability, and counterterrorism operations). Support civilian military control, transitions, and oversight.\nTotal personnel: 77 (as of September 2012)\nCourses: Governance, Governability and Security in The Americas: Responses to Transnational Organized Crime Nationlab Perspectives on Homeland Security and Homeland Defense Strategy and Defense Policy Course Washington Security and Defense Seminar Alumni: 5,335 (as of September 2012)",
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"Mission: Create a more stable security environment by advancing democratic institutions and relationships, especially in the field of defense; promoting active, peaceful security cooperation; and enhancing enduring partnerships among the nations of North America, Europe, and Eurasia.\nTotal personnel: 206 (as of September 2012)",
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"Total funding: $17.3 million Total personnel: 72 (as of September 2012)",
"The Secretary of Defense may use any of several specific authorities in Title 10 U.S. Code to pay the expenses of representatives from various regions around the world to attend Department of Defense (DOD)- sponsored programs and activities, including those of the Regional Centers. These authorities vary on the basis of the type of attendees (civilian or military) as well as the region of the world from where they originate. The authority contained in 10 U.S.C. § 184note specifically applies to nongovernmental and international organization (NGO/IO) personnel attending Regional Center programs, for which DOD has issued specific guidance to govern approval of reimbursement waivers.",
"In fiscal year 2009, 10 U.S.C. § 184note was enacted to temporarily grant the Secretary of Defense the authority to waive reimbursement of costs for NGO/IO personnel to attend Regional Center programs. Approval of waived reimbursement depends on whether the NGO/IO’s attendance is deemed to be in the U.S. national security interest and is subject to the concurrence of the Secretary of State. Further, the collective reimbursements being waived may not exceed a total of $1 million (according to DOD officials, reimbursement is paid from the Regional Centers’ Operation and Maintenance budgets) in any fiscal year. This temporary waiver authority has been renewed most recently through fiscal year 2013. Title 10 also contains permanent authorities to pay the expenses of foreign representatives in order to foster cooperation with various countries in those regions. Specifically, 10 U.S.C. 184(f)(3) allows the Secretary of Defense to waive reimbursement of the costs of activities of the Regional Centers for foreign military officers and foreign defense and security civilian government officials from a developing country if the Secretary determines that attendance of such personnel without reimbursement is in the national security interest of the United States. In addition, 10 U.S.C. § 1050 has been in effect since 1984 and allows the Secretary of Defense to pay the expenses of officers and students from Latin American countries.1050a, allowing the Secretary of Defense to pay the expenses of officers and students from African countries. Under 10 U.S.C. § 113note, the In 2011, Congress enacted 10 U.S.C. § Secretary of Defense has the ability to pay the expenses of military officers and civilian officials from European countries. The authorities are summarized in table 3.\nDOD has set up specific procedures to direct the use of the authority granted under 10 U.S.C. § 184note to waive reimbursement of expenses by NGO/IOs. This procedural guidance cites national security interests when considering waiver of reimbursement and encourages the Regional Centers to request waivers on the basis of each NGO/IO’s financial need. It also outlines six specific priorities to be used for determining waiver consideration, as described in table 4.\nAccording to the procedural guidance issued by DOD, as well as discussions with DOD and State Department officials, the process through which waivers are requested and approved under 10 U.S.C. § 184note is as follows:\nThe Regional Centers send the Defense Security Cooperation Agency (DSCA) their waiver requests identifying each organization, individual attendees, and dollar amounts, and providing justifications for their requests.\nDSCA then reviews the requests and transmits them to the Department of State’s Bureau of Political-Military Affairs for its concurrence and the Office of the Under Secretary of Defense for Policy (OUSD Policy) for approval.\nThe Department of State and OUSD Policy circulate the requests among their respective regional and functional bureaus, which perform a review of each candidate organization, principally to ensure that the organization’s participation would not undermine the program’s purpose.\nThe Department of State transmits its concurrence to DSCA which, in turn, notifies OUSD Policy of the concurrence. OUSD Policy transmits its approvals to DSCA.\nDSCA designates a portion of the $1 million total waiver authority to each Regional Center, setting a cap on how much of each center’s Operation and Maintenance budget may be spent on waiving reimbursements by NGO/IOs attending their programs.",
"In addition to the legislative authority provided for waiver of reimbursement for NGO/IO personnel, OUSD Policy and the Regional Centers may use other Title 10 authorities granted to the Secretary of Defense. To date, only the William J. Perry Center for Hemispheric Defense Studies has paid the expenses of NGO/IO personnel with an authority other than 10 U.S.C. § 184note. Using the authority under 10 U.S.C. § 1050, whereby the Secretary of Defense may pay the expenses of officers and students from Latin American countries, the William J. Perry Center for Hemispheric Defense Studies has paid the expenses of NGO/IO personnel. According to DOD, the Regional Centers have not used 10 U.S.C. § 1050a, whereby the Secretary of Defense may pay the expenses of officers and students from African countries; or 10 U.S.C. § 113note, through which the Secretary of Defense has the ability to pay the expenses of military officers and civilian officials from European countries, to waive reimbursements for participating NGO/IOs. Table 5 shows the extent to which the Regional Centers have used Title 10 authorities each fiscal year since 2009 to cover expenses for NGO/IO personnel attending their programs.",
"",
"",
"",
"In addition to the contacts named above, Matthew Ullengren, Assistant Director; Judith McCloskey, Assistant Director; David Keefer; Ricardo Marquez; Shirley Min; Jamilah Moon; Amie Steele; Michael Silver; Sabrina Streagle; and Cheryl Weissman made key contributions to this report.",
"U.S. Assistance to Yemen: Actions Needed to Improve Oversight of Emergency Food Aid and Assess Security Assistance. GAO-13-310. Washington, D.C.: March 20, 2013 Security Assistance: Evaluations Needed to Determine Effectiveness of U.S. Aid to Lebanon's Security Forces. GAO-13-289. Washington, D.C.: March 19, 2013 Building Partner Capacity: Key Practices to Effectively Manage Department of Defense Efforts to Promote Security Cooperation. GAO-13-335T. Washington, D.C.: February 14, 2013.\nSecurity Assistance: DOD’s Ongoing Reforms Address Some Challenges, but Additional Information Is Needed to Further Enhance Program Management. GAO-13-84. Washington, D.C.: November 16, 2012.\nState Partnership Program: Improved Oversight, Guidance, and Training Needed for National Guard’s Efforts with Foreign Partners. GAO-12-548. Washington, D.C.: May 15, 2012.\nSecurity Force Assistance: Additional Actions Needed to Guide Geographic Combatant Command and Service Efforts. GAO-12-556. Washington, D.C.: May 10, 2012.\nHumanitarian and Development Assistance: Project Evaluations and Better Information Sharing Needed to Manage the Military’s Efforts. GAO-12-359. Washington, D.C.: February 8, 2012.\nPerformance Measurement and Evaluation: Definitions and Relationships. GAO-11-646SP. Washington, D.C.: May 2, 2011.\nPreventing Sexual Harassment: DOD Needs Greater Leadership Commitment and an Oversight Framework. GAO-11-809. Washington, D.C.: September 21, 2011.\nDefense Management: U.S. Southern Command Demonstrates Interagency Collaboration, but Its Haiti Disaster Response Revealed Challenges Conducting a Large Military Operation. GAO-10-801. Washington, D.C.: July 28, 2010.\nDefense Management: Improved Planning, Training, and Interagency Collaboration Could Strengthen DOD’s Efforts in Africa. GAO-10-794. Washington, D.C.: July 28, 2010.\nDrug Control: DOD Needs to Improve Its Performance Measurement System to Better Manage and Oversee Its Counternarcotics Activities. GAO-10-835. Washington, D.C.: July 21, 2010.\nDefense Management: DOD Needs to Determine the Future of Its Horn of Africa Task Force. GAO-10-504. Washington, D.C.: April 15, 2010."
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"question": [
"In what aspects do the Regional Centers for Security Studies share similarities and differences with other DOD institutions?",
"What were the similarities that GAO found?",
"How are they different in offering their curricula?",
"How are they different in their target audience?",
"How are they different in terms of degrees?",
"What has DOD done to enhance foreign partnerships?",
"What does the conference report mandate GAO to do?",
"What does GAO's report include?",
"What did GAO do for making this report?"
],
"summary": [
"The Department of Defense's (DOD) five Regional Centers for Security Studies (Regional Centers) share similarities and differences with other DOD institutions that provide training and education, including professional military education, advanced degree-conferring, and professional development institutions, in terms of curriculum topics, targeted audience, and program format.",
"GAO found that they all offer training and educational programs and activities to help participants understand security and military matters and to enhance their knowledge, skills, and experiences in these matters.",
"However, there are notable differences in that the Regional Centers generally focus on helping foreign participants understand and respond to regional security issues; generally target a foreign civilian and military personnel audience; and offer shorter and typically less formal courses of study. The Regional Centers support DOD policy objectives with curricula designed to enhance security and foster partnerships through education and exchanges. By contrast, other DOD training and education organizations focus their curricula on military operations and leadership.",
"While the Regional Centers' target audience is foreign civilian and military officials, the other DOD educational organizations typically aim their programs and activities at U.S. servicemembers at all career levels.",
"Regional Center participants generally do not earn credit toward a degree, and the offered courses, conferences, and workshops are of shorter duration ranging from days to weeks. DOD's professional military education and advanced degree-conferring institutions are accredited and generally offer longer, more formal courses that provide participants the opportunity to earn advanced degrees.",
"DOD has emphasized innovative and low-cost approaches to build the defense capacity of foreign partners, and it uses its five Regional Centers to administer programs to foster partnerships and deepen foreign officials' understanding of U.S. objectives.",
"The conference report accompanying the fiscal year 2013 National Defense Authorization Act (H.R. Conf. Rep. No. 112-705) mandated GAO to conduct a study of the Regional Centers.",
"GAO's report (1) describes how the Regional Centers' activities compare with those of other DOD training and education organizations, and (2) evaluates the extent to which DOD has developed and implemented an approach to oversee and assess the Regional Centers' progress in achieving DOD priorities. This report also provides information on the process used to approve Regional Center requests to waive reimbursement of the costs for nongovernmental and international organizations that participate in the Regional Centers' activities.",
"GAO reviewed public law and departmental directives and conducted an analysis comparing aspects of the Regional Centers with other selected DOD training and education institutions."
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CRS_R45728
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{
"title": [
"",
"Introduction",
"Overview of U.S. Agricultural Trade1",
"Trump Administration Trade Policy11",
"Retaliatory Tariffs on U.S. Agricultural Exports32",
"USDA's Trade-Aid Package in Response to Trade Retaliation38",
"U.S. Withdrawal from Trans-Pacific Partnership (TPP)47",
"Agricultural Trade Issues with Canada and Mexico",
"U.S.-Mexico-Canada Agreement (USMCA)61",
"U.S. Dairy Exports to Canada78",
"U.S.-Canada Dispute Regarding the Sale of Wine in Grocery Stores82",
"Other North American Trade Issues",
"Import Competition of Seasonal Produce from Mexico91",
"Withdrawal of the U.S.-Mexico Tomato Suspension Agreement109",
"U.S.-Mexico Sugar Suspension Agreements123",
"Other Major Trade Issues",
"Agricultural Biotechnology128",
"Geographical Indications (GIs)140",
"U.S. Farm Trade with Cuba152",
"Generalized System of Preferences (GSP)159",
"U.S.-EU Agricultural Trade Issues",
"U.S.-EU Agricultural Trade Negotiations172",
"U.S.-EU Dispute over U.S. Olive Imports189",
"U.S.-EU Beef Hormone Dispute196",
"U.S.-EU Dispute over Pathogen Reduction Treatments (PRTs)207",
"EU Regulation of Edible Gelatin and Collagen215",
"Issues Related to Livestock Trade",
"Export Bans on U.S. Meat and Poultry222",
"U.S. Meat and Poultry Imports230",
"Imports of Chicken from China",
"Fresh Beef Imports from Brazil and Argentina",
"Trade Restrictions on Ractopamine Use246",
"Country-of-Origin Labeling (COOL)249",
"WTO and U.S. Agriculture",
"2018 Farm Bill and WTO Compliance255",
"U.S. Challenges of Farm Support Spending of WTO Members266",
"U.S. Challenges of China's Agricultural Domestic Support",
"U.S. Challenges of China's Agricultural Market Access Policy276",
"U.S. Challenges of India's Domestic Agricultural Support"
],
"paragraphs": [
"",
"This report identifies selected current major trade issues for U.S. agriculture that may be of interest to the 116 th Congress. It provides background on individual trade issues and attempts to bring perspective on the significance of each for U.S. agricultural trade. Each trade issue summary concludes with an assessment of its current status.\nThe report begins by examining a series of overarching issues. These issues include U.S. agricultural trade and its importance to the agricultural sector, a brief description of the trade policy being pursued by the Trump Administration and its ramifications for U.S. agricultural exports, the Administration's actions to mitigate the economic impact on agriculture from retaliatory actions by trading partners against its trade policies, and the implications for U.S. agriculture of the U.S. withdrawal from the Trans-Pacific Partnership (TPP) agreement. The report then reviews a number of ongoing trade disputes and trade negotiations while also examining a series of narrower trade issues of importance to the agricultural sector. The format for these more focused trade issues is similar, consisting of background and perspective on the issue at hand and an assessment of their current status.",
"U.S. agricultural exports have long been a bright spot in the U.S. balance of trade, with exports exceeding imports in every year since 1960. In recent years, the value of farm exports have experienced a downturn from the record level recorded in FY2014. The U.S. Department of Agriculture (USDA) forecasts U.S. agricultural exports in FY2019 at $141.5 billion (see Figure 1 ). If realized, this total would represent a decline from FY2018, when exports totaled $143 billion. Exports in FY2018 were $3 billion above the FY2017 total but almost $11 billion below the peak of $152.3 billion in FY2014. The decline in the value of farm exports since FY2014 initially reflected lower market prices for bulk commodities, such as soybeans and corn. Agricultural prices and U.S. exports of certain bulk commodities such as soybeans were further affected in 2018 by retaliatory tariffs imposed on selected U.S. agricultural imports by China, Canada, Mexico, the European Union (EU), and Turkey. The retaliatory tariffs were in response to the Trump Administration's imposition of Section 301 tariffs on certain imports from China and Section 232 tariffs on U.S. imports of steel and aluminum.\nU.S. agricultural imports are forecast to total $128 billion in FY2019, slightly up from $127.6 billion in FY2018, resulting in an agricultural trade surplus of $13.5 billion. This would be below the surplus of $15.8 billion in FY2018 and below the record high in nominal dollars of $43.1 billion in FY2014.\nAgricultural exports are important both to farmers and to the U.S. economy. During the calendar years 2017 and 2018, the value of U.S. agricultural exports accounted for 8% and 9% of total U.S. exports, respectively, and 5% of total U.S. imports, according to the U.S. Census data. As for the contribution of U.S. agricultural exports to the overall U.S. economy, USDA's Economic Research Service (ERS) estimates that in 2017 each dollar of U.S. agricultural exports stimulated an additional $1.30 in business activity. Moreover, that same year, U.S. agricultural exports generated an estimated 1,161,000 full-time civilian jobs, including 795,000 jobs outside the farm sector.\nWith the productivity of U.S. agriculture growing faster than domestic demand, farmers and agriculturally oriented firms rely on export markets to sustain prices and revenue. Within the agricultural sector itself, the importance of exports account for around 20% of total farm production by value. Export markets are a major outlet for many farm commodities, absorbing over one-half of U.S. output for cotton and about half of total U.S. production for wheat, soybeans, and some specialty crops.\nWithin the overall mix of agricultural exports, soybeans, corn, other feed crops, and wheat continue to rank at or near the top of the list of farm exports by volume. The high-value product (HVP) category—which includes such products as live animals, meat, dairy products, fruits and vegetables, nuts, fats, hides, manufactured feeds, sugar products, processed fruits and vegetables, and other processed food products—comprises the largest share of exports in value terms. In FY2018, the HVP share of the value of U.S. agricultural exports represented 66% of the total.\nAll U.S. states export agricultural commodities, but a minority of states account for a majority of farm export sales. In calendar year 2017, the 10 leading agricultural exporting states based on value—California, Iowa, Illinois, Texas, Minnesota, Nebraska, Kansas, Indiana, North Dakota, and Missouri—accounted for 57% of the total value of U.S. agricultural exports that year.\nStatus : In December 2018, Congress reauthorized major agricultural export promotion programs through FY2023 with the passage of the so-called 2018 farm bill ( P.L. 115-334 ). Title III of the farm bill includes provisions covering export credit guarantee programs, export market development programs, and international science and technical exchange programs that are designed to develop agricultural export markets in emerging economies.",
"In establishing policy for U.S. participation in international trade, the Trump Administration has placed increased emphasis on trade deficits, which it views as an indicator of \"unfair\" foreign trade practices, with potential implications for U.S. industry and jobs. With the objective of reducing trade deficits, the Administration's trade policy has focused on withdrawing from or renegotiating existing trade agreements that the Administration views as being \"unfair;\" initiating new bilateral agreements; and responding to the trade practices of U.S. trade partners (whether geopolitical ally or adversary) that it views as unfair, illegal, or threatening to U.S. industry, with punitive trade actions. The punitive actions have included the imposition of Section 232 tariffs on U.S. imports of steel and aluminum and Section 301 tariffs on U.S. imports of products from China. The direction of the Administration's trade policy—for example, withdrawing from the Trans-Pacific Partnership (TPP) agreement with Japan and 10 other Pacific-facing nations and engaging in trade disputes with important agricultural trading partners that have resulted in retaliatory tariffs on U.S. agricultural products—has coincided with market share losses for certain U.S. agricultural exports.\nThe Trump Administration has taken the position that current trade agreements to which the United States is a party and where the U.S. has a trade deficit or where the Administration perceives that the United States is being treated unfairly must be renegotiated or the United States will withdraw from them. Furthermore, the Administration questions the benefits of multi-party agreements, viewing them in some instances as improper vehicles for achieving meaningful negotiations. The Administration has also threatened to withdraw from the World Trade Organization (WTO) if it fails to undergo certain reforms. In January 2017, the Trump Administration withdrew from the TPP, which was subsequently concluded by the remaining TPP signatories under a modified framework renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in March 2018. Under U.S. initiative, the North American Free Trade Agreement (NAFTA) was renegotiated as the U.S.-Mexico-Canada Agreement (USMCA). USMCA was signed by the leaders of the three nations in November 2018 but requires legislative ratification to enter into force.\nIn contrast to the Trump Administration's view of regional or multilateral negotiations, the Administration believes that greater potential gains can be achieved under bilateral negotiations where two countries can negotiate directly in the absence of group consensus. The Administration has sought to update some existing bilateral trade agreements and open new bilateral negotiations:\nThe Administration negotiated selected modifications to the U.S.-South Korea free trade agreement. The Administration has notified Congress of its intent to begin negotiations under Trade Promotion Authority (TPA) with trading partners including Japan, the EU, and the United Kingdom (UK). The Administration is currently engaged in bilateral trade negotiations with China in an attempt to resolve the current trade dispute that has resulted in retaliatory tariffs on a wide range of U.S. agricultural products.\nStatus : The Administration's trade policy actions have in some cases resulted in retaliatory tariffs against U.S. agricultural product exports, while the status of new agreements with several important agricultural trading partners, such as Canada and Mexico, remains uncertain. U.S. agricultural exports continue to be subject to retaliatory tariffs imposed by trading partners in response to the Administration's imposition of Section 232 tariffs on steel and aluminum and Section 301 tariffs on China. The signed USMCA awaits consideration by Congress and ratification by Canada and Mexico. Numerous stakeholders have raised concerns that U.S. agriculture will lose export market shares to competitors due to U.S. withdrawal from TPP and its absence from CPTPP. Some stakeholders wonder whether agriculture will be prioritized in all planned bilateral negotiations. The Office of the U.S. Trade Representative (USTR) had indicated that it may pursue negotiations with Japan in stages, declaring that the automobiles sector will be a priority. At the same time, both President Trump and the Secretary of Agriculture have stated that U.S.-Japan negotiations would occur in stages with a \"very quick\" deal on agriculture. However, the Japanese economy minister has stated that the United States and Japan would not reach an agreement in any one sector before other sectors.\nElsewhere, the EU negotiating mandate for conducting trade negotiations with the United States articulates that a key EU goal is \"a trade agreement limited to the elimination of tariffs for industrial goods only, excluding agricultural products.\" As for the UK, it cannot formally negotiate or conclude a new trade agreement with the United States until it exits the EU.",
"On March 23, 2018, the Trump Administration applied a 25% tariff to certain U.S. steel imports and a 10% tariff to certain U.S. aluminum imports under Section 232 of the Trade Expansion Act of 1962. This action followed Department of Commerce (DOC) investigations that determined that current imports threaten U.S. national security. Citing objections to China's policies on intellectual property, technology, and innovation, the Administration also implemented three rounds of tariff increases under Section 301 on a total of $250 billion worth of Chinese products.\nCanada, China, Mexico, the EU, and Turkey—whose exports were affected by the steel and aluminum tariffs—retaliated with tariffs on imports of a range of U.S. agricultural and food products and other goods. India has proposed retaliatory tariffs on a number of U.S. agricultural products, but it has delayed implementation pending ongoing negotiations with the Trump Administration.\nIn all, the retaliatory tariffs imposed by these trading partners have targeted more than 800 U.S. agricultural and food products. Exports of those products to these five trading partners amounted to $26.9 billion in calendar year 2017, or about 18% of global U.S. agricultural and food product exports of $150.8 billion that year.\nRetaliatory tariffs by China affect 99% of U.S. agricultural products exported to China. With a combination of Section 301 and Section 232 retaliations, China has levied retaliatory tariffs ranging from 5% to 50%, in addition to existing most-favored nation (MFN) tariffs, on more than 800 U.S. food and agricultural products that were worth about $20.6 billion in calendar year 2017. The products, subject to retaliatory tariffs, span all agricultural and food categories, including grains, meat and animal products, fruits and vegetables, seafood, and processed foods. The U.S. agricultural imports into China with the largest loss of markets since the tariffs were imposed in 2018, compared with 2017, are soybeans, cotton, sorghum, and hides and skins.\nCanada has levied retaliatory tariffs of 10% on more than 20 U.S. agricultural and food products that are otherwise duty free under NAFTA. U.S. exports most affected by these tariffs are roasted coffee, ketchup, various beverage waters, licorice and toffee, and orange juice. U.S. exports of the products subject to Canada's retaliatory tariffs were valued at $2.6 billion in 2017.\nMexico has placed retaliatory tariffs of 15%-25% on a range of U.S. products that are otherwise duty free under NAFTA. U.S. exports to Mexico of these products amounted to approximately $2.5 billion in 2017. U.S. exports of cheese and pork have been the commodities most affected by Mexico's retaliatory tariffs as measured by reduced exports in 2018 compared with 2017.\nThe EU has levied a 25% tariff on certain U.S. exports of prepared vegetables and legumes, grains, fruit juice, peanut butter, and whiskey, which together amounted to $1 billion in sales in 2017. Turkey has imposed retaliatory tariffs on U.S. tree nuts, rice, prepared foods, whiskey, and unmanufactured tobacco. U.S. exports of these products to Turkey totaled $250 million in 2017.\nA study from Purdue University found that the retaliatory tariffs could result in a reduction of U.S. agricultural exports by as much as $8 billion annually (in inflation adjusted values) after the markets have adjusted in the near future. The study also projects that the reduction in U.S. agricultural exports could lower agricultural land prices and result in the reallocation of 45,000 farm, ranch, and processing workers. Additionally, the authors suggest that U.S. soybean producers would see the most change in the wake of tariff retaliation, with exports potentially falling by 21% and land prices declining by about 18%. The impact estimated by the model would be affected over time by other policy shocks and technological and population changes that are not accounted for in the model. A recent United Nations study states that extended imposition of retaliatory tariffs will erode U.S. market share in favor of export competitors in the longer term.\nStatus : U.S. agricultural exports continue to face retaliatory tariffs in response to the Administration's 2018 trade actions. The USDA forecasts U.S. agricultural exports for FY2019 at $141.5 billion compared with $143.4 billion in FY2018, reflecting its expectation that increased trade with other regions that are not involved in the tariff dispute will partially offset tariff-related trade losses, particularly with China. U.S. agricultural exports to China are forecast to decline in FY2019 by over $7 billion from $16 billion in FY2018. The United States and China are engaged in bilateral discussions to resolve the current trade dispute. USMCA—the proposed successor to NAFTA—does not address the Section 232 tariffs that led Canada and Mexico to impose retaliatory tariffs. Representatives of the U.S. business community, agriculture interest groups, other congressional leaders, and Canadian and Mexican government officials have stated that the Section 232 tariff issues must be resolved before USMCA enters into force.",
"On July 24, 2018, Secretary of Agriculture Sonny Perdue announced that the USDA would take several temporary actions to assist farmers in response to trade-related consequences from what the Administration characterized as \"unjustified retaliation\" against several U.S. agricultural products in 2018. Specifically, the Secretary said that the USDA would authorize up to $12 billion in financial assistance—referred to as a trade aid package—for certain agricultural commodities using the authority provided under Section 5 of the Commodity Credit Corporation (CCC) Charter Act (15 U.S.C. §714c).\nThe Secretary initially stated that there would be no further trade-related financial assistance beyond this $12 billion package. However, on May 10, 2019, Secretary Perdue tweeted that the White House had directed USDA to work on a new aid package. The 2018 trade aid package includes (1) a Market Facilitation Program (MFP) of direct payments (valued at up to $10 billion) to producers of commodities most affected by the trade retaliation, (2) a Food Purchase and Distribution Program to partially offset lost export sales of affected commodities ($1.2 billion), and (3) an Agricultural Trade Promotion program to expand foreign markets ($200 million).\nThe largest component of the trade aid package, the MFP, provides direct financial assistance to producers of commodities that are most impacted by actions of foreign governments resulting in the loss of traditional exports. Affected commodities include soybeans, corn, cotton, sorghum, wheat, hogs, dairy, fresh sweet cherries, and shelled almonds. USDA announced MFP per-unit payment rates to be applied to certified production of eligible commodities in 2018.\nUSDA's Farm Service Agency administers the MFP. Eligible participants had to sign up for payments from September 2018 to February 2019. They also had to meet additional criteria, including being \"actively engaged in farming,\" having an average adjusted gross income of less than $900,000, meeting conservation compliance provisions, and certifying their 2018 production with USDA by May 1, 2019.\nUSDA determined the MFP per-unit payment rate based on the estimated \"direct trade damage\"—the difference in expected trade value for each affected commodity with and without the retaliatory tariffs. The estimated \"trade damage\" for each affected commodity was then divided by the crop's production in 2017 to derive a per-unit payment rate. Indirect effects—such as any decline in market prices for affected commodities that were used domestically rather than exported—were not included in the payment calculation. Based on 2017 production data, USDA estimated that approximately $9.6 billion would be distributed in MFP payments to eligible producers, with over three-fourths ($7.3 billion) of MFP payments provided to soybean producers.\nBy linking MFP commodity payments only to the trade loss associated with each named MFP commodity, the payment formula favored commodities that relied more heavily on export markets than on domestic markets. Soybean growers and most farm-advocacy groups have generally been supportive of the payments, but some commodity groups—most notably associations representing corn, wheat, milk, and specialty crops—argued that the MFP payment formulation was inadequate to fully compensate their industries. For example, the National Corn Growers Association states that the 2018 trade disputes lowered corn prices by $0.44 per bushel for a potential total loss of $6.3 billion. Similarly, the National Association of Wheat Growers estimates a $0.75 per bushel decrease in domestic wheat prices that resulted in nearly $2.5 billion in lost value, while the National Milk Producers Federation has calculated that the retaliatory tariffs resulted in a $1.10 per hundredweight decline in domestic milk prices and over $1.2 billion in losses for milk producers based on milk futures prices. Similarly, many specialty crop groups contend that their tariff-related export losses were not fully compensated by the trade aid programs. To this point, a 2018 study by researchers at the University of California-Davis stated that, in California alone, specialty crops may suffer trade-related losses of over $3.3 billion on their 2018 production.\nStatus: In March 2019, USDA estimated that a total of $8.7 billion in outlays would be made available under the MFP program, including $5.2 billion in 2018 and $3.5 billion in 2019. The large volume of payments could attract international attention about whether they are consistent with WTO rules and commitments on domestic support. The trade aid package raises a number of potential questions. For instance, if the United States and China do not reach an agreement in their ongoing tariff-driven trade negotiations, should another trade aid package, or some alternative compensatory measure, be provided in 2019, and possibly beyond? If MFP payments are to be repeated in the future, should USDA revise its payment formulation to provide a broader distribution of payments across the U.S. agricultural sector?",
"The TPP was concluded on October 4, 2015, among 12 countries: the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The agreement had not yet entered into force when President Trump signed an executive order withdrawing the United States from TPP on January 23, 2017. On March 8, 2018, the remaining 11 countries concluded a revised agreement—the CPTPP. On December 30, 2018, the CPTPP entered into force among the first six countries to ratify the agreement—Canada, Australia, Japan, Mexico, New Zealand, and Singapore. On January 14, 2019, the CPTPP entered into force for Vietnam.\nWith the United States, the TPP would have become the world's largest trade agreement, covering 40% of the global economy and providing comprehensive market access through the elimination and reduction of tariff and non-tariff barriers. The TPP provisions would have significantly increased the overseas markets to which U.S. farm and food products would have preferential access. The CPTPP provisions are based on the TPP. The agricultural provisions of the CPTPP seek to liberalize trade through lower tariffs, expanded tariff-rate quotas (TRQs), and agreements for reducing non-tariff barriers, including laws and regulations pertaining to products of agricultural biotechnology.\nIn 2016, the U.S. International Trade Commission (USITC) had assessed the potential economic benefits from TPP ratification, projecting that by 2032 U.S. agricultural exports would be higher by $7.2 billion, or 2.6%, under TPP than without the agreement. Most of the increase in U.S. exports would have been concentrated in Japan (up $3.6 billion) and Vietnam (up $3.3 billion).\nCPTPP countries represent a major component of U.S. farm and food trade, providing markets for 42% of U.S. farm exports between 2015 and 2018 while also supplying 52% of U.S. agricultural imports. By one estimate, U.S. absence from CPTPP will lead to a decline in U.S. agricultural exports of about $1.8 billion (1.2% of FY2018 U.S. agricultural exports of $143 billion) per year. The combination of U.S. absence from CPTPP, retaliatory tariffs on U.S. farm and food exports, and the possibility of the United States withdrawing entirely from NAFTA—as President Trump has threatened in the absence of USMCA ratification—could lead to a potential annual drop in U.S. agricultural exports of $21.8 billion, according to a study commissioned by the Farm Foundation. As the CPTPP agreement is relatively new, the possible range of impact on U.S. agriculture is uncertain because of limited studies that are available.\nA broad cross-section of agricultural groups and food and agribusiness interests are concerned about losing potential export markets given U.S. absence from CPTPP. Under CPTPP, for example, Japanese tariffs on wheat imports will face a 50% reduction by 2025, which will put U.S. wheat exports to Japan at a competitive disadvantage. Similarly, the U.S. dairy industry estimates that by 2027, almost half of the U.S. dairy exports to Japan are likely to be replaced by dairy products from CPTPP and other countries with preferential trading agreements with Japan. Japan has historically accounted for more than a quarter of the total value of U.S. beef and pork exports. The U.S. share of Japan's imports of these commodities is expected to decline, because CPTPP competitors receive more favorable access to the Japanese market for beef and pork. U.S. Meat Export Federation states that annual beef export losses could reach $550 million by 2023 and more than $1.2 billion by 2028. Annual U.S. pork export losses are estimated to exceed $600 million by 2023 and reach $1 billion by 2028. USDA officials and representatives of the U.S. wheat and barley industries assert that U.S. wheat and barley exports are rapidly losing market share in Japan to CPTPP member countries and the EU.\nStatus : U.S. agricultural exports appear to be at an increasing disadvantage in the CPTPP member country markets as these countries have begun to expand market access and reduce tariffs on imported products from CPTPP signatory countries. On October 16, 2018, under the TPA procedures, the Trump Administration gave Congress its official 90-day advance notification of intent to enter into trade negotiations with Japan, a CPTPP member country. In view of the Trump Administration's expressed objectives to \"achieve fairer, more balanced trade,\" including in auto trade, stakeholders are uncertain about the prospects of reaching a quick deal with Japan. At the same time, both President Trump and the Secretary of Agriculture have stated that U.S.-Japan negotiations would occur in stages with a \"very quick\" deal on agriculture. However, the Japanese economy minister has stated that the United States and Japan would not reach an agreement in any one sector before other sectors.",
"Since 2002, Canada has been the United States' top agricultural export market, with U.S. agricultural exports averaging over $20 billion between FY2016 and FY2018. In FY2018, Canada accounted for 14% of the total value of U.S. agricultural exports to all destinations. Mexico has been the third-largest market for U.S. agricultural exports since FY2010. U.S. agricultural exports to Mexico averaged over $18 billion between FY2016 and FY2018, accounting for 13% of the total value of U.S. agricultural exports to all destinations in FY2018.",
"On September 30, 2018, the Trump Administration announced an agreement with Canada and Mexico, USMCA, which it is promoting as a replacement for the NAFTA. Under NAFTA, all agricultural tariffs were phased out to zero except for certain products traded between the United States and Canada. These included U.S. imports from Canada of dairy products, peanuts, peanut butter, cotton, sugar, and sugar-containing products and Canadian imports from the United States of dairy products, poultry, eggs, and margarine. Quotas that once governed bilateral trade in these commodities were redefined as TRQs to comply with WTO commitments. Under a TRQ, a lower tariff rate is levied on import quantities within the quota amount, while a higher tariff rate is imposed on quantities in excess of the quota. The United States and Mexico agreement under NAFTA did not exclude any agricultural products from trade liberalization.\nThe proposed USMCA would expand upon the agricultural provisions of NAFTA. All food and agricultural products that have zero tariffs under NAFTA would remain at zero under USMCA. Under USMCA, market access would be expanded for the agricultural products traded between Canada and the United States that were exempt from tariff elimination under NAFTA. Canada agreed to create new U.S.-specific TRQs for U.S. dairy products and to replace the existing NAFTA poultry TRQs with new USMCA TRQs. All U.S. exports within the set TRQ volume limit would be subject to zero tariffs rates, but U.S. over-quota exports would still face the higher levels of tariffs currently in place under Canada's WTO commitment. The United States, in turn, agreed to improve access for imports of Canadian dairy, sugar, peanuts, and cotton. Canada and the United States also agreed to grade each other's like varieties of wheat as if they were produced domestically, a long-standing request of the U.S. wheat industry.\nUnder USMCA, provisions are made for textiles and apparel to promote greater use of North American origin products, which may support domestic U.S. cotton production. Also, each country would offer the same treatment for distributing another USMCA country's spirits, wine, beer, and other alcoholic beverages as it would its own products. USMCA's Sanitary and Phytosanitary (SPS) chapter calls for greater transparency in SPS rules and improved regulatory alignment among the three countries. Under USMCA, the United States, Canada, and Mexico agreed to provide procedural safeguards for recognition of new geographic indications, which are place names used to identify products that come from certain regions or locations. The agricultural chapter of USMCA also lays out provisions for addressing the products of agricultural biotechnology, an issue NAFTA does not address.\nIn April 2019, USITC released its report that provides an assessment of the likely effects of USMCA on the overall U.S. economy and its component sectors. Because NAFTA has already eliminated duties on most goods and reduced most non-tariff barriers, USITC's quantitative assessment includes changes that are not easily quantifiable. These provisions of trade negotiations were excluded from past USITC quantitative analyses. The provisions included in USMCA assessment by USITC—such as intellectual property rights, future commitments to open flows of data, and strengthening labor standards and rights—may reduce uncertainty in future trading regimes. Uncertainty reducing provisions are part of most free-trade agreements, including NAFTA, even if past assessments excluded them in the analyses. The USITC report finds that U.S. agricultural exports would increase by 1.1% in year 6 of USMCA implementation compared to its 2017 baseline export levels. In inflation-adjusted dollars, U.S. dairy exports to NAFTA countries would increase by $314.5 million (7.1%), and U.S. poultry exports would increase by $183.5 million (1%) compared to exports in 2017.\nA 2018 study commissioned by the Farm Foundation performs an economy-wide analysis, but the analysis takes into consideration only the changes in agricultural tariffs and TRQs proposed under USMCA. The market access changes are introduced as shocks into a multi-region, economy-wide model. The impacts of these changes are analyzed after the economy has adjusted to the shocks after full implementation of USMCA—year 6. The adjustment process can include changes in production and consumption structure, including production costs and changes in the volume of agricultural outputs. This study estimates, in 2014 dollars, a net increase in annual U.S. agricultural exports of $450 million under USMCA, or about 1% of U.S. agricultural exports under NAFTA—$41 billion in FY2014. It projects the export losses from the retaliatory tariffs imposed by Canada and Mexico in response to U.S. Section 232 tariffs on steel and aluminum imports to be $1.8 billion per year (in 2014 dollars), which would more than offset the projected export gain of $450 million from USMCA. These losses include changes in production decisions and volumes resulting from higher production costs. This study does not consider changes in other sectors of the economy that would result from the implementation of USMCA provisions in these other sectors. Moreover, the impact estimated by the model would be affected over time by other policy shocks and technological and population changes that are not accounted for in the model.\nAccording to an updated version of the Farm Foundation study, under the possible scenario of a complete withdrawal from NAFTA without ratification of USMCA, tariffs on U.S. exports to Canada and Mexico would be expected to return to the higher WTO MFN rates. Under this scenario, the study finds that, in 2014 dollars, U.S. agricultural and food exports to Canada and Mexico would decline by about $12 billion annually.\nA study conducted by researchers at the International Monetary Fund assesses the potential impacts of USMCA on North America as a region taking into consideration the following provisions of the proposed USMCA: (1) higher vehicle and auto parts regional value content requirement; (2) new labor value content requirement for vehicles; (3) stricter rules of origin for USMCA textile and apparel trade; (4) agricultural trade liberalization that increases U.S. access to Canadian supply-managed markets and reduces U.S. barriers on Canadian dairy, sugar and sugar products, and peanuts and peanut products; and (5) trade facilitation measures.\nThe results describe a medium-term adjustment five to seven years after full implementation of USMCA—year 6. By this time, labor and capital would have been reallocated among sectors, but new investment spending would not yet have increased productive capacity. The study compares base period with what may happen five to seven years after full implementation of USMCA. This study finds that increasing higher regional vehicle and labor requirements would contribute to an economic loss for all three USMCA countries, with a decline in the production of vehicles and parts, shifts toward greater sourcing of both vehicles and parts from outside of the region, and higher prices for consumers. Regarding agricultural provisions of USMCA, the report highlights that Canada would stand to gain more than the United States. The study also highlights that the trade facilitation provisions of USMCA would potentially provide the largest gain to the region. Another researcher reiterates the findings of the International Monetary Fund study that the new domestic content provisions in USMCA would increase input costs for U.S. farmers who would end up paying more for trucks and machinery. As few studies have analyzed the potential impacts of USMCA, the diversity in the findings regarding the impacts from the implementation of USMCA is limited.\nStakeholder groups have expressed mixed responses to USMCA. A broad coalition representing more than 200 U.S. companies and industry associations has advocated for USMCA's approval. The American Farm Bureau Federation, which is the largest general farm organization, expressed satisfaction that USMCA not only locks in market opportunities previously developed but also builds on those trade relationships in several key areas. On the other hand, the National Farmers Union and the Institute for Agriculture and Trade Policy have expressed concern that the proposed agreement does not go far enough to institute a fair trade framework that benefits family farmers and ranchers.\nStatus: The proposed USMCA does not enter into force unless approved by the U.S. Congress and ratified by Canada and Mexico. A report by USITC that assesses the impact of USMCA on U.S. economy was submitted to Congress on April 18, 2019. The timeline for congressional approval of USMCA would likely be governed by the TPA procedures established under the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 ( P.L. 114-26 ) but would not be initiated until the President submits the draft implementing bill to Congress.\nSome policymakers have stated that the path to ratifying USMCA by Congress is uncertain, in part because the three countries have yet to resolve disputes over U.S. Section 232 tariffs on imports of steel and aluminum and over the retaliatory tariffs that Canada and Mexico have imposed on U.S. agricultural products. Senator Chuck Grassley is reported to have called on the Trump Administration to lift tariffs on steel and aluminum imports from Canada and Mexico before Congress begins considering legislation to implement USMCA. House Speaker Nancy Pelosi has reportedly stated that she wants \"stronger enforcement language\" and that USMCA talks should be reopened to tighten enforcement provisions for labor and environmental protections.\nFor more information, see CRS Report R45661, Agricultural Provisions of the U.S.-Mexico-Canada Agreement .",
"The Canadian dairy sector limits production, sets prices, and restricts imports. Canadian imports of dairy products are restricted through TRQs, with over-quota tariffs in excess of 200% for some products. Although Canada is the second-largest market for U.S. dairy product exports, U.S. exports would likely be higher but for Canadian import restrictions.\nIn recent years, U.S. milk producers began exporting increased quantities of ultra-filtered (UF) milk to Canada. UF milk is a high-protein liquid product made by separating and concentrating certain milk components (such as protein and fat) for use as ingredients in dairy products, such as cheese, yogurt, and ice cream. U.S. UF milk found a market among Canadian cheese makers in 2008 after Canada revised its compositional standards for cheese. This revision significantly reduced the use of several milk products that U.S. processors had been supplying to Canadian food manufacturers, including milk protein concentrates and dried protein products.\nIn recent years, growing demand for butterfat in Canada resulted in increased Canadian milk production and, consequently, surplus supplies of skim milk. To address the surplus, Canada adopted the Class 7 milk price classification in 2017 (Class 6 in Ontario). Milk classified as Class 7 comprises skim milk components—primarily milk protein concentrates (MPC) and skim milk powder (SMP)—used to process dairy products. Prices for Class 7 products were set at low levels. Once the Class 7 regime was implemented, Canadian skim milk products became cheaper. Canada expanded global exports of SMP with the consequence that U.S. producers lost exports of high-protein UF milk to Canadian cheese and yogurt processors.\nAccording to USDA, the value of U.S. UF milk exports to Canada peaked at nearly $107 million in 2015 but declined after the Class 7 regime was implemented in 2017 to $49 million in 2017 and $32 million in 2018. At the same time, Canada's exports of SMP more than tripled in 2017 to $133 million, compared with $42 million in 2016 before the Class 7 price regime was implemented. Eliminating Canada's Class 7 pricing regime became a priority for the U.S. dairy industry when NAFTA renegotiations commenced in 2017.\nStatus : Under USMCA, Canada agreed to eliminate the Class 7 pricing regime six months after USMCA enters into force. Canada also agreed to reclassify Class 7 products according to their end use and base its selling price on a formula that takes into consideration the USDA reported nonfat dry milk price. Also under the agreement, Canada would be required to monitor its exports of MPC, SMP, and infant formula and report at the harmonized tariff schedule level monthly.\nAlthough Canada would maintain its milk supply management system under USMCA, it would expand TRQs for U.S. exports of milk, cheese, cream, skim milk powder, condensed milk, yogurt, and several other dairy products. U.S. dairy products within the USMCA TRQs would enter Canada duty free, while U.S. exports above the TRQ quantities would be subject to the existing higher over-quota tariffs. Likewise, the United States would establish TRQs for imports of Canadian dairy products.\nIn total, under USMCA Canada would grant the United States duty-free access to nearly 17,000 metric tons (MT) of dairy products the first year of the agreement, 100,000 MT in the sixth year, and 109,000 MT in year 19. The USMCA quota is specific to the United States and would be in addition to the 93,648 MT of WTO global quota, which is available under NAFTA to exports from the United States as well as to exports from other WTO member countries. For more information, see CRS In Focus IF11149, Dairy Provisions in USMCA .",
"In Canada, the authority to import and distribute alcohol rests with the provincial governments. Starting in 2015, British Columbia (BC) initiated a series of policies and regulations that provide BC wine exclusive access to retail channels and grocery store shelves, while imported wine maybe sold in grocery stores only through a \"store within a store\" physically separated from the main retail outlet and with separate cash registers. Overall, the U.S.-based Wine Institute reports that Canada is the leading export market for California wine—the leading wine producing state in the United States—accounting for $444 million in sales in 2017.\nStatus: In January 2017, the Obama Administration initiated trade enforcement action against Canada at the WTO regarding Canada's BC wine measures. Subsequent actions by the Trump Administration, in September 2017, led to the United States requesting formal consultations with Canada regarding BC wine measures. USTR states that \"discriminatory regulations implemented by British Columbia are unfairly keeping U.S. wine off of grocery store shelves\" and that the measures are inconsistent with Canada's commitments and obligations under the WTO. The Canadian wine industry estimates that wine imports account for nearly 70% of the Canadian wine market. It also points out that the BC Vintners Quality Alliance has been issuing store licenses for the industry since the 1980s. The United States reiterated its concerns as part of a second complaint issued in this case in July 2018. Argentina, Australia, New Zealand, and the EU have requested to join the consultation.\nThe proposed USMCA addresses U.S. concerns about Canada's BC wine measures as part of a side letter to the proposed agreement. As outlined in the side letter, Canada would modify certain measures that provide preferential grocery store shelf space to wines produced within the province and \"implement any changes no later than November 1, 2019.\"",
"The proposed USMCA does not address all the issues that restrict U.S. agricultural exports to Mexico and Canada, nor does it include all of the changes sought by U.S. agricultural interest groups. For instance, Southeastern U.S. produce growers have been seeking changes to trade remedy laws to address imports of seasonal produce.",
"Mexico's production of some fruits and vegetables—tomatoes, peppers, cucumbers, berries, and melons—has increased in recent years in part due to Mexico's investment in large-scale greenhouse production facilities and other types of technological innovations. Greenhouse production in Mexico continues to rise, with 2018 estimates of nearly 57,500 acres of produce grown under protection, up from an estimated 9,000 acres in 2017. USDA researchers reported that Mexico is the largest foreign supplier of U.S. imports of vegetables and fruits (excluding bananas).\nRepresentatives of the Florida Fruit and Vegetable Association (FFVA) claim that Mexico's investment in produce production is supported by government subsidies and should be addressed through countervailing duties (CVD) on U.S. imports of these products. They further state that these exports enter the United States at prices below the cost of production and should be countered by higher antidumping (AD) duties. FFVA also believes that Mexico's labor cost advantage in fruit and vegetable production gives Mexico a competitive advantage over U.S. produce growers. In general, trade concerns have centered on tomatoes, peppers, and berries.\nOne of the Trump Administration's initial agriculture-related objectives in the renegotiation of NAFTA included a proposal to establish new rules for seasonal and perishable products, such as fruits and vegetables. The proposal would have established a separate domestic industry provision for perishable and seasonal products in AD and CVD proceedings, making it easier for a group of regional producers to initiate an injury case and to prove injury, thereby implementing CVD or AD duties to be levied on the imported products responsible for the injury. This could protect certain U.S. seasonal fruit and vegetable products in some regions by making it easier to initiate trade remedy cases. USITC has previously reviewed trade remedy cases involving perishable agricultural products that have proven difficult to settle.\nSome Members of Congress supported including seasonal protections as part of NAFTA's renegotiation. Others opposed including such protections, contending that seasonal production complements rather than competes with U.S. growing seasons, while still others worried it could open the door to an \"uncontrolled proliferation of regional, seasonal, perishable remedies against U.S. exports.\" Most U.S. food and agricultural sectors, including some fruit and vegetable producer groups, opposed including seasonal protections as part of the renegotiation. Some worried that efforts to push for seasonal protections would derail the renegotiation. Others claimed that such efforts would favor a few \"politically-connected, wealthy agribusiness firms from Florida\" at the expense of others in the U.S. produce industry and at the expense of both consumers and growers in other fruit and vegetable producing states, such as California. The Agricultural Technical Advisory Committee for Trade in Fruits and Vegetables (F&V ATAC) supported not including provisions in the NAFTA renegotiation, acknowledging that including such protections would generate \"significant opposition from Mexican and Canadian negotiators, in addition to raising concern by many in the U.S. agricultural community, including many in the fruit and vegetable industry.\" In January 2018, F&V ATAC passed a resolution supporting the withdrawal of the seasonal and perishable trade remedy proposal from the U.S. negotiating objectives.\nStatus: The proposed USMCA that might replace NAFTA does not include changes to U.S. trade remedy laws to address seasonal produce trade. As a result, some in Congress have taken additional steps to try to address this issue. Bills were introduced in both the House and Senate in the 115 th Congress as part of the Agricultural Trade Improvement Act of 2018 ( S. 3510 ; H.R. 7015 ). These bills would have provided for CVD and AD procedures for seasonal producers and defined core seasonal industry in U.S. trade remedy laws, among other changes. These two bills were reintroduced in the 116 th Congress but renamed \"Defending Domestic Produce Production Act of 2019\" ( S. 16 ; H.R. 101 ). Current law generally requires that an injury case be supported by at least 50% of the domestic industry. The House and Senate bills would allow regional groups representing less than 50% of nationwide seasonal growers to initiate an injury investigation. Such changes could make it easier for a group of regional producers to initiate trade remedy cases.",
"The U.S.-Mexico Tomato Suspension Agreement is an agreement between DOC and signatory producers/exporters of fresh tomatoes grown in Mexico that suspends the U.S. AD investigation into whether Mexican fresh tomatoes were sold into the U.S. market at less than fair value. Fresh tomatoes imported from Mexico have been governed by suspension agreements since 1996. The first suspension agreement on fresh tomatoes from Mexico became effective in November 1996. The Mexican signatory growers and the United States entered into new agreements in 2002 and 2008. The most recent agreement became effective in March 2013. Under the current agreement, the signatories agree to suspend the AD investigation and monitor compliance with the agreement. The basis for the suspension agreement was a commitment by each signatory producer/exporter to sell tomatoes at or above the stated reference price in order to eliminate the injurious effects of exports of fresh tomatoes to the United States. Analysis commissioned by the Fresh Produce Association of the Americas (FPAA) found that terminating the agreement could \"reduce the supply of tomatoes in the US market, and raise prices paid by consumers in the U.S., particularly during the winter tomato season (October-June).\"\nThe agreement sets different floor prices for Mexican fresh tomatoes during the summer and winter and specifies prices for open field/adapted-environment and controlled-environment production. These price floors cover all types of fresh or chilled tomatoes from Mexico, including common round, cherry, grape, plum, pear, and greenhouse tomatoes. The agreement does not cover tomatoes that are for processing.\nIn early 2018, DOC initiated consultations with the Mexican tomato growers and exporters to negotiate possible revisions to the 2013 agreement. In addition, DOC initiated its five-year sunset review of the suspended AD investigation and published the preliminary and final results of its analysis in late 2018. DOC's analysis indicated that dumping of fresh tomatoes was likely to occur or recur and calculated weighted-average dumping margins of up to 188%. In November 2018, the Florida Tomato Exchange requested that the United States withdraw from the suspension agreement, eliminate the reference prices, and resume the related initial 1996 AD investigation. Several Members of Congress in both the House and the Senate have expressed support for withdrawing from the suspension agreement. Among the groups that oppose withdrawal are the FPAA and other groups representing Mexican growers and exporters as well as businesses, various associations, and local and county governments.\nStatus: On May 7, 2019, the United States terminated the 2013 Suspension Agreement on Fresh Tomatoes from Mexico but said it plans to continue negotiations regarding a possible revised agreement. DOC initially announced its intention to withdraw from the agreement in February 2019 following its periodic review of the agreement, which concluded that Mexican fresh tomatoes have been sold into the U.S. market at less than fair value. Without a suspension agreement, an AD order could be issued if USITC makes a determination of financial injury to U.S. growers. Reportedly, the DOC and Mexico have been unable to develop a revised agreement that is acceptable to both sides, despite ongoing negotiations since early 2018. In April 2019, Mexico's tomato growers proposed to eliminate a price distinction between winter and summer season tomatoes and increase the reference price for USDA-certified organic tomatoes. The government of Mexico has expressed its disappointment about the U.S. decision.",
"In December 2014, DOC signed suspension agreements with the government of Mexico and Mexican sugar producers and exporters that prevented the imposition of CVD and AD on U.S. imports of Mexican sugar. This was a consequence of U.S. government determinations that Mexican sugar was being subsidized by the government of Mexico and was being sold into the U.S. market at less than fair value.\nThe suspension agreements limit Mexico's sugar exports to the United States to the residual of U.S. needs for domestic human use in a given marketing year after subtracting U.S. production and imports from other countries. The agreements establish minimum reference prices for Mexican sugar that are above U.S. sugar program loan levels for domestically produced sugar. Another provision limits the share of Mexican sugar that can enter the United States as refined sugar.\nAfter the suspension agreements took effect, a number of stakeholders in the U.S. sugar market asserted that the suspension agreements had not worked as intended and had not entirely eliminated the injury caused by the subsidization and dumping of Mexican sugar. One widely held criticism was that cane refiners who were dependent on imports of raw cane from Mexico had received an inadequate share of sugar from Mexico. Another criticism leveled at the agreements was that Mexican exporters were not always adhering to limits on the share of Mexican sugar imports that are refined sugar as compared with raw sugar nor to the specified minimum reference prices.\nIn November 2016, the American Sugar Coalition—representing sugar cane and sugar beet producers and sugar processors, refiners, and workers—called on DOC to withdraw from the agreements, an action that could have caused AD and CVD duties to be imposed on Mexican sugar. Imperial Sugar Company, a U.S. cane refiner, also advocated for withdrawal. The Sweetener Users Association, which represents sugar-using businesses, recommended renegotiating the agreements to address their shortcomings and warned that terminating them would virtually eliminate Mexican sugar from the U.S. market. In November 2016, DOC issued results of a preliminary administrative review. In it, the DOC concluded that the agreements may not have entirely redressed the injury, and that certain import transactions may not have adhered to the terms in the agreements.\nStatus: In June 2017, the United States and Mexico agreed to amendments to the suspension agreements. Under the amendments, effective October 1, 2017, the price of imported Mexican raw sugar was increased from $0.2225 per pound to $0.23 per pound. The price of imported refined sugar was increased from $0.26 per pound to $0.28 per pound. The maximum share of refined sugar imports was limited to 30%, with raw sugar imports constituting at least 70% of the total, compared with 53% and 47%, respectively, under the 2014 agreement. The agreement also requires that imported raw sugar be loaded in bulk and free flowing—that is, not packaged. Any raw sugar imports that are packaged would be counted toward the refined sugar allotment. In addition, if USDA determines that the United States requires additional sugar imports to meet its needs, Mexico would be awarded the first opportunity to fill the need. For more information, see CRS In Focus IF10693, Amended Sugar Agreements Recast U.S.-Mexico Trade .",
"Several other trade issues may be of interest to Congress. A key objective of U.S. trade negotiations has been to establish a common framework for approval, trade, and marketing of the products of agricultural biotechnology. Among other high-profile issues, geographical indications are increasingly becoming an agricultural trade issue. In addition, U.S. farm and food interests continue to see potential market expansion opportunities in Cuba, but interested exporters regard a prohibition on private U.S. financing as a major obstacle to this end. On the import side of the trade ledger, in March 2019, the United States initiated its review of the Generalized System of Preference (GSP), which provides duty-free tariff treatment for certain products imported from developing countries.",
"Agricultural biotechnology refers primarily to the commercial use of recombinant DNA techniques to genetically modify or bioengineer plants and animals so that they have certain desired characteristics, primarily herbicide tolerance and pest resistance. More recently, the term has also come to encompass a range of new genetic technologies involving genomic editing (e.g., CRISPR-Cas9) rather than recombinant DNA techniques alone. U.S. soybean, corn, cotton, and sugar beet producers have rapidly adopted genetically engineered (GE) varieties of these crops since commercialization began in the mid-1990s. The United States is the leading country in cultivating GE crops, accounting for more than 40% of total acres growing GE crops worldwide.\nElsewhere in the world, the adoption and cultivation of GE crops by both producers and consumers has been mixed. In the EU, for example, the European Commission (EC) may approve of GE products for import and marketing, but individual member states may maintain bans. GE crop production in the EU accounts for about 1% of crop acreage—about 325,000 acres—all in a single variety of pest-resistant GE corn: MON810. This particular variety is cultivated predominantly in Spain and Portugal. Eighteen EU member states ban cultivation of GE crops and/or have specific rules on the trade of GE seeds. EU officials have been cautious in permitting GE products to be cultivated within the EU, but EU-approved varieties of GE commodities can be imported.\nAll GE-derived food and feed imported to the EU must be labeled as such. The EU's regulatory framework regarding biotechnology is generally regarded as one of the most stringent worldwide. Many U.S. producers assert that EU labeling and traceability regulations for approving GE crops have effectively limited certain U.S. agricultural exports to the EU. The EU's approval process for GE products—effectively a de facto moratorium since 1998—has been a source of dispute since 2003 and continues to be a contentious issue in the current U.S.-EU agricultural trade negotiations.\nWhile the EU as a policymaking entity generally supports GE production, public opinion remains strongly opposed to GE food and crops in most EU member states. This opposition in the EU has also been an important factor in the acceptance of GE crops in lesser developed countries. Most African countries have largely followed the EU in restricting or banning the cultivation of GE crops.\nThe U.S. Secretary of Agriculture stated that the United States will not regulate plants created through genomic editing so long as they are developed without using a plant pest as the donor or vector and are not plant pests themselves. In contrast, the EU Court of Justice ruled that organisms obtained by mutagenesis are genetically modified organisms (GMOs) and are in principle within the scope of the GMO Directive, which governs the deliberate release of GMOs into the environment. The EU Court considers that the risks posed by new mutagenesis techniques such as gene editing (CRISPR-Cas9) to be similar to crops created from transgenesis, wherein GE crops have genetic material introduced from other organisms.\nChina's reluctance to approve GE crops or GE imports is a source of frustration for U.S. agricultural interests. While GE crops are technically banned from China, U.S.-developed GMOs appear to be grown in China without authorization despite Chinese laws banning their cultivation. In September 2016, China agreed to improve its agricultural biotechnology approval process. That commitment did not include specific details, although China stated that they are committed to review eight long-pending applications of agricultural biotechnology in a \"timely, ongoing, and science-based manner.\" On January 8, 2019, the Chinese Ministry of Agriculture and Rural Affairs announced approval of five new biotech traits in imported crops for processing, the first new approvals since June 2017. At the same time, the ministry amended the regulations on safety assessment, import approval, and labeling of agricultural GMOs without notifying the changes to the WTO nor soliciting comments from stakeholders.\nWith respect to the proposed USMCA, the agreement specifically includes provisions to improve transparency in approving and bringing to market products of agricultural biotechnology, something NAFTA did not cover. USMCA provisions cover crops produced with all biotechnology methods, including recombinant DNA and gene editing.\nTrade negotiations concerning agricultural biotechnology also involve labeling issues and other provisions that address the unintended presence of GE products in non-GE shipments. As the United States implements its new \"bioengineered food disclosure\" standard, it may raise concerns among some trading partners—particularly the EU. The food disclosure standard, for example, will not mandate labeling of highly refined ingredients from any GE crop if \"no modified genetic material\" is detectable. This provision would exclude food products, for example, containing high-fructose corn syrup, refined soybean oil, and sugar from sugar beets.\nStatus: A key objective of U.S. trade negotiations, such as the U.S.-EU agricultural trade negotiations and U.S. negotiations with China, has been to establish a common framework for GE approvals. This includes labeling practices consistent with the U.S. guidelines and harmonized regulatory procedures concerning GE presence in products that are consistent with the Codex Alimentarius Commission Annex on Food Safety Assessment in Situations of Low-Level Presence of Recombinant-DNA Plant Material in Food . The proposed USMCA specifically includes provisions to improve transparency in approving and bringing to market products of agricultural biotechnology. For other negotiations, U.S. objectives on agricultural biotechnology, for the most part, remain aspirational. Additionally, the United States believes that U.S. export opportunities are being impaired due to EU pressure on lesser developed countries to adopt EU SPS measures that ban GE products.",
"GIs are geographical names that act to protect the quality and reputation of a distinctive product originating in a certain region. The term GI is most often applied to wines, spirits, and agricultural products. Some food producers benefit from the use of GIs by giving certain foods recognition for their distinctiveness, thereby differentiating them in the marketplace. In this manner, GIs can be commercially valuable. GIs may also be eligible for relief from acts of infringement or unfair competition. While the use of GIs may protect consumers from deceptive or misleading labels, they also have the potential to impair trade when the use of names that are considered common or generic in one market are protected in another. Examples of registered or established GIs include Parmigiano Reggiano cheese and Prosciutto di Parma ham from the Parma region of Italy, Toscano olive oil from the Tuscany region of Italy, Roquefort cheese from France, Champagne from the region of the same name in France, Irish whiskey, Darjeeling tea, Florida oranges, Idaho potatoes, Vidalia onions, Washington State apples, and Napa Valley wines.\nGIs—along with other types of intellectual property such as patents, copyrights, trademarks, and trade secrets—are an example of intellectual property rights (IPR). The use of GIs has become a contentious international trade issue, particularly for U.S. wine, cheese, and sausage makers. In general, some consider GIs to be protected intellectual property, while others consider them to be generic or semi-generic terms. For example, in the United States, feta is considered the generic name for a type of cheese. However, it is protected as a GI in Europe. As such, feta cheese produced in the United States may not be exported for sale in the EU, since only feta produced in countries or regions currently holding GI registrations may be sold commercially.\nLaws and regulations governing GIs differ markedly between the United States and EU, which further complicates this issue. In addition, registered products often fall under GI protections in certain third-country markets, and some EU GIs have been trademarked in some non-EU countries. This has become a concern for U.S. agricultural exporters following a series of recently concluded trade agreements among the EU and Canada, Japan, South Korea, South Africa, and other countries that in many cases are also trading partners of the United States. As a result, Canada has agreed to recognize a list of 143 EU GIs in Canada, and Japan has agreed to recognize 71 EU GIs in Japan. More than 4,500 product names are registered and protected in the EU for foods, wine, and spirits originating in both EU member states and other countries.\nThe EU's GI program remains a contentious issue for many in the U.S. Congress, particularly among Members with dairy constituencies. Some have long expressed their concerns about EU protections for GIs, which they claim are being misused to create market and trade barriers. A 2019 study commissioned by the U.S. dairy industry forecasts declining U.S. cheese exports due to expanding restrictions on the use of generic terms such as parmesan, asiago, and feta cheese. However, some U.S. agricultural industry groups are trying to create a system similar to the EU GI system for U.S. products to promote certain distinctive American agricultural products as part of the American Origin Products Association, which represents certain U.S. potato, maple syrup, ginseng, coffee, and chile pepper producers and certain U.S. winemakers, among other regional producer groups, and seeks to work with federal authorities to \"create of a list of qualified U.S. distinctive product names, which correspond to the GI definition.\"\nStatus: GIs are included among other IPR issues in the current U.S. trade agenda. The proposed USMCA protects common names and limits the ability to register new GIs that some producers regard as common (generic) names. USMCA includes a side letter between the U.S. and Mexico regarding the use of 33 cheese names.\nGIs have been an active area of debate between the United States and EU in previous trade negotiations. GIs continue to be a trade issue for USTR, and the United States is working \"to advance U.S. market access interests in foreign markets and to ensure that GI-related trade initiatives of the EU, its Member States, like-minded countries, and international organizations, do not undercut such market access,\" stating that the EU's GI agenda \"significantly undermines the scope of trademarks and other [intellectual property] rights held by U.S. producers and imposes barriers on market access for American-made goods that rely on the use of common names.\" Previously, USDA officials have indicated that the United States would likely not agree to EU demands to reserve certain food names for EU producers and have expressed concerns about the EU's system of protections for GIs. GIs are also included in the United States' IPR negotiating objectives for the U.S.-EU and U.S.-Japan trade negotiations.",
"The U.S. embargo on trade and financial transactions with Cuba dates from 1962. The sanctions on Cuba were partially eased in 2000 with regard to U.S. exports of agricultural products with the enactment of the Trade Sanctions Reform and Export Enhancement Act of 2000 ( P.L. 106-387 ). The law allows for one-year export licenses for selling agricultural commodities to Cuba but without the availability of U.S. government assistance, foreign assistance, export assistance, credits, or credit guarantees to finance the trade. The law also denies exporters of agricultural goods access to U.S. private commercial financing or credit, although U.S. private export financing is permitted for all other authorized export trade to Cuba. Moreover, all agricultural product transactions must be conducted on a cash-in-advance basis or with financing from third countries.\nCuba received almost $5.7 billion, in nominal dollars, in U.S. agricultural products from FY2001 to FY2018. U.S agricultural exports to Cuba peaked in FY2008, reaching $658 million. Major exports during the earlier years included poultry, corn, soybeans, wheat, rice, and feed and fodder products including soybean meal and distillers grains. Since FY2008, U.S. agricultural exports to Cuba declined partly due to negligible exports of rice, wheat, cotton, beef, pork, and distillers grains. Shipments of U.S. farm products to Cuba amounted to $230 million in FY2018, down from $266 million in FY2017.\nA USDA attaché report on Cuba contends that the decline in U.S. market share in Cuba \"is largely attributable to a decrease in bulk commodity exports from the United States in light of favorable credit terms offered by key competitors.\" The same report concluded that lifting U.S. restrictions on travel and capital flow to Cuba, and enabling USDA to conduct market development and credit guarantee programs in Cuba, would help the United States recapture its market share in Cuba.\nA 2016 USITC report noted that Cuba imports 70%-80% of its food needs, which amount to some $2 billion per year. Given the price competitiveness and logistical advantages of key U.S. agricultural products compared with export competitors, ITC indicated that U.S. agricultural exports could expand significantly—to about $800 million within five years—if the remaining U.S. restrictions on trade with Cuba were removed. The report identified corn, wheat, rice, and dairy products (particularly milk powder) as the commodities that could see the greatest dollar increase in exports over the near term. The same report observed that U.S. agricultural suppliers view prohibitions on providing credit on food and agricultural product sales and U.S. restrictions on travel to Cuba as key obstacles to increasing U.S. farm exports to the island nation.\nUSDA also maintains that Cuba would likely develop comparative advantages in the production and export of certain citrus and tropical fruit, vegetables, tropical plants, and cut flowers. Some agricultural interests in Florida have expressed concern about potentially subsidized competition from Cuba and exposing U.S. agriculture to invasive pests and diseases. Sugar trade could be an area that would require negotiations. The United States is a major sugar importer, and Cuba is a sugar exporter. Should the embargo be further eased, Cuba may wish to export sugar to the United States. The United States tightly manages sugar imports, so any access for Cuba to export sugar to the U.S. market would have to be negotiated.\nStatus: In December 2014, President Obama announced a major shift away from a sanctions-based policy with Cuba toward a policy of engagement. President Obama acknowledged that he did not have the authority to lift the embargo because it is codified into Section 102(h) of the Cuban Liberty and Democratic Solidarity Act of 1996, P.L. 104-114 . Removing the overall economic embargo would require amending or repealing that law as well as other statutes—such as the Cuban Democracy Act of 1992 (Title XVII of P.L. 102-484 ) and the Trade Sanctions Reform and Export Enhancement Act ( P.L. 106-387 )—that include provisions impeding normal economic relations with Cuba. In 2017, the Trump Administration introduced new sanctions and partially rolled back some of the Obama Administration's efforts to normalize relations, including adding restrictions on transactions with companies controlled by the Cuban military and the elimination of individual people-to-people travel. On March 4, 2019, the Administration allowed lawsuits to go forward against some 200 Cuban entities operated by the Cuban military, intelligence, or security services for trafficking in confiscated property.\nAmid this policy shift toward Cuba, the 2018 farm bill ( P.L. 115-334 ) permits funding to be used to operate two U.S. agricultural export promotion programs in Cuba—the Market Access Program and the Foreign Market Development Cooperator Program.\nFor more on U.S. agricultural trade with Cuba, see CRS Report R44119, U.S. Agricultural Trade with Cuba: Current Limitations and Future Prospects . For information on U.S. policy toward Cuba, see CRS Report R44822, Cuba: U.S. Policy in the 115th Congress and CRS In Focus IF10045, Cuba: U.S. Policy Overview .",
"The GSP provides duty-free tariff treatment for certain products from designated developing countries. U.S. agricultural imports under GSP totaled $2.4 billion in 2018, accounting for about 15% of the value of total U.S. GSP imports. Leading agricultural imports (based on value) include processed foods and food processing inputs, beverages and drinking waters, processed and fresh fruits and vegetables, sugar and sugar confectionery, olive oil, fresh fruits, and miscellaneous food preparations and inputs for further processing. In 2018, the six leading GSP countries—Thailand, India, Turkey, Indonesia, Brazil, and Argentina—accounted for nearly 70% of all GSP-eligible U.S. agricultural imports. In recent years, a debate has emerged over the limits of eligibility for GSP treatment.\nOver the past decade, GSP has been extended through a series of short-term extensions—most recently until December 31, 2020 ( P.L. 115-141 ). This latest extension made certain technical modifications related to GSP imports and required USTR to submit an annual report to Congress on its efforts to ensure that GSP countries are meeting the eligibility criteria for the program.\nMembers of Congress have expressed a range of views on whether to include emerging market developing countries (e.g., India, Brazil) as GSP beneficiaries or limit the program to least-developed countries. Some GSP beneficiary countries have become ineligible to participate in the U.S. program. For example, in 2014, Russia's GSP status was terminated, and in 2017, Seychelles, Uruguay, and Venezuela were graduated out of the program because it was determined they had become \"high income\" countries. Argentina's GSP eligibility was suspended in 2012 but was reinstated in 2017. In early 2018, USTR initiated a series of actions regarding GSP as part of its ongoing review of specific country practices. USTR's review is in response to concerns about the countries' compliance under the program but is also part of its GSP country eligibility assessment and petition process. Some of the countries subject to USTR's review are actively exporting to the United States under GSP, including India, Indonesia, and Turkey. Combined, these three countries accounted for an estimated $800 million in 2018, or about one-third of the value of all GSP-eligible agricultural imports to the United States.\nThe interagency Trade Policy Staff Committee, chaired by USTR, reviews and revises the lists of eligible products annually, generally on the basis of petitions received from beneficiary countries or interested parties requesting that additional products be added or removed. When a country's petition for product eligibility is approved, the product becomes GSP-eligible for all GSP-beneficiary developing countries (or only for least developed countries if so designated). Based on previous reviews, opinions within the U.S. agricultural industry are often mixed, reflecting both support for and opposition to the current program.\nStatus: USTR initiated its current annual GSP product and country review in March 2019 and announced its intention to terminate GSP designations for Turkey and India \"because they no longer comply with the statutory eligibility criteria.\" Press reports suggest that continued U.S. GSP eligibility is a top priority for India, while other reports suggest that Turkey views U.S. GSP review standards as being in violation of WTO rules. Action by USTR to terminate GSP designations for Turkey and India could increase trade tensions between the United States and these two trading partners, potentially affecting future trade relations and U.S. agricultural exports. Some in Congress have expressed opposition to the Administration's stated intent to terminate India's designation as a GSP beneficiary. A survey of companies conducted by the Coalition for GSP suggests that terminating India's and Turkey's GSP beneficiary status could adversely affect U.S. businesses, including some food and agricultural companies, through higher tariffs for some imported products and ingredients.",
"The EU has historically been one of the top U.S. agricultural export markets, currently ranking as the fourth-largest buyer of U.S. agricultural products. U.S. agricultural exports to the EU totaled $12.7 billion in FY2018 and for FY2019 is forecast to reach $13.4 billion. Tree nuts, soybeans, and alcoholic beverages are among the top U.S. exports to the EU based on value. The EU is also a major supplier of U.S. agricultural products. The United States imported $23.7 billion worth of agricultural products in FY2018, and USDA forecasts imports of $24 billion in FY2019. Processed agricultural products such as wine and beer, essential oils, cheese, and other consumer-oriented food products are the top U.S. purchases from the EU. Based on the value of agricultural trade, the U.S. agricultural trade deficit with the EU was $11 billion in FY2018 and is projected to be $10.6 billion in FY2019.",
"The United States and the EU are the world's largest mutual trade and investment partners. Although this trading relationship is largely harmonious, the EU was among those U.S. trading partners that placed retaliatory tariffs on some U.S. products in response to Section 232 tariffs imposed by the Trump Administration on U.S. imports of steel and aluminum. Effective in June 2018, the EU imposed tariffs of 25% on U.S. exports of prepared vegetables and legumes, grains, fruit juice, peanut butter, and whiskey, among other products. These tariffs affect about $1 billion in U.S. agricultural exports to the EU, or about 8% of total U.S.-EU agricultural trade in recent years. In July 2018, the Trump Administration and the EC issued a joint statement announcing that they were forming an executive working group that will seek to reduce transatlantic barriers to trade, including eliminating non-auto industrial tariffs and non-tariff barriers. In October 2018, USTR officially notified Congress of the Administration's intention to start negotiations.\nThe WTO reports that the simple average WTO MFN tariff applied to agricultural products entering the United States was 5.1% in 2014, compared to an average of 12.2% for products entering the EU. Including all products imported under an applied tariff or a TRQ, USDA reports that the calculated average rate across all U.S. agricultural imports is roughly 12%, well below the EU's average of 30%. Restrictive TRQs on EU imports of agricultural products are an issue for U.S. exporters.\nIn 2013, the Obama Administration engaged in negotiations with the EU as part of the Transatlantic Trade and Investment Partnership (T-TIP) with the goal of concluding a \"comprehensive and high standard\" agreement within two years. T-TIP's last negotiating round was in October 2016, and negotiations were largely paused for both sides to evaluate progress. Underlying regulatory and administrative differences between the United States and the EU on issues of food safety, public health, and IPR for some types of agricultural products have been areas of contention in these negotiations.\nThe United States and the EU have engaged in a series of long-standing disputes involving agricultural products and certain SPS standards. These include, for example, delays in reviews of biotech products (limiting U.S. exports of grain and oilseed products), prohibitions on growth hormones in beef production and certain antimicrobial and pathogen reduction treatments (limiting U.S. meat and poultry exports), and complex certification requirements (limiting U.S. exports of processed foods, animal products, and dairy products). Other EU regulations of concern to U.S. exporters include the arguable lack of a science-based focus in establishing SPS measures, difficulty meeting food safety standards and securing product certification, the perceived lack of cohesive labeling requirements, and stringent testing requirements that appear to be implemented often inconsistently among EU member nations. Some U.S. agricultural producers also oppose EU policies on GIs. (See section \" Geographical Indications (GIs) .\")\nStatus: In January 2019, USTR announced its negotiating objectives for a U.S.-EU trade agreement following a public comment period and a hearing involving several leading U.S. agricultural trade associations. These include agricultural policies—both market access and non-tariff measures such as TRQ administration and other regulatory issues. Among regulatory issues, key U.S. objectives include harmonizing regulatory processes and standards to facilitate trade, including SPS standards, and establishing specific commitments for trade in products developed through agricultural biotechnologies. The U.S. objectives also include addressing GIs by protecting generic terms for common use. U.S. agricultural interests generally support including agriculture as part of the U.S. negotiating objectives for a U.S.-EU trade agreement. Several Members of Congress support this position and are opposed to the EU's decision to exclude agricultural policies in their negotiating mandate. A letter to USTR from a bipartisan group of 114 House Members states that \"an agreement with the EU that does not address trade in agriculture would be, in our eyes, unacceptable.\" Senate Finance Committee Chairman Chuck Grassley has reiterated, \"Bipartisan members of the Senate and House … have voiced their objections to a deal without agriculture, making it unlikely that such a deal would pass Congress.\" The EU, however, has indicated that it is planning for a more limited negotiation that does not include agricultural products and policies. In late January 2019, the EC published a progress report confirming that its joint agenda does not include agriculture, since it \"is a sensitivity for the EU side.\" The EU negotiating mandate states that a key EU goal is \"a trade agreement limited to the elimination of tariffs for industrial goods only, excluding agricultural products.\"\nSeparately, the EU has taken certain measures to avoid escalating agricultural trade tensions with the United States, for example, by increasing imports of U.S. soybeans as a source of biofuels and by proposing to lift a ban on certain pest-resistant American grapes in EU wine production, among other measures. At the same time, the EU has announced that it would retaliate against \"unlawful subsidies given\" to Boeing by imposing increased tariffs on imports of U.S. food products such as frozen fish, fruits, wine, liquors, and ketchup.",
"In 2018, the United States concluded an injury investigation regarding ripe olives imported from Spain based on complaints from two California-based olive producers. In June 2018, DOC announced its affirmative final determinations in the AD and CVD investigations. In the AD investigation, DOC found that Spanish ripe olives were being sold in the United States at less than fair value and calculated dumping margins ranging from about 17% to 25% on imports of ripe olives from Spain. In the CVD investigation, DOC determined that Spanish ripe olive producers and exporters were subsidized at rates ranging from about 8% to 27%. In July, USITC determined that U.S. producers were materially injured by imports of ripe olives from Spain. Given these determinations, AD and CVD duty orders on U.S. Spanish ripe olive imports were issued and became effective on August 1, 2018.\nStatus: In January 2019, the EU requested WTO dispute consultations with the United States concerning U.S. AD and CVD duties imposed on imported ripe olives from Spain. The EU position is that these measures are inconsistent with the U.S. commitments under the WTO. USTR states that \"the EU's case is without merit\" and that it intends to \"fight it very aggressively.\" AD/CVD duties levied against ripe olives from Spain have reportedly already cost the Spanish olive industry an estimated $27 million in lost exports.",
"The United States and the EU have engaged in a long-standing trade dispute over the EU's ban on hormone-treated meat. The EU adopted restrictions on livestock production in the early 1980s, limiting the use of natural hormones to therapeutic purposes, banning the use of synthetic hormones, and prohibiting imports of animals and meat from animals that have been administered the hormones. In response, the United States suspended trade concessions with the EU in 1999 by imposing retaliatory tariffs of 100% ad valorem on selected food products from EU countries. Despite an ongoing series of WTO dispute settlement proceedings and decisions, the United States and the EU continue to disagree on a range of legal and procedural issues, as well as the scientific evidence and consensus affirming the safety of hormone-treated beef.\nMany in the United States perceive EU's action and the use of SPS measures and non-tariff barriers as disguised protectionism intended to unjustifiably restrict and discriminate against product exports from certain countries. In January 2009, USTR announced its intent to make changes to the list of EU products subject to increased tariffs under the dispute, including changes to the EU countries and products affected, with additional tariffs on some products. The EU claimed that this action constituted an \"escalation\" of the dispute. In May 2009, following a series of negotiations, the United States and the EU signed a memorandum of understanding that phased in certain changes over the next several years, and the United States suspended its retaliatory tariffs for imported EU products under the dispute.\nAs part of the 2009 memorandum, the EU granted market access to U.S. exports of beef raised without growth promotants as part of its High-Quality Beef (HQB) TRQ. The EU's HQB quota is currently set at 45,000 MT annually and assessed a customs tariff of 20%. However, the HQB quota remains open to other beef exporting nations, which effectively limits the ability for U.S. beef producers to fully benefit under the quota. According to USTR and the U.S. beef industry, most of the HQB quota has been filled by countries other than the United States, and the EU has been unwilling to consider an allocation that would reserve a significant part of the HQB quota for the United States.\nIn December 2016, USTR proposed reinstating retaliatory tariffs on EU products under the dispute. In February 2017, USTR convened a hearing to review this possible retaliatory action. To date, the United States has not imposed retaliatory tariffs connected to the U.S.-EU beef hormone dispute.\nStatus: The EU continues to impose bans and restrictions on meat produced using hormones, beta agonists, and other growth promotants, and it allows only imports of beef produced without hormones subject to the EU's HQB quota. The United States maintains that scientific evidence demonstrates that meat produced using hormones, beta agonists, and other growth promotants is safe for consumers.\nThe United States continues to seek a U.S.-specific allocation of the EU's HQB import quota. In late 2018, the EU agreed to review its existing HQB quota and renegotiate its quota with the United States with the expectation that a revised HQB agreement would be implemented in early 2019. In March 2019, press reports indicated that the U.S. and EU had reached an \"agreement in principle\" for reallocating the EU's HQB quota, which could provide the United States a share of EU's annual quota. If realized, such an agreement could result in additional market access to the EU for U.S. beef certified as produced without hormones.",
"In January 2009, the United States escalated a long-running dispute with the EU over its refusal to accept imports of U.S. poultry that are subject to certain pathogen reduction treatments (PRTs). PRTs are antimicrobial rinses that have been approved for use by the USDA in poultry production to reduce the amount of microbes on meat. Meat and poultry products processed with PRTs are judged safe by the United States and also by European food safety authorities. However, the EU prohibits the use of PRTs and the importation of poultry treated with these substances. The EU generally opposes such chemical interventions and asserts that its own poultry producers follow much stricter production and processing rules that are more effective in reducing microbiological contamination than simply washing poultry products. In general, EU consumer groups argue that the use of such treatments compensates for poor hygiene in the supply chain. The United States requested WTO consultations with the EU on the matter, a prerequisite first step toward the establishment of a formal WTO dispute settlement panel. A WTO panel was subsequently established in November 2009, but this case has not moved forward.\nIn 2013, USDA submitted an application for the approval of peroxyacetic acid as a PRT for poultry. Although the EU initially put forward a proposal to authorize the PRT, the EU withdrew its proposal in December 2015, citing the European Food Safety Authority's (EFSA) opinion of insufficient evidence of peroxyacetic acid's efficacy against campylobacter.\nEFSA cleared lactic acid for reducing pathogens on beef carcasses, cuts, and trimmings in 2011. In 2013, the EU lifted its ban on the use of lactic acid in beef PRTs on beef carcasses, half-carcasses, and beef quarters in the slaughterhouse. In 2017, the National Pork Producers Council submitted an application to EFSA to approve organic lactic and acetic acid for use on pork carcasses and cuts. EFSA's panel report, issued in October 2018, concluded that use of the treatments do not pose a safety concern provided that the substances comply with the EU specifications for food additives and that their use is efficacious compared to untreated meat. However, EFSA raised questions about whether lactic and acetic acid were more efficacious than water treatment for certain applications.\nStatus: The United States continues to maintain that PRTs are a \"critical tool during meat processing that helps further the safety of products being placed on the market\" and continues to seek approval of certain PRTs for beef, pork, and poultry. To date, however, the United States and the EU have not been able to agree on a number of issues related to veterinary equivalency, and the EU continues to prohibit any substance other than water to remove contamination from animal products unless the EU approves the substance.",
"In December 2018, USDA's Animal and Plant Health Inspection Service (APHIS) responded to the WTO notification of a new EU regulation, 2017/625, concerning new requirements for gelatin and collagen entering the EU for human consumption. In FY2018, the U.S. exported over $199 million worth of raw materials to the EU for the production of gelatin and collagen that were intended for human consumption. APHIS and industry trade groups have objected to the EU's new requirement, which would be enforceable as of December 14, 2019.\nU.S. animal byproduct exports to the EU follow an EU regulation in force since 2011 that provides detailed rules for trade in animal byproducts. The current regulation allows APHIS to make changes to the list of eligible U.S. animal byproduct facilities that are authorized to export to the EU. The new EU regulation would require all U.S. animal byproduct exporters to register their establishments in the EU Trade Control Expert System (TRACES). APHIS contends that the TRACES registration process is cumbersome in that it could take more than a month to add a new facility or to amend an existing approval, creating delays that could potentially impede trade.\nCurrently, the EU recognizes only U.S. meat intended for human consumption overseen by the Food Safety and Inspection Service (FSIS) of USDA as equivalent to EU-produced products. As a result, many FSIS-inspected establishments are already listed in TRACES. However, not all animal byproduct facilities in the United States are overseen by FSIS, and these may not already be listed on TRACES. Some raw materials intended for collagen or gelatin products may have originated from FSIS-inspected establishments, but processed products and animal feeds may be overseen by U.S. Food and Drug Administration or other federal agencies. The new EU proposed regulation would eventually allow many of these facilities to be listed in TRACES.\nUnder the current EU Regulation 142/2011 Chapter 8 Health Certificate, APHIS is the recognized oversight authority for U.S. exports. The EU's proposed 2017 regulation Model Certificate would require that APHIS be present at all times during the loading of animal byproducts into a container. U.S. trade associations have expressed the view that the EU-specific certificate requirements are not consistent with guidance provided by Codex Alimentarius—the international food standards organization that sets guidelines to protect public health and ensure fair practices in the food trade. Instead, they allege that the EU requirements are unnecessarily restrictive and would have \"the effect of closing the EU market to the majority of U.S. hides and skins exported for the purposes of edible gelatin and collagen production.\"\nStatus: In December 2018, APHIS submitted comments to the WTO in response to the proposed EU 2017 draft regulation. APHIS \"requests that the EU delay the proposed implementation date to allow for competent authorities [USDA] to adequately prepare for implementation and provide the EU additional time to clarify its requirements.\" Officials at APHIS await an official response from the EU.",
"In 2018, exports of U.S. livestock and products totaled $29.6 billion, while imports totaled $16.5 billion. Foreign demand for U.S. animals and products supports prices of domestic livestock, poultry, and dairy products, while imports help to meet U.S. consumer demand for a variety of livestock and dairy products. U.S. producers in the livestock sector look to the U.S. government to negotiate market access agreements, monitor international trading policies, and settle trade disputes, including restrictions that certain countries impose on U.S. exports in response to animal disease concerns.",
"In 2019, the USDA forecasts that exports of meat and poultry products will represent about 17% of U.S. domestic production. Periodically, foreign countries impose export bans on U.S. meat products in response to an outbreak of certain animal diseases. The bans are disruptive for livestock producers and meat exporters, are often inconsistent with internationally accepted protocols, and vary in terms of how broadly and how long trading partners apply them. For example, bans were imposed on U.S. beef exports because of the discovery of bovine spongiform encephalopathy (BSE, or mad cow disease) in 2003. An outbreak of highly pathogenic avian influenza (HPAI) at the end of 2014 and early 2015 in U.S. turkey and egg-laying flocks triggered export bans on poultry products by more than 30 countries. The bans on U.S. broiler meat exports were imposed for various periods of time even though the HPAI outbreaks were not in areas in close proximity of commercial broiler production.\nThe World Organization for Animal Health (known as OIE) has established trade protocols when disease outbreaks occur in countries that export meat and poultry products. According to OIE, in most cases total export bans are not recommended or needed when there is a BSE or HPAI discovery or outbreak in exporting countries. In 2013, the OIE determined that the United States is at \"negligible risk\" for BSE, meaning that U.S. surveillance and safeguard systems are strong. For HPAI, USDA, in collaboration with states, has implemented increased flock biosecurity and has a system in place to rapidly contain and eradicate an outbreak of HPAI.\nOver the years, while some foreign markets imposed total bans on U.S. beef exports following the 2003 BSE incident, other export markets for U.S. beef imposed specific conditions for imports of U.S. beef. For example, Japan and South Korea—two importers of U.S. beef—require that imported U.S. beef be produced from cattle under 30 months of age. China did not lift its ban on U.S beef exports until 2017 and included an age restriction when it did. Regarding poultry, some foreign markets imposed total bans on poultry exports during the HPAI outbreak, while other markets imposed export bans only from the regions affected by the outbreak, consistent with the recommended OIE protocol. As the United States demonstrated that the outbreak was contained and then eliminated, most of these bans were lifted.\nStatus: China lifted the ban on U.S. beef in 2017 but restricts imports of U.S. beef to cattle under 30 months of age, similar to other countries that maintain age restrictions. The OIE guidelines do not include age restrictions for countries with the \"negligible risk\" status. China also requires that U.S. exporters of beef to China participate in the USDA Agricultural Marketing Service export verification program, which verifies that U.S. suppliers are meeting importing country requirements. In 2017 and 2018, the U.S. shipped about 10,000 MT of beef to China, representing 0.5% total U.S. beef exports.\nChina continues to ban U.S. exports of poultry meat because of the HPAI outbreak and has been unwilling to accept regionalization—the internationally accepted principle that export bans be applied only to areas affected by an animal disease outbreak. In 2018, the United States and South Korea reached an agreement accepting regionalization in the event of an HPAI outbreak in the United States instead of imposing nationwide bans.",
"Currently, 33 countries are eligible to export meat and poultry to the United States. Before the United States authorizes imports of meat or poultry, APHIS conducts risk assessments of any foreign animal diseases that could pose a threat to U.S. animal health. Also, FSIS must determine if a foreign meat or poultry inspection system provides an \"equivalent\" level of sanitation and protection of public health as the U.S. system. Foreign governments document how inspection systems are regulated, and FSIS conducts onsite audits of foreign facilities. FSIS also conducts equivalency verification and periodic audits of countries already approved to export meat and poultry to the United States.",
"In August 2013, FSIS confirmed that China's poultry processing inspection system was equivalent to the U.S. poultry inspection system. This determination allowed China to export processed (cooked) poultry meat that is sourced raw from the United States or from countries eligible to export poultry to the United States. In March 2016, FSIS recommended that the process of verifying equivalency for China's poultry slaughter inspection system move forward. In August 2017, FSIS released an audit report confirming that China's poultry processing system remained equivalent. To date, USDA has not issued a final rule on equivalency for China's poultry slaughter system.\nThese actions were the culmination of a process that began in 2005, when China requested that USDA evaluate its poultry inspection system. Congress halted the process in FY2006, when appropriations provisions prohibited FSIS from expending funds to evaluate China's poultry inspection system. The process resumed in FY2010 on the condition that FSIS provide Congress with regular reports on the equivalency process. The possibility that the United States could import poultry meat from China has alarmed some food safety advocates and some Members of Congress because of concerns about relatively lax food safety enforcement in China for both domestically consumed products and exports. Testimony presented during a Congressional-Executive Commission on China hearing highlighted concerns regarding China's food safety.\nStatus: In response to concern about China's record on food safety, Section 749 of Division B of the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), prohibits USDA from using any funds to purchase Chinese raw or processed poultry products for feeding programs, including the school lunch and school breakfast programs. Section 753 of Division B of the FY2019 appropriations act prohibits USDA from finalizing the proposed rule to allow the importation of slaughtered Chinese poultry.\nIn 2017, the United States imported about 500 pounds of processed poultry meat from China but did not import any processed poultry meat in 2018. If Congress were to lift the appropriations prohibition on finalizing the China poultry slaughter rule, China would still be restricted to sending only cooked/processed products because of APHIS restrictions on uncooked/processed products due to the presence of animal diseases in China, such as avian influenza.",
"The United States restricts or prohibits the importation of animals or animal products (including meat) from countries where highly infectious animal diseases exist in order to protect U.S. herds. Fresh beef imports from Brazil and Argentina have been prohibited or restricted because of foot-and-mouth disease (FMD) in the two countries. U.S. beef imports from Brazil and Argentina have mostly been limited to fully cooked/processed product. Argentina was approved to export fresh beef to the United States from 1997 to 2001,\\ until the United States halted exports after an Argentine FMD outbreak in 2001.\nIn December 2013, APHIS proposed a rule that would allow fresh beef imports from 13 regions in Brazil. In August 2014, APHIS proposed a separate rule to allow fresh beef imports from Patagonia and northern Argentina. In July 2015, APHIS released final rules to allow the import of fresh beef from these regions of Brazil and Argentina. USDA risk assessments determined that, under certain circumstances, fresh beef could be safely imported from Brazil and Argentina without threatening the FMD-free status of the United States. Some livestock industry stakeholders, such as the National Cattlemen's Beef Association and the National Farmers Union, have expressed opposition to allowing fresh beef from Brazil and Argentina because neither country is considered to be free of FMD. FMD was eradicated in the United States in 1929, and any introduction of the disease back into the United States could be economically devastating for the livestock industry. In 2013, the Department of Homeland Security estimated that the cost of an FMD outbreak in the United States could exceed $50 billion.\nIn May 2015, FSIS found that Brazil's beef inspection system would provide an equivalent level of food safety as the U.S. system. In August 2016, USDA announced that Brazil was approved to ship fresh beef to the United States, and the first shipments arrived the following month. In June 2017, USDA suspended imports of fresh beef from Brazil after FSIS found problems with re-inspected Brazilian beef at the U.S. port of entry. According to USDA, FSIS was re-inspecting 100% of Brazilian fresh beef imports and refused entry to 11% of shipments, well above the 1% refusal rate for other beef imports.\nIn November 2018, FSIS announced that the Argentine beef inspection system was equivalent, and the country could export fresh beef to the United States again. FSIS also announced that within six months of the November 2018 equivalency determination, the agency would undertake additional onsite audits of Argentina's raw beef inspection system.\nStatus : The United States continues to suspend its approval of fresh beef imports from Brazil. The United States imported about 10,000 MT of fresh Brazilian beef since September 2016, when U.S. imports began, until shipments were suspended in June 2017. In a step to allow U.S. beef imports from Brazil to resume, President Trump and President Bolsonaro of Brazil issued a joint statement during President Bolsonaro's March 2019 visit in which the United States agreed to \"expeditiously schedule\" an audit of Brazil's beef inspection system once FSIS is \"satisfied with Brazil's food safety documentation.\"\nThe United States imported nearly 1,100 pounds of fresh beef from Argentina in December 2018. Argentina holds a 20,000 MT ton duty-free TRQ allotment for beef shipments to the United States.",
"Ractopamine, an animal drug that increases animal weight gain and meat yield, is approved by FDA for use in U.S. cattle, hog, and turkey production. It is also approved for use in countries such as Canada, Japan, Mexico, and South Korea, but many other countries ban the use of ractopamine in meat production. In 2012, the Codex Alimentarius—the international food standards organization that sets guidelines to protect public health and ensure fair practices in the food trade—set maximum residue levels for ractopamine in beef and pork. However, several of the largest markets for U.S. meat exports have restricted imports of meat produced with ractopamine, despite U.S. adherence to the residue standards established by Codex.\nThe USTR, in its \"2019 National Trade Estimate Report on Foreign Trade Barriers,\" states that the EU, China, Taiwan, and Thailand continue to restrict U.S. meat exports produced with ractopamine. According to FSIS, U.S. meat exports—particularly pork—may be shipped to markets with ractopamine restrictions if the exported product is raised without ractopamine and is certified through USDA's Never Fed Beta Agonists Program. U.S. exports to markets that have ractopamine restrictions are subject to increased certification and testing costs, potentially affecting competitiveness and dampening market opportunities.\nStatus : USDA and the USTR continue to engage with trading partners to encourage them to accept international standards on the use of ractopamine.",
"In March 2009, USDA implemented a final rule to implement country-of-origin labeling (COOL) to provide consumers information on the origin of fresh fruits and vegetables, fish, shellfish, peanuts, pecans, macadamia nuts, ginseng, and ground and muscle cuts of beef, pork, lamb, chicken, and goat. The rules were required by the 2002 farm bill ( P.L. 107-171 ) as amended by the 2008 farm bill ( P.L. 110-246 ).\nIn 2009, Canada and Mexico challenged U.S. COOL in the WTO, arguing that COOL reduced the value and number of cattle and hogs shipped to the U.S. market, thus violating WTO trade commitments. In 2011, the WTO found that COOL treated imported livestock less favorably than U.S. livestock and did not provide complete information to consumers on the origin of meat products. The United States appealed the WTO ruling, but the Appellate Body upheld the findings. USDA issued a revised COOL rule in May 2013, which required that production steps—born, raised, and slaughtered, by origin country—be included on meat labels, but in 2014 the WTO found that the revised COOL regulations still violated U.S. WTO obligations by discriminating against imported livestock. In December 2015, the WTO authorized Canada and Mexico to retaliate against $1 billion worth of products imported from the United States. In December 2015, Congress repealed the COOL requirements for beef and pork and ground beef and pork in Section 759 of Division A of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ). USDA then issued a final rule that removed beef and pork from COOL regulations, thus settling the trade dispute. Even so, Canada and Mexico retain their rights granted by the WTO to retaliate if the United States should implement laws or regulations that violate the WTO findings on U.S. COOL for beef and pork.\nStatus : Following the repeal of COOL for beef and pork, several state legislatures—including Wyoming, South Dakota, Montana, and Colorado—have considered bills that would require COOL on meat sold within the state, but thus far none has been enacted. The Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America and the Cattle Producers of Washington sued USDA to restore COOL for beef and pork in June 2017. In June 2018, the district court in eastern Washington ruled in favor of USDA because the plaintiffs had missed \"the applicable statute of limitations time period and because the regulations follow Congress's clear intent.\"\nIn June 2018, the Organization for Competitive Markets and the American Grassfed Association petitioned FSIS to change its \"Product of USA\" label. The organizations state that foreign meat is imported into the United States, minimally processed, and then sold as \"Product of USA\" meat. The petition requests that FSIS change its Food Standards and Labeling Policy Book to clarify that the ingredients in a product must be of domestic origin to have a \"Product of USA\" label. To date, FSIS has not responded to this request.",
"The 164-member WTO oversees and administers multilateral trade rules, serves as a forum for trade liberalization negotiations, and resolves trade disputes through its Dispute Settlement Understanding (DSU). As a signatory member of the WTO, the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy. The WTO's general rules concerning subsidy disciplines, trade behavior, and market access concessions apply to all members.",
"Two developments in 2018 have created some uncertainty about whether the United States will remain in compliance with rules and spending limits for domestic support programs that it has agreed to in the WTO. These developments are farm program changes under both the 2018 farm bill ( P.L. 115-334 ) and a new USDA direct payment program—the MFP—implemented in 2018 under other statutory authorities in response to foreign trade retaliation targeting U.S. agricultural products. The outcome will depend on market conditions, but the potential for non-compliance would be heightened if market prices for major commodity crops were to weaken and lower prices were to generate farm program payments above current USDA projections.\nIn general, the farm program changes enacted in the 2018 farm bill incrementally shift farm safety net outlays away from decoupled programs that do not tie crop support payments to production and toward coupled programs that are potentially more market distorting. This resulted from the addition of a new, albeit temporary, coupled support program (the MFP) and, in the 2018 farm bill, from raising support levels for existing coupled programs and from removing several of the coupled programs from individual farm payment limit requirements.\nDirect farm support payments may occur under:\nOne of the revenue-support programs authorized by the farm bill—the Market Assistance Loan (MAL), Agricultural Risk Coverage (ARC), Price Loss Coverage (PLC), and Dairy Margin Coverage (DMC) programs; A program authorized by the Secretary of Agriculture using authority under the CCC Charter to make payments in support of U.S. agriculture—two such programs are the Cotton Ginning Cost Share (CGCS) program and the MFP; or One of the four disaster assistance programs—the Livestock Forage Disaster Program (LFP), Livestock Indemnity Program (LIP), Tree Assistance Program (TAP), and Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP).\nIn a change from previous policy, the 2018 farm bill excluded payments made under MAL, LIP, TAP, and ELAP from annual individual payment limits. DMC, like its predecessor—the Margin Protection Program—operates without any farm payment limit. The absence of a limit on benefits received by an individual farmer under these programs represents the potential for unlimited, fully coupled USDA farm support outlays that would count against U.S. domestic support limits agreed to under U.S. WTO commitments.\nMAL payments are coupled directly to actual production (subject to a producer's participation choice). DMC payments are made on a producer-selected share of a historical production base that is adjusted upward for annual growth in national average milk production. Milk producers must participate in the program to receive the annual base adjustment. Thus DMC payments are treated as coupled. The 2018 farm bill raised support levels for both dairy producers under the DMC and for several program crops under MAL, including barley, corn, grain sorghum, oats, extra-long-staple cotton, rice, soybeans, dry peas, lentils, and small and large chickpeas. Higher support levels increase the potential for higher payments during a market downturn. Such payments count against the market-distorting spending limit. Furthermore, coupled payments can influence producer production choices in favor of those farm activities expected to receive larger support payments. If such payments are noticeably large relative to the commodity's farm value and result in surplus production that moves into international markets, then they could attract the attention of competitor nations. Such spillovers, if measurably harmful to foreign export competitors or producers, could lead to challenges under the WTO's dispute settlement process.\nOf the direct payment programs, ARC and PLC are partially decoupled from producer behavior: Payments are made to a portion (85%) of historical base acres irrespective of actual plantings. Because of this they are notified as non-product specific and have been excluded from counting against WTO spending limits under a special \"de minimis\" exclusion, which allows minimum amounts of domestic support even if they are market distorting. Most of the other direct support programs—MAL, DMC, LFP, LIP, TAP, and ELAP—count against the United States' annual market-distorting \"amber box\" payment limit of $19.1 billion.\nCGCS and MFP are special cases. The United States has yet to notify spending under either of these programs to the WTO, so their exact WTO spending classification is currently unknown. However, because their payments are coupled directly to specific commodities, they could well be included with other market-distorting payments subject to the spending limit. To the extent that producers expect payments under these programs to recur, they can become market distorting and subject to potential WTO challenge. Secretary Perdue has, however, stated that MFP was a one-time assistance and would not be extended beyond the package announced in July 2018. CGCS outlays were $326 million in 2016 and $216 million in 2018. Actual outlays under MFP are estimated at $5.2 billion in 2018 and $3.5 billion in 2019.\nThe U.S. sugar program does not rely on direct payments from USDA. Instead, USDA provides indirect price support via MAL loans to processors at statutorily fixed prices (which were raised slightly by the 2018 farm bill) while limiting the amount of sugar supplied for food use in the U.S. market. In its 2015 notification of domestic support to the WTO (the most recent notification year), USDA notified the implicit cost of the sugar program at $1.5 billion.\nThe federally subsidized crop insurance program was largely unchanged by the 2018 farm bill. Annual USDA premium subsidies—which have averaged $6.4 billion per year since 2011—count against the U.S. trade-distorting spending limit of $19.1 billion. Payments under U.S. conservation programs are deemed generally non-market distorting and are notified as \"green box\" payments, which are not subject to any spending limit.\nStatus: Most recent studies suggest that, for U.S. program spending to exceed the $19.1 billion cumulative spending limit, even with the addition of large MFP payments and higher MAL and DMC support levels, a combination of events would have to occur that would broadly depress commodity prices. Perhaps more relevant to U.S. agricultural trade is the concern that, because the United States plays such a prominent role in most international markets for agricultural products, any distortion resulting from U.S. policy would be both visible and potentially vulnerable to challenge under WTO rules.",
"The United States was a major force behind the establishment of the WTO in 1995 and the rules and procedures governing its DSU. The United States has frequently used DSU, often successfully.\nSince the summer of 2017, the United States has blocked the appointment of new DSU Appellate Body (AB) jurists, which has limited the ability of the system to hear dispute cases. The AB currently has three jurists (the minimum number to hear a case) out of a total of seven positions. In December 2019, the terms of two of the three will expire, potentially leaving the AB unable to function if no new jurists are appointed.\nStatus: Since the inception of the WTO in 1995, the United States has brought to it 46 cases on agriculture. Of these cases, 34 were fully or partially decided in favor of the United States by the WTO panel hearing the case. Most recently, the WTO ruled in favor of the United States against China over Chinese domestic support policies for its agricultural sector and over China's administration of its market access policies. The United States has notified the WTO on a similar domestic support case against India. However, if no new members are appointed to the WTO AB, then pending U.S. cases may be unable to move forward toward a ruling.",
"In September 2016, USTR filed a dispute settlement case (DS511) at the WTO over Chinese domestic support policies for its agricultural sector that USTR alleged were inconsistent with WTO rules and commitments. Furthermore, USTR contended that China's policies had distorted international trade in wheat, rice, and corn and that government support payments were in excess of China's WTO spending limits. In December 2016, USTR requested that WTO establish a dispute settlement panel to examine China's domestic support levels for these crops, a request that was fulfilled in January 2017.\nIn its challenge, USTR contended that the level of support that China provided for rice, wheat, and corn had exceeded—by nearly $100 million from 2012 through 2015—the level to which China had committed to when it joined the WTO. USTR also asserted that China's price support for domestic production had been above the world market prices since 2012, thereby creating an incentive for Chinese farmers to increase production of the subsidized crops, which in turn displaced imports from the United States and elsewhere.\nWhen China acceded to the WTO in 2001, some of its domestic support policies—including market price support and certain producer payments and input subsidies linked to production—became subject to an annual spending limit of 8.5% of each product's value based on China's domestic prices.\nSince all of China's domestic production was potentially eligible for the above-market support prices—and on the assumption that all domestic producers had incorporated the high support levels into their production decisions—USTR stated that the correct measure of total support should be based on the total production of wheat, rice, and corn in the provinces and regions where the support programs operated. However, USTR asserted that China reported the subsidies only on the smaller quantities purchased by the government. USTR also argued that China's fixed external reference price for wheat, rice, and corn should be based on the three-year averages of 1986-1988 world prices, as specified in the WTO Agreement on Agriculture. In contrast, China had used the much higher 1996-1998 prices, which had resulted in smaller price gap calculations. Finally, the United States and China disagreed on whether to measure the level of market price support for milled or unmilled rice and the appropriate conversion factor between the two.\nStatus: On February 28, 2019, the WTO dispute settlement body (DSB) found that China had exceeded its domestic support limits for wheat and rice in each year between 2012 and 2015 and therefore was not in compliance with its WTO commitment. The panel agreed with China's reference price calculations based on 1996-1998 prices because these years had been used in China's WTO accession documentation. The panel disagreed with China's methodology of calculating domestic support taking into consideration only the purchases made by the government. The DSB panel made recommendations for calculation of reference prices and domestic support for China in order to comply with its WTO commitments. The DSB panel did not make a ruling on corn because, following the 2015 harvest, China made changes to its calculations of corn prices that were found to be less market distorting than the method used prior to 2015. If neither the United States nor China appeals the report, the findings and recommendations in the report would be adopted within 60 days of public circulation. China recently stated that it will not appeal the WTO ruling.",
"On December 15, 2016, USTR filed another WTO dispute settlement case (DS517) against China, alleging that China's administration of its TRQs for wheat, rice, and corn are unclear and that China had failed to fill the within-quota commitments, thus undermining U.S. exports. While China announced on an annual basis the opening of TRQs, USTR stated that China's application criteria and procedures were unclear and that China did not provide meaningful information on how it actually administered the TRQs.\nWhen China joined the WTO in 2001, it agreed to create TRQs to allow imports of wheat, rice, and corn. Imports within the set quota volume would be levied a lower within-quota tariff rate, while imports beyond the set quota amount would be levied at a higher tariff rate. Under China's WTO commitments, by 2004, the wheat TRQ would reach 9.6 million metric tons, rice 5.4 million metric tons, and corn 7.2 million metric tons. The in-quota tariffs for all three commodities are 1%, while the over-quota tariffs are set at 65%.\nDespite the low within-quota tariff, China's TRQs for wheat, rice, and corn have never been filled even when imported grains were priced lower and were more competitive than domestic grains. According to prices reported by China's Ministry of Agriculture, during 2014-2016, the import prices were lower by about 30-40% for wheat, 25-35% for rice, and 15-35% for corn. USTR states that China's TRQ administration appears to restrict imports and fails to provide sufficient information to permit the processing of quota application and importation.\nStatus: On September 22, 2017, a WTO DSB panel was established on \"China—Tariff Rate Quotas for Certain Agricultural Products\" (DS517). On April 18, 2019, the WTO ruled in favor of the United States, stating that \"China's administration of its TRQs for wheat, rice and corn were inconsistent with its obligations under the WTO to administer TRQs on a transparent, predictable and fair basis.\" The WTO recommends that China make changes to make its TRQ administration to conform with its WTO obligations.",
"In May 2018, the United States challenged India's domestic agricultural support notifications at the WTO, charging that India had under-notified spending on its market price support for rice and wheat for the marketing years 2010/11 through 2013/14. The United States alleged that India's market price support for wheat and rice exceeded its allowable levels of trade distorting domestic support under the WTO.\nIn November 2018, the United States also challenged India's domestic support for cotton, stating that it exceeded its allowable level under its WTO commitments. At about the same time, Australia, Brazil, and Guatemala challenged India's level of domestic support for sugar, charging that India had violated its WTO commitment levels.\nIn February 2019, the United States further challenged India stating that it had substantially underreported its market price support for chickpeas, pigeon peas, black matpe (a type of black lentil), mung beans, and lentils. According to USTR, when calculated using the WTO Agreement on Agriculture methodology, India's market price support for each of these pulses has exceeded the allowable levels of trade-distorting domestic support under India's WTO commitments.\nStatus: The United States' challenge to India's domestic support for rice and wheat was raised at the May 2018 WTO Committee on Agriculture (COA) meeting. USTR raised the issue concerning India's cotton price support during the November 2018 COA meeting, and the challenge against India's domestic support for pulses was raised at the February 2019 COA meeting. USTR raised these issues at the COA to alert India and other WTO members that the United States is aware and concerned about India's underreporting of its domestic agricultural subsidies. USTR intends to continue challenging India's domestic support for agriculture at upcoming COA meetings and, if necessary, could pursue these concerns through WTO's dispute settlement mechanism."
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{
"question": [
"How does Congress generally regard agricultural trade?",
"How has this interest been directed alongside the goals of the Trump Administration's goals?",
"How has the Trump Administration affected tariffs?",
"What was the reaction to the new tariffs?",
"How did the US attempt to combat the effect of new tariffs?",
"What actions from the Trump Administration will affect the agricultural market?",
"How has the Trump Administration changed NAFTA?",
"How has Trump changed US involvement in TPP?",
"How has TPP changed after US withdrawal?",
"How does the now CPTPP affect US agricultural trade?",
"How has the Trump Administration initiated new trade negotiations?",
"What options does Congress have for agricultural trade?",
"What issues does the USMCA fail to address?",
"What is one of the US's main trade negotiation objectives?",
"How is market expansion to Cuba an obstacle to these objectives?",
"How does the US intend to change some current tariff policies?",
"How are bans and trade restrictions on US products inconsistent?"
],
"summary": [
"Congress has traditionally displayed a keen interest in agricultural trade issues given their importance to farmers and ranchers and to the overall economy.",
"A major area of interest for the 116th Congress has been the loss of overseas export market shares for agricultural products due to the direction of the Trump Administration's trade policy, which places increased emphasis on reducing the overall U.S. trade deficit.",
"In March 2018, the Trump Administration imposed Section 232 tariffs on U.S. imports of steel and aluminum from most countries and additional Section 301 tariffs on a number of imports from China.",
"Following these actions, Canada, China, Mexico, the European Union (EU), and Turkey imposed retaliatory tariffs on more than 800 U.S. agricultural and food product exports.",
"In response, USDA authorized $12 billion in short-term assistance to the affected agricultural producers and commodities under its Market Facilitation Program to help mitigate the economic impact on farmers.",
"A number of policy developments undertaken by the Trump Administration in bilateral and regional trade agreements may affect agricultural markets as well.",
"On the Administration's initiative, the North American Free Trade Agreement (NAFTA) has been renegotiated and signed as the U.S.-Mexico-Canada Agreement (USMCA). This agreement is subject to legislative ratification by Canada and Mexico and approval by U.S. Congress.",
"President Trump withdrew the United States from the Trans-Pacific Partnership (TPP) in January 2017.",
"In March 2018, the remaining 11 countries concluded a revised version of TPP, the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP).",
"Signatories of CPTPP have begun to reduce tariffs and provide greater agricultural market access for imports from CPTPP signatory countries, actions that could potentially erode U.S. agricultural market shares in the region.",
"At the bilateral level, the Trump Administration has notified Congress of its intent to begin trade negotiations with Japan (a CPTPP member), the EU, and the United Kingdom.",
"Several other agricultural trade issues may be of interest to Congress.",
"For example, the proposed USMCA does not address all the issues that restrict U.S. agricultural exports to Mexico and Canada, and Southeastern U.S. produce growers have been seeking changes to trade remedy laws to address imports of seasonal produce.",
"A key objective of U.S. trade negotiations continues to be the establishment of a common framework for approval, trade, and marketing of the products of agricultural biotechnology.",
"U.S. farm and food interests see the potential for market expansion opportunities in Cuba, but a prohibition on private U.S. financing is generally viewed as a major obstacle to this end.",
"Moreover, the United States has announced its intention to withdraw eligibility for the Generalized System of Preference (GSP)—which provides duty-free tariff treatment for certain products from developing countries—from Turkey and India.",
"On another front, U.S. exports of beef, pork, and chicken continue to face bans and trade restrictions over disease outbreaks even though the bans are inconsistent with international trade protocols, among which are China's ongoing bans on imports of U.S. beef and poultry and restrictions imposed by several foreign markets on U.S. ractopamine-fed pork."
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GAO_GAO-18-57
|
{
"title": [
"Background",
"GAO Previously Reviewed FAA’s MPL Methodology",
"FAA Did Not Fully Address the CSLCA’s Three Mandated Requirements",
"FAA Has Not Fully Evaluated the Balance between Government Liability Exposure and Industry Insurance Costs",
"FAA Evaluated Only Indirect Costs to Industry and Government of Implementing a New Methodology",
"FAA Obtained Limited Input from the Commercial Space Sector and Insurance Providers",
"FAA’s Revised MPL Methodology Does Not Fully Address Certain Previously Identified Weaknesses",
"FAA Has Made Improvements to Its MPL Methodology but Has Not Updated the Cost-of- Casualty Amount",
"FAA Does Not Have Guidance for When to Estimate Property Damage Separately from the Number of Casualties and Which Analytical Tool to Use",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments",
"Appendix I: Comments from the Department of Transportation",
"Appendix II: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"The Commercial Space Launch Act Amendments of 1988 established the foundation for the current U.S. policy to potentially provide federal payment for a portion of claims by third parties for injury, damage, or loss that results from a commercial launch or reentry accident. A stated goal of the act was to provide a competitive environment for the U.S. commercial space launch industry. The act also provided for, among other things, government protection against some losses—referred to as indemnification—while still minimizing the cost to taxpayers. All FAA- licensed commercial launches and reentries by U.S. companies, whether unmanned or manned and from the United States or overseas, are covered by federal indemnification for third-party damages that result from the launch or reentry. According to agency officials, in 2016 FAA issued five active licenses, which had an average third-party MPL of about $51 million and ranged from $10 million to $99 million.\nThe amount of insurance coverage that FAA requires launch companies to purchase—the MPL value—is intended to reflect the greatest dollar amount of loss to third parties and the federal government for bodily injury and property damage that can be reasonably expected to result from a launch or reentry accident. FAA calculates separate MPL values for potential damages to third parties and the federal government. For each launch license that it issues, FAA determines MPL values for third parties with the intent of estimating the greatest dollar amount of losses that reasonably could be expected from a launch or reentry accident, which have no less than a 1 in 10 million chance of occurring. For damages to the federal government, FAA determines MPL values with the intent of estimating the greatest dollar amount of losses that reasonably could be expected from a launch or reentry accident, which have no less than a 1 in 100,000 chance of occurring. According to FAA, the agency defines these probability thresholds to estimate the federal government’s exposure to losses above the MPL. Agency officials said that the current probability thresholds are set such that losses are very unlikely to exceed launch companies’ private insurance and become potential costs for the government under CSLCA.\nFAA’s process for determining the MPL value for a launch or reentry license generally includes three elements: 1. Number of casualties. Estimating the number of third-party casualties involves adding the number of direct and secondary casualties that could result from a launch accident. Direct casualty estimates include serious injuries and deaths. Secondary casualties include those resulting from fires and collapsing buildings. 2. Cost of casualties. FAA uses $3 million as an estimate of the average loss per casualty, which is multiplied by the number of estimated casualties. 3. Property damage. FAA applies a predetermined factor—which it recently changed from 50 percent to 25 percent—to the estimated cost of casualties to derive estimated losses from property damage.\nThe total MPL is equal to the estimated cost of casualties plus property damage.\nFAA has revised two components of its MPL methodology since our 2012 report. For example, in April 2016, the agency adopted a new method for estimating the number of casualties, known as the risk profile method. This method uses different tools to simulate a range of possible scenarios to create a distribution of potential casualty numbers and the simulated probability of different levels of casualty numbers. The risk profile method replaced FAA’s “overlay method,” which was a method it had used since the early 1990s which the agency said did not work well for launches of small launch vehicles in remote areas, or for reentries. In addition, FAA reduced the factor it uses to estimate losses due to property damage, based on tests of a new process for estimating such losses that showed the previous factor was too high.",
"We have previously reviewed FAA’s MPL methodology in 2012 and 2017. In 2012 we examined the U.S. government’s indemnification policy, the federal government’s potential costs for indemnification, and the effects of ending indemnification on the competitiveness of U.S. launch companies, among other aspects of FAA’s MPL methodology. In 2017 we examined the extent to which FAA had revised its MPL methodology since our 2012 report to address previously cited weaknesses and the potential effect of any changes to that methodology on financial liabilities for the federal government. The findings and recommendations of those reports, including any unaddressed weaknesses, are discussed later in this report.",
"CSLCA required FAA to evaluate its MPL methodology incorporating three requirements, but the agency’s report did not fully address these requirements.\nFirst, the act required FAA to ensure a balance of risk between launch companies and the federal government. However, agency officials told us that they did not re-evaluate the probability thresholds—which are used to divide the risk of loss between launch companies and the federal government—as part of evaluating its MPL methodology when implementing the risk profile method due to resource constraints.\nSecond, the act required FAA to consider the cost impact of implementing an updated MPL methodology, but the agency did not evaluate the impact of implementing its revised methodology on the direct costs to launch companies (insurance premiums) and to the federal government (indemnification liability).\nThird, the act required FAA to consult with the commercial space sector and insurance providers in evaluating its MPL, but they did not consult such parties in response to the act.\nWithout fully addressing CSLCA’s mandated requirements, FAA cannot ensure that the federal government is not exposed to greater liability costs than intended or that launch companies are not required to purchase more insurance coverage than necessary.",
"In its report, FAA states that implementing an updated MPL methodology in April 2016—the risk profile method—helps ensure that the federal government is not exposed to greater liability costs than intended and that launch companies are not required to purchase more insurance coverage than necessary, as required under CSLCA. Further, agency officials told us that their updated methodology is technically more valid and improves their ability to avoid overestimating MPL values (which can cause launch companies to purchase more insurance coverage than necessary) or significantly underestimating MPL values (which can expose the federal government to greater costs than intended).\nWhile an improved model may provide a more realistic calculation of the MPL, by changing the resulting estimates it can also change the balance between the federal government’s exposure to liability costs and the amount of insurance launch companies are required to purchase. For example, if the more realistic results produced by the revised methodology increased the MPL estimates, this would increase insurance costs for the launch companies and reduce the federal government’s exposure, thereby shifting the balance of costs between the two and suggesting a reevaluation of the thresholds.\nIn addition, FAA officials told us that they had not reevaluated the probability thresholds upon implementing the revised MPL methodology, although defining these thresholds is their primary mechanism for adjusting the balance of risk between launch companies and the federal government. Agency officials acknowledged that an examination of the thresholds’ continued appropriateness would be warranted in the future.\nHowever, they told us that changing the probability thresholds would require significant effort because it would require them to change federal regulations and that resources are currently allocated to other rulemaking priorities. Nevertheless, without evaluating the appropriateness of the probability threshold as part of the mandated evaluation of the MPL methodology, FAA cannot ensure that the federal government is not exposed to greater liability costs than intended or that launch companies are not required to purchase more insurance coverage than necessary.",
"CSLCA also required FAA to consider the cost impact on both the commercial space launch industry and the federal government of implementing an updated MPL methodology. In its report to Congress, the agency discussed indirect costs to launch applicants and the federal government. For example, FAA discussed indirect data burden costs on launch company applicants and FAA analysts associated with the agency’s risk profile method implementation. The report states that the risk profile method requires more data from a launch applicant than the previous method, but that the added burden is minimal because the information is similar to the type of information required by FAA for a risk analysis. Agency officials also said that the risk profile method requires more of an FAA analyst’s time than the overlay method, but that the added burden is minimal because the work done by FAA on risk analysis provides much of the foundation for an MPL analysis.\nHowever, FAA’s report did not include an evaluation of the direct costs to launch companies and the federal government of implementing an updated MPL methodology. The report identifies the direct cost to the launch industry as insurance premiums, and the direct cost to the federal government include potential indemnification payments. Agency officials also told us that the agency does not track commercial space launch insurance costs, and that they do not have meaningful insights on insurance premiums paid by commercial launch companies. FAA officials told us that they only have a general notion of insurance premiums because the industry is reluctant to share such information. FAA officials also told us that, outside of the work done for the report, they have not evaluated the economic implications for launch companies of implementing an updated MPL methodology. Without evaluating direct costs to both the launch companies and the federal government, FAA will be limited in its ability to consider the impact of the cost to both the industry and the federal government of implementing an updated methodology.",
"Although CSLCA required FAA to consult with the commercial space sector and insurance providers in evaluating its MPL methodology for the mandated report, it obtained limited input. For example, FAA officials told us that they obtained input from their Commercial Space Transportation Advisory Committee (COMSTAC) in April 2016 about what to include in their report to Congress, but did not consult with the commercial space sector and insurance providers to evaluate their MPL methodology in response to CSLCA.\nFAA officials also said that, to respond to CSLCA’s consultation requirement, they did not think they needed to repeat the consultations they took in 2013. In January 2013, the agency solicited input from COMSTAC’s Business/Legal Working Group about how to best conduct a review of FAA’s methodology for calculating MPL, in response to our July 2012 report. FAA also briefed the Business/Legal Working Group in May 2013 to solicit input on MPL methodologies, including the risk profile method. In the January 2013 meeting, a COMSTAC member suggested several contractors for a study by outside experts of the complete MPL methodology, and FAA subsequently hired one of these contractors to develop the risk profile method that it implemented in April 2016. However, the agency did not solicit input from COMSTAC about its risk profile methodology prior to its April 2016 implementation or following CSLCA’s November 2015 mandated evaluation. As a result, FAA lacks input on the effect of its revised MPL methodology on launch companies and the federal government, making it difficult to evaluate the balance of risk between the two.",
"Our 2012 report identified concerns with all three components of FAA’s MPL methodology: estimating the number of casualties, estimating the cost of casualties, and deriving estimated property damage costs from estimated casualty costs. In that report we recommended that the agency reassess its methodology, including the reasonableness of several key elements. As noted in our 2017 report, FAA has since made improvements to its methodology. However, it still has not yet updated the cost of a casualty. In addition, in our 2017 report we also noted that there are instances where deriving estimated property damage from estimated casualty costs is inappropriate. As of November 2017, FAA does not have guidance to identify such instances or to guide decisions on which tools to use in developing the MPL estimate.",
"FAA has taken steps designed to improve two of three elements of its MPL methodology, including revising its methodology for estimating the number of potential casualties for a given launch and changing the factor it uses to derive estimated property damage from estimated casualties. However, the agency has not updated the third element, the amount it uses for the cost of an individual casualty, leaving a previously identified weakness unaddressed.\nOur 2012 report raised concerns with each of the three components of FAA’s MPL calculation methodology.\nFirst, we found that FAA’s method for estimating the number of casualties involved use of a single loss scenario instead of applying the insurance industry’s standard practice of catastrophe modeling, and that the agency’s method might significantly understate the number of potential casualties. Catastrophe modeling, unlike the single-loss approach, generally estimates losses by using various tools to simulate tens of thousands of scenarios to create a distribution of potential losses and the simulated probability of different levels of loss.\nSecond, we reported that FAA had been using an outdated and likely understated figure of $3 million to estimate the cost of a single casualty—including injury or death—which Office of Commercial Space Transportation officials said has not been updated since they began using it in 1988.\nThird, we reported that the agency’s approach of estimating potential property damage by adding a flat 50 percent to the estimated casualty damage could lead to estimates that were too high in some cases.\nGiven these weaknesses, we recommended that FAA reassess its MPL methodology, including assessing the reasonableness of the cost-of- casualty amount and other assumptions used. Because the agency took actions to assess its MPL methodology, we closed the recommendation as implemented.\nIn March 2017 we reported that FAA had taken steps to address weaknesses in two of these three areas. Specifically, we reported that FAA’s adoption of the risk profile method in April 2016 had improved its estimates of the number of potential casualties associated with a particular license launch. In addition, we reported that the agency had revised the factor it uses to estimate losses from property damage in the MPL calculation from 50 percent to 25 percent. This change has resulted in property damage estimates that FAA officials believe are still conservative but more realistic than previous estimates.\nHowever, in our March 2017 report we also determined that FAA had not yet addressed weaknesses in the cost-of-casualty amount we had previously identified; despite the conclusion by a contractor it had hired to study the cost-of-casualty that it was too low. Agency officials told us that they had not addressed this weakness because of other priorities. Given the significance of the cost-of-casualty amount to the MPL calculations, we recommended that FAA prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount, including setting time frames for action, and update the amount based on current information. In October 2017, FAA officials told us that they had not yet updated the cost-of-casualty because they have continued to prioritize completing other work with their limited resources, such as reviewing launch applications and fulfilling other safety responsibilities. As a result, our recommendation remains open.\nFAA officials told us that they have identified potential steps to update the cost-of-casualty amount, including seeking public input on whether and how to revise the amount, but that they do not expect to make a decision on whether to make any changes to the cost-of-casualty amount until June 30, 2018, at the earliest. FAA officials told us that in order to prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount they will need to consult with both the commercial space and insurance industries about the necessity and implications of any potential increase in the cost-of-casualty amount. Agency officials said that they plan to do such consultations through COMSTAC. However, because COMSTAC was just reestablished in June 2017 after not having been active since November 2016 and new members had not been approved as of October 2017, the anticipated decision date of June 2018 could be further delayed.\nAs we reported in March 2017, an understated cost-of-casualty amount can lead to an inaccurate loss calculation, which in turn understates the amount of insurance a launch company must obtain. This could increase the potential exposure to the federal government, as the insurance amount would be less than the potential losses associated with the launch activity and the property would be inadequately protected. Because of this potential exposure, we maintain that addressing this weakness is a priority.",
"As noted above, in our 2012 report we raised concerns about the first element of FAA’s MPL methodology, which is estimating the number of potential casualties. FAA officials said that they have implemented two tools for estimating the number of potential casualties, and that each tool requires a different level of resources and is more appropriate for different launch scenarios. The Range Risk Analysis Tool creates physics-based simulations of possible accidents using launch vehicle data, such as launch trajectory and types of failures, and assigns each simulated accident a probability of occurrence based on the failure rates of the different elements of the launch vehicle. According to agency officials, the Range Risk Analysis Tool is a comprehensive, high-fidelity tool and is the most appropriate tool for coastal launch sites, which are often located in heavily populated areas, and is labor intensive. The Risk Estimator Sub- orbital and Orbital Launch Vehicle and Entry tool, which in contrast to the Range Risk Analysis Tool, is a medium-fidelity tool that can be used for low-risk launches, such as launch sites located in very sparsely populated areas and reentry operations that do not need the use of a high-fidelity tool. According to FAA, this tool significantly reduces the time required to estimate the risk from launch and reentry vehicle operations.\nIn our 2017 report, we also reiterated that there are cases where the third element of FAA’s methodology, deriving estimated property damage from estimated casualties, could lead to misleading MPL calculations. Specifically, in March 2017 we reported that estimating losses from property damage as a percentage of losses from casualties could lead to overestimates. For example, FAA’s contractor found that, if a launch accident affected a residential area, the agency’s practice of estimating property damage based on casualties would likely overstate property damages because residential structures have relatively low values compared to losses from casualties. We also reported in March 2017 that in some accidents the number of casualties may be low but property losses could still be very large, in which case FAA’s estimating property losses based on casualties would likely understate potential property damage. For example, a launch vehicle could strike an unoccupied structure that is very expensive, such as a neighboring launch complex. Agency officials said that while deriving property losses from casualty losses is a simpler method that may be an effective use of limited FAA resources, it could be inappropriate in scenarios where the number of casualties might be low but property losses could still be very large.\nIn October 2017, agency officials said that FAA had not developed guidance for determining, for a given launch license, which of the available tools would be most appropriate to estimate the number of potential casualties, and whether it would be more appropriate to estimate property losses separately rather than derive them from estimated casualties. While FAA officials said they believe their current decision process is adequate and that they do not need more formal guidance at this time, they also told us that they were in the process of developing internal guidance on the most appropriate tool to use for future launches. The officials said that they did not have a projected completion date for the guidance, primarily because the agency has other priorities and resource limitations. As noted earlier, these priorities include reviewing commercial space launch license applications and managing program safety.\nFederal internal control standards state that, as part of an entity’s risk assessment component, management should identify, analyze, and respond to risks to achieving objectives. For example, the standards state that management should design control activities in response to the entity’s objectives and risks to achieve an effective internal control system.\nWithout such guidance, FAA could face challenges in ensuring that it is using the most appropriate method to calculate an MPL for a given launch and is making the most efficient use of its resources. Such guidance could become more important as the number of commercial space launches increases, potentially creating greater demands on its resources. We have previously reported that the commercial space launch industry has experienced significant growth in the number and complexity of launches in the past half-decade. FAA has also reported that its licensed launches have increased 60 percent and industry revenue has increased 471 percent since 2012.",
"FAA’s MPL methodology is critical in balancing the encouragement of the U.S. commercial space industry with the need to manage the federal government’s risk exposure because it determines how much risk each party will bear for third-party damages resulting from potential space launch accidents. However, despite changes to the methodology, the probability threshold that the agency uses to achieve this balance of risk has been the same since the 1990s, and has not been reviewed for appropriateness. In addition, while FAA evaluated the effect of its MPL methodology on the indirect costs of launch companies and the federal government, it did not similarly evaluate direct costs. Further, although FAA has obtained input from some stakeholders on certain aspects of its MPL methodology, it has not consulted with launch providers and insurance companies to evaluate effects on key potential costs to launch companies and the federal government, as required under CSLCA. FAA officials told us that resource issues and pursuing other priorities have prevented them from taking these actions. However, the longstanding nature of these issues, as well as their importance in determining the federal government’s financial exposure, makes their completion a priority.\nFAA has also begun improving other aspects of its MPL process, but important actions remain incomplete. For example, the cost of a casualty, a key component of the methodology, has not been updated since 1988. While FAA has identified potential steps to update this amount, it has not implemented these steps and our March 2017 recommendation to prioritize the updating of this amount remains open. Further, agency officials said they have begun to develop internal guidance on how to determine which methodological tools should be used for a given launch, but are not sure when this process will be completed. These are important steps to help ensure the validity of the MPL methodology and the results obtained for each launch, which in turn determine the balance between the amount of insurance launch companies are required to purchase and the potential financial exposure for the federal government.",
"We are making the following four recommendations to FAA: The FAA Administrator should fulfill the CSLCA mandate to include ensuring a balance of risk between the federal government and launch companies as part of FAA’s MPL methodology evaluation by reexamining the current probability thresholds. (Recommendation 1)\nThe FAA Administrator should fulfill the CSLCA mandate to analyze the cost impact of implementing its revised MPL methodology by evaluating the impact on the direct costs of launch companies and the federal government. (Recommendation 2)\nThe FAA Administrator should fulfill the CSLCA mandate to evaluate its MPL methodology in consultation with the commercial space sector and insurance providers by consulting with those entities on the cost impact of its revised MPL methodology, including an updated cost-of-casualty amount, on the launch industry and the federal government. (Recommendation 3)\nThe FAA Administrator should establish an estimated completion date for developing and implementing a plan to establish guidance on the most appropriate MPL methodologies and tools to use for each launch. (Recommendation 4)",
"We provided a draft of this report to the Department of Transportation for their review and comment. In its comments, reproduced in appendix I, the Department of Transportation concurred with our recommendations. The Department of Transportation also provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to interested congressional committees and the Secretary of the Department of Transportation. In addition, this report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions or would like to discuss this work, please contact Alicia Puente Cackley at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Individuals making key contributions to this report are listed in appendix II.",
"",
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"",
"In addition to the contact named above, Patrick Ward (Assistant Director), Jessica Artis, Isidro Gomez (Analyst in Charge), Courtney La Fountain, Maureen Luna-Long, Jessica Sandler, Jennifer Schwartz, Joseph Silvestri, and Shana Wallace made key contributions to this report."
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"question": [
"How was the FAA ordered to change their policies?",
"How did the FAA fail to reevaluate their new policies?",
"What are the FAA probability thresholds?",
"How has the FAA responded its methodology’s weaknesses?",
"What changes did they make to address the two weaknesses?",
"What has the FAA failed to update?",
"How did the GAO address this issue?",
"What is the risk of not addressing the cost?",
"How does the FAA fail to utilize their tools?",
"How are the two FFA tools and methods different?",
"How has the FFA addressed the difference in their tools?",
"What risk exists until the FAA creates proper guidance for the tools?",
"What federal responsibility exists in the commercial space launch industry?",
"What amount is the government liable for?",
"How are costs determined for accidents?"
],
"summary": [
"Balance of Risk. CSLCA required FAA to include ensuring that the federal government is not exposed to greater indemnification costs and that launch companies are not required to purchase more insurance coverage than necessary as a result of FAA's MPL methodology.",
"FAA said that it ensured this balance by improving its methodology, but it did not reevaluate its probability thresholds after revising its methodology.",
"These thresholds are used to divide the risk of loss between launch companies and the government.",
"FAA has addressed two of three previously identified weaknesses in its MPL methodology but has not yet dealt with the remaining weakness.",
"Specifically, the agency has revised its methodology for estimating the number of potential casualties for a launch and changed the factor it uses to derive estimated property damage from estimated casualties.",
"However, FAA has not updated the amount used for the cost of an individual casualty.",
"GAO recommended in a March 2017 report (GAO-17-366) that FAA update this amount.",
"Not doing so could understate the amount of insurance launch companies are required to purchase, exposing the federal government to excess risk.",
"GAO also determined that while FAA has two tools and methods it can use in making its MPL estimates, it does not have guidance on determining which are most appropriate for a given launch scenario.",
"For example, one tool is more comprehensive but also labor intensive to use, while the other is inappropriate for certain launch scenarios and could result in misleading MPL amounts.",
"Officials said they have begun to create such guidance but do not have an estimated completion date.",
"Without such guidance, FAA cannot ensure that the most appropriate MPL methodology is used for each launch.",
"The federal government shares liability risks with the commercial space launch industry for accidents that result in damages to third parties or federal property.",
"The government is potentially liable for damages above that amount, up to a cap GAO estimated to be $3.1 billion in 2017, subject to appropriations in advance.",
"This arrangement requires space launch companies to have a specific amount of insurance to cover these damages."
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GAO_GAO-19-496
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{
"title": [
"Background",
"While Health Centers’ Revenue Doubled from 2010 through 2017, the Share of Revenue from Grants Decreased",
"HRSA Awarded CHCF Grants Primarily to Support Ongoing Operations and Services at Health Centers",
"Agency Comments",
"Appendix I: Information on Health Centers and Patients Served",
"Appendix II: Sources and Amounts of Revenue for Health Centers, Calendar Years 2010 through 2017",
"Appendix III: Community Health Center Fund Awards for Health Centers, Fiscal Years 2011 through 2017",
"Appendix IV: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"The federal Health Center Program was established in the mid-1960s in an effort to help low-income individuals gain access to health care services. The Health Center Program, authorized in Section 330 of the Public Health Service Act, is administered by HRSA’s Bureau of Primary Health Care and makes grants—known as Section 330 grants—to four types of health centers that primarily serve low-income populations: 1. Community health centers. These health centers serve the general population with limited access to health care. They are required to provide primary health services to all residents who reside in the center’s service area. More than three-quarters of health centers are community health centers. 2. Health centers for the homeless. These health centers provide primary care services to individuals who lack permanent housing or live in temporary facilities or transitional housing. These centers are required to provide substance abuse services and supportive services targeted to the homeless population. 3. Health centers for residents of public housing. These health centers provide primary health care services to residents of public housing and individuals living in areas immediately accessible to public housing. 4. Migrant health centers. These health centers provide primary care to migratory agricultural workers (individuals whose principal employment is in agriculture and who establish temporary residences for work purposes) and seasonal agricultural workers (individuals whose principal employment is in agriculture on a seasonal basis but do not migrate for the work).\nHRSA’s Section 330 grants are funded by a combination of discretionary appropriations and, since 2011, mandatory appropriations provided from the CHCF. From fiscal years 2010 through 2017, total funding appropriated for Section 330 grants—which includes funding from discretionary appropriations and the CHCF—increased from about $2.1 billion to $4.9 billion (see fig. 1).\nAccording to HRSA data, approximately 70 percent of appropriations for Section 330 awards in fiscal year 2017—or about $3.5 billion—were funded by the CHCF. HRSA officials also told us that the total amount of CHCF appropriations may differ from the total amount of awards funded because, for example, appropriations may be (1) used for administrative costs, (2) reduced because of sequestration, or (3) carried over between fiscal years.\nHealth centers are required to provide comprehensive primary health services, including preventive, diagnostic, treatment, and emergency health services. (See table 1.) All services that health centers provide must be available to patients at the center regardless of patient payment source or ability to pay and must be available (either directly or under a referral arrangement) to patients at all health center service sites. Services are provided by clinical staff—including physicians, nurses, dentists, and mental health and substance abuse professionals—or through contracts or cooperative arrangements with other providers.\nIn addition to the services they provide, health centers are also required to document the unmet health needs of the residents in their service area and to periodically review their service areas to determine whether the services provided are available and accessible to area residents promptly and as appropriate. Health centers also must have a sliding fee scale based on a patient’s ability to pay and to be governed by a community board of which at least 51 percent of the members are patients of the health center. HRSA determines whether health center grantees meet these and other health center program requirements when making award determinations.",
"Our analysis shows that total revenue received by health centers nationwide more than doubled from calendar years 2010 through 2017— from about $12.7 billion to $26.3 billion (see fig. 2). Over the same time period, both the number of health centers and the number of patients served also increased. The number of health centers increased from 1,124 centers in 2010—operating 6,949 sites—to 1,373 centers in 2017— operating 11,056 sites. In addition, the total number of patients served at health centers over the same time period increased by 7.7 million patients, from 19.5 million to 27.2 million. See appendix I for additional information.\nWhile the total revenue received by health centers more than doubled from 2010 through 2017, the share of revenue received from grants— including Section 330 grants and other federal and non-federal grants— decreased, from 38.0 percent of total revenue in 2010 to about 30.2 percent in 2017. During the same time period, the share of revenue health centers received from Medicaid, Medicare, and private health insurance increased (see fig. 3). (See app. II for more information on health centers’ revenue from 2010 through 2017.)\nWhile the share of health centers’ total revenue coming from all grants decreased from 2010 to 2017, the share of revenue from one type of grant—Section 330 grants—increased. Specifically, the share of revenue health centers received from Section 330 grants—a portion of which are funded by the CHCF—increased from 15.7 percent of health centers’ total revenue in 2010 to 18.0 percent in 2017 (see figure 4).\nOur analysis also shows that the share of revenue health centers receive from Section 330 grants varies by state. As figure 5 below shows, in 2017, health centers in 2 states received more than 40 percent of their total revenue from Section 330 grants, while health centers in 18 states received less than 20 percent of total revenue from these grants.",
"Our analysis of HRSA data shows that for the 7-year period from fiscal years 2011 through 2017, HRSA provided health centers with about $15.8 billion in Section 330 grants funded by the CHCF. Most of this funding—$12.6 billion, or nearly 80 percent of all grants awarded through the CHCF during this period—was awarded for the purpose of service area funding, which supports ongoing operations and services across the nearly 1,400 health centers nationwide (see fig. 6). The remaining $3.2 billion in CHCF grants were awarded to increase the amount of services provided at existing health centers; to increase the number of health centers and sites; and for other special initiatives, such as initiatives to support health information technology.\nService area funding. From fiscal years 2011 through 2017, HRSA used the CHCF to provide health centers with approximately $12.6 billion in grants for service area funding, which supports ongoing operations and service delivery. HRSA officials told us that these CHCF grants are used to fill the gap between what it costs to operate a health center and the amount of revenue a health center receives. As such, the awards are a primary means through which health centers provide health care services that may be uncompensated, including services for patients who are uninsured or services not typically reimbursed by other payers, such as adult dental care, or other services such as transportation and nutritional education. These awards can cover uncompensated care costs for patients with incomes low enough to qualify for sliding fee assistance, which reduces or waives the cost of services for patients based on their ability to pay. In addition, these awards can cover patients who have private insurance but face substantial deductibles and cost-sharing. Officials we interviewed from the Congressional Research Service, George Washington University’s Milken Institute, and the National Association of Community Health Centers similarly noted that CHCF grants support services not typically covered by public health insurance, such as adult dental care services not generally covered by Medicare or Medicaid.\nIncreasing services at existing health centers. From fiscal years 2011 through 2017, HRSA used the CHCF to provide health centers with about $1.2 billion in grants to help increase the amount of services offered at existing health centers that chose to apply for an award. This amount included funding to increase the availability of specific health care services, such as dental care, as well as funding to support health centers’ efforts to extend service hours or increase the number of available providers. Specifically, these grants were awarded for the following:\nBehavioral and mental health, substance abuse. Three grants totaling about $400.8 million were awarded to expand access to behavioral health, mental health, and substance abuse services. These awards focused primarily on integrating primary care and behavioral health care services and expanding substance use services at existing health centers, such as medication-assisted treatment for opioid-use disorder.\nOral health. A grant for about $155.9 million was awarded to increase access to oral health services and improve oral health outcomes by funding new onsite providers and supporting the purchase and installation of dental equipment.\nExpanding Services. Two grants—one in fiscal year 2014 for $295.6 million and another in fiscal year 2015 for about $349.6 million—were made to increase access to comprehensive primary health care in various ways, at the discretion of individual health centers. At existing sites, health centers may have chosen to expand service hours, increase the number of health care providers, or expand services such as oral health, behavioral health, pharmacy, and vision services.\nIncreasing the number of health centers and sites. From fiscal years 2011 through 2017, HRSA awarded about $1.1 billion—or about 7 percent of total CHCF funds—to organizations to help establish new health centers or new sites at existing health centers. Specifically, HRSA awarded grants for the following purposes:\nNew Access Point (NAP) Awards. Most of the funding to increase access to health centers—about $648.5 million of the $1.1 billion— was provided through what are called NAP awards. According to HRSA officials, there are two primary ways these funds can be used—either to allow a new organization to become a health center (about 30 percent of grant applicants) or for an existing health center to add one or more service sites (about 70 percent of grant applicants). HRSA officials told us that they funded 1,059 NAP awards to new and existing health centers from fiscal year 2011 through 2017 for a combined total of 1,609 proposed new health centers or sites. These awards included 295 awards to new organizations and 764 awards to existing health centers adding one or more service sites. (See table 2 below for more information on the increase in health centers resulting from NAP awards.) Among the 1,609 total proposed new health centers or sites, 686 were in rural areas, including 191 new health centers and 495 additional sites at existing centers.\nConstruction Grants. HRSA awarded construction grants totaling about $411.3 million through the Health Infrastructure Investment Program to help existing health centers alter, renovate, expand, or construct a facility. According to HRSA officials, construction grants may increase the number of health center sites or may result in the consolidation of sites while still expanding access to care.\nHealth Center Planning Grants. HRSA awarded a Health Center Planning grant in fiscal year 2011 for about $10.3 million to support planning and development of comprehensive primary care health centers.\nCollectively, a total of 5,536 new health center sites were added in the United States from fiscal year 2011 through 2017. Of these new sites, 3,838 were in urban locations and 1,698 were in rural locations. While many of these new health center sites were from NAP awards, as previously described, other grants either funded by the CHCF or by discretionary appropriations may have contributed to the establishment of new health center sites. For example, HRSA officials told us that health center sites may be added through a change of scope to their service area competition award or through other types of grants funded by the CHCF, such as grants to increase adult dental services. However, according to HRSA officials, the data do not allow for directly associating the number of new sites with those grants, as the grants may be used for multiple purposes. Figure 7 below shows the locations of health center sites added during this time period that are active as of February 2019.\nOther special initiatives. From fiscal years 2011 through 2017, HRSA awarded about $898.9 million of CHCF funds for grants to health centers to support other special initiatives and to address identified priorities or emerging health care needs. Specifically, HRSA awarded grants to those health centers that chose to apply for the following purposes:\nHealth information technology. Three grants totaling about $243.4 million were awarded to advance the adoption and implementation of health information technology. For example, the purpose of one grant—the Health Center Controlled Networks—was to advance the adoption, implementation, and optimization of health information technology. Another grant provided supplemental funding to improve the electronic reporting capabilities of health centers in Beacon Communities.\nHIV. Two grants totaling about $23.8 million were awarded with the goal to increase access to HIV care and services. One specifically targeted prevention and treatment services in those communities most affected by HIV.\nOutreach and enrollment. $222.0 million in grant funding was awarded to support health centers in raising awareness of affordable insurance options and providing eligibility and enrollment assistance to uninsured patients of health centers and residents in their approved service areas.\nPatient-Centered Medical Home. About $84.6 million in grant funding was awarded to support HRSA efforts to expand the number of patient-centered medical homes with a particular focus of improving quality of care, access to services, and reimbursement opportunities.\nQuality improvement. Approximately $305.1 million in grant funding was awarded to support health centers that displayed high quality performance so they can continue to strengthen quality improvement efforts. Specifically, the funds were to support health centers to further improve the quality, efficiency, and effectiveness of health care delivered to the communities served.\nTraining and technical assistance. Two grants totaling about $14.3 million were awarded to support training and technical assistance for health centers in order to support programmatic, clinical, and financial operations. One grant focused on the delivery of training and technical assistance by national organizations and the other grant was based on statewide and regional needs.\nZika. A grant for about $5.7 million was awarded to health centers that chose to apply to expand their existing activities to strengthen the response to the Zika virus in Puerto Rico, the U.S. Virgin Islands, and American Samoa. These activities included outreach, patient education, screening, voluntary family planning services, and/or treatment services.\nSee appendix III for a complete list of all grants awarded through CHCF by category.",
"We provided a draft of this report to HHS. HHS provided technical comments, which we incorporated as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further action until 30 days from the report date. At that time, we will send copies of this report to the Secretary of Health and Human Services and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or at [email protected]. Contact points for our Office of Congressional Relations and Office of Public Affairs can be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.",
"This appendix provides information on health centers and patients served. Specifically, figure 8 illustrates the number and location of health centers in 2017; figure 9 illustrates the growth in health centers and sites since 2010; figure 10 illustrates the growth in patients served at health centers since 2010; and table 3 provides information on how the payer mix for patients served at health centers has changed since 2010.",
"HRSA’s Uniform Data System defines other public insurance as state and/or local government programs, such as Washington’s Basic Health Plan or Massachusetts’ Commonwealth plan, that provide a broad set of benefits for eligible individuals. Other federal grants in HRSA’s Uniform Data System include Medicare and Medicaid Electronic Health Record Incentive grants. HRSA’s Uniform Data System defines non-federal grants and contracts as revenue from contracts that are not tied to the delivery of services and revenue received from state and local indigent care programs. HRSA’s Uniform Data System defines other revenue as non-patient related revenue not reported elsewhere. Examples include revenue from fund-raising, rent from tenants, medical record fees, and vending machines.",
"",
"",
"",
"In addition to the contact named above, Kristi Peterson, Assistant Director; Amy Leone, Analyst-in-Charge; Margot Bolon, Krister Friday, Jeff Tamburello, and Eric Wedum made key contributions to this report. Also contributing were Vikki Porter, Rotimi Adebonojo, Giselle Hicks, and Jennifer Whitworth."
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"question": [
"What makes up health center revenue?",
"How did health center revenue change from 2010 to 2017?",
"How did the makeup of the revenue change?",
"How did federal and state grant revenue change?",
"How did health centers change in the 2010 to 2017 period of time?",
"How did patients served from 2010 to 2017 change?",
"How was the HRSA aided by federal grants from 2011 to 2017?",
"To what extent did this amount go towards operation costs?",
"Why does the HRSA rely on CHCF grants?",
"Why are these grants so critical?",
"What are the remaining amounts of CHCF grants used for?",
"How did health centers provide for individuals in 2017?",
"How do health centers impact low-income individuals?",
"How do CHCF grants affect health centers?",
"How did the HRSA collaborate with the CHCF?",
"What information was used to analyze the HRSA?",
"How did the GAO additionally use CHCF information?",
"How did the GAO gather new information from people?"
],
"summary": [
"Health centers' revenue comes from a variety of sources, including reimbursements from Medicaid, Medicare, private insurance, and federal and state grants.",
"Health centers' revenue more than doubled from calendar years 2010 through 2017, from $12.7 billion to $26.3 billion.",
"While total health center revenue increased from 2010 through 2017, the share of revenue from each source changed in different ways.",
"In particular, revenue from federal and state grants decreased from 38.0 percent of total revenue in 2010 to about 30.2 percent of total revenue in 2017 while reimbursements from Medicaid, Medicare, and private insurance increased.",
"Over the same time period, the number of health centers increased from 1,124 centers in 2010 to 1,373 centers in 2017.",
"In addition, the number of patients served over the same time period increased by 7.7 million patients, from 19.5 million to 27.2 million.",
"GAO's analysis of Health Resources and Services Administration (HRSA) data shows that from fiscal years 2011 through 2017, health centers received approximately $15.8 billion in federal grants funded by the Community Health Center Fund (CHCF), which was established by the Patient Protection and Affordable Care Act in 2010.",
"Of this total amount, 79.7 percent—or $12.6 billion—was awarded for the purpose of maintaining operations at existing health centers (see figure).",
"According to HRSA officials, these CHCF grants are used to fill the gap between what it costs to operate a health center and the amount of revenue a health center receives.",
"As such, officials explained, the awards are a primary means through which health centers provide health care services that may be uncompensated, including services for uninsured patients or services not typically reimbursed by other payers, such as adult dental care.",
"The remaining $3.2 billion in CHCF grants were made to increase the amount of services provided at existing health centers; increase the number of health centers and sites; and other special initiatives, such as implementing health information technology.",
"In 2017, nearly 1,400 health centers provided care to more than 27 million people, regardless of their ability to pay.",
"Health centers were established to increase the availability of primary and preventive health services for low-income people living in medically underserved areas.",
"Health centers rely on revenue from a variety of public and private sources, including revenue from CHCF grants.",
"HRSA began awarding grants funded by the CHCF in fiscal year 2011.",
"GAO analyzed HRSA data collected from health centers and compiled in its Uniform Data System to identify the sources and amounts of revenue health centers received from 2010 through 2017, the most recent data at the time of GAO's analysis.",
"GAO also reviewed HRSA grant documentation for grants funded by the CHCF for fiscal years 2011-2017—the most recent data at the time of GAO's analysis—including information on the award amount and purpose of the grant, and reviewed published studies that described the purposes for which CHCF grants have been made.",
"Additionally, GAO interviewed HRSA officials, authors of the published studies, and an association representing health centers."
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GAO_GAO-14-144
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{
"title": [
"Background",
"Statutory and VEI Task Force Changes to TAP",
"Administration of the Revamped TAP",
"Other Federal Employment Programs That Serve Transitioning Servicemembers and Veterans",
"Agencies Report That Most Locations Have Implemented Key TAP Components, but Some Locations Are Experiencing Delays",
"Agencies’ Efforts for TAP Adequately Address Three of Five Key Elements Associated with Effective Program Implementation and Evaluation",
"Agencies Are Adequately Addressing Three Elements",
"Element 1: Tracking Attendance",
"Element 2: Ensuring Training Quality",
"Agencies’ Efforts to Address the Remaining Two Elements are Mixed",
"Element 4: Ensuring Participation and Completion",
"Element 5: Measuring Performance and Evaluating Results",
"DOD Lacks a Process to Assess the TAP Experience of National Guard and Reserve Members",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Technical Appendix",
"Elements and Relevant Attributes and the Extent to Which They Have Been Addressed",
"Appendix II: DOD Form 2958, Individual Transition Plan (ITP) Checklist",
"Appendix III: Comments from the Department of Defense",
"Appendix IV: Comments from the Department of Veterans Affairs",
"Appendix V: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"",
"Prior to the redesign initiated in 2011, TAP consisted of four core components: (1) pre-separation counseling, (2) an employment workshop, (3) an optional briefing on federal veteran benefits, and (4) the Disabled Transition Assistance Program. Pre-separation counseling, which includes VA benefits information, was required by law to be provided prior to the VOW Act.\nA number of revisions, new requirements, and components were added to TAP by the VOW Act and the VEI Task Force. For example, the VOW Act mandates that DOD require that transitioning servicemembers participate in an employment workshop, with some exceptions. Included among the VEI Task Force’s changes to the program are: an extended curriculum with segments on translating military skills to civilian job requirements, financial planning, and individual counseling and assessment with the goal of each servicemember developing an Individual Transition Plan; an updated employment workshop and briefings on federal veteran benefits divided into two sessions.embed information relevant for those who have or think they have a service-connected disability rather than as part of a separate Disabled Transition Assistance Program component; The VA benefits I and II briefings a series of 2-day, career-specific tracks that focus on (1) pursuing college education, (2) entering a technical skills training program, or (3) starting a business. The track that a servicemember chooses depends on his or her post-separation goals; a capstone event during which servicemembers are to demonstrate— and military service commanders verify—that they have met required career-readiness standards. The standards pertain to employment, education, and technical training, depending on the servicemember’s post-separation goals; and a referral process—called a “warm handover”—to connect servicemembers who do not meet the career readiness standards with the appropriate partner agency (VA or DOL) to provide continued support and services as veterans.\nAdditional details about the previous TAP compared to the revamped program are shown in table 1.\nFigure 1 shows each of the components in the order a servicemember would currently participate in the redesigned program. The services generally implement these core components at the installation level and may include other components in addition to TAP.\nRather than TAP continuing to be an end-of-career event, DOD plans to shift to a Military Life Cycle Transition Model after October 2014. This model is intended to integrate transition preparation—counseling, assessments, and access to resources to build skills or credentials— throughout the course of a servicemember’s military career.",
"The VEI Task Force oversaw the design and development of the revised TAP and was led by DOD and VA. Other agencies participating on the VEI Task Force include DOL, the Department of Education, the Office of Management and Budget, the Office of Personnel Management, and the Small Business Administration (SBA). Members of the White House staff and senior representatives from each service also participated. Each agency is responsible for different activities. For example, DOD provides guidance and monitors compliance with TAP provisions, and DOL facilitates the employment workshop. Also, each service coordinates with agencies on scheduling TAP workshops and briefings. The respective roles and responsibilities are spelled out in a memorandum of understanding (MOU), which the agencies signed in January 2014. A new TAP governance structure, established in October 2013, steers implementation of TAP and will modify the program, as needed, through 2016. The new governance structure is co-led by DOD in 2014 and co- chaired by VA and DOL.",
"With the draw down from the wars in Iraq and Afghanistan and as the military makes ongoing and planned force structure reductions, many servicemembers are projected to depart the military through 2017. TAP is one of a number of federal programs to assist transitioning servicemembers and veterans in developing job skills and securing civilian employment. TAP serves as a gateway to additional information and services that are available, either while servicemembers are on active duty or after they have separated from the military. For example the DOL employment workshop highlights many of the skills and techniques helpful in obtaining employment. After completing the workshop, servicemembers can benefit further by returning to the TAP offices on installations, using services at local VA and DOL offices, or using websites introduced to participants during TAP training.\nOnce servicemembers separate from the military, a number of other federal programs offer assistance. These programs include five employment and training programs overseen by DOL and VA that target veterans.to veterans. For example, DOL provides grants to states to support state workforce agency staff positions, Disabled Veterans’ Outreach Program Specialists and Local Veterans Employment Representatives, who serve veterans through the Jobs for Veterans State Grant Program. In addition, VA provides employment services to certain veterans with disabilities through the Vocational Rehabilitation and Employment Program. As of 2012, the program was offered in 56 regional offices and 169 satellite offices. In addition, DOD helps National Guard and Reserve members obtain civilian employment though its operation of other programs, including the Yellow Ribbon Reintegration Program and Employer Support of the Guard and Reserve. For example, the Yellow Ribbon Reintegration Program serves National Guard and Reserve members and their families by hosting events that provide information on employment opportunities, health care, education/training opportunities, finances, and legal benefits.",
"As of December 2, 2013, DOD, DOL, and VA have implemented changes to the program’s key components at most of the 206 military installations that provide TAP. However, a few program components have not yet been fully implemented by the agencies. For example, the agencies are still using the previous version of the VA benefits briefing at a number of locations and are offering the career technical training track at fewer than half of the TAP locations. Although some agencies had planned to fully implement the revamped TAP at all locations by October 1, 2013, they missed their targeted time frame. According to the revised plan, agencies now expect to implement virtually all components by the end of March 2014, with full implementation planned by June 2014. The planned start dates and the status of agencies’ efforts to implement the key components at the 206 TAP locations are summarized in figure 2.\nPre-separation counseling and DOD Core Curriculum: According to DOD officials, eligible servicemembers were participating in pre-separation counseling and the modules in the new DOD core curriculum by November 21, 2012 at all TAP locations. As noted previously, part of the DOD core curriculum includes a module on translating military skills to civilian job requirements. Current military crosswalks map the majority of military occupations to a single civilian occupation. Based on those crosswalks and supplemented by analyses from Army and Navy credentialing websites, tools like DOL’s My Next Move and My Next Move for Veterans can suggest multiple occupations for career exploration. To enhance the existing electronic tools used for the crosswalk, DOL contracted with an organization to identify equivalencies between military and civilian jobs, as required by the VOW Act. According to DOL officials, the results of the military equivalencies study will enhance the military- civilian crosswalk by enabling a mapping of a single military occupation into multiple civilian occupations based on an analysis of embedded skill sets in addition to the similarity of tasks performed. This will be done for a selected set of military occupations that represent 59 percent of current active duty servicemembers. DOL officials said they plan to complete the update of the electronic tools beginning in 2014.\nDOL Employment Workshop: Effective November 21, 2012, DOD was generally required to mandate participation in the program with some exceptions. According to DOD and DOL officials, the agencies met this participation requirement in the VOW Act by offering eligible servicemembers, with some exceptions, the previous or revised version of the DOL employment workshops at domestic and overseas locations by November 21, 2012. Moreover, as required by the act, the DOL employment workshops are being conducted by contractors at all TAP locations.offered at all TAP locations, according to DOD and DOL officials.\nAs of the spring of 2013, the revised workshop was being VA Benefits Briefing: All departing servicemembers are generally required to be provided the VA benefits briefing. Officials from DOD and VA stated that this participation requirement was met by offering servicemembers the previous version of the VA benefits briefing while implementing a phased rollout of the revised VA benefits I and II briefings. As of December 2, 2013, the revised VA benefits I and II briefings were unavailable at about 8 percent of TAP locations. VA officials said that the revised VA benefits briefings are offered at all domestic locations. However, the revised briefings are not currently offered in all overseas locations, such as Air Force locations in Germany, South Korea, and Japan. Although VA planned to implement the revised benefits briefings by October 1, 2013, full implementation is now expected no later than March 31, 2014, according to VA officials. DOD and VA officials said that VA faced challenges, such as training enough personnel to facilitate the revised briefings at these overseas locations during the extended furlough and delays with negotiating agreements with foreign nations hosting U.S. military forces.\nCareer-specific Tracks: Since late 2012 the agencies had been planning to fully implement these tracks by October 2013. However, as of December 2, 2013, the tracks were not fully implemented, particularly at overseas locations:\nEntrepreneurial Track: SBA offers the entrepreneurial track at least quarterly at all domestic locations, but this only meets 12 percent of the estimated total demand for the track, according to SBA officials. Moreover, the track is not offered at the majority of overseas locations. After reviewing a draft of this report, SBA officials stated that the track can be extended to meet domestic and overseas demand given additional funding recently provided in the fiscal year 2014 budget. Full implementation at all TAP locations is expected by the end of fiscal year 2014, according to SBA officials.\nCareer Technical Training Track: VA is offering the career technical training track at about 43 percent of the TAP locations. In particular, many overseas locations lack this track. According to VA officials, the delays were mainly due to efforts to incorporate substantial feedback received from participants during the pilot phase. VA completely revised the curriculum and piloted it in the summer of 2013. As a result, VA delayed training the facilitators until the curriculum was finalized and began its roll out in September 2013. According to the services’ implementation plans, full implementation of this track is expected by April 30, 2014.\nHigher Education Track: DOD is offering the higher education track at about 72 percent of TAP locations. According to DOD officials, they plan to offer the track at all locations, but sequestration and other resource constraints as well as delays in hiring and training facilitators slowed the roll out of this track. Full implementation is expected by April 9, 2014, according to the services’ implementation plans.\nFor servicemembers lacking access to the entrepreneurial track, content from the track is available online. The online version, however, is a poor substitute for the classroom-based track, according to SBA officials. Unlike the technical training and higher education tracks, the entrepreneurial track does not have associated readiness standards. According to SBA officials, the readiness standards for the other tracks were developed prior to the inclusion of this track in TAP. While they considered creating associated standards, SBA officials decided that the track’s main purpose is to help participating servicemembers determine whether or not starting a business in general or their specific ideas for a business is right for them, so standards were not needed.\nIf the higher education or career technical training tracks are not available for servicemembers who wish to attend an institution of higher education or seek technical training, other options are available to meet the readiness standards associated with the tracks. For servicemembers in remote locations or who are rapidly separating from the military, one option is to access a virtual TAP curriculum, according to a draft DOD policy under consideration. However, classroom instruction is the preferred method. Another option for servicemembers located overseas is to take the track at a domestic location when they return to the United States, according to DOD officials. Moreover, according to DOD policy, a servicemember could meet the standards outside of the track by completing the required documents or activities associated with those standards, such as by completing a comparison of academic institution choices and a college or university application. While servicemembers may meet the readiness standards without taking the tracks, they would miss instruction, for example, on resources to cope with challenges transitioning into college as nontraditional students (those who are older or with family obligations).\nCapstone Event: The services, working with DOD, DOL, and VA, are finalizing implementation of a “capstone event”—a final check to verify that servicemembers have met TAP requirements—and a referral process, known as a “warm handover,” for those servicemembers who do not meet the requirements. Although as of December 2013 the services were holding capstone events at most locations, according to the services’ implementation plans, the details for how the capstone event and warm handover will work are still being finalized by DOD, DOL, VA, and the services. Specifically, the agencies and services must clarify the roles and responsibilities of servicemembers, TAP staff, commanders, and the partner agencies as well as develop policies and guidance that underpin this effort, according to a December 2013 DOD report about implementation of the capstone event at TAP locations.\nIn addition to implementing the key components of TAP at military installations, the services continue to update physical infrastructure at a number of locations to provide an optimal experience for servicemembers participating in TAP components. General standards for infrastructure are set forth in DOD policy. Approximately 6 percent of locations lack computer availability and according to officials from DOD, the Navy and Marine Corps, other infrastructure is still being put in place at a number of their domestic and overseas locations. According to officials from DOD, they expect all of the TAP locations to meet infrastructure standards by March 31, 2014.\nMilitary Life Cycle Model: According to the agencies’ implementation plan, the envisioned end state for the redesigned TAP involves integrating transition preparation throughout the course of a servicemember’s career. The agencies refer to this end state as the military life cycle transition model. The services plan to fully implement the military life cycle by October 2014. Under this new transition model, for example, the Army intends for all new servicemembers to receive counseling and initiate an individual development plan regarding their military career goals within 30 days of reporting to their first permanent duty station. Overall, DOD intends such counseling and planning to continue throughout a servicemember’s military career at various “touchpoints”, such as when For example, servicemembers will be expected to they are promoted.create plans for achieving their military and post-military goals for employment, education, or starting their own business. Further, servicemembers are to be made aware of the career readiness standards they must meet long before they separate.",
"Agencies have efforts underway to address three of the five key elements associated with effective program implementation and evaluation for TAP. However, agencies’ efforts to address the remaining two elements are mixed.",
"",
"Effective training programs have systems to track data, and we found that DOD and the services have systems to collect and report on attendance rates and are taking steps to improve the reliability of these data. DOD developed a DOD-wide system to track attendance for all TAP components, which has been in use since October 2012. This system is populated with attendance data from the services. The Army and Air Force each input TAP attendance data into their own systems, which they then transmit to the DOD system, while the Navy and the Marines input TAP attendance data directly into the DOD system because they do not have service-level systems that allow for tracking individual TAP attendance.\nDOD and the services are taking steps to improve the reliability of these data. According to DOD officials, accuracy will improve now that the capstone event is in place because servicemember attendance at each of the three required TAP training components will be verified at this event.\nAccording to DOD officials, the services are taking other steps to improve the accuracy of TAP attendance data, as well. For example, the Navy plans to replace the paper data collection systems that exist at some installations with electronic attendance tracking, which may be less prone to data-entry error.\nDOD tracks attendance to measure progress toward its performance goal of eligible servicemembers attending the mandatory components each year, beginning in fiscal year 2013. In February 2014, DOD reduced the fiscal year 2014 performance goal from 90 percent to 85 percent. According to DOD officials, the expected attendance rate is less than 100 percent because some servicemembers do not complete all required TAP training for various reasons. For example, some may separate quickly, such as for medical or disciplinary reasons, and not have an opportunity to fully take TAP.\nFor fiscal year 2013, DOD expects an attendance rate of about 75 percent, primarily because servicemembers that transitioned in that year may have taken several TAP components in fiscal year 2012, prior to when DOD and the services began tracking these rates. DOD anticipates meeting their goal in fiscal year 2014.",
"Effective training programs incorporate feedback into training efforts,and each agency involved in TAP plans to use this type of information, as well as monitor their respective components, to improve TAP. To measure participants’ reactions to each TAP component they attend, including the career-specific tracks, DOD launched a participant assessment in April 2013. The assessment seeks feedback on the quality of the instruction, content, and facilities.knowledge of the information presented in each component of the training.\nIt also measures participants’ According to agency officials, the agencies plan to use the results from the assessment to monitor the performance and outcomes for the redesigned TAP, assess trends, determine areas of improvement, and modify TAP components as appropriate. DOD is leading this effort. To help facilitate this effort, DOD officials said that they plan to analyze feedback at the DOD, service, and installation levels and share this information with partner agencies and the four services in a quarterly report. For example, the participant assessment collects demographic information that will allow for a comparison of the responses of servicemembers in different military branches, locations, and groups, such as enlisted personnel and officers. DOD performed a similar analysis in mid-2013 for responses to two questions in the participant assessment. This analysis provided DOD with information that could be used to understand how the program’s usefulness is perceived by different populations. Moreover, according to DOD’s TAP evaluation plan, DOD plans to convene teams with the partner agencies on an as-needed basis to make recommendations to address challenges, concerns, and areas for improvement. According to VA and DOL officials, they also plan to analyze the feedback to improve their respective components.\nThe agencies also monitor their respective TAP components through site visits or plan to do so. According to DOD’s monitoring plan, DOD visits installations to monitor the TAP components it is responsible for as well as overall TAP implementation. According to DOL officials, their staff intends to perform annual monitoring visits to each domestic installation where the employment workshop is provided, but not at overseas installations. They said that at overseas locations they plan to rely on feedback from participant assessments, the company hired to facilitate the workshops, and the military staff at those DOD sites who will monitor the facilitators’ instruction and whether they are engaging and knowledgeable. VA officials said that they have not completed their monitoring plan for the VA benefits I and II briefings and its career technical training track. However, they expect to have a quality assurance plan completed by March 2014. Also, in comments provided after reviewing a draft of this report, VA officials stated that VA is participating in the DOD site visits to installations to monitor the TAP components. These are joint, agency-administered, on-site staff assistance visits led by DOD. Also, VA currently has contract staff at each military installation to monitor implementation of the VA benefits I and II briefings and the career technical training track. that TAP participants have completed products, such as resumes and job applications, which demonstrate that they are career ready.\nCreated a capstone event to verify that standards have been met; the capstone event can be completed one-on-one, in large groups, or in small groups. For example, the Marines model is one-on-one.\nAssigned the task of verifying career readiness to commanders and identified steps to ensure that commanders or their designees are properly trained to assess an individual servicemember’s career readiness. To document whether or not a servicemember is career ready, DOD developed a new form called the Individual Transition Plan (ITP) Checklist in which each one of the career readiness standards is listed. We have reprinted this form in appendix II.\nDeveloped procedures for providing a warm handover, or referral, for servicemembers not meeting the career readiness standards. Generally, the warm handover is to be a confirmed person-to-person contact.\nAccording to the December 2013 DOD capstone report, during the recent pilot of the capstone event, several implementation challenges emerged. For example, confusion exists among servicemembers, TAP staff, commanders, and the agencies as to their roles and responsibilities in the capstone event. According to the DOD capstone report, to address this challenge, the agencies are taking actions, such as the services implementing a training program for their TAP staff and planning efforts to educate commanders and servicemembers on the requirements, purpose, and importance of the capstone event.\nAs noted previously, according to DOD guidance, if a servicemember has not met the career readiness standards at the time of the capstone event, they are to be referred to the appropriate curriculum or services before they transition. If they do not meet the standards before separating from the service, the services plan to provide them with a “warm handover”. The delivery of the warm handover may vary at domestic and overseas locations because DOL and VA have limited capacity at overseas According to the DOD capstone report, DOL staff will likely locations.not be present at capstone events overseas and will conduct the warm handover in other ways, and VA staff will be located only at larger overseas installations. For example, servicemembers overseas will be able to contact DOL’s call center within established hours, which, due to time differences, may limit opportunities to make a person-to-person contact.",
"",
"Effective training programs encourage participation and hold both individuals and their leaders responsible. While DOD has taken steps that are consistent with most attributes of effective training programs, two services currently lack an oversight mechanism at the commander level to help ensure participation. DOD’s efforts underway include: (1) prioritizing training for servicemembers based on agreed-upon goals and priorities, (2) encouraging servicemembers to buy in to training goals, and (3) communicating the importance of training. For example, DOD and the services communicate the importance of TAP training by providing information on their websites, including how TAP aids in a successful transition, and through other communications, such as brochures with similar information. In addition, DOD has assigned unit commanders the responsibility of ensuring that eligible servicemembers have full access to and successfully complete required TAP components.\nHowever, only the Army and the Air Force possess the capability to gauge the rate at which servicemembers under an individual unit commander participate in TAP. Specifically, the Army and Air Force provide commanders and their leaders information on their unit’s participation levels. In contrast, the Navy and the Marines do not have such systems. According to Navy officials, they obtained funding and plan to develop such a system by late June 2014 and plan to start using the data for oversight no later than fiscal year 2015. Marine officials said that because they have a long-standing culture of requiring servicemembers to attend TAP training, such an oversight mechanism was not necessary. In our 2002 and 2005 reviews of TAP, we found that servicemembers sometimes faced difficulties being released from military duties to attend TAP because of the priority accorded their military mission or the lack of supervisory support for TAP.on the pilot of the capstone event, DOD reported that ensuring servicemember participation in capstone events was a challenge for most of the services. According to DOD, lack of servicemembers’ awareness of this requirement and lack of commanders’ support may have hampered participation in capstone events. Without routine information on servicemembers’ participation by commander, it may be difficult to hold accountable those directly responsible for ensuring participation.",
"Outputs are the direct products and services delivered by a program, and outcomes are the results of those products and services. See GAO, Performance Measurement and Evaluation: Definitions and Relationships, GAO-11-646SP (Washington, D.C.: May 2011). basic end-of-course evaluations to higher level impact evaluations.agencies plan to evaluate TAP at lower levels. Their evaluation plan includes (1) gauging participant reaction to all TAP components through end-of-course evaluations and (2) determining whether servicemembers met the career readiness standards prior to separation. Higher level evaluations are also important to help gauge the effectiveness of TAP, and the agencies have not demonstrated a strategic approach to planning such evaluations. Since the program is administered by multiple agencies, planning an evaluation is more challenging than if it were administered by a single agency. In December 2011, the agencies stated, in an internal report, that they would develop a methodology to assess the effectiveness of TAP by engaging new veterans approximately six months after they have separated from the military. Despite the modular nature of TAP, this report did not specify whether this type of higher level evaluation would assess all of TAP or certain components. DOL and VA are considering higher level evaluations for the employment workshop and VA benefits briefings. For example, DOL is considering different methodologies it could use to conduct an impact evaluation of the employment workshop. However, the agencies could not provide a rationale for not using higher-level evaluations to assess either TAP overall or some of the other TAP components and career-specific tracks. Best practices call for the development of a written evaluation strategy, which the agencies prepared for lower evaluation levels, but not for higher levels. Without a written evaluation strategy that identifies the TAP components to be evaluated, and includes the appropriate level and timing of the evaluation and methods, the agencies may miss important opportunities to obtain information needed to make fully informed decisions on whether and how to modify TAP and may either over invest or under invest in evaluations.",
"Based on GAO’s prior work and interviews with stakeholders, we identified a key remaining challenge; namely, that DOD lacks a process to assess the TAP experience of National Guard and Reserve members. DOD’s policy generally requires all eligible servicemembers, including members of the National Guard and Reserve, to be exposed to the entire TAP experience even if their circumstances differ. Unlike active duty servicemembers, many members of the National Guard and Reserve hold civilian occupations, and federal law protects their employment rights when they return from active duty. If they can document their civilian employment or acceptance to an institution of higher education or accredited technical training, members of the National Guard and Reserve and other eligible servicemembers can be exempted from attending the DOL employment workshop. Nevertheless, they are generally required to complete pre-separation counseling, the VA benefits I and II briefings and, under DOD policy, participate in the capstone event. Further, the policy states that they must attend the DOD core curriculum and applicable career specific tracks if they cannot meet the career readiness standards associated with these two components.\nHowever, according to many stakeholders that we talked with, including officials from the services and organizations that support members of the National Guard and Reserve and other servicemembers, DOD has not resolved long-standing concerns that eligible members of the National Guard and Reserve attend TAP offerings in locations and on a timetable that diminish their experience. Specifically, given that eligible National Guard and Reserve members generally demobilize at locations where they neither work nor live, they may be distracted by their desire to return home, which can affect how much the training benefits them. Separating servicemembers need to be aware of the benefits and services and know how to access them to take advantage of them, such as the Post-9/11 GI Bill. In a January 2013 report, the Defense Business Board Task Group recommended that eligible National Guard and Reserve members be afforded the opportunity to demobilize and transition in their home unit’s geographical area. According to stakeholders, eligible National Guard and Reserve members also typically have less time to complete the program because they often demobilize more quickly than active duty servicemembers separate. For example, according to DOD’s 2011 Handbook, the Reserve demobilization timeline makes scheduling a pre- separation counseling appointment not later than 90 days prior to leaving active duty impractical for Reserve members.\nAccording to officials from DOD and the services, they took steps to help meet the needs of National Guard and Reserve members eligible for TAP. For example, the agencies tailored the content of TAP components to better suit the needs of National Guard and Reserve members after However, only one analyzing the results of feedback from pilots of TAP.of the steps taken directly addresses the concerns of stakeholders related to the location and timing of TAP. Specifically, eligible members of the Army National Guard are allowed to participate in the DOL employment workshop and the capstone event in their home unit’s geographical area, according to DOD and Army officials. These eligible Army National Guard members will remain on active duty while participating in these two components.\nNonetheless, DOD may not be well positioned to determine whether its actions successfully address the long-standing challenges in designing transition services for the National Guard and Reserve. This is because while DOD collects participant feedback through the online assessment, this tool does not ask whether the timing and location met the needs of servicemembers, including the National Guard and Reserve. Moreover, DOD’s planned survey to active duty servicemembers contains questions about the timing of TAP, but DOD has not drafted similar questions for its survey to the National Guard and Reserve. According to OMB, being able to track and measure specific program data can help agencies diagnose problems, identify drivers of future performance, evaluate risk, support collaboration, and inform follow-up actions. Without a systematic process targeted to identify any remaining long-standing concerns, DOD will not be able to make fully informed decisions about the extent to which eligible members of the National Guard and Reserve reap the full benefits of TAP.",
"Helping servicemembers successfully transition to civilian life after their service ends is an important government goal. The agencies undertook an ambitious effort to redesign the 1990s-era program to provide servicemembers with training and skills to successfully transition to civilian life. The increase in the number of servicemembers attending the revised TAP components, along with the significant coordination effort among multiple agencies and military services, pose significant implementation challenges. Efforts to implement the redesigned program continue to evolve. The importance of serving the ongoing and projected wave of servicemembers departing the military increases the urgency to fully implement TAP components as well as to finalize related policies and procedures. To the extent that the program remains behind schedule in implementing TAP, some transitioning servicemembers may be denied the full benefit of the revamped program. Because TAP is not fully implemented, the full impact of the revamped TAP, particularly the warm handover—a key effort to serve those deemed at greater risk of not being career ready—remains to be seen.\nThe revamped TAP exhibits elements important for the effective implementation and evaluation of the program. Yet, we found room for improvement in several key areas. In particular, while federal law generally requires DOD to mandate participation in the employment workshop and DOD policy requires that all eligible transitioning servicemembers participate in TAP overall, the Navy and the Marines lack the ability to provide unit commanders and their leaders with information on participation levels of servicemembers under their command. Without the capability to gauge and report participation in TAP components by unit commander—those directly responsible for ensuring servicemember participation—leaders may find that holding them accountable is difficult.\nWhile the administration cites the revamped TAP as a key strategy of its crosscutting goal to improve the career readiness of veterans, it may not be positioned to determine the extent to which the program prepared veterans to pursue their post-separation goals. Without a written evaluation strategy that identifies the TAP components to be evaluated and includes the appropriate level and timing of the evaluation methods, the agencies may miss important opportunities to obtain information needed to make fully informed decisions on whether and how to modify TAP and may either over invest or under invest in evaluations.\nThe circumstances of National Guard and Reserve members differ from those of other active duty servicemembers. Many stakeholders have raised concerns that these circumstances diminish eligible National Guard and Reserve members’ TAP experience. Absent efforts to systematically collect information about eligible National Guard and Reserve members’ experiences under the revamped program, DOD may not be well positioned to determine whether there are problems with how TAP is provided to these groups.",
"Based on our review, we recommend that the Secretary of Defense take the following actions: 1. To better ensure servicemember participation in and completion of TAP, direct the Under Secretary for Personnel and Readiness to require that all services provide unit commanders and their leaders information on TAP participation levels of servicemembers under their command, similar to that provided by the Army and Air Force. Such information could be used to help hold leaders accountable for ensuring TAP participation and completion. 2. To provide information on the extent to which the revamped TAP is effective, direct the Under Secretary for Personnel and Readiness to work with the partner agencies to develop a written strategy for determining which components and tracks to evaluate and the most appropriate evaluation methods. This strategy should include a plan to use the results of evaluations to modify or redesign the program, as appropriate. 3. To ensure that decisions about the participation of eligible members of the National Guard and Reserves in TAP are fully informed, direct the Under Secretary for Personnel and Readiness to systematically collect information on any challenges facing demobilizing members of the National Guard and Reserves regarding the logistics of the timing and location to attend TAP. For example, agencies might add questions to their online assessment tool specific to eligible members of the National Guard and Reserves who participate in TAP.",
"We provided a draft of this report to DOD, VA, DOL, and SBA for comment. In its comments, DOD agreed with one recommendation and disagreed with the other two recommendations. VA generally agreed with our findings. Written comments from DOD and VA are reproduced in appendices III and IV. DOL and SBA did not provide comments, but all four agencies provided technical comments, which we incorporated into the final report as appropriate.\nDOD agreed with our recommendation to work with partner agencies to develop a written strategy for determining which components and tracks to evaluate and the most appropriate evaluation methods. DOD stated that it will continue to support interagency collaboration, which, as of January 31, 2014, has been formalized in a memorandum of understanding among the agencies administering TAP.\nDOD disagreed with our recommendation to require that all of the services provide unit commanders and their leaders information on TAP participation levels of servicemembers under their command. DOD stated that we justified the need for a mechanism to ensure a servicemember’s completion of TAP by commander based on concerns that without such a mechanism, commanders will not support the release of servicemembers to attend TAP. DOD also said that these concerns are based on observations that preceded full implementation of the capstone event. In October 2013, DOD launched the capstone as a mandatory process by which commanders verify TAP participation and positively affirm that servicemembers have or have not met career readiness standards. In addition, DOD said that capstone event implementation was accompanied by a communications campaign to inform both commanders and the services’ TAP providers of this key requirement. Finally, DOD said that capstone event completion is monitored departmentwide to ensure compliance.\nWe agree with DOD that departmentwide monitoring of capstone event completion is an important element in helping ensure compliance. However, such monitoring does not provide routine information to commanders and their leaders and not all TAP locations will be monitored routinely. As noted in our report, based on the pilot of the capstone event last fall, DOD reported that ensuring servicemember participation in capstone events was a challenge for most of the services (with the exception of the Air Force), adding that this challenge is possibly due in part to lack of commanders’ support. Commander support for the program has been a long-standing challenge for the program. Therefore, we continue to believe that our recommendation is needed because it would establish an accountability mechanism for TAP that mirrors the level at which responsibility has been assigned. DOD has assigned unit commanders the responsibility of ensuring that eligible servicemembers have full access to and successfully complete required TAP components. Providing information to unit commanders and their leaders on TAP participation levels of servicemembers under their command—similar to that provided by the Army and Air Force—could thus promote accountability and oversight. Servicemember participation in TAP is generally required by law and DOD policy, and also relates to a Cross- Agency Priority Goal, which reinforces the need for an appropriate accountability mechanism.\nDOD also stated that the Navy is funding IT system upgrades to provide the ability to analyze and report program compliance at the command level. DOD added that the Marine Corps has mandated participation since the program's inception, and Marine Corps commanders leverage the capabilities of the personnel system to identify eligible Marines and schedule their TAP attendance. DOD stated that despite the limitations of a data tracking system that underreports compliance figures, the Marine Corps had the highest compliance rate of all services, as of December 2013. DOD said it recommends that department-wide compliance data be allowed to normalize to show true compliance percentages before the services are required to fund and implement expensive systems for the sole purpose of providing an additional mechanism for commander accountability. However, we continue to believe that our recommendation is needed. Three of the services either have or are working to develop the kind of accountability mechanism that we are recommending, but the Marine Corps does not plan to develop such a system. While DOD reports that the Marine Corps has the highest TAP compliance rate of all services, DOD did not provide any data on these rates. Finally, in response to DOD’s recommendation to wait until compliance data normalize, we believe that this would not be appropriate. We do not see any advantage to delaying the implementation of appropriate accountability mechanisms to provide assurance that the ongoing and projected wave of servicemembers departing the military receive the expected level of services from TAP.\nDOD disagreed with our recommendation to systematically collect information on challenges facing demobilizing members of the National Guard and Reserve regarding the timing and location to attend TAP. Specifically, DOD stated that it has long understood that the National Guard and Reserves operate under schedules and logistical constraints that differ from those of active duty servicemembers. DOD stated that several processes (which we note in our report) are already in place to identity and rectify any misalignments between TAP services and the needs of eligible National Guard and Reserve members, including regular coordinating councils that include representation from the National Guard and Reserve and TAP managers, as well as a participant assessment that provides ample opportunity for eligible National Guard and Reserve members to voice concerns. In addition, DOD highlighted the implementation of the military life cycle transition model in which DOD plans to provide the services, including to the National Guard and Reserve, with the latitude to optimize placement of certain elements of TAP throughout a servicemember's military service. According to DOD, the military life cycle transition model may help address some of the challenges related to the timing and location of program delivery. As we note in the report, full implementation of the military life cycle transition model is planned by October 2014.\nNonetheless, at this time DOD is not fully positioned to know whether or not the revamped program addresses the long-standing challenges facing eligible members of the National Guard and Reserve in taking TAP. As we describe in the report, all eligible servicemembers, including the National Guard and Reserve members, have an opportunity to provide feedback about the instruction, content, and facilities for TAP. However, the participant assessment does not ask questions specific to the National Guard and Reserve experience even though they face different circumstances than active duty servicemembers. Given these differences, we continue to believe that unless DOD systematically collects information on any challenges facing eligible members of the National Guard and Reserve, DOD is at risk of not fully knowing whether the revamped TAP addresses long-standing challenges. In addition, the move to a military life cycle transition model could enable active duty servicemembers and members of the National Guard and Reserve to benefit from transition-related assistance throughout their military service. Recognizing that the military life cycle transition model is not implemented and specific policies and plans are not completed, many unknowns remain about how it will work in general and how National Guard and Reserve members will fare specifically. During our review, we asked DOD how this program would work in practice, including for National Guard and Reserve members, but DOD did not provide us details.\nWe are sending copies of this report to appropriate congressional committees; the Secretary of Defense; the Secretary of Veterans Affairs, the Secretary of Labor; the Acting Administrator of the Small Business Administration; and other interested parties. In addition, this report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff members have any questions regarding this report, please contact me at (202) 512-7215 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix V.",
"This appendix summarizes our work to assess efforts to implement and evaluate the revamped TAP.",
"For each of the five elements that we identified as important for the effective implementation and evaluation of TAP, we identified relevant attributes that we used to determine the extent to which the elements were addressed in the revamped TAP (see table 2).\nTo determine the extent to which agencies have addressed each element and attribute, we made our assessments in two steps. First, an analyst reviewed all of the evidence. Based on that review, the analyst documented evidence that conformed to the elements and attributes and made and documented a judgment about the status of these efforts. Then a second analyst separately reviewed the assessment and documented their agreement or disagreement. The two analysts discussed any differences in their assessments and made changes based on their verbal resolution of those differences.\nWe assessed the status of the agencies’ efforts to address each relevant attribute as “completed”, “underway”, or “not completed”. Based on this analysis, we then determined the status of efforts to address each respective attribute overall. For example, for the status of efforts to address an attribute overall to be considered “completed”, efforts to address each relevant attribute had to be completed. For the status of efforts to be considered “underway”, it had to be documented that efforts to address each relevant attribute were progressing toward being finalized, or were a mix of underway efforts and finalized efforts. For the status of efforts to be considered “not completed”, efforts to address at least one relevant attribute were not determined to be finalized or underway.\nWe considered the agency to be “adequately addressing” the element if the overall status of the efforts to address the relevant attributes was determined to be completed or underway. However, if some attributes related to an element had efforts completed or underway to address them, but one or more other attributes did not have efforts completed or underway to address it (them), then we consider the overall efforts to address the element to be “mixed”.\nWe used the following general decision rules for characterizing the status of efforts to address each attribute as “completed”, “underway”, and “not completed”: “Completed” means interagency partners (or relevant agency) have a system, policy, or procedure in place to address a relevant attribute. “Underway” means interagency partners (or relevant agency) have an authoritative internal or public document that demonstrate progress toward implementing actions to address the attribute (e.g., agencies have draft policies, operating procedures, or guidance, or they have interim systems in place and/or are developing systems). “Not completed” means that interagency partners (or relevant agency) have shown little to no action toward implementing actions to address the attribute, meaning they lack an authoritative internal or public document (e.g., no draft policies, operating procedures, or guidance or interim systems).\nAs we conducted this analysis, we kept in mind how far along agencies (mainly DOD and the military services) are in implementing each component of TAP (informed by objective 1). Because agencies were in the process of implementing the revamped TAP and the program was not fully operational at the time of our review, we were not able to determine whether the policies and procedures are in place at all sites or if they are working as intended. Similarly, we were not able to comment on whether the changes to TAP are yielding desired benefits or improvements in outcomes.",
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"Andrew Sherrill, (202) 512-7215 or [email protected].",
"In addition to the contact named above, individuals making key contributions to this report were Patrick Dibattista, Assistant Director; Julianne Hartman Cutts; and James Whitcomb. In addition, key support was provided by James Bennett, Rachael Chamberlin, David Chrisinger, Brett Fallavollita, Alex Galuten, Kathy Leslie, David Moser, and Michael Silver."
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{
"question": [
"How has TAP been implemented?",
"What is missing from these TAP implementations?",
"How are these missing parts proceeding with the program?",
"Why is the TAP evaluation not suitable?",
"What TAP measurements do agencies track?",
"How does this tracking fail to assist more meaningful analysis?",
"How did the agencies defend their use of TAP?",
"What is one of the important challenges of implementing TAP?",
"What differs National Guard and Reserve members from others who use TAP?",
"How does location affect their ability to benefit from TAP?",
"Why can't DOD comment on TAP effectiveness?",
"What is meant to happen for servicemembers in the next few years?",
"How does TAP assist servicemembers?",
"How is TAP being revamped?",
"What is the GAO reviewing surrounding TAP?",
"How is the GAO planning to execute this review?"
],
"summary": [
"The Departments of Defense (DOD), Labor (DOL), and Veterans Affairs (VA) have implemented most of the key components of the Transition Assistance Program (TAP), a gateway to information and services available to servicemembers transitioning to civilian life.",
"However, the agencies are still in the process of implementing other key components of TAP.",
"While originally planned for October 2013, agencies now plan to implement virtually all components by the end of March 2014, with full implementation expected by June 2014.",
"5-Measure performance and evaluate results : The agencies have established certain measures to assess program performance, but their TAP evaluation approach is incomplete.",
"For example, the agencies have established measures to track program outputs, such as the percentage of servicemembers who have participated in TAP.",
"However, the agencies' efforts to evaluate TAP results have focused on basic end-of-course evaluations and gauging servicemembers' readiness prior to separation instead of higher impact program evaluations, such as assessing the effectiveness of TAP on servicemembers 6 months after they have separated from the military.",
"According to agency officials, such evaluations are being considered for certain components of TAP, but they could not provide GAO with a justification for including or excluding specific components of TAP in their evaluation planning efforts.",
"Based on GAO's prior work and according to officials from the agencies and organizations GAO spoke with, a key remaining challenge for TAP may be the unfavorable timing and location of program delivery for National Guard and Reserve members.",
"Unlike active duty servicemembers, National Guard and Reserve members receive TAP services closer to their transition and in locations that are generally neither where they work nor live.",
"As a result, they may be distracted and have less time to benefit from TAP services.",
"DOD is not well positioned to verify these concerns because it is not collecting data about these members' experiences with the timing and location of TAP service delivery.",
"Over the next few years, over a million military servicemembers are expected to transition to civilian life and some may face challenges such as finding employment.",
"To help them, TAP provides departing servicemembers employment assistance and information on VA benefits, among other things.",
"Begun in 2011, efforts to revamp TAP are underway based on the VOW to Hire Heroes Act of 2011 and the administration's recommendations.",
"The act also mandated GAO to review TAP. This report addresses: 1) the status of TAP implementation; 2) the extent to which elements of effective implementation and evaluation of TAP have been addressed; and 3) any challenges that may remain.",
"To do this GAO identified five elements of effective implementation and evaluation based on relevant federal laws and previously established GAO criteria for training programs; reviewed related GAO work; assessed reports, plans, and policies provided by agencies that administer TAP; interviewed officials from entities that support servicemembers and veterans; and conducted four nongeneralizable discussion groups with servicemembers who had taken TAP at three military installations."
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CRS_RL33872
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{
"title": [
"",
"Introduction",
"Background",
"Legislative History of the Refuge",
"Alaska Native Claims Settlement Act",
"Alaska National Interest Lands Conservation Act",
"Chandler Lake Agreement of 1983",
"Other Legislative Actions Prior to the 115th Congress",
"Actions in the 115th Congress",
"The Energy Resources",
"Current Market Conditions: Low Oil Prices Hinder Project Economics",
"Oil Resource Potential",
"Prices Unlikely to Support Natural Gas Development",
"Advanced Technologies in Development and Production",
"Native Interests and Subsistence Uses",
"The Biological Resources",
"Research",
"Polar Bears",
"Issues for Congress",
"Size of Footprints",
"Other Environmental Protections",
"NEPA Compliance and Compatibility Determinations",
"Judicial Review",
"Oil Export Restrictions",
"Special Areas",
"Other Protection Options",
"Conclusion"
],
"paragraphs": [
"",
"The prospect of oil development in the biologically rich ecosystem of the Arctic National Wildlife Refuge (ANWR, or the Refuge), on Alaska's North Slope, has been a focus of the American energy debate ever since oil was discovered on nearby state lands. At the heart of the debate is a part of the Refuge that has potentially significant oil and natural gas resources and also serves as habitat for numerous species, such as polar bears, caribou, waterfowl, and others. The U.S. Fish and Wildlife Service (FWS), within the Department of the Interior (DOI), manages the Refuge and has periodically updated plans to guide its management.\nOn December 22, 2017, President Trump signed into law P.L. 115-97 , which establishes an oil and gas program in the Refuge's Coastal Plain, to be administered by DOI's Bureau of Land Management (BLM). The ANWR provisions were included in tax reform legislation enacted under the budget reconciliation process. The law requires at least two lease sales (of no fewer than 400,000 acres each) for the Coastal Plain within 10 years and contains provisions for the distribution of revenues and royalties. Surface development is limited to 2,000 acres, which need not be concentrated in a single area.\nThe Congressional Budget Office estimated the state and federal revenue from the first two lease sales at approximately $2.2 billion over 10 years (with 50% of revenues—$1.1 billion—going to the State of Alaska and 50% to the federal government). However, once the areas for lease are determined, and depending on the market conditions at the time of the lease sales, the bids the government receives may be higher or lower. Drilling in ANWR, as elsewhere in the Arctic, is a difficult and expensive prospect. A key factor in what companies may bid for leases is the price of oil, which as of January 2018 is relatively low. After acquiring a lease, companies will have to analyze seismic data and drill exploratory wells to determine where oil may be located and estimate amounts in relation to possible revenues, in order to decide if they want to develop any discoveries and produce oil. In addition to the work on hydrocarbon discoveries, moving oil found in ANWR to market will require infrastructure, most likely new pipelines, to transport the oil to shipping terminals and eventually to refineries.\nThe oil and gas program mandated by P.L. 115-97 is similar but not identical to ANWR oil and gas leasing programs proposed in two other bills in the 115 th Congress, H.R. 49 and S. 49 . These bills contain various provisions related to the program that were not included in P.L. 115-97 , possibly owing in part to limitations imposed by the budget reconciliation process on the matters that can be considered in reconciliation legislation. In addition to conducting oversight of the oil and gas program's implementation, Congress could choose to address some of these other issues—such as issues related to environmental compliance, judicial review, and special management areas within the Coastal Plain—in future legislation, or it could decide that the provisions of P.L. 115-97 provide sufficient guidance for the program. By contrast, two other bills in the 115 th Congress, H.R. 1889 and S. 820 , would establish the Coastal Plain as wilderness, meaning there would be no commercial development, except to meet the minimum requirements for managing the area as wilderness. Such a designation would be consistent with recommendations in the Obama Administration's Revised Comprehensive Conservation Plan and Final Environmental Impact Statement (RCCP) for ANWR, finalized in January 2015.\nThis report discusses the Refuge's legislative history (including Native claims and congressional actions from the 109 th to the 115 th Congresses), energy resources (including relevant market forces and potential oil and gas resources), Native interests and subsistence uses, and biological resources, as well as issues for Congress related to development under P.L. 115-97 .",
"ANWR, established by the Alaska National Interest Lands Conservation Act of 1980 (ANILCA; P.L. 96-487 , 43 U.S.C. §§1601 et seq.), consists of 19 million acres in northeast Alaska. It is administered by FWS within DOI. Development proponents view its 1.57-million-acre Coastal Plain—also known as the 1002 Area—as a promising onshore oil prospect. According to the U.S. Geological Survey (USGS), the mean estimate of technically recoverable oil from multiple prospects on the federally owned land in the Refuge is 7.7 billion barrels (billion bbl); there is a low probability that more than 11.8 billion bbl could be recovered on the federal lands over the life of the prospective fields. (In comparison, the United States currently uses about 7.1 billion bbl per year; see \" Oil Resource Potential .\")\nThe amount that can be recovered depends, in part, on the economics of the oil market. When oil prices are high, more oil will be economic to produce; when oil prices are low, less oil will be economic to produce. Since January 2014, oil prices have dropped by almost 40%, going from an average of $94.60/bbl to $60.37/bbl in the beginning of January 2018. For all of 2017, nominal prices ranged from a high of $60.46/bbl to a low of $42.48/bbl. In 2005, in the most recent analysis available on ANWR, when oil was priced at $67.65/bbl in 2017 dollars, the mean estimate of economically recoverable oil on the federal lands in the 1002 Area was 7.1 billion bbl, and there was a small chance that the federal lands could have had more than 10.7 billion bbl of economically recoverable oil. (See box, \"Old Geological Data, Old Prices, and New Interest,\" on use of older data.) In comparison, the single giant field at Prudhoe Bay, Alaska, discovered in 1967 on the state-owned portion of the coastal plain located west of ANWR (shown in Figure 1 ), is now estimated to have held almost 14 billion bbl of economically recoverable oil. The available information and analysis indicates that any ANWR oil would be scattered among multiple smaller fields rather than concentrated in a single large field, which would make development more expensive and potentially expand the area in which any environmental effects might occur.\nCongress's decision in P.L. 115-97 to open the federal lands on ANWR's Coastal Plain to energy development also opens the Coastal Plain's Native lands, based on current law. (See \" Alaska Native Claims Settlement Act \" and \" Chandler Lake Agreement of 1983 .\") In addition, development in the Coastal Plain may make nearby state lands along the coast (already legally open to development) more economically attractive to industry for exploration and development. Together, the federal, state, and Native ownerships likely have multiple individual fields with oil potential. Although only fields on the federal lands would produce federal revenue from bonus bids, royalties, and rents, the 2005 USGS figures show that when state and Native lands also are considered, the mean estimate of economically recoverable oil rises from 7.1 billion bbl to 9.7 billion bbl. In addition, there is a small chance that the three ownership areas might contain more than 14.6 billion bbl of economically recoverable oil (as opposed to the high-end estimate of 10.7 billion bbl for federal lands alone), if oil is priced at $67.65/bbl in 2017 dollars. (See box, \"Old Geological Data, Old Prices, and New Interest,\" for a discussion of the use of old data and old prices, and see section on \" Oil Resource Potential \" for further discussion of prices.)\nThe Refuge, especially the nearly undisturbed coastal plain, is home to a wide variety of plants and animals. The presence of caribou, polar bears, grizzly bears, wolves, migratory birds, and other species in this wild area has led some to call the area \"America's Serengeti.\" (See \" The Biological Resources .\") Several species found in the area (including polar bears, caribou, migratory birds, and whales) are offered certain limited protections through international treaties or agreements. In the past there have been proposals that the Refuge and two neighboring parks in Canada join to form an international park, with prohibitions on oil exploration and development.\nThe analysis below discusses the legislative history of the Refuge; the economic and geological factors that have triggered interest in development; the Native interests in the area; biological and environmental quality factors; and ongoing issues for Congress.",
"The balance between oil and natural gas development and the preservation of biological resources of northern Alaska has been controversial for decades, even before Alaska became a state. In 1943, the federal government withdrew all lands on the North Slope (the land north of the crest of the Brooks Mountain Range and between Canada and the Chukchi Sea) by Public Land Order (PLO) 82 to prevent certain types of development. In November 1957, Interior Secretary Fred Seaton filed a document protecting some of those lands (plus some additional lands south of the crest of the Brooks Range) for the benefit of wildlife and migratory birds. Alaska was admitted to the Union in 1959. In 1960, PLO 2214 reserved the 1957 segregated area as the Arctic National Wildlife Range. The PLO withdrew the lands from \"all forms of appropriation ... including mining but not the mineral leasing laws,\" thus leaving oil and natural gas development as a possibility.\nDespite these withdrawals, not all of the Refuge is owned by the federal government. The history of ANWR (and its energy development restrictions) is intertwined with congressional efforts to settle land claims of Native Alaskans. As part of those efforts, some ANWR property was transferred to Native corporations. The next section provides a short history of those transfers to help explain the restrictions on development prior to enactment of P.L. 115-97 .",
"In 1971, Congress enacted the Alaska Native Claims Settlement Act (ANCSA) to resolve Native claims against the United States. One purpose of ANCSA was to distribute land to Native corporations, which were created in the act. Native village corporations (for example, the Kaktovik Inupiat Corporation, based at the northern shore of the coastal plain of the Refuge) usually were entitled under the terms of ANCSA to select the surface estate of lands; they received the surface estate of approximately 22 million acres of land that had been held by the federal government. Native regional corporations (for example, the Arctic Slope Regional Corporation, covering the area north of the Brooks Range from the Chukchi Sea to Canada) were entitled to the selected subsurface estate, meaning they got the mineral rights. Usually the regional corporations could receive the lands beneath the village corporations in their area, but subsurface lands beneath pre-1971 refuges were not available, so other lands were substituted for them. ANCSA Section 22(g) also provided that surface lands that were conveyed within a refuge created before 1971 were subject to that refuge's regulations. The restriction on subsurface selections and Section 22(g) limited Native claims regarding oil development.",
"In 1980, Congress enacted the Alaska National Interest Lands Conservation Act (ANILCA), which expanded the Arctic National Wildlife Range to the south and west by 9.2 million acres of public domain lands and renamed it the Arctic National Wildlife Refuge. (See Figure 2 .)\nANILCA Section 702(3) designated 8 million acres of the original Wildlife Range as a wilderness area. The remainder of the original refuge, defined in Section 1002 of ANILCA as the Coastal Plain and constituting 1.57 million acres, was not included in the wilderness designation. Debate over use of the area was intense, with one group favoring wilderness designation and another group (led by Alaska's two Senators at the time) favoring energy development. Instead, Congress postponed decisions on the development or further protection of the Coastal Plain. Section 1002 of ANILCA directed that all of the resources of the Coastal Plain be studied. (This section is the reason this part of ANWR is also referred to as the 1002 Area .) That study by DOI was completed in 1987 and is known as the 1002 report or the Final Legislative Environmental Impact Statement (FLEIS). The 1002 report recommended full energy development.\nFor the future of the 1002 Area, the most significant aspect of ANILCA was Section 1003. This section prohibited oil and natural gas production in the Refuge as a whole, as well as \"leasing or other development leading to production of oil and natural gas from the range\" unless authorized by an act of Congress.",
"In 1983, a further complication was added to energy development in ANWR. As allowed by ANCSA, the Kaktovik Inupiat Corporation (KIC) previously had selected the surface estate of certain lands near the northern boundary of the Refuge. These selections amounted to three townships. Because the Refuge was created before ANCSA, the Arctic Slope Regional Corporation (ASRC) was prohibited from taking title to the subsurface estate of those lands. ANILCA, in its definition of the 1002 Area, excluded these three townships even though, in a geographic sense, they are within the coastal plain north of the Brooks Range. ANILCA further authorized KIC to select more lands within the 1002 Area, as defined. These additional lands totaled approximately 19,588 acres. Together with the three townships, the KIC surface estate in ANWR totaled more than 92,000 acres (about four townships of land), although much of the total is defined as out of the Coastal Plain. (In addition, there are at least eight individually owned Native allotments within the Coastal Plain that, together with the KIC lands, total nearly 100,000 acres.)\nThen, in 1983, an agreement between the United States and ASRC, known as the Chandler Lake Agreement (or sometimes the 1983 Agreement ), gave ASRC title to the subsurface estate beneath those KIC surface lands, even though the KIC lands all fall in a refuge area created before ANCSA. The 1983 Agreement prohibited development of the ASRC lands in ANWR unless Congress opened ANWR, as Congress did in December 2017 in P.L. 115-97 . The opening of ANWR for energy development could affect not only subsurface but also surface Native lands, to the extent that they may be available for storage, staging, and other development activities. The Native lands are not subject to the limitation in P.L. 115-97 on the maximum number of surface acres that may be developed (see \" Size of Footprints \").",
"This section focuses on more recent actions, beginning with the 109 th Congress. The ANWR debate in the 109 th Congress included reconciliation bills ( S. 1932 and H.R. 4241 ) under the budget process, which cannot be filibustered, and other bills ( H.R. 6 , an energy bill; H.R. 2863 , Defense appropriations; and H.R. 5429 , a bill to open the Refuge to energy development). These bills would have provided for an expedited opening of the Refuge to development to address national energy needs. Two bills ( H.R. 567 and S. 261 ) would have designated the area as wilderness. In the end, the 109 th Congress did not enact any changes to ANWR.\nIn the 110 th Congress, a concurrent resolution ( S.Con.Res. 70 ), which was rejected by the House, would have adjusted budget levels to assume increased revenues from opening ANWR to leasing and exploration. The Senate rejected S.Amdt. 4720 to S. 2284 , which would have opened the Refuge to energy development. A number of other bills to open the 1002 Area to development also were introduced. Two bills ( H.R. 39 and S. 2316 ) would have designated the area as wilderness. In the end, the 110 th Congress did not send any bill with ANWR provisions to the President.\nIn the 111 th Congress, 17 bills concerning the Refuge were introduced, but none was reported by committees in either the House or Senate.\nOne bill regarding the Arctic Refuge— H.R. 3407 —was reported from committee during the 112 th Congress. Under its provisions, the Coastal Plain would have been opened to energy leasing, with BLM as the lead agency. H.R. 3407 would have required the Secretary of the Interior to administer the leasing program so as to \"result in no significant adverse effect on fish and wildlife, their habitat, and the environment, [and to require] the application of the best commercially available technology\" for energy exploration, development, and production. The bill also would have required that this program be administered to ensure \"the receipt of fair market value by the public for the mineral resources to be leased,\" and would have limited the surface area covered by specified facilities to 10,000 acres per 100,000 acres of leased area. Other provisions included requirements for mitigation, limits to the venue and scope of legal challenges, stipulations regarding the development of regulations, prohibitions on public access to service roads, and other transportation restrictions. The bill would have allocated 50% of revenues from bonus bids, royalties, and rents to the U.S. Treasury. Two other bills ( H.R. 139 and S. 33 ) that would have designated the area as wilderness were not reported during the 112 th Congress.\nIn the 113 th Congress, 15 bills relating to the Arctic Refuge were introduced, including 13 promoting development in some form and 2 promoting wilderness designation. No bills were reported by House or Senate committees during the 113 th Congress.\nDuring the 114 th Congress, the Obama Administration approved the RCCP for ANWR. The RCCP recommended that Congress designate the Coastal Plain of the Refuge as wilderness. Under the Wilderness Act, a \"recommendation of the President for designation as wilderness shall become effective only if so provided by an Act of Congress.\" Two amendments ( H.Amdt. 577 and H.Amdt. 1355 , both to H.R. 2822 , providing for Appropriations for Interior and Related Agencies) were approved by the House to prohibit use of funds to implement the RCCP. Neither became law. An amendment ( H.Amdt. 961 to H.R. 2406 ) to designate the Coastal Plain as wilderness failed in a recorded vote. There were four other bills promoting development in some form and two promoting wilderness designation, but no bills were reported by House or Senate committees.",
"On December 22, 2017, President Trump signed into law P.L. 115-97 , which directs the Secretary of the Interior, acting through BLM, to establish and administer a competitive program for the leasing, development, production, and transportation of oil and gas in and from ANWR's Coastal Plain. The legislation amends ANILCA to provide that Section 1003, which prohibited oil and gas development in ANWR unless authorized by Congress, does not apply to the Coastal Plain. It also amends ANILCA to add, as a Refuge purpose, \"to provide for an oil and gas program on the Coastal Plain.\"\nP.L. 115-97 directs BLM to manage the oil and gas program on the Coastal Plain in a manner similar to the administration of lease sales under the Naval Petroleum Reserves Production Act of 1976 (NPRPA; 42 U.S.C. §§6501 et seq.) and associated regulations, except as otherwise provided. The NPRPA provided for competitive oil and gas leasing in the National Petroleum Reserve in Alaska (NPR-A), subject to certain conditions and restrictions. The regulatory framework for the NPR-A (43 C.F.R. §§3130, 3137, 3150, 3152, and 3160) includes requirements for leasing terms, bonding, environmental obligations, and many other activities associated with oil and gas development.\nThe law requires at least two area-wide lease sales in the Coastal Plain. An initial lease sale is required within four years of the bill's enactment, and a second lease sale is required within seven years of enactment. Separately, other bill provisions require that these two lease sales be conducted within 10 years of the bill's enactment. Each ANWR lease sale must offer at least 400,000 acres and must include those areas with the highest potential for discovery of hydrocarbons.\nThe law sets the royalty rate for ANWR oil and gas leases at 16.67%. It directs that 50% of revenues derived from oil and gas leases on the Coastal Plain (including royalties, rents, and bonus bids) are to be distributed to the State of Alaska, with the remaining 50% deposited into the U.S. Treasury as miscellaneous receipts. This split differs from the standard revenue arrangement for Alaska established by the Mineral Leasing Act of 1920 (MLA), under which the State of Alaska typically receives 90% of the revenue from federal onshore oil and gas leases within the state, with 10% deposited in the Treasury as miscellaneous receipts.\nH.Rept. 115-97 authorizes up to 2,000 surface acres of federal land on the Coastal Plain to be covered by production and support facilities. For further discussion, see the section of this report on \" Size of Footprints .\"\nOther bills to promote development in the 1002 Area ( H.R. 49 and S. 49 ) have been introduced in the 115 th Congress, but have not received floor consideration. Two bills that would designate the 1002 Area as wilderness— H.R. 1889 and S. 820 —have also been introduced.",
"The developed parts of Alaska's North Slope suggest promise for energy prospects in the adjoining ANWR. Petroleum-bearing strata extend eastward from structures in the National Petroleum Reserve-Alaska through the Prudhoe Bay field, and they may continue into and through ANWR's 1002 Area. (See Figure 3 and Figure 5 .) Both changing prices and changing costs affect oil and natural gas prospects. New technologies may help alleviate some environmental concerns. However, production issues in some North Slope fields have raised doubts about ANWR's potential for oil and natural gas resource development. Any ANWR resources would be expensive to produce and would require construction of new infrastructure, such as pipelines and processing units, due to location and environmental conditions.",
"The United States consumed approximately 19.8 million barrels per day (million bbl/day) of oil in the first 10 months of 2017, which includes petroleum products that may have been exported. Of that, 10.6 million bbl/day came from imported sources of oil and 9.2 million bbl/day was produced domestically, with the difference being made up by the refining process. Production from Alaska accounted for about 0.49 million bbl/day, or 2.4% of U.S. consumption. Alaskan oil production, the bulk of which is from the North Slope, has been in decline since peaking in 1989.\nWhether oil is produced domestically or imported, it is traded in a global market, and any one part of the market can affect other parts. The result is that oil prices are set by world markets. Figure 4 shows the interconnectedness of crude oil prices in the United States and international markets. Starting in 2010, the demand for oil increased as the global economy improved and put upward pressure on oil prices. Political unrest in the Middle East and North Africa also pushed prices up for a time, though short of an earlier peak in 2008. However, since May 2014, world oil prices have dropped significantly, and companies have been cutting back on capital expenditures and postponing the development of some relatively more expensive projects.\nSome oil companies' interest in ANWR likely decreases as oil prices are low, whereas other companies may maintain capital budgets for exploration and development in high-cost areas. Sustained low oil prices make development of more expensive oil resources less economically feasible. Even the outlook of sustained low oil prices will prompt companies to reconsider their resource development plans and capital budgets, as has been seen with current oil prices. Additionally, the smaller fields thought to be present in the 1002 Area might be less attractive if prices are low.",
"Estimates of ANWR's oil potential are based on limited data and numerous assumptions about geology, economics and, in part, climate. Early attention focused on the northern and eastern parts of the 1002 Area. Since the 1990s, interest has shifted to parts of the 1002 Area west and north of the Marsh Creek anticline, roughly a third of the 1002 Area. (See Figure 5 .) The shift was driven mainly by a reevaluation of geological data from nearby formations.\nThe amount that would be economically recoverable depends in part on the price of oil. In its last economic assessment in 2005, USGS estimated that, at $67.65/bbl in 2017 dollars, there is a 95% chance that 4.0 billion bbl or more could be economically recovered and a small (5%) chance that 10.9 billion bbl or more could be economically recovered on the federal lands on the Coastal Plain; the mean was 7.3 billion bbl. These estimates reflected newer field development practices and cost and price changes, since USGS's 1998 assessment. Prices in January 2017 averaged between $50 and $55/bbl. If low prices are sustained over the long term, the estimates of economically recoverable oil could be less than the 2005 estimate.\nAbout one-third more oil may be under adjacent state waters and Native lands than is available in the 1002 Area alone. The state waters adjacent to the 1002 Area are far from any support system or land-based development, and any oil or natural gas that may be under them currently likely would not be economic to produce at current prices. To the extent that onshore development occurs under P.L. 115-97 , leases in state waters could benefit from onshore transportation systems (airstrips, haul roads, pipelines, etc.) and supply bases (gravel mines, water treatment plants, staging areas, etc.), and these areas might become more attractive to industry. In addition, lifting the statutory prohibition on oil and natural gas development in the Refuge not only lifts the ban on Native lands but also may make smaller fields on Native lands more attractive, if they are able to share facilities with nearby development or if they become preferred locations for support facilities due to fewer restrictions on surface development.",
"USGS has projected that in addition to oil, large quantities of natural gas may be found in the Coastal Plain, as in other areas on the North Slope. Unlike oil, the United States imports very little natural gas (about 12% of consumption in 2016, mostly from Canada). Prices for natural gas are more regionally based than oil, and with ample supplies, the United States has experienced relatively low prices over the last nine years compared to other parts of the world.\nCurrent North American natural gas prices likely would not support building the infrastructure, including a pipeline that would be required to transport ANWR natural gas to the lower 48 states or Canada. Globally, natural gas prices tend to be linked to oil prices, which have fallen since July 2014 by about 40%, making additional U.S. exports of liquefied natural gas (LNG) less economically attractive. Low prices present an economic obstacle to developing ANWR's natural gas resources as well as those in the rest of northern Alaska. Natural gas prices in the United States, on average, are projected to stay relatively low compared to most other fuels for the rest of the decade and beyond. The State of Alaska, through the Alaska Gasline Development Corp., has taken over as the lead developer of a project to export North Slope natural gas after partners Exxon Mobil, BP, and ConocoPhillips backed out. If completed, the project, which is in its early stages of development, would consist of gas processing facilities on the North Slope, an 800-mile pipeline, and a liquefaction facility for export. The estimated cost is between $45 billion and $60 billion.",
"The cost of operating oil and natural gas facilities in Arctic conditions is higher than the industry costs in other parts of the United States, in part due to the remoteness of the area. According to the American Petroleum Institute, in 2014 the average cost per well onshore and offshore in Alaska was 38% higher than the average cost per well onshore and offshore in the lower 48 states. This cost differential highlights the difficulties and challenges of producing oil and natural gas in Arctic conditions and the need for substantial finds of oil and natural gas to cover the higher costs. The presumed dispersed nature of ANWR's oil and natural gas resources may make development especially costly to pursue. Environmental concerns also have prompted companies to reduce their footprint in the region, which has resulted in smaller production sites, among other changes.\nReducing the footprints of development has been a major goal of industry, partly in an effort to reduce environmental impacts and associated costs. As North Slope development proceeded after the initial discovery at Prudhoe Bay, oil field operators developed less environmentally intrusive ways to develop Arctic oil, primarily through innovations in technology. New drill bits and fluids and advanced forms of drilling—such as extended reach, horizontal, and \"designer\" wells—permit drilling to reach laterally far beyond a drill platform. Advanced drilling technologies are commonly more costly than simpler techniques.\nIn the 1002 Area, ice-based transportation infrastructure may be modified or limited because of safety concerns resulting from the rolling terrain. Normally, ice-based infrastructure can serve remote areas during the exploratory drilling phase on ice roads and on insulated ice pads at the drill site. During exploration, drilling pads made of ice are approximately 3-10 acres in size. During the production phase, pads are built of gravel and can double in area. Pads are not regularly staffed during the production phase, and they are feasible when linked to larger pads providing worker housing, equipment storage and maintenance facilities, airfields, and other production support. The linkage may be by road or small airfields, which provide access for periodic maintenance or servicing.\nAlthough oil and natural gas development is becoming more dependent on ice roads and pads in some areas of Alaska, by 2007 warming trends in Arctic latitudes shortened heavy equipment winter access across the tundra by more than 50% and led to changes in the standards for use of ice roads. Industry has responded by creating new technologies to begin construction of ice roads earlier in the winter, using different kinds of vehicles. Over the long term, if warming trends continue, heavy reliance on ice technology could be reduced further and might force greater reliance on gravel structures, with inherently longer-lasting impacts and higher costs. Rigid adherence to ice technology (instead of more expensive gravel construction) might put some marginal fields out of reach due to the shorter drilling season, or difficult terrain. Companies have taken steps to adapt to the changing conditions, in some cases using two drilling rigs, starting ice road construction from both ends simultaneously, using aircraft to reach remote sites, and prepositioning equipment and materials so that tasks can be accomplished more quickly during the shorter winter season. Nevertheless, it is expected that projects such as the development of ANWR would need to adapt to a shorter development and maintenance season.\nBetter development and operating technologies compared to older technologies could reduce or mitigate some environmental impacts of petroleum operations, although they would not eliminate them entirely. Advocates of wilderness protection maintain that facilities of any size will still be industrial sites and will change the character of the Coastal Plain, in part because the sites will be spread out in the 1002 Area and connected by pipelines and probably roads.",
"The Native community, both between and within its villages and organizations, is divided on the question of energy development in the Refuge, but some patterns can be discerned. Generally, the Alaska Natives along the North Slope (Inuit) have supported ANWR development, whereas the Natives of interior Alaska (Gwich'in) have opposed it, though neither group is unanimous. Some parts of the Native community are heavily dependent for their subsistence uses on the caribou herd that calves in the 1002 Area, and because of the lengthy migration of the caribou herds, this dependency is an important factor for them even if they live at a considerable distances from the coastal plain. Seeing energy development as a threat to the safety or success of calving season, these groups have opposed drilling the Refuge. Among these opponents are most members of the Gwich'in tribe, whose members are found both south and east of the Refuge in Alaska and Canada.\nAmong the Native groups supporting ANWR development are the Arctic Slope Regional Corporation (ASRC) and Doyon Limited (both Native regional corporations) and the Native Village of Kaktovik (a Native organization in Kaktovik, the only town within the coastal plain of ANWR). The chief arguments cited by these groups are the increases in both North Slope employment and revenues from increased business activity. According to ASRC, Chevron Texaco and BP currently hold leases to all of the ASRC/KIC acreage within the ANWR coastal plain. Many Native supporters argue that development and production practices can be carried out so as to avoid damage to the caribou that calve in the area.",
"The 1002 report, issued in 1987, rated the Refuge's biological resources highly—\"The Arctic Refuge is the only conservation system unit that protects, in an undisturbed condition, a complete spectrum of the Arctic ecosystems in North America.\" It also stated that \"[t]he 1002 area is the most biologically productive part of the Arctic Refuge for wildlife and is the center of wildlife activity.\" The biological value of the 1002 Area rests on intense productivity in the short Arctic summer; many species arrive or awake from dormancy to take advantage of this biological richness and leave or become dormant during the remainder of the year. Caribou have long been the center of the debate over the biological impacts of Refuge development. Among the other species most frequently mentioned are polar bears (which were listed under the Endangered Species Act [ESA] as threatened in 2008), musk oxen, and the 135 species of migratory birds that breed or feed there. In addition, the effects of energy development on marine mammals (many of which are protected under the ESA and all of which are protected under the Marine Mammal Protection Act) could become an issue if expanded infrastructure development onshore made nearby offshore development more economically attractive.",
"The Biological Resources Division of USGS published an assessment of the array of biological resources in the coastal plain in 2002. The report analyzed information about caribou, musk oxen, snow geese, and other species in the Refuge, and it concluded that development impacts on wildlife would be significant. A subsequent memorandum on caribou by one of the assessment's authors clarified that if development were restricted to the western portion of the Refuge (an option being considered at that time by the George W. Bush Administration), the Porcupine caribou herd would not be affected during the early calving period, since the herd is not normally found in the area at that time.\nA 2017 update of the 2002 report analyzed new research on caribou, polar bears, musk oxen, and environmental conditions, among other topics. Research in the last 15 years has shown a continued warming trend with associated effects on wildlife, though no significant changes in vegetation quality and quantity. Research on specific species has shown that polar bears have become more dependent on onshore habitat for denning purposes and that the number of musk oxen has decreased in the 1002 Area. Caribou herds, including the Porcupine and Central Arctic herds, have continued to be documented to use the calving grounds in the 1002 Area, but this use has been variable between years.\nSeparately, a 2003 report by the National Research Council (NRC) highlighted impacts of existing development at Prudhoe Bay on Arctic ecosystems. NRC noted harmful environmental impacts, including changes in the migration of bowhead whales, in distribution and reproduction of caribou, and in populations of predators and scavengers that prey on birds. NRC also credited industry for its strides in decreasing or mitigating environmental impacts. NRC cited some beneficial economic and social effects of oil development in northern Alaska, although it also said that some social and economic impacts have been harmful. The NRC report specifically avoided determining whether beneficial effects were outweighed by harmful effects.\nIndustry supporters contend that impacts on wildlife can be reduced or mitigated by various measures. Among these are (1) restricting activities at the exploration phase to the winter season, with maximum use of ice roads and ice platforms; (2) careful placement of gravel roads and platforms to minimize wetlands disturbance; (3) re-injection of wastes below the permafrost layer; (4) limiting human access to the oil field; (5) management of garbage to avoid build-up of scavenger populations; (6) reducing the footprint of development; and (7) other measures already in effect in current oil fields. Supporters also contend that improvements in production technology will result in significantly reduced environmental impacts, helping to minimize the footprint of oil and gas production activities. Under P.L. 115-97 , oil and gas activity in the 1002 Area will still be subject to environmental regulations, including NEPA.",
"In 2008, FWS listed polar bears as threatened under the ESA. The primary factors in listing the species were the effect of accelerated polar climate change on polar bears and their prey (primarily seals) and the effects of oil and natural gas development. The ESA prohibits activities that harass or harm listed species. The listing of polar bears could have a significant impact on energy development in ANWR, because the 1002 report stressed the unusual importance of the 1002 Area as a location for dens of pregnant female polar bears. (See Figure 6 .) Female polar bears are known to abandon their dens when disturbed. If the cubs are young and unable to maintain their body temperature, abandonment of a den would probably be fatal. The arguments against listing, as cited by FWS in the final rule to list the species, included observations that the species was increasing in population in some parts of the Arctic; the possibility that some species of seals (a common prey for polar bears) might increase; questions concerning the accuracy of climate models as they might affect population levels of the species; and claims that existing regulations were adequate to maintain population levels. FWS analyzed these arguments, holding that, on balance, the species warranted listing as threatened throughout its range.\nIn 2010, FWS established a wide area in northern Alaska, including the 1002 Area and a considerable area offshore, as critical habitat under ESA for polar bears. The designation could provide a stronger role for the ESA in shaping any federal agency activities, such as energy development, that may take place in critical habitat. Under ESA, federal agencies must avoid actions that jeopardize listed species or that destroy or adversely modify their designated critical habitat. The action agency must consult with FWS (or the National Marine Fisheries Service for some species) to determine whether such jeopardy or destruction might occur. If there is such a risk, the action agency must modify the action to reduce the risk. Scientists also cite research on the risk to polar bears from changing sea ice conditions off the coast of Alaska: many female polar bears have responded to thinning or vanishing offshore ice by moving more of their dens to locations onshore, and many females that historically denned on land to the west of Prudhoe Bay have moved their dens to the east, into or nearer the Refuge. This shift could increase the importance of the Refuge's coastal plain to the polar bear population and add to the significance of consultation under ESA in any federal action related to exploration.",
"The basic and most contentious ANWR question for Congress has been whether to permit energy development in the Coastal Plain. P.L. 115-97 addressed the question by establishing an oil and gas program for this area (see \" Actions in the 115th Congress \"). Earlier legislative proposals had ranged from those to designate the Coastal Plain as wilderness or a national monument to those to allow partial or full development.\nIn the context of oversight of the implementation of the ANWR provisions in P.L. 115-97 , or in the context of debate over other bills that would address ANWR, Congress may continue to be interested in key aspects of the ANWR debate that have been raised previously. These could include issues related to limits on the footprint of development, other environmental protections, compliance with the National Environmental Policy Act (NEPA), judicial review of legal challenges, and treatment of special areas within the Coastal Plain, among other matters. P.L. 115-97 addressed some of these issues and not others, possibly owing in part to limitations imposed by the budget reconciliation process on the matters that can be considered in reconciliation legislation. Congress could choose to address some of these issues in future legislation and oversight or could decide that the provisions of P.L. 115-97 already provide sufficient guidance for the program.",
"Newer technologies permit greater consolidation of leasing operations, which tends to reduce the size and environmental impacts of development. Since the 1980s, an element of the ANWR debate in Congress has been the size of the footprints—or physical area—in the development and production phases of energy leasing. For over a decade, development bills for ANWR have proposed a 2,000-acre limit on the acreage of surface disturbance. Development proponents contend that the limited footprint will preserve the Coastal Plain's environment and wildlife, while opponents express concern that even with the limitation, drilling infrastructure and associated human activity will have adverse wildlife impacts, such as deterring caribou cows from calving in the area.\nSimilar to earlier bills, P.L. 115-97 directs the Secretary to authorize up to 2,000 surface acres of federal land on the Coastal Plain to be covered by production and support facilities. (This 2,000-acre limit does not appear to apply to Native surface lands on the Coastal Plain owned by the Kaktovik Inupiat Corporation or through individual Native allotments.) Bill provisions specify that \"airstrips and any area covered by gravel berms or piers in support of pipelines\" are included in the 2,000-acre limit. It is unclear whether other potential disturbances—for instance, temporary roads or areas under a pipeline that might be temporarily disturbed during construction—would be included within the limit.\nThe law does not require the development facilities to be concentrated in a single 2,000-acre area. Development facilities likely would have to be dispersed, because one single consolidated facility of 2,000 acres (3.1 square miles) would not permit full development of the 1002 Area. Dispersal is necessary due to the limits of lateral (or extended-reach) drilling. However, the location and dispersal of any potential oil and natural gas in ANWR is unknown.\nAlthough the cost of lateral drilling has declined somewhat, it remains more expensive than simpler methods. As a result, adherence to the 2,000-acre limit could make some marginal fields uneconomic or inaccessible. If so, a future policy choice could be between not developing such fields and expanding the allowed limit on the footprint of development.",
"Both H.R. 49 and S. 49 in the 115 th Congress would provide environmental protections in addition to the 2,000-acre surface development limitation. These include, among others, requirements to ensure, to the maximum extent practicable, that oil and gas exploration, development, and production activities on the Coastal Plain will result in no significant adverse effect on fish and wildlife, their habitat, subsistence resources, and the environment; requirements for site-specific analyses of the probable environmental effects of individual drilling proposals and for mitigation plans to avoid significant adverse effects; and requirements to apply the best commercially available technology for all new exploration, development, and production operations. These provisions were not part of P.L. 115-97 .",
"NEPA requires the preparation of an environmental impact statement (EIS) to examine major federal actions with significant effects on the environment and to provide the opportunity for public involvement in agency decisions. The last full EIS examining the effects of development in ANWR was the 1002 report, which was completed in 1987. NEPA requires an EIS to analyze an array of alternatives, including a no-action alternative—a process that can take years for complex or controversial actions. To hasten development in ANWR, some bills, including H.R. 49 in the 115 th Congress, have stipulated that the 1002 report of 1987 would be considered as satisfying NEPA requirements. Other bills, including S. 49 in the 115 th Congress, have provided that prelease and initial leasing activities would not be considered as major federal actions requiring NEPA review, or have made other provisions to expedite NEPA review for all or part of the program. P.L. 115-97 did not contain provisions explicitly addressing NEPA review.\nP.L. 115-97 did address a separate issue—that of the compatibility of oil and gas activities with refuge purposes. Under authorities for the management of national wildlife refuges in general and Alaskan refuges specifically, an activity may be allowed in a refuge only if it is compatible with the purposes of the particular refuge and with those of the National Wildlife Refuge System as a whole. Some past bills have stated that the energy leasing program and activities in the 1002 Area would be deemed to be compatible with the purposes for which ANWR was established and that no further findings or decisions would be required to implement this determination. P.L. 115-97 does not contain such language but amends ANILCA to add, as a purpose of the Refuge, \"to provide for an oil and gas program on the Coastal Plain.\"",
"The expediting, curtailing, or prohibiting of judicial review could help to achieve the goal of putting an ANWR leasing program in place promptly. The counterargument raised in such discussions is that the prospect of judicial review leads to better decisionmaking by the agency and that judicial review provides the opportunity to correct any errors. H.R. 49 and S. 49 in the 115 th Congress would expedite judicial review by reducing the time limits within which suits must be filed and limiting the venue and scope of the review. P.L. 115-97 does not contain provisions concerning judicial review.",
"Export of North Slope oil in general, and any ANWR oil in particular, has been an issue, beginning with the authorization of the Trans Alaska Pipeline System. The Trans Alaska Pipeline Authorization Act specified that oil shipped through the pipeline could be exported internationally, but only under restrictive conditions. In the mid-1990s, high volumes of Alaskan oil that could legally be shipped only to the four Pacific states resulted in falling oil prices on the West Coast. As California prices fell below the world market in the mid-1990s, there were complaints from both North Slope and California producers. Congress responded by amending the Mineral Leasing Act to provide that oil transported through the pipeline may be exported unless the President finds, after considering specified criteria, that exports are not in the national interest. North Slope exports rose to a peak of 74,000 bbl per day in 1999, or 7% of North Slope production. These exports ceased voluntarily in May 2000 as West Coast buyers had to pay world prices to compete with foreign buyers for Alaskan oil. The first crude export cargo from the North Slope in a decade left Alaska in September 2014 destined for South Korea. Since 2014, additional cargos of Alaskan crude oil have been exported, with total Alaskan crude exports for 2016 at about 3 million barrels or 8,400 bbl per day.\nIn the 115 th Congress, H.R. 49 would prohibit the export of oil and gas produced under ANWR leases. No such provision was included in P.L. 115-97 .",
"Within the context of development, and beginning with the 1002 report, there has been consideration of setting aside certain small portions of the 1002 Area to protect specific ecological or cultural values. This could be done by designating the areas specifically in legislation or by authorizing the Secretary of the Interior to set aside areas to be selected after enactment. The 1002 report identified four special areas that together total more than 52,000 acres (about 3% of the 1002 Area). Both H.R. 49 and S. 49 in the 115 th Congress would authorize the Secretary to designate up to 45,000 acres of the Coastal Plain as special areas that could be excluded from leasing. P.L. 115-97 does not contain such provisions.",
"While P.L. 115-97 authorizes an oil and gas program for the 1002 Area, other bills in the 115 th Congress— H.R. 1889 and S. 820 —would take a contrasting approach by designating the area as wilderness. FWS's Revised Comprehensive Conservation Plan (RCCP), approved in January 2015, recommended this protection. Wilderness designation generally prohibits commercial activities, including energy development. In the past, some groups also have sought to preserve the 1002 Area as a national monument, using the President's power under the Antiquities Act. (However, ANILCA's Section 1326 limits withdrawals from the public lands in Alaska to 5,000 acres unless Congress passes a joint resolution to approve the withdrawal within one year of the President's proclamation. ) Congressional opponents of ANWR development have indicated that they will continue to advocate for protective designations for the Coastal Plain that would prohibit exploitation of oil and gas resources in the Refuge, aiming to reverse the policy enacted in P.L. 115-97 .",
"Enactment of P.L. 115-97 in December 2017 culminated a decades-long debate over whether to allow oil and gas development in ANWR in northeastern Alaska. The law established an oil and gas program for the Refuge's Coastal Plain, with at least two oil and gas lease sales required in the next 10 years. Development proponents contend that the sales will generate economic activity, contribute to U.S. energy security, and result in royalty revenues for both the federal government and the State of Alaska, while opponents express concern that development will detrimentally impact the unique biological resources of the Refuge.\nP.L. 115-97 requires the first ANWR lease sale within four years of the law's enactment. Activities preparatory to the lease sale include identifying lands to be leased, conducting sale-specific environmental reviews, issuing notices of sales, and other \"prelease\" activities. Activities could also include new geological and geophysical (G&G) surveys to determine the extent and location of hydrocarbon resources.\nCongress could potentially take additional action related to ANWR oil and gas leasing, including through further legislation or through oversight of DOI's implementation of the provisions of P.L. 115-97 . A number of development issues addressed in earlier ANWR bills were not addressed in P.L. 115-97 , possibly owing in part to limitations imposed by the budget reconciliation process. Congress could choose to address some of these issues in future legislation amending the oil and gas program or could decide that the provisions of P.L. 115-97 already provide sufficient guidance for the program. Alternatively, Congress could decide to end the program, for example by designating the Refuge's Coastal Plain as wilderness, as is proposed in some 115 th Congress bills.\nThe Congressional Budget Office estimated the state and federal revenue from the first two lease sales in ANWR at approximately $2.2 billion over 10 years. Actual bids will depend on many factors, including market conditions at the time of the lease sales. Development and transportation of oil in the Refuge, as elsewhere in the Arctic, is a difficult and expensive prospect, and a key factor in industry bids will be the price of oil."
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{
"question": [
"Why is development in the ANWR an issue?",
"What resources does ANWR have?",
"How did Trump change the use of the ANWR for energy?",
"What is the monetary value of this law?",
"What does this report discuss?",
"How is ANWR managed?",
"Why is the location of the gas and oil extraction from the ANWR problematic?",
"What are the resources and what is the value of ANWR?",
"Why hadn't earlier action been taken to obtain energy from ANWR?",
"What dilemmas has ANWR and energy caused for Congress?",
"What legislature has been previously proposed regarding ANWR?",
"What management has Congress considered before?",
"How is this connected to the new use of ANWR?",
"What is the expected environmental impact of energy operations in ANWR?",
"How does ANWR connect to Native Alaskans?",
"How does this affect ownership of the refuge?",
"How does ANWR development affect Natives?",
"What is the Natives' stance?",
"How does earlier ANWR legislation contrast to the current line of action?",
"How would this have abided by past US administration?",
"How is earlier ANWR legislation similar to the current line of action?",
"What did those bills additionally address?",
"What might Congress do regarding other topics these bills addressed?"
],
"summary": [
"In the ongoing energy debate in Congress, one recurring issue has been whether to allow oil and gas development in the Arctic National Wildlife Refuge (ANWR, or the Refuge) in northeastern Alaska.",
"ANWR is rich in fauna and flora and also has significant oil and natural gas potential. Energy development in the Refuge has been debated for more than 50 years.",
"On December 22, 2017, President Trump signed into law P.L. 115-97, which provides for an oil and gas program on ANWR's Coastal Plain.",
"The Congressional Budget Office estimated federal revenue from the program's first two lease sales at $1.1 billion, but actual revenues may be higher or lower depending on market conditions and other factors.",
"This report discusses the oil and gas program in the context of the Refuge's history, its energy and biological resources, Native interests and subsistence uses, energy market conditions, and debates over protection and development.",
"ANWR is managed by the U.S. Fish and Wildlife Service (FWS) in the Department of the Interior (DOI).",
"Under P.L. 115-97, DOI's Bureau of Land Management (BLM) is to administer the oil and gas program in a portion of the 19-million-acre Refuge: the 1.57-million-acre Coastal Plain, also known as the 1002 Area.",
"This area is viewed as a promising onshore oil prospect and is also a center of activity for caribou and other wildlife. It is designated as critical habitat for polar bears under the Endangered Species Act (16 U.S.C. §§1531-1544).",
"A 1987 study of the area by DOI had recommended energy development, but the Alaska National Interest Lands Conservation Act of 1980 (ANILCA; 43 U.S.C. §§1601 et seq.) prohibited development unless authorized by an act of Congress. (Development was thus barred prior to the December 2017 enactment of P.L. 115-97.)",
"The conflict between oil and natural gas potential and valued natural habitat in the Refuge has created dilemmas for Congress, with the most contentious question being whether to permit energy development in the 1002 Area.",
"Previous legislative proposals ranged from those to designate the 1002 Area as wilderness or a national monument (with energy development prohibited) to those to allow partial or full development.",
"Related questions have concerned the extent to which Congress should legislate special management to guide the manner of any development—for example, by limiting the footprint of energy activities.",
"Under P.L. 115-97, surface development is limited to 2,000 acres, which need not be concentrated in a single area.",
"Some contend that newer technologies will help to consolidate oil and gas operations and reduce the environmental impacts of development, whereas others maintain that facilities will likely spread out in the 1002 Area and significantly change the character of the Coastal Plain.",
"The history of ANWR is intertwined with congressional efforts to settle land claims of Native Alaskans.",
"As part of those efforts, some property in the Refuge was transferred to Native corporations, including surface lands and subsurface rights within the 1002 Area.",
"The opening of federal lands in ANWR to development under P.L. 115-97 also opens adjacent Native lands.",
"The Native community, both between and within its villages and organizations, is divided on the question of energy development in the Refuge.",
"Other legislation related to ANWR's Coastal Plain was introduced in the 115th Congress prior to the enactment of P.L. 115-97. H.R. 1889 and S. 820 would establish the Coastal Plain as wilderness, meaning there would be no commercial development, except to meet the minimum requirements for managing the area as wilderness.",
"Such a designation would be consistent with recommendations made by the Obama Administration in its planning documents for the Refuge.",
"By contrast, H.R. 49 and S. 49 proposed oil and gas leasing programs for the Coastal Plain, which are similar but not identical to the program mandated by P.L. 115-97.",
"These bills address some issues that were not addressed in P.L. 115-97, such as environmental compliance, judicial review, and exports of ANWR oil.",
"Congress could choose to consider some of these other issues in future legislation and oversight."
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GAO_GAO-12-54
|
{
"title": [
"Background",
"OMB and Agencies Take a Number of Steps to Ensure Efficient Information Collections, Though Opportunities Exist for Refinements",
"OMB Uses Its Oversight Authority to Improve Efficiency",
"The Reliability of Information in OMB’s Information Collections Database Needs to Be Improved",
"Agencies Identify Duplication and Solicit Input to Enhance Efficiency",
"Interagency Committees Facilitate Collaboration, but Better Communication Could Increase Effectiveness",
"Administrative Data Could Help Improve Federal Surveys, but Continued Progress Is Needed on Access and Quality Issues",
"Administrative Data Have Greater Potential to Supplement, Rather than Replace, Federal Surveys",
"Agencies Are Addressing Issues That Hamper Use of Administrative Data, but Additional Actions Could Facilitate Progress",
"Prospects for Enhanced Use of the ACS with Other Surveys Are Mixed",
"The ACS Provides Unique Coverage of the Nation’s Population",
"Uses of ACS That Require Design and Methodology Changes Have Limited Potential",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Scope and Methodology",
"Appendix II: Description of Case-Study Surveys",
"Consumer Expenditure (CE) Surveys: Quarterly Interview Survey (CEQ) and Diary Survey (CED)",
"National Health and Nutrition Examination Survey (NHANES)",
"National Health Interview Survey (NHIS)",
"National Survey of College Graduates (NSCG)",
"Survey of Income and Program Participation (SIPP)",
"Appendix III: Selected Statutes Related to Information Collection",
"Governmentwide Statutes",
"Agency-Specific Statutes",
"Appendix IV: Printable Interactive Graphic",
"Appendix V: Comments from the Department of Commerce",
"Appendix VI: GAO Contacts and Staff Acknowledgments",
"GAO Contacts",
"Staff Acknowledgments"
],
"paragraphs": [
"In contrast to many other countries, the United States does not have a primary statistical agency. Instead, the statistical system is decentralized, with statistical agencies generally located in different government departments. This structure keeps statistical work within close proximity to the various cabinet-level departments that use the information. There are 13 federal agencies, referred to as the principal statistical agencies, which have statistical activities as their core mission. These agencies conduct much of the government’s statistical work, though there are more than 80 additional federal agencies that carry out some statistical work in conjunction with their primary missions. The 13 principal statistical agencies are all attached to a cabinet-level department or an independent agency that reports to the president. As shown in figure 1, they are located at different levels within their respective departments and agencies.\nFor fiscal year 2011, $6.83 billion was requested for statistical work, which includes the collections in our scope as well as work that focuses on entities other than households and individuals, such as businesses and farms. This amount is about 0.2 percent of that year’s total federal budget request. Much of this work is concentrated in the 13 principal statistical agencies, which account for approximately 40 percent of requested funding. The budget request for the Census Bureau is among the highest of the principal statistical agencies. Excluding funding related to the decennial census, the fiscal year 2011 budget request for the Census Bureau was $558 million. In addition to conducting its own statistical activities, the Census Bureau also performs statistical work for other agencies on a reimbursable basis.\nMost of the collections in our scope have relatively modest annual costs. In a sample of 112 information collections that fell within our scope and were active as of September 22, 2011, the majority cost less than $500,000 annually, and fewer than one in five cost more than $1 million annually. There are a few, more expensive, large and broad-based collections such as the Current Population Survey and National Health Interview Survey, both of which cost tens of millions of dollars each year, and the ACS, which costs over $200 million annually (see fig. 2).\nVarious statutes and guidance from OMB and other entities establish standards for quality and privacy that apply to the federal statistical system. One of the most significant statutes is the PRA, which designates OMB as the coordinating body of the federal statistical system. The PRA establishes requirements that agencies must meet in order to administer information collections, and OMB must meet in overseeing the system, including that it issue guidance to agencies. Other entities also provide guidance to agencies that conduct statistical work. In addition, use of information must be balanced with protection of privacy and confidentiality. Statutes such as the Confidential Information Protection and Statistical Efficiency Act (CIPSEA) apply to the federal statistical system and focus on ensuring the privacy and confidentiality of respondents’ information. Agency-specific statutes also protect the privacy and confidentiality of data collected by those agencies. For example, Title 13 of the U.S. Code authorizes the Census Bureau to request and collect information from individuals but also guarantees the confidentiality of these data and establishes penalties for unlawfully disclosing this information. Additional statutes are described in more detail in appendix III.",
"",
"Under PRA, OMB, through its Office of Information and Regulatory Affairs (OIRA), has responsibility and broad authority to improve the efficiency and effectiveness of federal information resources.is charged with the oversight and coordination of federal agencies’ statistical activities. Specifically, these oversight functions are carried out by OIRA’s Statistical and Science Policy Branch, headed by the Chief Statistician, which includes five staff members who work closely on these oversight and coordination activities with approximately 25 other OIRA desk officers. OMB exercises four key authorities that contribute to the efficiency of the federal statistical system: In this regard, OMB\nOversight and approval of information collections: OMB generally must approve information collections that are to be administered to 10 or more people. OMB staff review agencies’ information collection requests to determine whether proposed collections meet PRA standards by assessing such factors as whether they are necessary for the mission of the agency and do not unnecessarily duplicate existing information. This review also enables OMB to identify opportunities for improvement. For example, according to OMB and agency officials, if it determines that it is necessary to ask similar questions in multiple collections, then OMB works to ensure that agencies ask them in a consistent manner, when appropriate.\nStandard-setting and guidance to agencies: OMB is responsible for developing and implementing governmentwide policies, principles, standards, and guidelines related to statistical issues, such as procedures and methods for collecting data and disseminating information. Specifically, OMB issues directives, guidance, and memorandums, and provides additional information through information sessions and presentations, to guide federal data collection and promote the quality and efficiency of information collections. For example, OMB published “Questions and Answers When Designing Surveys for Information Collections,” a set of 81 questions and answers on the OMB review process for agency information collection requests required by PRA.Standards and Guidelines for Statistical Surveys, which outlines 20 standards and related guidelines for the design and methodology of statistical surveys. Finally, OMB issues memorandums focusing on various topics, with recent ones clarifying the guidance for complying with PRA and encouraging agencies to coordinate efforts to share data.\nBudget development and reporting: Although agency budgets are initiated within agencies, OMB is responsible, under PRA, for ensuring that agency budget proposals are consistent with systemwide priorities for maintaining and improving the quality of federal statistics. In addition to the budgets themselves, OMB reports information to the public and Congress about the identification of key priorities through key documents. OMB annually reports on the paperwork burden federal collections impose on the public in the Information Collection Budget of the United States Government. In addition, OMB annually describes statistical program funding and proposed program changes for statistical activities in the Statistical Programs of the United States Government.\nOther statistical-policy coordination activities: The Chief Statistician and staff in OMB’s Statistical and Science Policy Branch participate in both formal and informal coordination activities with agencies. OMB’s role and participation in the formal interagency committees are discussed later in this report. In general, it maintains regular contact with staff at principal statistical agencies. Additionally, OMB encourages agencies that are designing information collections to collaborate with principal statistical agencies because they can help improve survey design and methodology. For example, according to OMB and Census Bureau officials, OMB encouraged the Corporation for National and Community Service to work with the Census Bureau and BLS to sponsor a supplement to the Current Population Survey rather than a stand-alone survey. OMB indicated that sponsoring this supplement likely resulted in cost savings, improved data quality, and greater utility.",
"One tool that OMB uses to facilitate its oversight and coordination functions under PRA is an internal system called the Regulatory Information Service Center and OIRA Consolidated Information System (ROCIS), which contains information on all active collections and those pending OMB approval. Agencies use the system to submit information collection requests. This system also facilitates OIRA’s review of the requests and underlies the information provided on the public website Reginfo.gov. Agency submissions to OMB typically include a copy of the data-collection instrument (e.g., a survey) and supporting documentation that, in a standardized form, provides information on the collection, such as the estimated annual burden hours and cost to the federal government. Further, under PRA, agencies must certify that the collection satisfies the act’s standards, for example that the collection avoids unnecessary duplication. Making this information transparent and easily accessible to other agencies facilitates coordination and can potentially help agencies avoid duplication and identify opportunities for improvement. Furthermore, OMB uses the information contained in its internal system to track reviews of information collections, and to compile quantitative data for the Information Collection Budget of the United States Government.\nDespite the benefits of this electronic system, our review identified some discrepancies between the Reginfo.gov website’s data and the underlying documentation for certain key variables. Specifically, we reviewed a systematic random sample of 56 of the 555 collections in our scope and checked the reported information for annual cost to the federal government and annual burden hours. For 11 of the 56 information collections, the information on cost or burden, or both, did not match between the two sources. In cases where annual cost did not match, the differences ranged from $1,000 to $19.3 million. In cases where annual burden hours did not match, the differences ranged from 30 to almost 500,000 hours. OMB confirmed that the information in the external Reginfo.gov system is the same as in its internal ROCIS system. As a result, these discrepancies raise questions about the confidence that users can have in both the internal and external databases and may affect OMB’s ability to track information collection requests. OMB officials told us that responsibility for ensuring data reliability is shared between OMB and agencies. The Regulatory Information Service Center has issued detailed guidance to agencies on how to upload information into ROCIS, and the system has a function that allows agencies to check the completeness of data for individual information collections to ensure that no required data are missing. Entering this information is not always straightforward, however, and some interpretation of the underlying documentation may be required. The discrepancies that we identified indicate that additional actions, such as edit checks, review by an informed staff member, or increased clarification in supporting documents are necessary to ensure the reliability of Reginfo.gov and ROCIS data.",
"Our analysis indicated that agencies addressed PRA standards related to duplication and public comment in their information collection requests to OMB, and in many cases went beyond the actions specifically described in PRA and related OMB guidance.\nThe elements of PRA most directly related to our review were identifying duplication and soliciting external input on proposed collections. To analyze agencies’ actions in these two areas, we reviewed a generalizable sample of supporting statements from 106 active statistical information collections administered to households and individuals.Each of the supporting statements we reviewed addressed those PRA standards, as required, and in many cases included detailed descriptions, the content of which we analyzed in order to identify the range of actions that agencies took.\nAlthough agencies must address how their proposed collections meet PRA standards, the act and OMB guidance do not prescribe many specific actions that agencies need to take in addressing these standards. Regarding duplication, PRA does not dictate how agencies should address the standard. Regarding external input, PRA does require that agencies at a minimum provide notice in the Federal Register to allow the public to comment on proposed collections as well as consult with members of the public and affected agencies. OMB guidance expands somewhat on ways that agencies can address these standards, particularly in the case of surveys using statistical methods. However, just as with PRA, much is left to the discretion of agencies and little is specifically required. For example, OMB guidance states that agencies should review existing studies and consult with survey methodologists and data users.\nIdentifying potential duplication: Our analysis showed that agencies took various steps to comply with the PRA requirement that information collections do not unnecessarily duplicate an available information source. Specifically, based on our analysis, we estimated the following for the universe of collections in our scope:\n77 percent included detailed explanations of the actions taken to identify potential duplication.\nThe 95 percent confidence interval for this estimate is (68, 85). not include detailed explanations were generally for information collections that had unique scopes or other characteristics that made them unlikely to duplicate existing information.\n57 percent reported reviewing other surveys when looking for duplication.seven other surveys that collected information similar to that of a Current Population Survey supplement on tobacco use and explained why the data from these surveys could not replace those collected through the supplement.\nFor example, the National Cancer Institute identified\n46 percent indicated that the agency considered administrative data as a potential source of data.\nAbout a quarter indicated that they consulted with other entities, such as agencies, and a similar number reported that they conducted literature searches. In addition, for six of the information collections in our sample, agencies sponsored a collection in the form of a supplement to the Current Population Survey rather than creating a stand-alone survey, thus piggybacking onto another survey vehicle to potentially avoid duplication.\nThe 95 percent confidence interval for this estimate is (32, 59). evaluate surveys’ data quality. In order to facilitate comparisons among surveys, OMB encourages asking consistent questions, when possible, about certain characteristics such as race and ethnicity. Further, when considered from an individual’s perspective, duplication of survey questions is relatively rare. This is because in a given year a very small percentage of households are selected to participate in a single collection within our scope. The likelihood that a household would be selected for participation in more than one collection, and thus household members be asked the same question more than once, is considerably lower.\nThe 95 percent confidence interval for this estimate is (46, 67). and sponsoring or participating in workshops, panels, or other events.\nAgencies in our sample reported making changes in response to input, potentially resulting in improvements to their information collections. For example, in response to recommendations made by the Committee on National Statistics on a Current Population Survey supplement about food security, ERS reported entering into an agreement with Iowa State University to study food security measurement issues. This collaborative project is exploring alternatives to an aspect of the supplement’s current design, which could result in alternatives to methods used to estimate food security prevalence and potentially improve measurement precision and reliability. The U.S. Geological Survey also reported incorporating changes in response to feedback on its Landsat Survey.\nAgencies’ actions to find duplication and solicit input that we identified in our review, as well as others that OMB may identify, could be useful for OMB to share with other agencies that sponsor information collections. Offering more-detailed guidance in a single document that outlines different actions agencies can take to identify duplication and solicit input would help ensure that agencies are aware of the various options. It would also allow them to easily access and reference this information. OMB could include this information in one of its periodic memorandums related to compliance with the PRA. We previously reported on the importance of establishing ways to operate across agency boundaries, and promoting these actions is one way OMB can do this. Also, just as OMB’s guidance to agencies in complying with the Information Quality Act gives agencies flexibility to determine the most appropriate actions, it is important that any new guidance continue to give agencies discretion in the number and types of actions they take to identify duplication and solicit input. This is because the most appropriate actions will vary based on the characteristics of the collection.",
"Interagency statistical committees offer opportunities for broader collaboration to increase the efficiency of the federal statistical system. Three key committees are the Interagency Council on Statistical Policy (ICSP), the Federal Committee on Statistical Methodology (FCSM), and the Statistical Community of Practice and Engagement (SCOPE), all of which are either chaired or sponsored by OMB. Importantly, the activities of the interagency committees are consistent with key collaborative practices we identified in our previous work. For example, each of these committees has defined roles and responsibilities, and the committees serve as a vehicle for the agencies to operate across agency boundaries. Specifically, ICSP serves an advisory function to the Chief Statistician and focuses on broader issues related to the federal statistical system. In addition, ICSP provides overarching guidance to FCSM and SCOPE. FCSM investigates statistical practices and methodologies used in federal statistical programs, while SCOPE focuses on cross-agency activities of data management and dissemination. Table 1 provides an overview of these committees.\nThe committees study statistical issues and methods through subcommittees and working groups, most of which rely on volunteers from member agencies who take on these responsibilities in addition to their current job duties. The work of the subcommittees and working groups has been useful to other agencies. For example, an FCSM subcommittee produced a checklist that, according to OMB, is used around the world to determine whether a public-use data product sufficiently protects the confidentiality of individuals’ data.\nThe interagency committees use various methods to disseminate information on their activities and products, but they do not do so in a timely or comprehensive manner. The committees’ work is summarized in OMB’s annual report Statistical Programs of the United States Government, but the report does not always communicate key information about it. For example, the fiscal year 2011 report states that one of ICSP’s activities over the past year was identifying the highest- priority statistical-program improvements, but does not provide information about all of these improvements. In addition, interagency committees present information about their work at statistical seminars. For example, according to OMB officials, FCSM has presented work at the biennial FCSM Statistical Policy Seminars. Additionally, agency officials noted that members of interagency statistical committees utilize a limited-access web-based system to facilitate information sharing. Information about FCSM’s work is also posted on the committee’s website or the FedStats website. Neither ICSP nor SCOPE has a dedicated website, though OMB believes that this is not necessary or appropriate because the work of these groups is deliberative. While the FCSM website offers the potential to effectively disseminate information, it is not comprehensive or timely. For example, it provides links to the sites of various interagency and advisory committees, including three FCSM permanent working groups, but does not have pages for any of the active FCSM subcommittees. Moreover, the websites do not appear to be regularly updated with new products produced by the committees that could be useful for other agencies. For example, the subcommittee on the statistical uses of administrative data published a paper in April 2009 highlighting examples of successful data-sharing projects using administrative data for statistical purposes, but this product is not yet available on the FCSM website.\nProviding more-comprehensive and timely information on interagency activities could offer benefits. As identified in our previous work, developing mechanisms to monitor and report on results is a necessary element of a collaborative relationship.committee activities and products could offer benefits to those who are not involved in committee activities, as well as committee members. Membership in the committees is made up almost exclusively of representatives from the 13 principal statistical agencies, so most agencies are not directly involved in committee activities. It makes sense that agencies that have statistics as their primary focus are the most- heavily involved, but those agencies for which statistics is a supporting function to their primary mission, and possibly academics and the broader public, could benefit from greater access to information and products related to the committees’ work and priorities. More easily accessible information would also benefit member agencies, as it would offer a centralized place to maintain committee work and communicate priorities. Much work goes into developing the committees’ products, and making them easily accessible maximizes their value.",
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"Administrative data, typically collected to administer a program or business, are a growing source of information on individuals and households. For example, the Social Security Administration collects data on the earnings of U.S. workers from employers and the Internal Revenue Service to calculate the amount of benefits for retired workers, spouses, children, and other beneficiaries, while businesses obtain data, for example, on item and amount of purchases when customers use credit cards and store loyalty cards. According to the Census Bureau, the amount of administrative data held by private companies exceeds the amount held by the government. Researchers recently estimated that the amount of digital data in existence, which includes some types of administrative data such as retail customer databases, more than doubles every 2 years. Administrative data have been identified as an important resource for the future of the statistical system, as some of these publicly and privately held data may be analyzed or reported with survey data to yield greater value. Furthermore, the increasing capacity to store and process administrative data has facilitated this potential use.\nFor decades, agencies have been working to expand the use of administrative data in conjunction with data collected from surveys, but certain characteristics of administrative data make it difficult to use them to replace surveys or sections of surveys administered to households and individuals. There is interest in exploring how administrative data may be used to improve data quality, hold down costs, and reduce respondent burden. For example, as part of the redesign of the Consumer Expenditure Surveys, BLS is investigating the potential for replacing some portions of the survey with external sources of expenditure data to reduce respondent burden and potentially improve data quality. However, agencies we contacted have not replaced surveys or sections of surveys administered to households and individuals with administrative data because data: (1) are often not representative of a survey’s population of interest; (2) may not correspond to information collected through survey questions; (3) are vulnerable to program cancellation or changes; and (4) may take a long time to obtain, which delays use and in some cases could cause agencies to miss required reporting dates.\nAdministrative data currently show greater promise for supplementing federal surveys. Indeed, the agencies we contacted identified four major opportunities to enhance surveys with administrative data in order to create efficiencies and enhance data quality.administrative data include the following: Current uses of\nCreating new data products: Agencies link survey data and administrative data to create new, more robust, statistical data products, which increases efficiency in two key ways. First, according to OMB and agency officials, agencies can use these new data products to evaluate and potentially improve federal policies and programs, especially those related to the source of the administrative data, without adding to respondent burden. Second, combining administrative data with survey data can increase efficiency by enhancing previously collected survey data. For example, the National Center for Health Statistics’s (NCHS) record-linkage program links survey data from various health-related surveys to different administrative datasets to create new data products for studying factors that influence health-related outcomes, such as disability, health care, and mortality.\nSupplementing surveys’ sample frames: Using administrative data to supplement surveys’ sample frames—the sources from which a survey’s sample is drawn—can create efficiencies, reduce costs, and enhance the quality of surveys. For example, the National Household Food Acquisition and Purchase Survey uses administrative data from the Supplemental Nutrition Assistance Program to develop a sample frame of participating households to potentially include in the survey. ERS officials said that using these data to help develop the survey’s sample frame costs less than the alternative of screening a broader group of respondents to determine if they are participating. In addition, agencies can use administrative data to augment sample frames in areas where the sample is not large enough to fully support a survey. For example, the Census Bureau’s pilot project studying the potential to use ACS data as a sample frame for the National Immunization Survey used commercial data to supplement ACS data in a county that had a limited ACS sample.\nComparing data to improve survey accuracy and design: By comparing survey data to similar administrative datasets and identifying reasons for any discrepancies that may exist, agencies can improve the quality of survey data. For example, researchers identified opportunities for improving surveys’ designs and methodologies after agencies found that surveys of enrollment in health-insurance programs provided lower estimates than those compiled from administrative data. Agencies can also improve the efficiency of their surveys by using administrative data as part of nonresponse follow-up activities.\nModeling estimates: Agencies combine administrative data and survey data to create, or model, estimates that are designed to be more accurate than estimates based on survey data alone. The main benefit of modeling is that it provides the ability to produce estimates for smaller geographic areas than is possible using a survey alone. For example, the Census Bureau conducts the Small Area Income and Poverty Estimates Program to provide updated data on poverty and income, which is used to administer federal programs and allocate federal funds to local areas. The Census Bureau combines survey data from the ACS with population estimates and administrative data and has found that this approach produces consistent and reliable data more reflective of current conditions than data produced only by existing surveys.",
"Despite the benefits of using administrative data to supplement federal surveys, agencies face five key constraints related to data access and quality:\nStatutory restrictions on data sharing: Federal and state statutes sometimes prohibit or limit sharing of data for statistical purposes. In cases where specified authorized uses do not include statistical use, nothing short of a statutory change can overcome the constraint. In other cases, statutes limit sharing to purposes related to program administration. For example, the 2008 Farm Bill restricts access to data on participants in certain nutrition-assistance programs to uses for the “administration or enforcement” of the programs. Similarly, the Higher Education Act of 1965, as amended, restricts federal student aid data to purposes related to the “application, award, and administration of aid.” However, agencies holding such restricted data can differ on whether statistical uses are related to program administration. The Census Bureau successfully negotiated access to the nutrition assistance data because it could demonstrate that the linked data would help the federal sponsor and state agencies develop better measures of outcomes, such as poverty, inequality, and the receipt of government transfers. Conversely, the Census Bureau was unable to gain access to the federal student aid data for statistical uses because the Department of Education did not consider that any of the planned uses related to the program’s administration.\nConsent: Individuals’ consent to allow their administrative and survey data to be linked affects uses of administrative data for statistical purposes. Seeking consent derives from a core concept of personal privacy: the notion that each individual should have the ability to control personal information about himself or herself. Moreover, there can be issues regarding the privacy and confidentiality of data collected for one purpose and used for another, and agencies use different practices, wording, and level of detail to meet consent requirements, according to OMB officials. At the time administrative data are collected, an agency can inform individuals that their data may be used for statistical purposes, but, according to ERS officials, agencies collecting administrative data often do not consider possible future statistical uses and therefore may not provide such notice. Obtaining consent after data have been collected can be time- consuming and costly. In addition, an agency can ask survey respondents for permission to link their survey data with certain administrative data. Some respondents may not consent, which can substantially limit the number of respondents eligible for linkage and as a result potentially affect the quality of the linked data.\nCosts and infrastructure: Because the primary cost of collecting administrative data has already been incurred, using these data can, in some cases, be more efficient and less costly than new survey efforts. However, there still are costs to using administrative data for statistical purposes, including up-front and ongoing investments to purchase and maintain hardware and software to link data and protect their confidentiality. Agencies identified various factors that can affect costs. These include but are not limited to negotiations with the agency holding the data, the quality of the administrative data, and the ease with which they can be linked to other data. BLS officials said that in some cases the costs of using administrative data with survey data may outweigh any savings and that evaluation of administrative data options always requires careful consideration of a wide range of quality and cost issues, including the costs of specialized personnel and infrastructure. According to an FCSM study that profiled examples of successful statistical uses of administrative data, agencies wanting to share data also may not have the necessary staff, policies, or procedures. For example, negotiating data-sharing agreements may require significant time. Moreover, many key administrative datasets are held by states, further complicating the data-sharing process because agencies have to negotiate under different policies and procedures as well as work with numerous staff across states.\nDocumentation of datasets: OMB and agency officials said that agencies holding administrative data do not uniformly document information about their datasets in a way that is always useful or efficient for use outside of the agency. This lack of documentation of datasets makes evaluating their potential for statistical uses challenging. For example, definitions of key variables of research interest or information about how frequently the agency updates the data may not be available. ERS officials also noted that private companies typically do not disclose detailed information about the sources of their data, making it difficult to assess their quality. As a result, agencies interested in using these data for statistical purposes may have to spend additional time and resources to understand the content and structure of the datasets.\nQuality of data: Agency officials and experts identified reasons why the quality of administrative data can vary, which can affect their potential use with survey data. Specifically, different agencies may use different systems, definitions, and time frames when collecting administrative data. For example, states may collect and evaluate the quality of data in different ways, making it complicated to aggregate the data across states as well as to compare state-level data. In addition, several factors can influence the accuracy of data reported in administrative data. For example, agencies that collect data for the purpose of program administration may be concerned with the accuracy of only the variables used for such purpose. Moreover, reporting incentives may influence data quality. For example, individuals may underreport income on tax forms, and program agencies may pay less attention to the accuracy of information collected from applicants when it does not affect their participation in a program.\nAgencies and interagency committees have been taking numerous actions to address these constraints. For example, ERS, in collaboration with the Census Bureau, NCHS, and OMB is undertaking a pilot project to address data quality concerns with state-level administrative data, and FCSM is working on a project to clarify legal requirements for informed consent (see fig. 3).\nOne theme that cuts across many of these efforts, and where additional short-term actions could accelerate progress, is identifying ways to facilitate the process of deciding whether to share data among agencies. FCSM published a paper describing successful data-sharing arrangements between various federal and state agencies. One of the four core elements of success that FCSM identified in these arrangements was mutual interest, in that each participant—in particular the agency providing the data—evaluates a proposed data-sharing agreement from its own perspective. On the one hand, agencies may share data because the linked data can benefit program administration, as noted earlier. On the other hand, OMB and agency officials noted that agencies may decide against sharing because perceived disadvantages, such as policy concerns and potential identification of weaknesses in program administration, outweigh the possible benefits. In such a case, an individual agency’s interests may be at odds with the broader efficiency of the whole federal statistical system. As illustrated in figure 3, FCSM and agencies are developing tools to approach these decisions in a more standardized way, such as developing checklists for evaluating the quality of administrative data and a template for executing data- sharing agreements. However, these individual tools focus on particular aspects of data sharing—for example, the checklist focuses on data quality. Separately, they may not be sufficient for agencies to efficiently identify potential datasets with the greatest potential for mutual benefit and address all factors involved in the decision-making process.\nThe benefits of having more-comprehensive centralized guidance could include greater consistency, clarification, and efficiency. A more- comprehensive standardized framework that ties together existing tools with additional resources in order to cover major aspects of the data- sharing process could bring consistency to the decision-making process. Similar to the checklist that FCSM is developing for agencies to use in evaluating data quality, the framework could include a template outlining a list of key questions for all agencies involved in the proposed data sharing, including federal and state agencies that hold data, to address issues such as: (1) the steps to take to ensure data reliability; (2) any statutory limitations on planned uses of the data (including confidentiality protections); (3) whether consent has already been obtained for additional use of the data, or how it will be obtained; and (4) methods to fully account for the costs associated with obtaining and using the data. To be comprehensive, such guidance would not need to be voluminous, but it should identify each of these major aspects of data sharing, provide advice to agencies, and reference any tools available to assist agencies during the process. It should also be kept up-to-date, reflecting changes in legislation or other factors that affect data sharing, as well as any new tools that are developed. Although such a framework may not lead to sharing in all cases, the framework could better ensure that agencies weigh the related benefits and costs in a more balanced, consistent, and transparent fashion. Such guidance could also clarify ways that agencies could resolve disagreements over data sharing. It could also improve efficiency, given that agency officials we spoke with cited examples in which it took multiple years to reach a resolution on data sharing, by helping agencies evaluate available data and determine those that have the greatest potential for mutual benefit.\nWhile agencies can take steps to address some constraints on sharing data, in other cases only policy actions on the part of the executive branch or Congress can lift barriers. One of the primary examples of such action is Congress’s enactment of CIPSEA in 2002, which authorized the Census Bureau to share selected business data with BLS and the Bureau of Economic Analysis for statistical purposes. However, CIPSEA is limited because the Census Bureau’s business data are based in large part on tax data, and as a result the tax code would need to be amended for the Census Bureau to also share these data with other statistical agencies. There have been proposals to amend the tax code to further expand the scope and coverage of CIPSEA, but action has not yet been taken by Congress.",
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"The Census Bureau’s full implementation of the ACS in 2005 was a major change to the statistical system. The survey is unique among other surveys of households and individuals because of its size—the monthly surveys add to an annual sample of 3.54 million addresses. The ACS provides annual estimates of social and economic characteristics for all areas of the country and is a primary source of information on small areas, such as towns and tribal lands, down to the neighborhood level. The ACS covers a broad range of topics, such as housing, education, and employment. The information provided by the ACS was previously only available once a decade from the decennial census long form, which the ACS replaced. Users of ACS information include all levels of government, the private and nonprofit sectors, and researchers. According to the Census Bureau, ACS estimates are currently used to help allocate more than $400 billion in federal funding annually. Table 2 lists some of the key characteristics of the ACS.\nSeveral of the ACS’s characteristics lend to its appeal for use for other surveys, including that it produces annual estimates on a broad range of topics at finer geographic levels than other surveys, and agencies and others identified five areas of opportunity in which surveys can make use of ACS data and resources. Two of these areas, which generally rely on publicly-available ACS estimates and do not require changes to the survey’s design or methodology, have the greatest potential for widespread use. The Census Bureau has provided users with various resources to guide their use of ACS estimates. These include a guide to comparing estimates, handbooks directed to specific types of users, training presentations, and a tutorial. The two areas with the most potential for use are as follows:\nEvaluating and supplementing other surveys’ results: Survey administrators and data users can also use ACS estimates to evaluate information collected by other surveys. For example, survey administrators can use ACS information to evaluate the quality of responses to other surveys that include some questions that are the same as or similar to ACS questions. Additionally, data users and survey administrators can use ACS data to supplement information collected by other surveys. For example, a recent report based on analysis of ACS data describes how median earnings vary by the field in which people obtain their bachelor’s degrees. Such information can complement results from other surveys. In this case, NCSES also produces information on earnings by degree type, based on information in its Scientists and Engineers Statistical Data System database, which contains data on people with a science or engineering degree and those who work in related fields. NCSES information collection is less frequent than ACS estimates and pertains to a more-narrowly defined population, but allows more detailed analysis of issues such as how people use their college degrees at work. Together, these two sources of information offer more-timely and more-detailed information than a single source.\nDesigning other surveys: There is also widespread potential to use ACS data to more-efficiently design other surveys. Because many of the topics included in the ACS are covered in more detail by other surveys or relate to other surveys’ target populations, survey administrators can use ACS estimates at different demographic or geographic levels to stay up-to-date on changes that may affect their surveys. These estimates can also be used when designing and selecting a survey’s sample. Census Bureau officials told us that, when designing a survey, survey administrators can use the data to guide the selection of a survey’s sample so that it better represents individuals or households with certain characteristics. For example, the Survey of Income and Program Participation can use ACS estimates at different demographic or geographic levels to identify and more-efficiently sample geographic areas with disproportionately large numbers of low-income households because this is a population of interest for the survey. Because these data are available for small geographic areas, agencies can use the data when samples include more-local geographic levels.",
"Agencies and others identified three uses of ACS data and resources that, while offering potential benefits to other surveys, face such constraints that more widespread use is likely not possible under current ACS design. These uses are more intensive than the ones described above, in that they affect the survey’s design and methodology or respondent burden, or both. Because the ACS has a large sample size and a complex methodology, there are logistical challenges involved in changing its design and methodology. Additionally, any changes that affect the survey’s respondent burden also have limited potential, as there are already concerns about the burden that the ACS places on respondents. Uses with more-limited potential are as follows:\nAdding or modifying ACS content: Adding a question to the ACS or modifying existing questions can improve the efficiency of other surveys, though doing so involves trade-offs with factors such as respondent burden. This use of ACS could provide information that would inform the design of other surveys or facilitate the use of ACS data for another survey’s sample frame. For example, NCSES worked with the Census Bureau to add a question to the ACS about the field in which respondents earned their bachelor’s degrees in order to identify respondents that are in the target population for the National Survey of College Graduates. Despite the potential benefits of adding or modifying ACS content, adding a question to the ACS would increase respondent burden and have operational impacts, as it requires the Census Bureau to change the questionnaire design and processing and editing systems. If these actions result in additional pages for the questionnaire, it could affect costs and the response rate. Modifying questions poses an additional challenge because ACS estimates reflect multiple years of data, and a change in a question may affect the Census Bureau’s ability to cumulate data.\nAdding supplements to the ACS: Another possible use of the ACS by other surveys is adding supplements to the ACS, though this use faces several obstacles. While the ACS currently does not include supplements, doing so could enable surveys to leverage the resources of the ACS. Other surveys, such as the Current Population Survey, allow other agencies or entities to sponsor supplemental surveys that are added on to the survey’s core set of questions. According to officials at BLS, which sponsors the Current Population Survey, in their experience it costs less to add a supplement to an existing survey than to conduct a separate stand-alone survey. Additionally, the agencies sponsoring the supplements gain the benefit of the experience of BLS or Census staff, or both, in designing and implementing surveys. Although the Current Population Survey successfully incorporates supplements, the ACS is different in several key ways, and adding supplements to the ACS would involve significant challenges. For example, the ACS is mandatory, meaning that responses are required by law. Assuming a supplement to the ACS would be voluntary, Census Bureau officials told us that they would have to determine how to distinguish between the mandatory and voluntary sections, which would create complexity. Additionally, the Census Bureau processes ACS data on a yearly basis and does not have a process in place for producing estimates from a single month’s data, which would be a challenge if the supplement was administered along with only 1 month’s ACS mailout. Finally, including supplements raises concerns about respondent burden and respondent fatigue. BLS officials noted the potential of matrix sampling, in which a set of additional questions, as in a supplement, is added to a month of collection (or all months) but differs from a supplement in that it is only administered to a subset of the survey sample in a given collection period. This option could reduce burden and increase efficiency; however, such an option involves logistical considerations in administering the survey and processing the data, and adds complexity for analysts using the data for research.\nCreating sample frames: Using ACS data to develop sample frames for follow-on surveys has been identified as a potential use of ACS data, but several factors limit this use. This involves using ACS data to identify ACS respondents with certain characteristics for potential inclusion in a follow-on survey and requires the approval of the Census Bureau and OMB. At present only NCSES uses ACS data for this purpose. Agency officials told us that using ACS data to create a sample frame, as opposed to census long-form data, which they used previously, has improved the agency’s coverage of its target population and has reduced costs and respondent burden.benefit of this use is expanded analysis, as agencies, under appropriate Title 13 restrictions, can analyze respondents’ answers to the ACS along with responses to the follow-on surveys, and can analyze the characteristics (from ACS data) of those who do and do not respond to the follow-on survey to determine if they have different characteristics, which might cause bias in the survey. Surveys such as the National Survey of College Graduates that focus on populations that are costly to identify are likely to realize higher gains in efficiency from using ACS data for this purpose. Despite these benefits, opportunities for other surveys to use ACS data for this purpose are limited. ACS’s sample size, although large compared to most surveys, can be too small for another survey to use for a sampling frame. This is especially an issue if a survey targets a rare population or targets members similar to those of surveys already drawing from the ACS for their frame, because there would be too much chance of drawing individuals into both follow-on surveys, and current policy does not allow for that. Census Bureau policy states that, when agencies conduct follow-on surveys, they may not contact any member of a household that has already responded to the ACS and also had a member selected for a follow-on survey. With certain households in the ACS excluded from potential selection, it becomes more difficult for other surveys to draw samples because the data no longer reflect respondents with certain characteristics.\nIn the long run, more-intensive uses of ACS data and resources may require difficult decisions and entail trade-offs with factors such as cost and respondent burden. Further, they risk affecting ACS response rates and overall data quality. However, redesign of the scope and methodology of ACS might overcome some of these constraints. After the release of the survey’s first 5-year data products in 2010, the Census Bureau and others began evaluating the survey and exploring options for increased uses. In addition to its own evaluation of the ACS, at the Census Bureau’s request the National Academy of Sciences is organizing workshops with data users to assess the survey. Also, OMB, in cooperation with the Census Bureau, created an ACS subcommittee of the ICSP with the goal of investigating trade-offs of options such as adding questions to the ACS and rotating questions in and out of the survey. If the Census Bureau changes the survey’s design or methodology, these changes may become more feasible.",
"To ensure the provision of high-quality, timely statistical data for public- and private-sector users, OMB and the agencies that make up the federal statistical system must continue to identify opportunities for efficiency in federal surveys of households and individuals. Most of the surveys and other information collections in our scope have relatively modest costs, but challenges such as declining survey response rates will strain available resources unless agencies find more-effective and less-costly ways to collect and analyze the needed information, while maintaining critical protections of respondents’ privacy and confidentiality. In the long term, addressing the key challenges and constraints that agencies have identified will necessitate broader public debates and policy decisions about balancing trade-offs among competing values, such as quality, cost, timeliness, privacy, and confidentiality. In the short term, our review indicated that two promising avenues to sustain the progress that OMB and agencies are making include (1) facilitating collaboration and coordination among agencies and (2) combining existing data from both survey and administrative sources.\nThe federal statistical system already exhibits many collaborative traits and practices, in particular through projects sponsored by OMB and interagency committees that facilitate coordination and the development of new policies and tools. However, additional efforts could help enhance the effectiveness of these efforts. Going forward, it will be important for OMB to supplement existing guidance to clarify the range of options available to address PRA standards. Supplementing the guidance could increase agencies’ awareness of these options, in particular those that were cited less frequently. At the same time, interagency committees could do more to improve accessibility and timeliness of their work products. Doing so could maximize the usefulness of committees’ work. Additionally, OMB’s ability to oversee and coordinate information collections across the government would benefit from additional steps to ensure the reliability of data on collections’ costs and burdens. Doing so would also benefit users of the information, whether they access it through the website or though OMB reports.\nAgencies identified multiple ways that combining survey and administrative data can improve the efficiency and quality of their work, and they are already pursuing such opportunities. Importantly, they have demonstrated that using existing datasets to supplement each other can add value for all agencies involved in data sharing. But agencies also face serious constraints to expanded uses of existing data. One of the more-significant barriers is the complexity of the process through which they make decisions about sharing data. Though agencies and interagency committees are working to create tools to facilitate parts of this process, more-comprehensive and centralized guidance for agencies to follow when negotiating and making decisions regarding data-sharing opportunities could help facilitate the process.\nA standard protocol or framework could accelerate progress in this area by helping agencies to (1) evaluate the growing array of administrative data to identify those datasets that have the greatest potential for mutual benefit of the participating agencies, and (2) consider a common set of criteria and key questions when weighing the pros and cons of sharing data. A key benefit would be to encourage agencies to consider, in a uniform manner, all relevant aspects of these decisions, such as whether or not proposed uses would be consistent with applicable law, maintain confidentiality protections, be cost-effective, and serve to increase the broader efficiency of the federal statistical system.",
"In order to maintain progress in maximizing the efficiency of existing data sources, we recommend that the Director of OMB, in consultation with the Chief Statistician, work with the ICSP to take the following four actions: To improve the broader efficiency of the federal statistical system and improve communication among agencies and others, when OMB next updates guidance on agency survey and statistical information collection and dissemination methods, include additional details on actions agencies can take to meet requirements to identify duplication, to consult with persons outside of the agency, and address other requirements as appropriate; and create new methods or enhance existing methods to improve the dissemination of information and resources produced by interagency statistical committees. For example, such enhancements could include increasing the timeliness and availability of information on websites to better capture the full range of products and identify committee priorities.\nTo increase the reliability of the information presented on the Reginfo.gov website and in OMB’s internal system, implement quality-control procedures designed to identify and remedy any differences between cost and burden information provided on the website and in the related supporting statement documentation that underlies this information.\nTo accelerate progress in sharing administrative data for statistical purposes, where appropriate, develop comprehensive guidance for both statistical agencies and agencies that hold administrative data to use when evaluating and negotiating data sharing, such guidance should include key questions focused on issues such as statutory authority, confidentiality, cost, and usefulness in order to ensure agencies consider all relevant factors and the broader interest of the federal government.",
"We provided a draft of this report to the Secretaries of Commerce and Health and Human Services, the Director of OMB, the Commissioner of BLS, the Administrator of ERS, and the Director of the National Science Foundation for their review and comment. We received written comments on the draft report from the Secretary of Commerce that are reprinted in appendix V. We also received comments from OMB staff that are summarized below. The Department of Health and Human Services, BLS, National Science Foundation, OMB, and agencies on the ICSP also provided technical comments and suggestions that we incorporated as appropriate.\nCommerce stated that our observations illuminate future opportunities for using administrative records within the federal statistical system to increase efficiency and better meet informational needs and that our suggested actions would enhance the ability of statistical agencies to realize these opportunities. Regarding our recommendation on standard protocols and procedures to facilitate data sharing, the department noted that policies and other initiatives can also play a role in achieving cooperation. Finally, the department noted that our report’s acknowledgement of related concerns about the quality of administrative data, and the level of support and resources necessary to maintain a statistical and administrative data infrastructure, underscore the importance of our recommendations.\nOMB generally agreed with our recommendations and said that the agency hopes to pursue these in the future. More specifically,\nOMB agreed that it is worth considering good practices for reducing duplication. As we suggested, OMB indicated that when its survey guidance is next updated it will include additional details and examples of actions agencies can take to identify duplication and consult with persons outside the agency.\nOMB said that it shared our concerns about timely and easily accessible dissemination of information resources produced by interagency statistical committees, and that our recommendation underscores the need for addressing this issue.\nWith respect to our recommendation that OMB implement quality- control procedures designed to identify and remedy any differences between cost and burden information provided on Reginfo.gov and in the related supporting statement documentation that underlies this information, OMB noted that PRA requires OMB to weigh the burdens imposed on the public by information collections against the legitimate needs of the federal agencies. OMB said that this requires a careful assessment of the estimates of paperwork burden that agencies provide to OMB as part of their information collection requests and, further, that these estimates are subject to public scrutiny and comment in Federal Register notices, in the PRA statements provided on information collections, and on Reginfo.gov. OMB pointed out that, because the burden estimates provided on Reginfo.gov and in the underlying supporting statements are all made public, discrepancies such as those found by us are public as well. OMB said that it will investigate and address any such discrepancies that are brought to its attention by GAO or any member of the public.\nFinally, OMB concurred that administrative records can be a valuable supplement to, though usually not a replacement for, household surveys. OMB believes that our recommendation to develop comprehensive guidance for statistical and administrative agencies to use when evaluating and negotiating data-sharing agreements would be constructive, but cautioned that this involves a very complex set of issues and said it will take some time to develop such guidance.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Commissioner of the Bureau of Labor Statistics (BLS), the Director of the U.S. Census Bureau, the Administrator of the Economic Research Service (ERS), the Secretary of Health and Human Services, the Director of the National Science Foundation, the Director of OMB, the Secretary of Commerce, and the Under Secretary of Economic Affairs. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions concerning this report, please contact Robert Goldenkoff at (202) 512-2757 or [email protected], or Ronald S. Fecso at (202) 512-7791 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors are listed in appendix VI.",
"The objectives of this report were to (1) review the ways in which the Office of Management and Budget (OMB) and agencies identify opportunities for improvement and increased efficiency of selected information collections; (2) evaluate opportunities and constraints for the statistical agencies to use administrative data in conjunction with selected surveys; and (3) evaluate ways in which American Community Survey (ACS) data and resources can be used in selected surveys, and the associated benefits and constraints.\nTo achieve our objectives, we focused on statistical information collections administered to households and individuals and subject to the Paperwork Reduction Act (PRA), which requires OMB approval of certain federal data collections. Although in many cases the information and views provided by agencies during our review and our general findings may also apply to statistical information collections outside of our scope, such as those administered to businesses, all of the specific collections and surveys we reviewed were administered to households and individuals. The majority of the collections within our scope include a survey, though some also include other methods of information collection such as focus groups. To examine the issues related to our objectives, we performed case studies of five federal surveys: the Consumer Expenditure Surveys, sponsored by the Bureau of Labor Statistics; the National Health and Nutrition Examination Survey and the National Health Interview Survey, both sponsored by the National Center for Health Statistics, part of the Centers for Disease Control and Prevention; the National Survey of College Graduates, sponsored by the National Center for Science and Engineering Statistics, part of the National Science Foundation; and the Survey of Income and Program Participation, sponsored by the Census Bureau. We selected these surveys based on several factors, such as their size and cost and whether they use or have the potential to use administrative data or ACS data.\nFor the first objective, to review the ways in which OMB and agencies identify opportunities for improvement and increased efficiency of selected statistical information collections, we examined the PRA, OMB guidance to agencies, and prior GAO work on the federal statistical system. We interviewed officials at OMB and the four agencies that administer the case-study surveys to learn about coordination among agencies, efforts agencies take to identify improvement, and OMB’s role. We also interviewed officials at the Department of Agriculture’s Economic Research Service, which is a member of several interagency statistical committees and the lead agency for the Statistical Community of Practice and Engagement. In addition, we interviewed experts on the federal statistical system to learn about their perspectives on the efficiency of the federal statistical system and agency and OMB coordination. In evaluating OMB, agency, and interagency actions, we used as criteria the requirements of the PRA and practices identified in prior GAO work on agency collaboration.\nTo address the second objective, to evaluate opportunities and constraints for agencies to use administrative data in conjunction with selected surveys, we reviewed statutes that govern the sharing and use of administrative data, documentation from case-study surveys, and various papers and reports. We interviewed officials at OMB and experts in the field of federal statistics to learn about their perspectives on the current and potential uses of administrative data. We also interviewed officials at the Economic Research Service and the agencies that sponsor the case-study surveys to learn about ways in which their surveys use or could potentially use administrative data. For this objective and the third we used OMB guidance, relevant statutes, and prior GAO work as criteria in our evaluation.\nFor the third objective, to evaluate the ways in which ACS data and resources can be used in selected surveys, we reviewed Census Bureau documentation, National Science Foundation reports, prior GAO work, and reports issued by the Committee on National Statistics. We interviewed officials at the Census Bureau, which sponsors the ACS, and at OMB to learn about their perspectives on potential uses of the survey and its data. We also interviewed officials at the Economic Research Service and the agencies that administer the case-study surveys to learn about ways in which their surveys use or could potentially use ACS data and resources, and experts in the field of federal statistics to learn about their assessment of the uses and potential uses of the ACS.\nTo gain a broader perspective on the information collections in our scope and to inform our work across all three objectives, we obtained and analyzed publicly-available data from Reginfo.gov, a government website that provides access to information on agency requests for OMB approval of information collections. We used the website’s search feature to download all of the collections that were classified as (1) active, meaning that they are currently approved by OMB for use by agencies; (2) employing statistical methods; and (3) directed to households and individuals. We downloaded data on all information collections that met these criteria from Reginfo.gov on two dates, May 17, 2011, and September 22, 2011.\nWe performed more in-depth analyses of the 507 information collections in our May 17, 2011, download. First, we reviewed the supporting statements for each of these collections, and on the basis of information in these documents classified them according to the subject matter on which they focus. Next, we grouped the collections into categories, based on information on the sponsoring agency in Reginfo.gov and the supporting statements. Depending on the sponsoring agency, we put the collections into one of four categories: (1) those that are sponsored by one of the 13 principal statistical agencies; (2) those that are sponsored by another agency that shares a parent agency with one of the 13 principal statistical agencies (for example, agencies in the Department of Health and Human Services would fall into this category because it is the parent agency of the National Center for Health Statistics); (3) those that are not a principal statistical agency and do not share a parent agency with one; and (4) unknown, for those whose sponsoring agency we could not determine based on the available information. We also used the information in the supporting statements to determine if the collections included a survey component and found that 481 of the 507 did.\nWe divided the 481 collections that included a survey component into three strata that reflect the type of sponsoring agency. Of the 481, we were not able to determine agency type for 7 collections so we dropped these records, leaving a population of 474 statistical information collections. The number of collections by stratum is shown in table 3. In order to estimate the prevalence of certain characteristics in this population—for example, the percentage of information collections for which the sponsoring agency reported steps taken to identify potential duplication—we drew a stratified sample of 106 collections. Within each stratum, we estimated the sample size required to yield a 95 percent confidence interval of plus or minus 14 percent around such an estimate. For the overall population of 474, the approximate precision for an estimated percentage of 50 percent is plus or minus 8.4 percent, at the 95 percent level of confidence.\nWe reviewed the supporting statements of each of the information collections in our sample of 106, focusing on agencies’ reported efforts to identify duplication and to consult with persons outside the agency to obtain their views. Because agencies follow a standard format in preparing supporting statements, we focused our analysis on the sections of the supporting statements in which OMB instructs agencies to include this information (sections 4 and 8, respectively, of section A of the supporting statement). To review agencies’ reported actions, we used a data-collection instrument that contained a series of “yes-no” questions about the types of efforts reported. For example, we reviewed whether agencies had reported considering administrative data as a potential source of duplication, and whether agencies reported that they had consulted with other agencies when describing consultations outside of the agency. We did not evaluate whether agencies actually took the actions they reported taking. Estimates produced from the sample of the collections are subject to sampling error. We express our confidence in the precision of our results as a 95 percent confidence interval. This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn. As a result, we are 95 percent confident that each of the confidence intervals in this report will include the true values in the study population.\nWe took several steps to evaluate the reliability of the data we accessed through the Reginfo.gov website. We interviewed OMB officials and reviewed documentation of the Reginfo.gov website and the Regulatory Information Service Center and OIRA Consolidated Information System,which is the system that agencies use to track information collection requests and that underlies information provided on Reginfo.gov. As part of our review of the subject matter of the collections in the May 17, 2011, download, we confirmed that the collections were within our scope. We also used the information in the September 22, 2011, download to evaluate the reliability of data on collections’ cost and annual burden. To do this, we drew a systematic random sample of 56 (approximately 10 percent) of the 555 collections in the download.\nWe found a number of inconsistencies between the cost and burden information available on the website and that provided in supporting statement documentation. According to an official at OMB, the two sources should match, but the supporting statement documentation is more accurate than that on the website. On the basis of our assessment, we determined that the information from the website was not sufficiently reliable for the purpose of describing the annual cost or annual burden to respondents of the collections in our scope. However, through this review and the other steps we took, we found that the other information provided on the Reginfo.gov site was sufficiently reliable for our other intended purposes of identifying the collections within our scope and obtaining information on their subject matter and reported actions taken to identify unnecessary duplication and solicit input from outside persons and entities.\nBecause the cost information on the Reginfo.gov website was not sufficiently reliable, we used cost information from the supporting statements of the collections in our sample to provide background information on the costs of the collections in our scope. In addition to using information from the supporting statements in our initial sample of 56 collections, we drew another systematic random sample of 56 additional collections from the September download. In total, we obtained cost information from the supporting statements of 112 (approximately 20 percent) of the 555 collections in our scope that were active as of our September 22, 2011, download.\nWe conducted this performance audit from December 2010 until February 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audits to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"",
"Purpose: To collect information on expenditures and households’ characteristics Sponsoring agency: Bureau of Labor Statistics (BLS)\nThis amount reflects the approximate fiscal year 2010 cost of collecting, processing, reviewing, and publishing data collected through the CE Surveys. Survey costs vary somewhat from year to year.\nBLS estimates that respondents will take an average of 60 minutes to complete one interview survey of the CEQ. Since the CEQ is administered to the same sample of households four times in a year, the annual burden for respondents who complete all four surveys is roughly 4 hours. In addition, a certain number of respondents who complete the interview surveys are reinterviewed, a process that adds 10 minutes to these selected respondents’ burden times.\nPrice Index, the most widely used measure of inflation.government agencies, private companies, policymakers, and researchers use data from the CE Surveys in a variety of ways. For example, the Department of Defense uses data from the CE Surveys to update cost-of- living adjustments for military families. Congressional committees also use the data to inform decision making, such as the potential effect of increases in the minimum wage.",
"NCHS estimates that the annual cost to the federal government of NHANES for fiscal year 2010 was $37.8 million, including both direct and reimbursable funding provided by other agencies for NCHS statistical services. Survey costs vary somewhat from year to year.\nNCHS estimates that the total annual burden for the NHANES is 37,626 hours, including screening, household interviews, physical examinations, and any follow-up interviews. In addition, tests of procedures and special studies account for an additional 12,000 hours, for a total annual burden of 49,626 hours. NCHS estimates that respondents who participate in all aspects of the NHANES, including the screener survey, household interview, and physical examination, can expect a burden of 6.7 hours. In addition to those who complete all aspects of the NHANES, some respondents may only participate in the screener survey and be screened out of the sample, while other respondents may participate in the screener survey and the household interview but not the physical examination. NCHS includes all respondents at these varying levels of participation in its calculation of the annual burden hours.\nTarget population: Nationally-representative sample of individuals of all ages Uses of data: According to NCHS documentation, a variety of users, including federal agencies, research organizations, universities, health- care providers, and educators, use NHANES data. For example, the Food and Drug Administration uses NHANES data to determine whether changes are needed to federal regulations. In addition, use of NHANES data informs key decision making. For example, according to NCHS documentation, NHANES data on lead levels in blood were instrumental in developing the policy to eliminate lead from gasoline and in food and soft drink cans. As part of its broader data-linkage program, NCHS links NHANES survey data to multiple administrative datasets, such as the National Death Index (a centralized index of state death record information) and Medicare and Medicaid claims from the Centers for Medicare and Medicaid Services. The National Death Index linkages give researchers an opportunity to analyze mortality differences among subgroups defined using the survey information. Similarly, the Medicare and Medicaid claim linkages provide an opportunity to examine health conditions, utilization, and costs among subgroups defined using the survey information. Additionally, according to NCHS officials, NCHS is currently conducting a pilot study to link NHANES data on participants from Texas to administrative data on food assistance.",
"Purpose: To monitor the health of the U.S. population Sponsoring agency: National Center for Health Statistics (NCHS), Centers for Disease Control and Prevention Annual sample size (estimated): 35,000 householdsAnnual cost to the federal government (estimated): $32.2 millionAnnual burden hours (estimated): 34,977 hours Target population: Nationally-representative sample of households, collecting data on all members of each household Uses of data: According to NCHS documentation, government agencies, policymakers, researchers, and academics use NHIS data for a variety of purposes, such as identifying health problems and evaluating health programs. For example, policymakers used NHIS data to shape the Centers for Disease Control and Prevention’s cervical-cancer screening policy. In addition, other agencies can use the NHIS as a sample frame for their surveys. Lastly, as part of its broader data-linkage program, NCHS links NHIS survey data to multiple administrative datasets, including those it uses for linkages with NHANES data, such as the National Death Index and Medicaid and Medicare claims.",
"NCHS estimates that the total annual burden of the NHIS was 34,977 hours for 2010 and 2011. NCHS estimates that a single respondent who completes all portions of the NHIS for a household can expect a time burden of one hour. Some respondents who complete all portions of the NHIS are asked to take a short reinterview survey, a process that adds 5 minutes to these selected respondents’ burden times. In addition to those who complete all portions of the NHIS, some respondents may only participate in a screener survey and be screened out of the sample, which NCHS estimates takes 5 minutes per respondent. NCHS includes all respondents at these varying levels of participation in its calculation of the annual burden hours.\nCost to the federal government (estimated): $13.3 millionBurden hours per administration (estimated): 34,792 hours Target population: Individuals in the United States who have a bachelor’s degree in science, engineering, or health, and those who have a degree in another field but work in science, engineering, or health occupation.\nUses of data: According to National Science Foundation documentation, information from the NSCG is used by researchers and policymakers. Government agencies use the data to assess available scientific and engineering resources and inform the development of related policies. Additionally, educational institutions use NSCG data to inform the establishment and modification of curricula, and businesses use the data to develop recruitment and compensation policies.",
"This estimate is based on the assumption that 83,500 individuals will respond to the survey and each respondent will take 25 minutes to complete it.\nThe Census Bureau estimates that the production cost for all parts of the SIPP in fiscal year 2011 is $50.1 million. Survey costs vary somewhat from year to year.\nAnnual burden hours (estimated): 143,303 hours All Target population: Nationally-representative sample of households. household members 15 years old or over are interviewed for the survey.\nUses of data: According to the Census Bureau, SIPP data are used by agencies such as the Department of Health and Human Services and the Department of Agriculture, as well as economic policymakers, Congress, and state and local governments, to plan and evaluate government social-welfare and transfer-payment programs.\nThe SIPP is limited to the U.S. civilian, noninstitutionalized population, and as a result excludes certain segments of the population, such as active-duty military members living on bases and prisoners.",
"Selected statutes that regulate the collection and dissemination of information include the following.",
"The Information Quality Act of 2000 requires, among other things, that the Office of Management and Budget (OMB) develop and issue guidelines that provide policy and procedural guidance for federal agencies for ensuring and maximizing the quality of the information they disseminate. These guidelines include steps designed to assure objectivity and utility of disseminated information. See 44 U.S.C. § 3504(d)(1); OMB guidelines are at http://www.whitehouse.gov/omb/info_quality_iqg_oct2002/.\nThe Privacy Act of 1974, as amended, and the privacy provisions of the E-Government Act of 2002 specify requirements for the protection of personal privacy by federal agencies. The Privacy Act places limitations on agencies’ collection, disclosure, and use of personal information maintained in systems of records. See 5 U.S.C. §§ 552a and 552a note. The E-Government Act requires agencies to conduct privacy impact assessments that analyze how personal information is collected, stored, shared, and managed in a federal system. See 44 U.S.C. § 3501 note.\nThe Confidential Information Protection and Statistical Efficiency Act (CIPSEA) of 2002 focuses on confidentiality protection and data sharing. It requires that information acquired by an agency under a pledge of confidentiality and for exclusively statistical purposes be used by the agency only for such purposes and not be disclosed in identifiable form for any other use, except with the informed consent of the respondent. It also authorizes identifiable business records to be shared for statistical purposes among the Bureau of Economic Analysis, Bureau of Labor Statistics, and the Census Bureau. See 44 U.S.C. § 3501 note.",
"Agency-specific statutes also guide federal data collection and use. For example, the Census Bureau conducts the census and census- related surveys such as the American Community Survey under Title 13 of the U.S. Code, which gives the Census Bureau the authority to request and collect information from individuals but also guarantees the confidentiality of these data and establishes penalties for unlawfully disclosing this information. Unless specifically authorized, these provisions preclude the Census Bureau from sharing identifiable census information with other agencies. See 13 U.S.C. § 9. Title 15 of the U.S. Code permits the Secretary of Commerce to conduct studies on behalf of other agencies and organizations. Identifiable data from surveys conducted under Title 15 authority are subject to the sponsoring agency’s legislation and confidentiality requirements. See 15 U.S.C. § 176a. Statutes and regulations specific to other agencies also affect collection and sharing of data.\nSection 6103 of the Internal Revenue Code provides that federal tax information is confidential and may not be disclosed except as specifically authorized by law.\nSection 308(d) of the Public Health Service Act requires that identifiable information obtained by the National Center for Health Statistics be used only for the purpose for which it was collected unless consent is obtained for another purpose, and it prohibits the release of identifiable information without consent.\nOther legislation such as the Family Educational Rights and Privacy Act, which protects the privacy of student education records, can affect federal data-collection efforts. See 20 U.S.C. § 1232g.",
"This table reproduces the information in the interactive figure 3 earlier in this report.",
"",
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"In addition to the individuals named above, Tim Bober (Assistant Director), Carl Barden, Russell Burnett, Robert Gebhart, Jill Lacey, Andrea Levine, Jessica Nierenberg, Susan Offutt, Kathleen Padulchick, Tind Shepper Ryen, and Jared Sippel made key contributions to this report."
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"question": [
"What is the role of the OMB?",
"What authority do they hold?",
"How is OMB collection information made public?",
"What advice does OMB give?",
"What did the GAO find on the OMB's documentation?",
"What advice did the GAO have from this review?",
"Why are interagency committees important for collaboration?",
"What projects do these committees have?",
"What can be fixed with the project information?",
"What potential does admin data hold?",
"What are the main ways these data are used?",
"Why are there issues with expanding admin data use?",
"What could improve the potential problems?",
"What is the ACS?",
"What potential does ACS have?",
"What of this potential is limited?",
"Why must efficiencies be identified?",
"What was the GAO asked to review surrounding cost-effectiveness?",
"What did the GAO collect to make this review?"
],
"summary": [
"The Office of Management and Budget (OMB), agencies, and interagency statistical committees have distinct roles in identifying opportunities to improve federal information collection efforts.",
"OMB exercises several authorities that promote the system’s efficiency, including overseeing and approving agency information collections.",
"The website Reginfo.gov provides the public with information, such as cost and burden, on collections that OMB reviews, though GAO’s review identified some discrepancies in selected items.",
"OMB periodically issues guidance to agencies on complying with federal requirements for information collections, but this guidance generally does not prescribe specific actions to take.",
"GAO’s analysis of agencies’ documentation of active surveys indicated that 77 percent included detailed descriptions of efforts to identify duplication, while those that did not tended to be for collections that are unlikely to duplicate existing information; and 75 percent reported actions beyond those required by statute to solicit external input.",
"OMB, through enhanced guidance, could promote additional awareness of options agencies can take to identify duplication and solicit input.",
"Interagency committees, which primarily draw members from the 13 agencies that have statistics as their primary focus, are particularly important in helping ensure collaboration.",
"The committees have numerous projects underway aimed at addressing key challenges facing the statistical system.",
"However, mechanisms for disseminating information about their work are not comprehensive or up-to-date. Though member agencies are the most-likely customers of the committees’ products, making information about committee work and priorities more accessible could benefit other agencies, academics, and the general public. It could also benefit committee members by providing a central repository for information.",
"Administrative data have greater potential to supplement rather than replace survey data.",
"Agencies currently combine the two data sources in four key ways to cost-effectively increase efficiency and quality. Specifically, agencies use administrative data to: (1) link to survey data to create new data products; (2) supplement surveys’ sample frames; (3) compare to survey data to improve accuracy and design of surveys; and (4) combine with survey data to create, or model, estimates.",
"However, expanding the use of administrative data faces key constraints related to the access and quality of the data. While agencies and committees are taking steps to address these constraints and facilitate the process through which agencies work together to share data, individual tools may not be sufficient.",
"A more-comprehensive framework for use by all agencies involved in data-sharing decisions that includes key questions to consider when evaluating potential use of administrative data could make the decision process more consistent and transparent.",
"ACS, an ongoing monthly survey that provides information about the nation’s communities, offers agencies important opportunities to increase the efficiency and reduce the costs of their surveys, but its current design limits the extent to which agencies can utilize some of these opportunities.",
"Uses that do not affect ACS design or the survey’s respondents, such as using ACS estimates to inform survey design or evaluate other surveys’ results, have widespread potential.",
"However, more-intensive uses, such as adding content or supplemental surveys to the ACS, currently have limited potential.",
"As demand for more and better information increases, rising costs and other challenges require that the federal statistical system identify efficiencies.",
"To explore opportunities to improve cost-effectiveness, GAO was asked to (1) review how the Office of Management and Budget (OMB) and agencies improve information collections, (2) evaluate opportunities and constraints for agencies to use administrative data (information collected as part of the administration of a program or held by private companies) with surveys, and (3) assess the benefits and constraints of surveys making greater use of the Census Bureau’s American Community Survey (ACS) data and resources.",
"GAO focused on collections administered to households and individuals, analyzed statutory and agency documents, did five case studies of surveys, reviewed documentation of representative samples of active surveys, and interviewed agency officials and experts."
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GAO_GAO-16-475
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{
"title": [
"Background",
"Earned Income Tax Credit",
"Additional Child Tax Credit",
"American Opportunity Tax Credit",
"More Taxpayers Claim the EITC than Other Refundable Tax Credits and the Largest Share of Benefits Go to Those Making Less than $20,000",
"Lack of Third Party Data Complicates IRS’s Ability to Administer Credits and Complexity of Credit Requirements Contributes to Taxpayer Burden",
"IRS Relies on Pre-Refund Screening Systems, Correspondence Audits, and Document Matching to Detect, Prevent, and Correct Errors",
"Lack of Third Party Data and Filing and Refund Deadlines Complicate IRS’s Enforcement Efforts",
"Complexity of Eligibility Rules and Complying with IRS Enforcement Activities Contribute to Taxpayer Burden",
"Developing a Comprehensive Strategy for RTC Compliance Efforts and Greater Use of Available Data Could Help IRS Better Target Limited Enforcement Resources",
"IRS’s Lack of a Comprehensive Compliance Strategy for RTCs Hampers Its Ability to Make Informed Resource Allocation Decisions",
"IRS Does Not Report Error Rates for All RTCs and It Is Unclear How It Uses Compliance Data to Make Resource Allocation Decisions",
"RTC Performance Indicators Are Difficult to Interpret and Do Not Include Indicators for Equity and Compliance Burden",
"Agency-wide Administrative and Compliance Challenges Complicate RTC Oversight",
"IRS Is Missing Opportunities to Use Available Data to Identify Drivers of ACTC and AOTC Noncompliance",
"IRS Could Use Previous Years’ Tax Returns to Identify AOTC Noncompliance, but Congressional Action Is Needed",
"IRS Has Made Efforts to Promote RTC Awareness and Compliance by Taxpayers and Paid Preparers",
"Evaluating Proposed Changes to the RTCs Involves Assessing Trade-offs in Their Impact on Equity, Efficiency, and Simplicity",
"Efficiency, Equity, and Simplicity Are Standard Criteria for Evaluating Tax Credits",
"A Review of Changes Proposed for One or More of the Key Features of the Refundable Tax Credits",
"Changing Refundability Affects Access to the RTCs by Taxpayers with Lower Incomes and Judgments about Equity of the Credits",
"Changes in Eligibility Rules Can Affect Judgments about the RTCs’ Equity and Effectiveness",
"Changes to the Structure of the RTCs Involve Trade-offs among Equity, Efficiency, and Revenue Cost",
"Changes That Address Interactions of the RTCs with Other Programs Attempt to Improve Effectiveness by Increasing Transparency",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and our Evaluation",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: National Research Program Error Rate Methodology and Estimates with Sampling Errors",
"National Research Program Error Rate Calculation Methodology",
"Appendix III: Research Findings on the Current Refundable Tax Credits",
"Research Has Shown That the EITC Has Increased Employment and Reduced Poverty but Is Complex to Comply with and Administer",
"The CTC/ACTC Provides Financial Assistance to Families with Children but It Is Complicated to Comply with and Administer",
"The AOTC Provides Assistance for Educational Expenses but Its Effect On College Attendance Is Unknown and It Is Complicated to Comply with and Administer",
"Appendix IV: Comments from the Internal Revenue",
"Appendix V: GAO Contact and Staff Acknowledgments",
"GAO Contacts:",
"Staff Acknowledgments:"
],
"paragraphs": [
"Refundable tax credits (RTC) differ from other credits because a taxpayer is able to receive a refund check from IRS for the amount their credit exceeds their tax liability. For example, a person who owed $2,000 in taxes, but qualified for $3,000 in EITC would receive a $1,000 refund from IRS. A nonrefundable credit can be used to offset tax liability, but any excess of the credit over the tax liability is not refunded to the taxpayer. If, instead of claiming the EITC, that same person claimed $3,000 in a nonrefundable credit, the person would use $2,000 to reduce the tax liability to zero, but would not receive the remaining credit amount as a refund.\nAccording to the Congressional Budget Office (CBO), the number and costs associated with refundable tax credits have varied over the past 40 years. The first refundable credit, the EITC, was enacted in 1975. In 1998, additional RTCs became effective and by 2010 there were 11 different refundable tax credits. The cost of refundable tax credits peaked in 2008 at $238 billion, but declined over the next 4 years because of the expiration of several credits designed to provide temporary economic stimulus. Starting in 2014, the refundable Premium Tax Credit (PTC) was made available to some low-income households for the purchase of health insurance through newly created exchanges, as part of the Patient Protection and Affordable Care Act (PPACA). According to estimates from the Joint Committee on Taxation (JCT) and CBO, the cost of the PTC in its first year was $35 billion and will be about $110 billion by 2021.\nIn 2015, there were five refundable credits in effect. Four of those were available to individuals—the EITC, ACTC, AOTC, and PTC. We issued a report last year assessing IRS’s implementation of PPACA requirements, including efforts to verify taxpayers’ PTC claims. This report focuses on the design and administration of the other three refundable tax credits available to individuals.",
"Congress enacted the EITC in 1975 to offset the impact of Social Security taxes on low-income families and encourage low-income families to seek employment rather than public assistance. The credit was also meant to encourage economic growth in the face of a recession and rising food and energy prices. Since the credit’s enactment, it has been modified to provide larger refunds and differentiate between family size and structure. In fiscal year 2013, taxpayers received $68.1 billion in EITC; an average amount of $2,362 was distributed to about 29 million taxpayers.\nBeginning in 1979, the credit was also available as an advance credit. This meant that filers had the option to receive their predicted credit in smaller payments throughout the preceding year and reconcile the amount received with the amount they were actually eligible for upon filing their taxes. However, as we reported, the advanced payment option had a low take-up rate of 3 percent and high levels of noncompliance (as many as 80 percent of recipients did not comply with at least one of the program requirements), which led to its repeal in 2010.\nThe EITC divides the eligible population into eight different groups based on the number of eligible children claimed by the filer and filing status. The basic structure of the credit remains the same for each group: the credit phases in as a percentage of earned income; upon reaching the maximum benefit, the credit plateaus; and when income reaches a designated point, the benefit begins to phase out as a percentage of income. The phase-in and phase-out rates, maximum benefit, and phase- out point all differ depending on filing status (such as single or married filing jointly) and the number of eligible children claimed.\nIn order to claim the EITC, the tax filer must work and have earnings that do not exceed the phase-out income of the credit. Additional eligibility rules apply to any children that a tax filer claims for the purpose of calculating the credit. A qualifying child must meet certain age, relationship, and residency requirements. For example, the child must be younger than 19 (or 24 if a full-time student) and be a biological, adopted, or foster child, grandchild, niece/nephew, or sibling of the filer and live with the filer in the United States for at least 6 months of the year. Additionally, the child must have a valid Social Security number (SSN).\nThe Improper Payments Information Act (IPIA) of 2002, as amended, requires federal agencies to review programs and activities that may be susceptible to significant improper payments and report on actions taken to reduce improper payments. In addition, the Office of Management and Budget (OMB) identifies high-priority (or high-risk) programs, one of which is EITC, for greater levels of oversight and review. For fiscal year 2015, IRS estimated that, $15.6 billion—or 23.8 percent—of EITC program payments were improper. The estimated improper payment rate for EITC has remained relatively unchanged since fiscal year 2003 (the first year IRS had to report estimates of these payments to Congress), but the amount of improper EITC payments increased from an estimated $10.5 billion in fiscal year 2003 to nearly $16 billion in fiscal year 2015 because of growth in the EITC program overall.",
"The Additional Child Tax Credit (ACTC) is the refundable portion of the Child Tax Credit (CTC) and provides tax relief to low-income families with children. It also adds to the positive reward the EITC provides to those who work. The credit was initially created in 1997 by the Taxpayer Relief Act of 1997 as a nonrefundable child tax credit for most families, but in 2001 was expanded to include the current refundable ACTC for which more low-income families were eligible. Like the EITC, taxpayers can use the child tax credits to both offset tax liabilities (CTC) and receive a refund (ACTC); however, unlike the EITC, the nonrefundable CTC and the refundable ACTC amounts are entered separately on the Form 1040. In fiscal year 2013, taxpayers claimed $27.9 billion in ACTC and $27.2 billion in the nonrefundable CTC. Thus, the total revenue cost of the CTC and ACTC was $55.1 billion.\nThis report will sometimes combine these credits (referring to them as CTC/ACTC) when their combined effect is at issue or to facilitate comparison with other RTCs that do not break out refundable and nonrefundable components. In general, the ACTC is claimed by those with lower tax liabilities and lower income than those that claim only the CTC. As reported by the SOI Division of the Internal Revenue Service, in 2012, 88 percent of the ACTC went to taxpayers with adjusted gross income below $40,000, while 17 percent of the CTC went to taxpayers below that income.\nUnder current law, taxpayers can use the CTC to offset their tax liabilities by up to $1,000 per qualifying child. If the available CTC exceeds the filer’s tax liability, they may be able to receive a portion of the unused amount through the refundable ACTC. The ACTC phases in at 15 percent of every dollar in earnings above $3,000 up to the unused portion of the CTC amount. To claim the CTC or ACTC, taxpayers must have at least one qualifying child. The criteria for qualifying children are slightly different from that used to determine eligibility with the EITC. For the CTC and ACTC, the child must be under the age of 17 and a U.S. citizen, national, or resident, but taxpayers file using either a SSN or individual taxpayer identification number (ITIN). However, the relationship and residency requirements are similar for the ACTC and EITC. See figure 1 for a description of the credits and their requirements.",
"The American Opportunity Tax Credit (AOTC) offsets certain higher education related expenses in an effort to lessen the financial burden of a college or professional degree for taxpayers and their dependents. The credit was created by the American Recovery and Reinvestment Act of 2009 as a modification of the nonrefundable Hope Credit and was made permanent in 2015 with the Protecting Americans from Tax Hikes (PATH) Act. In 2013, taxpayers claimed $17.8 billion in AOTC.\nThe AOTC is designed as a partially refundable credit. The entire credit is worth up to $2,500 and a taxpayer can receive a refundable credit equal to 40 percent of their credit (for a maximum of $1,000). The size of the entire credit is determined by taking 100 percent of the first $2,000 in qualified education expenses and 25 percent of the next $2,000 in qualified expenses, which include tuition, required enrollment fees, and course materials. The value of the limit on expenses qualifying for the credit is not indexed for inflation. In order to claim the AOTC a tax filer or their dependent must meet certain requirements including adjusted gross income requirements. Furthermore, they must be in their first 4 years of enrollment and be at least a half-time student at an eligible post- secondary school. Taxpayers may only claim the AOTC for 4 years.",
"More taxpayers claim the EITC than the other two refundable credits we examine in this report. The EITC is also the most expensive in terms of tax revenue forgone and refunds paid. In 2013, taxpayers claimed a total of $68.1 billion in EITC with $59 billion (87 percent) of this amount refunded; the total was $55.1 billion for the CTC and ACTC with $26.7 billion (48 percent) refunded as ACTC and a total of $17.8 billion in AOTC with $5 billion refunded (28 percent). There are several reasons why the ratio between the amount received as tax refunds and the amount used to offset tax liabilities varies from credit to credit including whether the credits are partially or fully refundable as well as income levels of the recipients.\nThe number of taxpayers claiming the earned income credit increased 50 percent from1999 to 2013, and the total amount claimed after adjusting for inflation increased 60 percent, due in part to legislative changes which increased the number of people eligible for the credit and the amount they could claim. Over that same period, the ACTC also increased, with 20 times more taxpayers receiving the credit in 2013 than 1999. The AOTC did not see similar constant growth. See figures 2 and 3 for the number of taxpayers claiming credits and the amounts of credits received over time.\nAs figure 4 shows, a greater share of EITC benefits goes to lower-income taxpayers. More than half (62 percent) of EITC benefits go to taxpayers making less than $20,000, with the largest share (48 percent) going to those making from $10,000 to less than $20,000. For the other credits, the benefits are spread more evenly among income groups. The CTC and AOTC do not have the same income restrictions as the EITC, so higher income taxpayers also benefit from those credits. For example, taxpayers making $100,000 or more receive 22 percent of the AOTC. Figure 4 also shows the percent of each credit claimed per adjusted gross income (AGI). Examined separately from the nonrefundable CTC, the ACTC also benefits lower income groups, but is less concentrated on the lowest income groups than the EITC, with 42 percent going to taxpayers making less than $20,000. (See figure 11 in appendix III for a comparison of CTC and ACTC benefits by AGI.)\nIn addition to being lower income, EITC and ACTC claimants are more likely to be sole proprietors—persons who own unincorporated businesses by themselves—and to be heads of households than the general taxpayer population. As table 1 shows, 16 percent of taxpayers are sole proprietors, but they represent 25 percent of EITC and ACTC claimants. (Additionally, but not shown in the table, 29 percent of all EITC dollars go to sole proprietors.) EITC and ACTC are claimed mostly by heads of households. While people filing as head of household make up only 15 percent of the taxpayer population, they represent 56 percent of ACTC claimants and 47 percent of EITC claimants. AOTC claimants, on the other hand, are most likely to be married filing jointly (43 percent) or single (34 percent). Workers without qualifying children, or childless workers, make up 25 percent of EITC claimants, but receive 3 percent of benefits. Table 1 shows additional detail on how these characteristics differ across the three credits.",
"",
"IRS relies on pre-refund controls and filters to detect, prevent, and correct errors, a selection of which is shown in figure 5.\nBefore accepting a return, IRS checks it for completeness and attempts to verify the taxpayer’s identity and credit eligibility. A series of systems use IRS and other government data to check whether returns meet certain eligibility requirements (like whether earned income falls within EITC income limits) and include the required forms (such as a Schedule EIC).\nIRS can use its math error authority (MEA) to correct or request information on electronic returns with these errors.\nDuring return processing, IRS runs returns through additional systems to screen for fraud and errors. One system, IRS’s Electronic Fraud Detection System (EFDS), screens returns for fraud including possible identity theft. If flagged, IRS stops processing the return and sends a letter asking the taxpayer to confirm his or her identity. Another system— the Dependent Database (DDb)—incorporates IRS and other government data, such as the National Prisoner File or child custody information from the Department of Health and Human Services, along with rules and scoring models to identify questionable tax returns and further detect identity theft. Once the suspicious tax returns are identified, the DDb assigns a score to each tax return. Based in large part on these scores, as well as available resources, IRS selects a portion of suspicious returns for correspondence audits, which are audits conducted through the mail. IRS conducts most of its EITC audits (about 80 percent) and ACTC audits (about 64 percent) prior to issuing refunds. In these pre-refund audits, IRS freezes the refund and sends a letter to the taxpayer requesting documentation such as birth certificates or school or medical records to verify eligibility. During the audit process, IRS will also freeze and examine other refundable credits claimed on the return. See table 2 for a description of how many audits IRS selects specifically for each credit and the total amount audited including returns selected for other reasons.\nIRS’s compliance activities continue after it issues refunds. In addition to post-refund audits, IRS also conducts the automated underreporter program (AUR) which matches income data reported on a tax return with third-party information about income and expenses provided to IRS by employers or financial institutions. In 2014, this document matching review process included just over 1 million EITC returns and IRS recommended $1.5 billion in additional tax.",
"Lack of third party data complicates IRS’s ability to administer these credits, but such data are not easy to identify. According to IRS, the data it uses should be complete and accurate enough to allow IRS to select returns with the highest potential for change without placing an undue burden on taxpayers. IRS reported that it evaluated several different databases to determine if they were reliable enough to be used under MEA to make changes to tax returns without going through the audit process. For example, IRS tested the Federal Case Registry (FCR), a national database that aids the administration and enforcement of child support laws. IRS determined that it could not identify errors related to qualifying children from this database with enough accuracy under its standards. In addition, IRS participated in a project led by Treasury and conducted by the Urban Institute that assessed the overall usefulness of state-level benefit data to help validate EITC eligibility. The study concluded, based on a number of issues, including different data collection practices across states that this data would not improve the administration of the EITC.\nWithout data reliable enough to be used under MEA, IRS generally conducts a correspondence audit to verify that a taxpayer meets the requirements for income and that their children meet both residency and relationship requirements. Audits are more costly than issuing MEA notices and they can be lengthy. For example, in 2014 it cost IRS on average $.21 to process an electronic return (including issuing math error notices), while an EITC audit cost $410.74. However, as mentioned above, cost savings should be weighed against other goals such as fairness and burden on taxpayers.\nMore EITC claimants make income errors than qualifying children errors, but the dollar value of the errors due to noncompliance with qualifying children requirements is larger than the dollar value of the income errors. Verifying eligibility with residency and relationship requirements can be complicated and subject to interpretation. IRS offers training to tax examiners on various types of documentation that could be used to verify EITC requirements and tax examiners are allowed to use their judgment to evaluate whether residency or relationships requirements are satisfied. This lack of available, accurate, and complete third party data complicates IRS’s efforts to verify qualifying children eligibility requirements, increasing IRS’s administrative costs and taxpayer burden.\nFiling and refund timelines also complicate IRS’s ability to administer these credits. IRS states on its website that more than 90 percent of refunds are issued within 21 days. It is important that IRS issues refunds on time because when it is late, taxpayers’ refunds are delayed, and IRS is required to pay interest on delayed refunds. However, it is also important to allow enough time to ensure refunds are accurate and issued to the correct individuals. The IRS strategy with respect to improper payments is to intervene early to ensure compliance through outreach and education efforts as well as various compliance programs. Even so, in order to meet timeliness goals, IRS issues most refunds months before receiving and matching information returns, such as the W-2 to tax returns, rather than holding refunds until all compliance checks can be completed. As a result, IRS ends up trying to recover fraudulent refunds and unpaid taxes after matching information and pursuing discrepancies. We previously reported that, in 2010, it took IRS over a year on average to notify taxpayers of matching discrepancies, increasing taxpayer burden. In August 2014, we recommended that IRS estimate the costs and benefits of accelerating W-2 deadlines and identify options to implement pre-refund matching using W-2 data as a method to combat the billions of dollars lost to identity theft refund fraud, allowing the agency more opportunity to match employers’ and taxpayers’ information. In response to our recommendation, IRS conducted such a study and presented the results to Congress in 2015.\nIn December 2015, Congress moved the W-2 filing deadlines to January 31 and required IRS to take additional time to review refund claims based on the EITC and the ACTC. As such, most individual taxpayers who claim either credit would not receive a refund prior to February 15. JCT estimated that the entire provision will result in $779 million in revenue from fiscal years 2016 to 2025. According to IRS officials, they are evaluating how to implement these changes and the impact on the administration of the credits.",
"The complexity of eligibility requirements, besides being a major driver of noncompliance and complicating IRS’s ability to administer these credits, are also a major source of taxpayer burden. For example, for the EITC and ACTC, each child must meet certain age, residency and relationship tests. However, given complicated family relationships, determining whether children meet these eligibility requirements is not always clear- cut, nor easily understood by taxpayers. This is especially true when filers share responsibility for the child with parents, former spouses, and other relatives or caretakers, as the following figure illustrates.\nExamples of Complications that Can Arise when Applying the EITC Eligibility Rules Scenario 1: A woman separated from and stopped living with her husband in January of last year, but they are still married. She has custody of their children. She is likely eligible for the Earned Income Tax Credit (EITC) because she can file using the head of household status.\nHowever…..If the couple separated in November, she is likely not eligible for the EITC because she was not living apart from her husband for the last 6 months of the year and therefore cannot claim the head of household filing status.\nScenario 2: An 18-year old woman and her daughter moved home to her parents’ house in November of last year. She is likely eligible for the EITC because she was supporting herself and her child.\nHowever…..If she always lived at her parents’ house, she is likely NOT eligible for the EITC because she was a dependent of her parents for the full tax year and therefore cannot claim the EITC on her own behalf.\nScenario 3: A young man lives with and supports his girlfriend and her two kids. He and the mom used to be married, got divorced, and are now back together. He is likely eligible for the EITC because the children are his stepchildren and therefore meet the relationship requirement.\nHowever…If he and the mom were never married, he is likely NOT eligible for the EITC because the children are not related to him.\nThe complexity of eligibility requirements, besides being a major driver of noncompliance and complicating IRS’s ability to administer these credits, is also a major source of taxpayer burden. For example, for the EITC and ACTC, each child must meet certain age, residency, and relationship tests. However, given complicated family relationships, determining whether children meet these eligibility requirements is not always clear- cut, nor easily understood by taxpayers. This is especially true when filers share responsibility for the child with parents, former spouses, and other relatives or caretakers, as the following textbox illustrates.\nDifferences in eligibility requirements among the RTCs also contribute to complexity. In 2013, according to our analysis of IRS data, 11.4 million taxpayers claimed both the EITC and ACTC while another 5.3 million claimed the EITC, ACTC, and CTC, navigating multiple sets of requirements for income levels and child qualifications. We have also previously reported that the complexity of education credits like the AOTC means that some taxpayers do not make optimal choices about which education credits to claim. Faced with these complexities, many potential credit recipients seek help filing their tax returns, typically from paid preparers. Fifty-four percent of taxpayers claiming the EITC use paid preparers to help them navigate these requirements and complete the tax forms. These preparers provide a service that relieves taxpayers of costs in terms of their own time, resources, and anxiety about the accuracy of their returns. However, the preparer costs may be an additional burden if their fees are excessive or their advice inaccurate. As we previously reported, the fees charged for tax preparation services vary widely and may not always be explicitly stated upfront. As noted later in this report, unenrolled paid preparers—those generally not subject to IRS regulation—have higher error rates for the RTCs than taxpayers who choose to prepare their own returns.\nTaxpayers who choose to prepare their own returns file a tax return (some version of Form1040) along with additional forms, such as the Earned Income Credit schedule, Schedule 8812 for the CTC, or Form 8863 to claim education credits. To determine both eligibility and the amount of the credit, taxpayers can consult separate worksheets included with the forms. These can be long and detailed; Publication 596, which includes instructions and worksheets for claiming the EITC, is 37 pages long. IRS reported that most taxpayers who self-prepare use tax software when they file their returns and that, on average, the burden for RTC returns was about 11 hours per return in 2013.\nIn addition to the costs of filing a claim for a credit, complying with IRS enforcement activities also contributes to taxpayer burden. In tax year 2013, IRS rejected over 2 million electronically filed EITC claims. IRS rejects these claims for a variety of reasons, such as missing forms, incorrect SSNs, or if another taxpayer has claimed the same child. Taxpayers can handle some of these issues, such as a mistyped SSN, by correcting their electronic returns. IRS reported that a majority (74.4 percent) of rejected returns are corrected and resubmitted electronically. IRS also reported that this process takes taxpayers on average half an hour—shorter than if they had to make this correction after filing. Other issues impose a larger burden. To claim a child that someone else has already claimed for the EITC, taxpayers can fill out and resubmit their return on paper and then face a possible audit with its associated costs.\nWhen processing the tax return, if IRS identifies potential noncompliance with eligibility requirements it can initiate a correspondence audit and send a letter to the taxpayer requesting documentation showing that the taxpayer meets those eligibility requirements. For taxpayers overall, IRS estimated that participating in a correspondence exam takes taxpayers 30 hours, which, combined with any out of pocket costs, is valued on average at $500. In 2015, IRS conducted just under 446,000 EITC exams, which means that approximately 1.6 percent of people filing a EITC claim were audited compared to about .9 percent for individual taxpayers overall in 2014.\nHowever, this compliance burden may be larger for some populations. For example, according to attorneys who represent low-income tax filers, these filers may have difficulty proving they meet residency and relationship requirements due in part to language barriers, limited computer literacy, and complicated family structures. To prove a residency requirement—that a child lived with the taxpayer in the United States for more than half the year—taxpayers may submit a document with their address, name, and the child’s name that could include school or medical records or statements on letterhead from a child-care provider, employer, or doctor. Again, according to low-income tax clinic representatives, these can be hard to cobble together for families with limited English proficiency or who move multiple times throughout the year. To prove a relationship requirement, unless they are claiming their son or daughter, taxpayers must submit birth certificates proving the relationship. For example, to claim a great-grandchild, the taxpayer must submit the child’s, grandchild’s, and great-grandchild’s birth certificates. The names must be on the birth certificates, or they will also need to submit another type of document such as a court decree or paternity test. For multigenerational families or situations in which another relative is taking care of the child, locating and assembling the necessary chain of birth certificates can be a challenge.\nIf IRS determines that a taxpayer improperly claimed the EITC due to reckless or intentional disregard of rules or regulations, it may ban the taxpayer from claiming the credit for 2 years—even if the taxpayer qualifies for it. However, the National Taxpayer Advocate reported that IRS’s procedures automatically imposed the ban on taxpayers who did not respond to IRS’s notices and put the burden of proof onto taxpayers to show they should not have received the ban. According to IRS officials, in response to these concerns, IRS implemented new training programs, strengthened managerial oversight, and added protections for taxpayers to ensure they only systematically issue bans to taxpayers with a history of noncompliance. In 2015, IRS issued fewer 2-year bans than in previous years.\nDespite the compliance burden and costs associated with these RTCs, the burden may be lower than benefits from spending programs. For example, tax credit recipients can self-certify, they do not need to meet with caseworkers, nor submit up-front documentation as is required with some direct service antipoverty programs such as Supplemental Security Income (SSI) or Temporary Assistance for Needy Families (TANF). The simplified up-front process may contribute to higher participation rates. The EITC participation rate — over 85 percent as reported by Treasury— is in the high end of the range for antipoverty programs. GAO previously reported that the SSI participation rate in 2011 was about 67 percent of adults who were estimated to be eligible, while the TANF participation rate was about 34 percent. IRS does not estimate participation rates for AOTC or ACTC.",
"",
"Sustained annual budget reductions at IRS have heightened the importance of determining how best to allocate declining resources to ensure it can still meet agency-wide strategic goals of increasing taxpayer compliance, using resources more efficiently, and minimizing taxpayer burden. In an effort to improve efficiency, IRS consolidated administration of the EITC, ACTC, and AOTC across several different offices within the Wage & Investment Division. Return Integrity and Compliance Services (RICS) oversees the division’s audit functions. Within RICS, Refundable Credits Policy and Program Management (RCPPM) is responsible for refundable credit policy, enforcement, and establishing filters for computerized selection of returns for audit. Refundable Credits Examination Operations is responsible for conducting the audits, oversight and training of personnel, maintaining the phone and mail operations, and addressing personnel and union issues. Although these offices work collaboratively to formulate and implement policies and process workload, they lack a comprehensive strategy for RTC compliance efforts. IRS is working on an operational strategy to document all current EITC compliance efforts and identify and evaluate potential new solutions to address improper payments. However, this review only focuses on efforts to improve EITC compliance and does not include the other refundable credits. The lack of a comprehensive strategy that takes into account all ongoing compliance efforts for the three RTCs (the EITC, ACTC, and AOTC) presents several potential challenges, as discussed below.",
"IRS measures compliance by estimating an aggregate error rate for the EITC and error rates for certain subcategories of EITC claimants (e.g., claimants grouped by type of tax preparer). IRS uses National Research Program (NRP) data for these estimates because it employs a representative sample that can be used to estimate error rates for the universe of taxpayers. In addition to measuring compliance with the tax code, the error rates help IRS understand taxpayer behavior; information IRS could use to develop compliance strategies and allocate resources. According to IRS, it estimates net overclaim percentages (net misreported amount divided by the amount reported) for the RTCs. IRS reported it uses these overclaim percentages to identify areas for potential future research. However, IRS does not report the frequency of these errors or amounts claimed in error across credits, which makes it difficult to compare noncompliance across the credits. Analyses which incorporate relative frequencies and the magnitudes of these errors could be used by IRS to inform resource allocation decisions.\nIn order to show how IRS can use these error rates to inform its compliance strategy and resource allocations, we estimated aggregate error rates for the EITC, the AOTC, and the CTC/ACTC, which combines the refundable ACTC with its nonrefundable counterpart the CTC. Estimating the CTC/ACTC makes it possible to compare error rates for this credit with those for the EITC and AOTC because these credits include the refunded amounts as well as the amounts used to offset tax liabilities. The CTC/ACTC error rate estimate will exclude any adjustments due to dollars shifted between refundable ACTC and nonrefundable CTC. For example, a taxpayer who understates her income may claim a higher ACTC, but if IRS adjusts the income, the effect could be that the refundable ACTC decreases and the nonrefundable CTC increases. This adjustment does not necessarily result in saved dollars or revenue protected, but rather a shifting of dollars from a refund to a lower tax liability, depending where the taxpayer is in relation to the income phase-out rate. Without making these adjustments for the CTC/ACTC estimates, the error rates for the credits would not be comparable.\nThe relative frequency of error rates by different types of credit could be useful information for determining the allocation of enforcement resources. As figure 6 shows, the estimated average error rates for overclaims and underclaims from 2009 to 2011 can vary considerably by credit type. The EITC and AOTC have similar average error rates for overclaims of 29 percent and 25 percent, respectively, but the CTC/ACTC error rate for overclaims is 12 percent—less than half of the other two credits. Although they are much smaller, the underclaim rates vary in a similar way, with the 4 percent AOTC error rate being twice as large as the CTC/ACTC rate. The relative frequency of errors by type of credit may help IRS better focus its limited resources.\nIn addition to the error rates, information about the amount estimated to be claimed in error would also be useful for resource allocation. From 2009 to 2011, the average amount overclaimed for the RTCs also had considerable variation by credit type. The average yearly amount overclaimed for the EITC was $18.1 billion, for the CTC/ACTC was $6.4 billion, and for the AOTC was $5.0 billion. (See appendix II for more details about credit amounts erroneously claimed.) Combining these dollar amounts with the error rate information can further inform resource allocation. For example, although the AOTC had an overclaim rate of 25 percent—nearly as large as the EITC’s 29 percent rate—the amount overclaimed was only about one-third of the EITC’s amount. Both the rate and the amount—among other considerations like effects on equity and compliance burden—would factor into a plan for allocating enforcement resources.\nThe lack of a comprehensive compliance strategy that includes information on error rates by type of credit and categories of taxpayers could limit IRS’s ability to recognize gaps in its enforcement coverage and compliance efforts. For example, IRS previously reported in its EITC compliance studies that unenrolled paid preparers have higher error rates than other preparer types. Our analysis of NRP data, discussed later in this report, showed that this pattern of noncompliance by type of preparer is also true for the ACTC and AOTC. With this information, a compliance strategy can be devised that takes into account these other credits.\nAdditional information could also help IRS better plan resource allocations among the RTCs. IRS devotes a large percentage of its RTC enforcement resources to the EITC, but has not made clear the basis for this allocation. As previously noted, in 2014, IRS selected 87 percent (or 435,000) of its RTC audits based on issues related to the EITC and 6 percent (or 31,000) of its audits based on issues related to the ACTC. The returns that IRS selects for EITC audit may also be audited for other RTC issues. For example, in addition to the 31,000 returns selected for ACTC audits in 2014, another 382,000 returns were audited for the ACTC even though they were selected for another RTC issue—almost always an EITC issue. This approach allows IRS to pick up a lot of potentially erroneous ACTC claims, which IRS can then also freeze as part of the EITC audit. However, this approach raises several concerns about whether IRS is achieving an optimal resource allocation: (1) the very low audit coverage of the approximately 5 million claimants who claim the ACTC but not the EITC could risk a reduction in voluntary compliance, (2) using EITC tax returns as a selection mechanism for ACTC audits may not be the best way to identify ACTC noncompliance, and (3) questions about equity in audit selection for ACTC arise because EITC claimants are generally lower-income than claimants for other credits. Weighing these concerns and other factors like administrative costs could help IRS create a comprehensive strategy for the RTCs that could provide a framework for IRS to make decisions about how to allocate resources and to communicate what criteria it uses to make these allocations.\nAlthough IRS lacks a comprehensive RTC strategy, it has been able to identify some compliance trends for other credits besides the EITC. IRS officials observed an increase in the ACTC overclaim percentage from 2009 to 2011. According to IRS, confirming and understanding the nature of that potential increase will require more research. To that end, IRS plans to begin work in 2016 on an ACTC compliance study similar in nature to the recent EITC 2006-2008 Compliance Study. Officials could not provide a start date or timeline for completion and said the rate at which this work progresses will depend on competing priorities given limited budget and staff. However, they stated that the CTC/ACTC compliance study remains a high priority project. Previously, we reported that IRS could identify ways to reduce taxpayer noncompliance through better use of NRP data and that ACTC was one area where further research could provide information on how to address noncompliance.",
"Another challenge related to the lack of a comprehensive plan is that certain IRS performance indicators may be difficult to interpret. IRS relies on the no-change rate and default rates to make resource allocation decisions. IRS closes audits as defaults when the taxpayer (1) does not respond to any IRS notice or (2) responds to some notices but not the last one asking for agreement with a recommended additional tax assessment. IRS officials stated that they believe that taxpayers who default are generally noncompliant because taxpayers selected for audit receive multiple notices and the refunds can equal several thousand dollars, giving them the information and incentive to engage with IRS. Therefore, when there is a high default and a low no-change rate, IRS officials said that they interpret that as an indicator that the taxpayers selected for audit were not entitled to the credit claimed.\nEven so, it can be difficult to interpret a low no-change rate when it includes defaults. As we previously reported, in fiscal years 2009 through 2013, the no-change rate ranged from 11 percent to 21 percent for all closed correspondence audits but rose to 28 percent to 45 percent when IRS had contact with the taxpayers throughout the audit and did not close the audit through a default. Without knowing the reasons why taxpayers default, it is difficult to know how to interpret the no-change rate. To the extent that some of the taxpayers who default are compliant, the reported no-change rate underestimates what would be the actual no-change rate. The Taxpayer Advocate has raised concerns that taxpayers may not understand the notices, which could be contributing to the low response rate.\nThe difficulty interpreting the no-change rates and default rates can make the results of IRS’s assessments of its programs less certain. According to IRS, two of the most effective and reliable enforcement programs for addressing RTC compliance and reducing improper payments are post- refund document matching and audits. IRS stated that it protects over $3 billion dollars in revenue based on these enforcement activities, but the default rate is over 50 percent. The no-change rate indicates that the overwhelming majority of the cases IRS selects have mistakes that require an adjustment. However, because the defaults are included among the no-change audits and the default rate is high, it calls into question the extent to which the cases being selected are actually noncompliant. Table 3 shows the number of returns IRS identifies through these various enforcement activities, the no-change rate, and the default rate.\nThe no-change rates for these enforcement activities are very low but the associated default rates are high. This disproportion can make the no- change rate misleading as an indicator of noncompliance. For example, if 10 percent of the defaulting taxpayers in the case of document matching were actually compliant, the no-change rate would double to about 14 percent, and if 50 percent were compliant, the no-change rate would increase to about 40 percent. These figures could call into question whether IRS is getting useful information out of no-change rates when the default rate is so high and little is known about the compliance characteristics of defaulting taxpayers.\nAnother challenge that IRS faces is that the set of indicators that it uses to make resource allocation decisions does not include indicators for equity and compliance burden. When evaluating enforcement strategies, such as developing new screening filters for exam selection, IRS officials look at filters that produce a low response rate and a low no-change rate. For example, at the 2015 annual strategy meeting, IRS managers recommended increasing the number of Disabled Qualifying Child (DQC) cases that they plan to work each year based on a high default rate (70 percent compared to a 54 percent default rate for other programs) and a low no-change rate of between 3 and 6 percent. Based on these high default and low no-change rates, program managers recommended increasing the number of cases that they plan to work or replacing cases waiting to be worked with DQC cases as a way to reduce their backlog of unclosed cases. The managers did not evaluate the recommendation on the basis of equity or compliance burden. In addition, IRS did not provide any reliable indicator of compliance burden associated with any of the refundable tax credits that we reviewed. According to IRS officials, reviewing taxpayers’ responses is resource intensive, and by reducing that process, IRS could perform more audits elsewhere. However, as discussed above, the no-change rate on which they based their decision may be an unreliable estimate of actual taxpayer noncompliance when, as the officials said, they do not know why taxpayers did not respond to notices.\nA more comprehensive strategy that documents RTC compliance efforts could help IRS officials determine whether their current performance indicators are giving them reliable information and their current allocation of resources is optimal, and if not, what adjustments are needed. IRS officials could also use this review as an opportunity to ensure program managers have a balanced suite of performance measures which adequately address all priority goals. For example, the desire to reduce inventory or concentrate resources on efforts with the lowest no-change rate could take precedence over undue taxpayer burden.",
"IRS faces administrative and compliance challenges which also complicate the administration of RTCs. Due in part to long-standing concerns about the EITC improper payment rate, EITC examinations account for nearly 39 percent of all individual income tax return audits each year. However, the EITC only accounts for about 5 percent of the tax gap in tax year 2006 (the most recent estimate available). In a 2013 report, we demonstrated that a hypothetical shift of about $124 million in enforcement resources among different types of audits could have increased direct revenue by $1 billion over the $5.5 billion per year IRS actually collected in 2013. An agency-wide approach that incorporates ROI calculations could help IRS allocate enforcement resources more efficiently not just among the credits, but also across EITC and non-EITC returns. We previously recommended that IRS develop a long-term strategy and use actual ROI calculations as part of resource allocation decisions to help it operate more effectively and efficiently in an environment of budget uncertainty. In response to our recommendation, IRS has begun a project to develop ROI measures that could be used for resource allocation decisions.\nWe have previously reported that while IRS publishes information regarding the coverage rates and additional taxes assessed through various programs, relatively little information is available on how much revenue is actually collected as a result of these enforcement activities.\nAdditional analysis of available RTC collections data could also inform resource-allocation decisions. Currently, IRS reviews the amount of revenue collected annually based on EITC post-refund enforcement activities, but it could not verify the reliability of that data during the timeframe of the GAO audit. Such data could be used to calculate a collections rate—the percentage of tax amounts assessed that is actually collected. A reliable collections rate could be used as an additional data point for informing and assessing allocation decisions.\nAccording to federal internal control standards, managers need accurate and complete information to help ensure efficient and effective use of resources in making decisions. Recognizing that not all recommended taxes would be collected or collected soon after the audit, IRS could still use available data to compute a collections rate for post-refund enforcement activities and conduct further analyses of assessments from post-refund audits and document-matching reviews. IRS officials said they have conducted such studies in the past, and they were resource- intensive. Nonetheless, given that collections data are needed for both the detailed analyses described above, as well as for an agency-wide analysis of the relative costs and results of various enforcement activities to inform resource-allocation decisions, there may be opportunities to coordinate the data collection efforts to reduce overall costs.\nIn addition to collections, an agency-wide approach could help IRS develop a strategy for addressing Schedule C income misreporting—a long-time challenge for IRS—and a key driver of EITC noncompliance. According to IRS, income misreporting is the most commonly made error on returns claiming the EITC, occurring on about 67 percent of returns with overclaims. Self-employment income misreporting represents the largest share of overclaims (15 to 23 percent) while wage income misreporting represents the smallest (3 to 6 percent). In the claimant population as a whole, 76 percent of taxpayers earn only wage income, while the remaining 24 percent earn at least some self-employment income. As shown in figure 7, error rates in terms of overclaimed amounts of credit were largest for Schedule C filers for the EITC and AOTC. The error rate for Schedule C filers claiming the CTC/ACTC was not statistically different from the error rate for filers without a Schedule C.\nAlthough Schedule C income misreporting is larger for EITC claimants, IRS’s enforcement strategies are more likely to be effective with wage income misreporting than Schedule C income misreporting. According to IRS, it addresses income misreporting through (1) DDb filters designed to identify taxpayers making up a fake business; (2) the questionable refund program designed to identify and follow-up with taxpayers lying about where and how long they worked; and (3) the post-refund document matching program that matches returns with other information such as W- 2s. While these methods may catch some income misreporting by the self-employed, they rely to a great extent on the types of third party income and employment documentation that are likely to be available for wage earners but are largely absent for the self-employed. According to IRS officials, starting in tax year 2011, IRS started matching other information such as Form 1099K Merchant Card payments to tax returns to verify self-employment income. IRS also addresses EITC noncompliance through correspondence audits but Schedule C income issues are more conducive to field audits than correspondence audits. However, EITC Schedule C returns are less likely to be selected for field audits because the dollar amounts do not meet IRS thresholds.\nAddressing Schedule C income misreporting has been a long-standing challenge for IRS. In 2009, we reported that according to IRS, sole proprietor income was responsible for about 20 percent of the tax gap. A key reason for this misreporting is well known. Unlike wage and some investment income, sole proprietors’ income is not subject to withholding and only a portion is subject to information reporting to IRS by third parties. We have made several recommendations over the years to address this issue. In 2007, we recommended that Treasury’s tax gap strategy should cover sole proprietor compliance in detail while coordinating it with broader tax gap reduction efforts. As of March 2015, no executive action has been taken to address this recommendation, nor has Treasury provided us with plans to do so. We maintain that without taking these steps, Treasury has less assurance that IRS is using resources efficiently to promote sole proprietor compliance.\nIn 2009, we recommended IRS develop a better understanding of sole proprietor noncompliance, including sole proprietors improperly claiming business losses. As of November 2015, IRS partially addressed this recommendation by researching sole proprietor noncompliance and focusing on those who improperly claim business losses. The results of this research will take several years to compile but IRS plans to provide at least rough estimates of disallowed losses in 2016. This research, when completed, could help IRS to identify noncompliant sole proprietor issues and address one of the drivers of EITC noncompliance.",
"IRS does not track the number of returns erroneously claiming the ACTC and AOTC identified through screening activities. (IRS currently tracks this information for the EITC). As we noted earlier, according to federal internal control standards, managers need accurate and complete information to help ensure efficient and effective use of resources in making decisions. IRS conducts various activities to identify and prevent the payment of an erroneous refund, such as screening returns for obvious mistakes and omissions. IRS officials said this information would help them deepen their understanding of common errors made by taxpayers claiming these credits and the insights could then be used to develop strategies to educate taxpayers. IRS officials reported that they are working to figure out how to extract these data for the ACTC and AOTC so they can begin to track the data and use them to refine their overall compliance strategy. Although IRS said that it understands the potential usefulness of these data, it has not yet developed a plan that includes such desirable features as timing goals and resource requirements and a way to develop indicators from the data that would be most effective for understanding and increasing compliance.\nIRS may also be missing an opportunity to use information from the Department of Education (Education) to detect and correct AOTC errors. Education collects in its Postsecondary Education Participants System (PEPS) a list of institutions and their employer identification numbers (EIN), which would indicate whether the institution the student attends is eligible under the AOTC. The PATH Act of 2015 requires taxpayers claiming the AOTC to report the EIN for the education institutions to which they made payments.\nThere is some evidence that PEPS may be a useful tool for detecting noncompliance. In a review of the AOTC, the Treasury Inspector General for Tax Administration (TIGTA) used PEPS data and identified 1.6 million taxpayers claiming the AOTC for an ineligible institution in 2012. TIGTA recommended that IRS coordinate with Education to determine whether IRS could use Education data to verify the eligibility of educational institutions claimed on tax returns. While IRS agreed that these PEPS data could identify potentially erroneous claims, it did not agree to further explore using the data.\nIRS has not determined whether PEPS can be used for enhancing AOTC compliance for two reasons. First, IRS does not have math error authority (MEA) to correct errors in cases where taxpayer-provided information does not match corresponding information in government databases. IRS would still need to conduct an exam to reject a claim with an ineligible institution. For example, if the EIN on a submitted return is not contained in the PEPS database of eligible institutions, IRS does not have the authority to automatically correct the return and notify the taxpayer of the change. Instead, IRS would have to contact the taxpayer for additional documentation or open an examination to resolve discrepancies between PEPS data and the tax return information. Secondly, IRS believes its current selection process is sufficient because IRS already identifies more potentially fraudulent returns with its filters than it can examine given its current resources. In 2012, IRS identified 1.8 million returns with potentially erroneous education claims and selected 9,574 for exam, for an exam rate of 0.5 percent. To identify these returns for exam, IRS used its pre-refund filters of students claiming the credit for more than 4 years, returns without the 1098-T form, or students in an unexpected age range.\nThe administration submitted legislative proposals for fiscal years 2015 and 2016 that, among other things, would establish a category of correctable errors. Under the proposals, Treasury would be granted MEA to permit IRS to correct errors in cases where information provided by a taxpayer does not match corresponding information provided in government databases. We have previously reported that expanding MEA with appropriate safeguards could help IRS meet its goals for the timely processing of tax returns, reduce the burden on taxpayers of responding to IRS correspondence, and reduce the need for IRS to resolve discrepancies in post-refund compliance, which, as we previously concluded, is less effective and more costly than at-filing compliance. However, Congress has not granted this broad authority.\nAlthough correctable error authority may reduce compliance and administrative burden, it raises a number of concerns. Experts have raised concerns that such broad authority could put undue burden on taxpayers. For example, the National Taxpayer Advocate has raised concerns that IRS’s current math error notices are confusing and place a burden on taxpayers as they try to get answers from IRS. The JCT also raised concerns about whether all government databases are considered sufficiently reliable under this proposal.\nHowever, an assessment of the completeness and accuracy of PEPS data may be useful for IRS enforcement efforts even in the absence of correctable error authority. First, while IRS believes its current selection process is sufficient, without assessing the PEPS data, it cannot know whether its case selection could be improved by this additional information about ineligible institutions. Second, if an IRS assessment of PEPS data determined that pre-refund corrections based on those data would be effective, the case for correctable error authority would be easier to make to Congress. As our work on strategies for building a results-oriented and collaborative culture in the federal government has shown, stakeholders, including Congress, need timely, action-oriented information in a format that helps them make decisions that improve program performance.",
"Taxpayers can only claim the AOTC for 4 years, but IRS does not have MEA to freeze a refund on a claim that exceeds the lifetime-limit rule. In 2015, TIGTA found that more than 400,000 taxpayers in 2012 received over $650 million for students claiming the AOTC for more than 4 years. According to IRS officials, they have processes to identify students who exceed the 4-year lifetime limit based on information from prior returns. Those returns are candidates for audits. However, as noted earlier, IRS identifies far more candidates for audits than it can perform given current staffing levels. In 2011, we recommended that Congress consider providing IRS with MEA to use tax return information from previous years to ensure that taxpayers do not improperly claim credits or deductions in excess of lifetime limits where applicable. Granting this authority would help IRS disallow clearly erroneous claims, reduce the need for an audit, and promote fairness by limiting claims to taxpayers who are entitled to them. It would also assist taxpayers in self-correcting unintentional mistakes where they may have chosen an incorrect educational tax benefit since they exceeded the lifetime limit. As we recommended in 2011, we continue to believe that Congress should consider providing MEA to be used with credits and deductions with lifetime limits. Any RTCs that contain these limits such as the AOTC should fall under this authority as well if it is granted by Congress.",
"IRS has several efforts intended to educate taxpayers about eligibility requirements and improve compliance including social media messaging, webinars, and tax forum presentations. According to IRS, these efforts are intended to promote participation among taxpayers eligible for these credits, ensure that taxpayers are aware of the eligibility requirements before filing a tax return, and prevent unintentional errors before they occur. Additionally, IRS designated an EITC Awareness Day to increase awareness among potentially eligible taxpayers at a time when most are filing their federal income tax returns. The 10th Annual EITC Awareness Day was January 29, 2016.\nAccording to IRS, it currently has limited ability to measure the effectiveness of its outreach efforts. As recently as 2011, IRS officials said they were able to measure the effectiveness of the efforts through a semi-annual survey where they tested, for example, the effect of concentrating messaging in certain areas on taxpayer awareness of the EITC. Although IRS reported it no longer has the funds for that survey, officials said IRS still commissions an annual survey intended to improve services to volunteers and external stakeholders. IRS officials also said that they collect user feedback to assess use and effectiveness of their EITC website and make changes accordingly. For example, after users cited problems with easily locating information on maximum income limits for the EITC, IRS reported that it revised its website to make income information more prominent.\nTo address underutilization of the AOTC, IRS has been working to improve the quality and usefulness of information about the credit. We reported in 2012 that about 14 percent of filers in 2009 (1.5 million of almost 11 million eligible returns) failed to claim an education credit or deduction for which they appeared to be eligible, possibly because filers were unaware of their eligibility or were confused. In response to the recommendation in our 2012 report, IRS conducted a limited review in 2013 that determined that over 15 million eligible students and families may not have been or were not claiming an education benefit. Identifying these potentially eligible taxpayers will help IRS develop a comprehensive strategy to improve use of these tax provisions.\nWe also recommended in 2012 that IRS and Education work together to develop a strategy to improve information provided to tax filers who appear eligible to claim a tax provision but do not. IRS has been implementing this recommendation by coordinating with Education to (1) create an education credit web page on the department’s Federal Student Aid website and (2) improve IRS’s AOTC and Lifetime Learning Credit Communication Plan. To improve understanding of requirements for education credits, IRS has enhanced information and resources on IRS.gov and revised the tax form for claiming education credits (Form 8863, Education Credits American Opportunity and Lifetime Learning Credits) to include a series of questions for the taxpayer to ascertain credit eligibility.\nIRS has also made efforts to address compliance issues associated with certain tax preparers. As shown in figure 8, unenrolled preparers have the highest error rates for RTCs among preparers. For the EITC, unenrolled preparers have the highest overclaimed rate at 34 percent of total credit claimed, and, as IRS reported, they are the type of preparer most often used by EITC claimants, preparing 26 percent of all EITC returns. In contrast, although comprising only 3 percent of all returns with the EITC, returns prepared by volunteers in the IRS-sponsored Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs have the lowest error rate at 16 percent.\nIRS’s chief compliance effort for paid preparers is the EITC Return Preparer Strategy designed to identify preparers submitting the highest number of EITC overclaims and tailor education and enforcement treatments to change their behavior. The strategy uses a variety of methods to address preparer noncompliance including (1) educational “knock-and-talk” visits with preparers before filing season; (2) due diligence visits where IRS officials determine whether preparers complied with due diligence regulations, such as documenting efforts to evaluate the accuracy of information received from clients; and (3) warning and compliance letters to preparers explaining that IRS has found errors in their prior returns. The EITC preparers that appear to be associated with the most noncompliance receive the most severe treatments, which include visits from revenue agents, and if necessary, an assessment of penalties: $500 per noncompliant return, or if the preparer used a bad preparer tax identification number, penalties of $50 per return, up to a maximum of $25,000. (The PATH Act of 2015 expanded preparer due diligence requirements and penalties to the CTC and AOTC.) These preparers can also be referred to the Department of Justice for civil injunction proceedings. If fraud is identified, these preparers can be referred to criminal investigation.\nThe project recently found that less severe, lower cost treatments, such as warning letters, affect preparer behavior but more severe, higher cost due diligence visits improve preparer behavior the most. IRS expanded the number of preparers it selected to contact from 2,000 in fiscal year 2012 to around 31,000 in fiscal year 2015.\nAccording to IRS data, the EITC Return Preparer Strategy has protected around $1.7 billion in revenue of EITC and CTC/ACTC claims since fiscal year 2012. In fiscal year 2015, the project protected over $465 million in revenue ($386 million in EITC savings and $79 million in CTC/ACTC). Also, the proposed preparer penalties for the 2015 effort totaled $30 million with an overall due diligence visit penalty rate of around 85 percent.\nAny attempts to improve preparer compliance through increased regulation by Treasury and IRS are likely to require congressional action. IRS issued regulations in 2010 and 2011 to require registration, competency testing, and continuing education for paid tax return preparers and to subject these new registrants to standards of conduct in their practice. However, the courts ruled that IRS did not have the statutory authority to regulate these preparers. In 2014, we suggested Congress consider granting IRS the authority to regulate paid tax preparers. Establishing requirements for paid tax return preparers could improve the accuracy of the tax returns they prepare, not just returns claiming EITC.",
"A variety of proposals have been made to change the design of the EITC, ACTC, and AOTC. The proposals generally focus modifications on one or more elements of the credits such as how much of the credit is refundable, the maximum amount of credit, the level of the phase-in and phase-out income ranges, and rates. Changing these elements will have certain effects on their equity, efficiency, and simplicity that are common across the credits. For example, increasing or decreasing refundability affects the distribution of the credits’ benefits by income level which has implications for whether the change is viewed as increasing or decreasing equity. The following review of proposals has been organized according to the basic design elements of the credits where the effects of certain proposals to change these elements are evaluated according to the standard criteria of a good tax system.",
"Evaluating tax credits requires identifying their purpose (or purposes) and determining their effectiveness. The tax credits reviewed in this report are intended to encourage taxpayers to engage in particular activities, to offset the effect of other taxes, and to provide assistance for certain categories of taxpayers. The EITC, for example, has the purposes of offsetting the payroll tax, encouraging employment among low-income taxpayers and reducing poverty rates. Determining effectiveness can be challenging due to the need to separate the effect of a tax credit from other factors that can influence behavior. Even if the credit claimants increase their subsidized activities, the credits are ineffective if they merely provide windfall benefits to taxpayers who would have engaged in the activities in the absence of the credit. Even when the credits are determined to be effective, broader questions can still be asked about whether they are good tax policy. As explained in our 2012 report, these questions are addressed by applying criteria such as economic efficiency, equity, and simplicity which have long been used to evaluate proposed changes to the tax system. The criteria may sometimes conflict with one another and some are subjective. As a result, there are often trade-offs between the criteria when evaluating a particular tax credit.\nEconomic efficiency deals with how resources are allocated in the economy to produce outcomes that are consistent with the greatest well- being (or standard of living) of society. Tax credits may affect the allocation of resources by favoring certain activities. A credit’s effect on efficiency depends on its effectiveness—whether people change their behavior in response to the credit to do more or less of the activity as intended—and its effect on resource allocation— whether the effect of the credit increases the overall well-being of society. The tax credit can increase efficiency when, for example, it is directed at addressing an externality like spillovers from research where the researchers do not gain the full benefit of their activities and might, without the credit, invest too little in research from the point of view of society as a whole. Finally, a tax credit may be justified as promoting a social good like improving access to higher education for disadvantaged groups.\nEquity deals with how fair the tax system is perceived to be by participants in the system. There are a wide range of opinions regarding what constitutes an equitable, or fair, tax system. However, there are some principles—for example, a taxpayer’s ability to pay taxes—that have gained acceptance as useful for thinking about the equity of the tax system. The ability-to-pay principle requires that those who are more capable of bearing the burden of taxes should pay more taxes than those that are less capable.\nEquity judgments based on the ability-to-pay principle can be separated into two types. The first is horizontal equity where taxpayers who have similar ability to pay taxes receive similar tax treatment. Tax credits affect horizontal equity when, for example, they favor certain types of economic behavior over others by taxpayers in similar financial conditions. Views of a credit’s effect on horizontal equity usually depend on whether eligibility requirements that exclude some filers and include others are viewed as appropriate. The second type is vertical equity where taxpayers with different abilities to pay are required to pay different amounts of tax. Tax credits affect vertical equity through how their benefits are distributed among people at different income levels (or other indicators of ability to pay such as their level of consumption spending). Distribution tables, where the tax benefits of the credits are grouped by the income level of the recipients, are often used by policy analysts to help them make informed judgments about the equity of tax policies like the RTCs. People may have different notions about what is a fair distribution but they cannot make a judgment about the fairness of a particular policy without consulting the actual distribution of tax benefits.\nSimplicity is a criterion used to evaluate tax systems because simple tax systems tend to impose less compliance burden on the taxpayer and less cost on tax administrators than more complex tax systems. Taxpayer compliance burden is the value of the taxpayer’s own time and resources, along with any out-of-pocket costs paid to tax preparers and other tax advisors, invested to ensure their compliance with tax laws. Compliance costs include the value of time and resources devoted to activities like record keeping (for the purpose of tax compliance and not records that would be kept in any case), learning about requirements and planning, preparing and filing tax returns, and responding to IRS notices and audits. The administrative costs include the resources used to process tax returns, inform taxpayers about their obligations, detect noncompliance, and enforce compliance with the provisions of the tax code. However, while simplicity is linked to administrability, they are not always the same. For example, a national sales tax may be relatively simple for taxpayer compliance but difficult to administer as it requires distinguishing between tax-exempt and taxable commodities and between taxable retail sales and nontaxable sales among companies.",
"Changes to the RTCs can be analyzed using the above criteria where the changes are grouped according to the key design elements of the credits that are most affected by the changes. The key design elements are (1) the degree to which the credit is refundable; (2) the eligibility rules for filers and qualifying children or dependent students; (3) the structure of the credit consisting of parameters that determine credit rates and phase- in and phase-out ranges; and (4) the credit’s interaction with other code provisions. As mentioned above, changing these elements will have effects that are common for all the credits. In the following review of proposals, a description of the effect on revenue will be a provided where possible but a dollar estimate of revenue costs cannot be provided because it depends too much on variable details of proposals. For example, increasing refundability would increase revenue costs but the amount would depend, as explained below, on factors like the refundability rate and income or spending threshold of refundability.",
"Refundability can affect judgments about vertical equity by providing a larger share of the tax benefits to lower income filers than a nonrefundable credit does. These filers are more likely to have little or no tax liability and thus are not able to fully benefit from the nonrefundable credit. Refundability, as such, may have little effect on judgments on horizontal equity because these judgments depend chiefly on the eligibility rules which need not be different from those under a nonrefundable credit.\nThe effect of refundability on compliance and administrative costs depends on how the change in refundability is implemented. If the eligibility rules, a major source of complexity as described above, are not changed when refundability is introduced, it may have less impact on compliance burden and administrative costs. However, other structural changes may be needed when refundability is introduced that can add complexity and compliance burden for the taxpayer. For example, additional calculations were made necessary for the CTC when the ACTC was introduced as its partially refundable counterpart with a phase-in range and rate. In addition, administrative burden could increase if the population of claimants changes when refundability is introduced. IRS costs could increase if IRS reviews more returns when the number of claimants increases in response to refundability and taxpayer compliance burden may increase if the claimants include more taxpayers for whom understanding or documenting compliance is more difficult.\nChanges have been proposed to expand refundability for the currently partially refundable CTC/ACTC and AOTC. For the CTC/ACTC, the refundable ACTC is limited to 15 percent of income in excess of the $3,000 refundability threshold up to a maximum of $1,000 for each child and for the AOTC the refund is limited to 40 percent of qualified spending up to a maximum of $1,000. Modifications of these credits that have been proposed include raising the refundability rate and reducing the refundability threshold for the CTC/ACTC or in the case of the AOTC, making the credit fully refundable. The principal effect of these modifications is to increase the share of benefits going to low-income filers by increasing their access to the credit. In the AOTC, the expansion could also increase effectiveness as described in appendix III by increasing access to the credits by low-income filers who are more responsive to changes in the price of education. The effect on revenue of these changes would vary considerably depending chiefly on the extent to which refundability is increased.",
"Modifications to the RTCs’ eligibility rules affect the criteria of a good tax system by changing taxpayers’ access to the credits. The change in access in turn can affect judgments about equity and effectiveness. For example, expanding the availability of the AOTC to part-time in addition to half-time and full-time students could affect judgments about vertical equity by increasing access for lower income filers if they are more represented among part-time students. This proposal may also increase the effectiveness of the AOTC by targeting more of the population that is more responsive to education price changes, but, as described in appendix III, these effects have not been tested.\nAnother change to eligibility rules that has been proposed for RTC filers would require that SSNs be provided by all claimants of the AOTC and the ACTC and that, in some cases, claimants’ qualifying children or student dependents have SSNs. SSNs are currently required for all EITC claimants and qualifying children but claimants of the other RTCs can use individual taxpayer identification numbers (ITIN). IRS issues ITINs to individuals who are required to have a taxpayer identification number for tax purposes, but who are not eligible to obtain an SSN because they are not authorized to work in the United States. In 2013, 4.38 million tax returns were filed with ITINs (about 3 percent of all returns) which claimed $1.31 billion in CTC, $4.72 billion in ACTC, and $ 204 million in AOTC, or 5 percent, 17 percent, and 1.1 percent of the total credits claimed, respectively.\nThe effect of restrictions on access to the credits by ITIN users depends on whether all filers claiming refundable tax credits and their qualifying children or permit “mixed-use” households to obtain a partial credit. Most households using ITINs are mixed-use households in the sense that they use both ITINs and SSNs on their returns. In 2013, 2.68 million returns (or 61 percent of all ITIN returns) were mixed-use returns having (1) a parent with an ITIN and at least one child with an SSN or (2) a parent with an SSN and at least one child with an ITIN. If the change requires that the parent have an SSN, about 82 percent of current ITIN users will be excluded. A change that permits RTCs for a child or parent with an SSN would exclude 39 percent of current ITIN filers.\nRestrictions on access to RTCs by ITIN users may affect judgments about vertical equity of the credits. ITIN claimants of the CTC, ACTC, and AOTC tend to have similar or lower levels of income than claimants who do not use ITINs. As figure 9 shows, 31 percent of CTC claimants with ITINs have incomes less than $40,000 while 17 percent of all CTC claimants have incomes as low and 56 percent of AOTC claimants have incomes less than $40,000 while 41 percent of all AOTC claimants have incomes this low. On the other hand, the income levels of the ACTC claimants with ITINs generally track those of all ACTC claimants: 87 percent of all ACTC claimants and 88 percent of ACTC claimants with ITINs have incomes less than $40,000.\nRestrictions on ITIN use may also have implications for compliance. From 2009 through 2011, credit claimants using ITINs had higher overclaim error rates than other claimants. The overclaim error rate for CTC claimants using ITINs was 14 percent as opposed to 6 percent for all CTC claimants. Similarly, the CTC/ACTC error rate was 32 percent for ITIN users and 10 percent for all claimants. As we discussed above, complying with the eligibility rules can be challenging for everyone and the ITIN users may have greater difficulty from factors like language barriers which could contribute to these higher error rates.\nThe scope of the SSN requirement—whether it includes the taxpayer, the spouse if married filing jointly, or the qualifying dependents—would add to the complexity of administering and complying with the credits. For example, the value of the credit could be apportioned among taxpayers who meet the criteria (e.g., if three of the four individuals claimed on a tax return have SSNs, the taxpayers would be eligible for 75 percent of the total value of the credit). Determining and enforcing compliance with these apportionment rules could be difficult. On the other hand, as noted above, a majority of ITIN households are mixed use and in the absence of an apportionment procedure, taxpayers with valid SSNs could be denied access to the credits entirely. Lastly, the AOTC is likely to be less effective to the extent that ITIN users are excluded because, as they have lower incomes than other claimants, they are more likely to respond to an effectively lower cost of education due to the credit by increasing attendance.",
"A change in the structure of the RTCs can affect all the criteria for evaluating the credits as part of a good tax system. The credit structure includes features that determine the rate at which the credit is calculated. The phase-in range – the range of income levels over which the credit amount is increasing; the plateau range – the range where the credit amount is unchanged and reaches the maximum amount and the phase- out range – where the credit amount is declining. The cut-off amount of income determines the end of the phase-out range and maximum income that can qualify for the credit. All the RTCs have phase-in and phase-out ranges subject to different phase-in and phase-out rates and the EITC also has different values for these ranges that vary according to the number of qualifying children being claimed. The phase-in range generally provides incentives for increasing the activity promoted by the credit: as they work more, EITC recipients receive a larger credit amount and, as they spend more on education, AOTC recipients also get a larger credit. The phase-out ranges generally introduce disincentives by reducing the credit benefit for any increase in the activity that the credit is intended to promote.\nOne of the key trade-offs in this structure is between the size of the maximum credit amount and the steepness of the phase-out range. If the maximum credit amount is increased with no change in the qualifying income cut-off amount, the phase-out range becomes steeper—the phase-out rate increases—and therefore disincentives increase over the phase-out range. In this case, the increase in the maximum credit reduces efficiency in the phase-out range. On the other hand, if disincentives are to be reduced without reducing the maximum credit, the qualifying income cut-off amount must be increased in order to flatten the phase-out range and thereby lower the phase-out rate. However, by increasing the cut-off income amount, the credit becomes available to people with higher incomes, affecting judgments about the equity of the credit and increasing its revenue cost.\nStructural modifications proposed for the EITC include expanding the credit for childless workers. As described in appendix III, the EITC for childless workers is much lower than the credit for workers with children and has not been shown to have an effect on workforce participation or raising these workers out of poverty. Expanding the credit for childless workers generally means increasing the maximum credit with the follow- on effects described above on other parameters like the phase-out rate. The effect on efficiency, equity, and simplicity will depend upon which parameters are changed and will have similar trade-offs.\nAlthough the relative effects of expanding the credit for childless workers will depend on details of the parameter changes, the overall effect is likely to increase the effectiveness of the credit. Increasing the credit for childless workers would increase work incentives for individuals for whom, as described in appendix III, the current EITC is ineffective because it provides little or no work incentive. The expansion of the credit for childless workers could also affect judgments about equity of the EITC by decreasing the percentage of taxpayers living in poverty and by changing how benefits are distributed by income level. The expansion would also affect judgments about horizontal equity concerns arising from the current large disparity in the credit available to filers with and without children. In addition, expanding the EITC for childless workers is unlikely to add complexity to the filing process for taxpayers, although it would increase the number of taxpayers claiming the credit. A major source of complexity for the EITC that increases both compliance and administration burden is determining whether a dependent meets the requirements for a qualifying child. These determinations would not be necessary for the childless worker. However, again depending on specifics of proposals like the size of the maximum credit, the revenue cost could be high.\nProposed structural changes for the AOTC can impact its effectiveness by increasing or decreasing access to the credit. Modifications that expand access include increasing the maximum credit, raising the upper limit on income for credit claimants and lowering the phase-out rate. Changes like these may also reduce effectiveness because the credit is now more available to taxpayers for whom it is likely to be a windfall while less of the increase is available to lower income people who are more responsive to education price changes. These changes may also affect judgments about equity because the increase in the phase-out range would increase the share of the credit going to higher income taxpayers. However, the increase in the maximum credit benefits the lower income filers as well as those with higher income. Modifications that reduce access include reducing the maximum credit and phase-out income and increasing the phase-out rate. Modifications like these may concentrate the AOTC’s benefit on lower income individuals and could increase effectiveness by reducing the windfall going to higher income taxpayers.\nChanges to the CTC/ACTC illustrate how structural changes interact to affect the criteria for evaluating the credit. For example, a modification that increases the credit per child and increases the income limit may have offsetting effects on judgments about equity by reducing the share of benefits going to low-income taxpayers but at the same time increasing the credit amount per child. However, raising the amount of the credit may not benefit lower income taxpayers to the extent that the refundability threshold and rate prevent them from accessing the full credit. Further adjustments such as eliminating the current refundability threshold of $3,000 and making the credit refundable up to $1,000 at a refundability rate of 25 percent may provide more benefits to lower income taxpayers. However, the more adjustments are made the harder it is to determine the net effect on equity.",
"The RTCs share purposes and target populations with a variety of government spending programs and other provisions of the tax code. We previously estimated that, in 2012, 106 million people, or one-third of the U.S. population, received benefits from at least one or more of eight selected federal low-income programs: the ACTC, the EITC, SNAP, SSI, and four others. Almost two-thirds of the eight programs’ recipients were in households with children, including many married families. Without these programs’ benefits, we estimated that 25 million of these recipients would have been below the Census Bureau’s Supplemental Poverty Measure (SPM) poverty threshold. Of the eight programs, the EITC and SNAP moved the most people out of poverty. In addition, the AOTC interacts with other spending provisions like Pell grants and tax provisions like the Lifetime Learning Credit and the deduction for tuition and fees to provide subsidies for college attendance.\nThis shared focus of certain tax benefits has led to consideration of their combined effect on incentives and complexity. As figure 10 shows, the combined effects of the EITC, CTC/ACTC, and the dependent exemption produce a steeper phase-in of total benefit amounts than that attributable to any of the tax benefits alone. As incomes increase, total benefits peak and then decline sharply when the phase-out range of the EITC is reached. How taxpayers respond to the RTCs will depend on the taxpayer’s ability to sort out and assess the combined effects of all these tax benefits. Each RTC was the product of unique social forces and was designed to address a specific social need. As a result, it is unlikely that attempts were made to coordinate and focus on the combined tax rates, combined subsidy rate and combined incentive effects and effects on compliance and administration. The lack of coordination that leads to increased administrative and compliance burden is exemplified in the differing age limits of what constitutes an eligible child for different tax benefits.\nInteractions like these have raised concerns that the RTCs and other provisions may not be coordinated to be most effective. To increase coordination and transparency, a number of different ways have been proposed to consolidate the tax benefits. Proposals include combining tax benefits for low income taxpayers (such as CTC/ACTC, dependent exemption and child related EITC ) into a single credit or combining child related benefits into a single credit while creating a separate work credit based on earnings and unrelated to the number of children in the family. In a similar vein, proposals have been made to combine education tax benefits by using the AOTC to replace all other education tax credits, the student loan interest deduction and the deduction for tuition and fees. These proposals may also expand certain features of the credit like increasing refundability or making the credit available for more years of post-secondary education. Consolidation can make incentives more transparent to taxpayers and increase simplicity and decrease compliance and administrative burden to the extent it includes harmonizing and simplifying the eligibility requirements.",
"Each year the EITC, ACTC, and AOTC help millions of taxpayers—many of whom are low-income—who are working, raising children, and paying tuition. Nonetheless, challenges related to the RTCs’ design and administration contribute to errors, improper payments, and taxpayer burden.\nAnnual budget cuts have forced IRS officials to make difficult decisions about how best to target declining resources to ensure they can still meet agency-wide strategic goals of increasing taxpayer compliance, using resources more efficiently, and minimizing taxpayer burden. In light of these budget cuts, it is essential that IRS take a strategic approach to identifying and addressing RTC noncompliance in an uncertain budget environment. IRS is working on a strategy to document current EITC compliance efforts and identify and evaluate potential new solutions to address improper payments, but this review does not include the other refundable credits. A more comprehensive approach could help IRS determine whether its current allocation of resources is optimal, and if not, what adjustments are needed.\nIRS is also missing opportunities to use available data to identify potential sources of noncompliance and develop strategies for addressing them. For example, IRS does not track the number of returns erroneously claiming the ACTC and AOTC identified through screening activities. This information would help IRS deepen its understanding of common errors made by taxpayers claiming these credits; IRS could then use these insights to develop strategies to educate taxpayers. IRS has also not yet evaluated the Department of Education’s PEPS database of eligible educational institutions; these data could help IRS identify potentially erroneous AOTC returns.\nFinally, although IRS reviews the amount of revenue collected from EITC post-refund enforcement activities, it could not verify the reliability of that data during the timeframe of the GAO audit. By not taking necessary steps to ensure the reliability of that data and linking them to tax assessments to calculate a collections rate, IRS lacks information required to assess its allocation decisions. Periodic reviews of collections data and analyses could help IRS officials more efficiently allocate limited enforcement resources by providing a more complete picture about compliance results and costs.\nOver the years we have recommended various actions IRS and Congress could take to reduce the tax gap; several of these would also help bolster IRS’s efforts to address noncompliance with these credits. For example, developing a better understanding of sole proprietor noncompliance and linking sole proprietor compliance efforts with broader tax gap reduction could help IRS to identify noncompliant sole proprietor issues and address one of the drivers of EITC noncompliance. Providing IRS with the authority to regulate paid preparers would also help. In addition, as we recommended in 2011, we continue to believe that Congress should consider providing IRS with math error authority to use tax return information from previous years to enforce lifetime limit rules. Any refundable tax credits that contain these limits such as the AOTC should fall under this authority as well if it is granted by Congress. Structural changes to the credits, such as changes to eligibility rules, will involve trade-offs with respect to standard tax reform criteria, such as effectiveness, efficiency, equity, simplicity, and revenue adequacy.",
"To strengthen efforts to identify and address noncompliance with the EITC, ACTC, and AOTC, we recommend that the Commissioner of Internal Revenue direct Refundable Credits Policy and Program Management (RCPPM) to take the following steps: 1. Building on current efforts, develop a comprehensive operational strategy that includes all the RTCs for which RCPPM is responsible. The strategy could include use of error rates and amounts, evaluation and guidance on the proper use of indicators like no-change and default rates, and guidance on how to weigh trade-offs between equity and return on investment in resource allocations. 2. As RCPPM begins efforts to track the number of erroneous returns claiming the ACTC or AOTC identified through pre-refund enforcement activities, such as screening filters and use of math error authority, it should develop and implement a plan to collect and analyze these data that includes such characteristics as identifying timing goals, resource requirements, and the appropriate methodologies for analyzing and applying the data to compliance issues. 3. Assess whether the data received from the Department of Education’s PEPS database (a) are sufficiently complete and accurate to reliably correct tax returns at filing and (b) provide additional information that could be used to identify returns for examination; if warranted by this research, IRS should use this information to seek legislative authority to correct tax returns at filing based on PEPS data. 4. Take necessary steps to ensure the reliability of collections data and periodically review that data to (a) compute a collections rate for post- refund enforcement activities and (b) determine what additional analyses would provide useful information about compliance results and costs of post-refund audits and document-matching reviews.",
"We provided a draft of this report to Treasury and IRS. Treasury provided technical comments which we incorporated where appropriate. In written comments, reproduced in appendix IV, IRS agreed with three of our four recommendations and described certain actions that it plans or is undertaking to implement them.\nAfter sending us written comments, IRS informed us it could not verify the reliability of the collections data it provided during the timeframe of our audit. We removed this data from the report and modified our fourth recommendation to address data reliability. The revised recommendation states that IRS should take necessary steps to ensure the reliability of collections data and then periodically review that data to compute a collections rate for post-refund enforcement activities and determine what additional analyses would provide useful information.\nIn response to this recommendation, IRS stated it is taking steps to verify the reliability of the collections data, but further analysis would not be beneficial because the majority of RTC audits are pre-refund. However, we found that a significant amount of enforcement activity is occurring in the post-refund environment. According to IRS data, IRS conducted 87,000 EITC post-refund audits and over 1 million document-matching reviews in 2014.\nWe recognize that gathering collections data has costs and the data have limitations, notably that not all recommended taxes are collected. However, use of these data— once IRS is able to verify its reliability – could better inform resource allocation decisions and improve the overall efficiency of enforcement efforts. In fact, the Internal Revenue Manual states that examiners are expected to consider collectability as a factor in determining the scope and depth of an examination. IRS also stated that previous studies have indicated that post-refund audits of RTCs have a high collectability rate. However, the studies that IRS provided did not include collection rates for the EITC, ACTC, or AOTC. IRS further cautioned that collections can be influenced by factors like the state of the economy; however an appropriate statistical methodology would take such factors into account. Finally, opportunities may exist to reduce the costs of data collection efforts, for example, if coordinated as part of an agency wide analysis of the costs and results of various enforcement efforts.\nIRS disagreed with our conclusion that its compliance strategy and selection criteria for its prefund compliance program do not consider equity and compliance burden. In its comments, IRS describes its audit selection process but did not explain how it measures equity or compliance burden. Without such measures, it is not possible to assess whether IRS is achieving its strategic goals of increasing taxpayer compliance, using resources more efficiently, and minimizing taxpayer burden. Finally, IRS stated that nonresponse to its taxpayer enquiries is a strong indicator of noncompliance but did not provide data to support this assumption.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretary of the Treasury, Commissioner of Internal Revenue, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff has any questions about this report, please contact me at (202) 512-9110 or [email protected]. Contact points for our offices of Congressional Relations and Public Affairs are on the last page of this report. GAO staff members who made major contributions to this report are listed in appendix V.",
"This report (1) describes the claimant population including the number of taxpayers and the amount they claim along with other selected characteristics for the Earned Income Tax Credit (EITC), Additional Child Tax Credit (ACTC), and American Opportunity Tax Credit ( AOTC); (2) describes how the Internal Revenue Service (IRS) administers these credits and what is known about the administrative costs and compliance burden associated with each credit; (3) assesses the extent to which IRS identifies and addresses noncompliance with these credits and collects improperly refunded credits; and (4) assesses the impact of selected proposed changes to elements of the EITC, ACTC, and AOTC with respect to three criteria for a good tax system: efficiency, equity, and simplicity.\nTo describe the taxpayer population claiming the EITC, ACTC, and AOTC, we used the IRS Statistics of Income (SOI) Individual Study for tax years 1999 to 2013. The SOI Individual Study is intended to represent all tax returns filed through annual samples of unaudited individual tax returns (about 330,000 returns in 2013), which are selected using a stratified, random sample.\nIRS performs a number of quality control steps to verify the internal consistency of SOI sample data. For example, it performs computerized tests to verify the relationships between values on the returns selected as part of the SOI sample and edits data items to correct for problems, such as missing items. The SOI data are widely used for research purposes and include information on returns prior to changes due to IRS audits. We used SOI data to describe the number of returns claiming credits, the credit amounts, and characteristics about credit claimants, such as filing status or adjusted gross income (AGI) for each credit.\nWhen necessary, we combined the nonrefundable Child Tax Credit (CTC) with the ACTC, referring to the combined credit as the CTC/ACTC. We did this when their combined effect is at issue or to facilitate comparison with other RTCs that do not break out refundable and nonrefundable components. Similarly we combined the refundable and nonrefundable portions for AOTC estimates. However, unlike the other credit amounts, SOI data do not report the nonrefundable AOTC amounts. Estimating the level of nonrefundable AOTC requires decomposing the nonrefundable education credits into AOTC and other nonrefundable education credit amounts using education expenses amounts and other line items reported on the tax return that determine the taxpayer’s eligibility for claiming the credit. These computations are done by tax return prior to producing the aggregate total AOTC estimates.\nWe reviewed documentation on SOI data, interviewed IRS officials about the data, and conducted several reliability tests to ensure that the data excerpts we used for this report were sufficiently complete and accurate for our purposes. For example, we electronically tested the data for obvious errors and used published data as a comparison to ensure that the data set was complete. The SOI estimates of totals and averages in the report, excluding ITIN estimates, have a margin of error of less than 3.5 percent of the estimates unless otherwise noted. The SOI percentages, excluding ITIN percentages, have a margin of error of less than 1 percentage points unless otherwise noted. Totals based on ITIN returns have a margin of error less than 18 percentage points unless otherwise noted. Percentages and ratios based on ITIN filers have a margin of error of less than 8 percentage points unless otherwise noted. We concluded that the data were sufficiently reliable for the purposes of this report.\nTo describe how IRS administers these credits, we reviewed documentation on program procedures from the Internal Revenue Manual (IRM), internal documents describing audit procedures, and memorandums from IRS officials. We also interviewed IRS officials who oversee or who work on administering the refundable tax credits. To describe what is known about the administrative costs, we reviewed information IRS provided us on processing returns and conducting audits. To supplement these cost data, we spoke with IRS and Treasury officials about challenges IRS faces in administering the credits. To describe the compliance burden associated with each credit, we collected and reviewed IRS forms, worksheets, and instructions for each credit. We also reviewed the National Taxpayer Advocate’s annual reports to Congress, including the most serious issues affecting taxpayers. Finally, we interviewed experts involved with tax preparation to determine challenges taxpayers face when claiming the credits.\nTo assess the extent to which IRS identifies and addresses noncompliance with these credits and collects improperly refunded credits, we reviewed reports by GAO, IRS, the Treasury Inspector General for Tax Administration (TIGTA) National Taxpayer Advocate (NTA), Congressional Research Service (CRS), and Congressional Budget Office (CBO) on challenges IRS faces to reduce EITC, ACTC, and AOTC noncompliance and steps IRS is taking to address those challenges. We also reviewed relevant strategic and performance documents such as annual financial and performance reports; education and outreach plans; annual planning meeting minutes; and project summary reports. We met on a regular basis throughout the engagement with IRS officials responsible for developing and implementing RTC policy to determine the scope and primary drivers of RTC noncompliance as well as the steps IRS is taking to address those challenges. We integrated information from our document review and interviews to describe and asses IRS compliance efforts—including steps IRS is taking to implement specific programs and projects, how IRS’s internal controls ensure that specific efforts are being pursued as intended, how IRS monitors and assesses the progress of specific efforts toward reducing noncompliance, and how IRS incorporates new data to adjust its strategy as needed. We compared IRS efforts to develop, implement, and monitor compliance efforts to criteria in Standards for Internal Control in the Federal Government and federal guidance on performance management. We also applied the criteria concerning the administration, compliance burden, and transparency that characterize a good tax system, as developed in our guide for evaluating tax reform proposals.\nTo evaluate compliance within the refundable credits, we used audit data from the National Research Program (NRP) for tax years 2009 to 2011, the most recent years for which data were available. NRP audits are like other IRS audits, but they can be used for population estimates of taxpayer reporting compliance. The goal of the NRP is to provide data to measure payment, filing, and reporting compliance of taxpayers, which are used to inform estimates of the tax gap and provide information to support development of IRS strategic plans and improvements in workload identification. The NRP audits provide a reflection of the domestic taxpayer populations through an annual sample of returns (about 14,000 returns in 2011), which are selected for NRP audits using a stratified, random sample.\nOne potential source of nonsampling error comes from NRP audits where the taxpayer does not respond to the NRP audit, so audit results may not reflect the taxpayer’s true eligibility for the RTCs. For the calculations in this report, audit observations within the data that correspond to nonrespondent filers are given observation weights of zero (i.e., the observations do not influence the calculations). In contrast, IRS’s compliance study of the EITC produced high and low estimates for overclaim rates, where the former assumes the nonrespondents to be generally noncompliant and the latter assumes the nonrespondents to be as compliant as the respondent observations.\nData for analysis include amounts reported by taxpayers on their tax returns and corrected amounts that were determined by examiners. Using NRP data, we estimated the errors and mistakes individual taxpayers made claiming the EITC, ACTC, and AOTC on their Forms 1040, U.S. Individual Income Tax Return. We present the results as a percent of the credit amounts claimed.\nWe reviewed documentation on the NRP, interviewed IRS officials about the data, and conducted several reliability tests to ensure that the data excerpts we used for this report were sufficiently complete and accurate for our purposes. For example, we electronically tested the data for obvious errors and used totals from our analysis of SOI data as a comparison to ensure that the data set was complete. We concluded that the data were sufficiently reliable for the purposes of this report. See appendix II for further discussion of our NRP estimation techniques and for information about the sampling errors of our estimates.\nTo assess the impact of selected proposed changes to elements of the EITC, ACTC, and AOTC, we first identified proposals to improve the three refundable tax credits through a literature review on RTCs. Our literature search started with a review of studies and reports issued by government agencies including GAO, IRS, CRS, CBO, JCT, and TIGTA. We supplemented this search with academic literature and studies produced by think tanks and professional organizations. Additionally, we inquired of agency officials and subject-matter experts for relevant studies.\nWe then interviewed external subject-matter experts from government, academia, think tanks, and professional organizations knowledgeable about refundable tax credits in general and specifically the EITC, ACTC, and AOTC. We spoke to those with expertise on how IRS administers RTCs, how low-income taxpayers claim the credits, and how tax preparers interact with the credits. We conducted interviews to obtain views of experts on criteria commonly used to evaluate refundable tax credits and possible modifications to the credit. The experts were from across the ideological spectrum. The views from these interviews are not generalizable. Based on these interviews and our review of studies, we drew conclusions about the likely impact of modifying elements of the RTC with respect to three criteria we identified for a good tax system: efficiency, equity, and simplicity.\nWe conducted this performance audit from July 2015 to May 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"",
"Error rates by credit are computed using National Research Program (NRP) data. The Child Tax Credit (CTC) is combined with the Additional Child Tax Credit (ACTC) and shown as an aggregated credit amount for the CTC/ACTC. The American Opportunity Tax Credit (AOTC) includes refundable and nonrefundable portions, where the refundable portion of the credit benefits the taxpayer regardless of the tax liability.\nThe AOTC estimates combine refundable and nonrefundable portions. The nonrefundable portion of the AOTC is estimated as the proportion of total nonrefundable education credits that is from claiming the AOTC. Eligibility for claiming the different education credits can vary by adjusted gross income (AGI), filing status, and the year the return was filed. Statistics of Income (SOI) data were used to estimate these proportions of AOTC to total nonrefundable education credits. These proportions were multiplied by NRP total nonrefundable credits values for each tax return, which estimates the nonrefundable portion of AOTC for that tax return. Measurement errors for AOTC estimates shown in tables 4 through 8 reflect sampling errors from NRP data only and do not reflect sampling errors from SOI data, which was used to estimate the proportion of nonrefundable AOTC claimed from nonrefundable education credits within NRP data.\nThe credit adjustment or error is the difference between the credit amount originally claimed by the taxpayer and the correct credit amount, as determined by the NRP audit. The net credit adjustments can be separated into audited returns that received negative and positive adjustments. Negative adjustments, or credit overclaims, occur when the taxpayer claimed the credit, but either did not qualify for the credit or the credit amount originally claimed was adjusted downward. Credit overclaim amounts represent a potential for revenue loss to the government, where taxpayers incorrectly claim a tax benefit. Similarly, positive adjustments, or credit underclaims, occur when the taxpayer either failed to claim the credit or the credit amount originally claimed was adjusted upward. Credit underclaim amounts represent a potential expense for the government, where taxpayers forego available tax benefits. Using NRP data (2009 to 2011), the annual average credit and credit adjustment amounts are shown in table 4.\nThe error rates are computed as the credit adjustment amount divided by the net credit amount claimed by the taxpayers prior to the NRP audit, where the credit adjustment may represent all returns claiming, overclaiming, or underclaiming the credit. These error rates for all credit claimants are computed for 2011 and 2009 to 2011, as shown in table 5. The precision of these estimates generally increases when using 3 years instead of a single year of data. The numbers of overclaim and underclaim returns as a percent of all returns claiming the credits are shown in table 6. The overclaim error rates are computed for Schedule C and non-Schedule C returns and for returns based on the preparer of the return, as shown in tables 7 and 8.",
"The following is a summary of the findings in the policy literature of the effect of the current design of the Earned Income Tax Credit (EITC), the Additional Child Tax Credit (ACTC), and the American Opportunity Tax Credit (AOTC) on the effectiveness, efficiency, equity, and simplicity of these credits. This description can be viewed as a baseline against which to compare specific proposals that are advanced to improve the credits. For example, a proposal to change the EITC would be evaluated, at least in part, on its effect on poverty rates judged against the poverty reduction under the current EITC structure.",
"The EITC provides financial assistance to a relatively large proportion of its target population of low-income taxpayers. As mentioned earlier in this report, the EITC was claimed by about 29 million people in 2013 for an average amount of about $2,300.These claimants represent over 85 percent of the eligible population – a large participation rate for a government ant-poverty program. For example, the participation rate for TANF recipients is estimated at about 34 percent and 67 percent for SSI recipients in 2011 and the rate for SNAP was 83 percent in 2012.\nOne purpose of the EITC is to increase employment among low-income taxpayers by providing incentives for claimants to become employed or to increase the hours they work if they are already employed. The empirical evidence shows that the EITC has had a strong effect on labor force participation for certain claimants but much less, if any, effect on hours worked. The EITC has led more single mothers to enter the workforce. However, the effect on labor force participation for secondary workers (for example, a spouse of someone already in the labor force) is inconclusive with studies showing no effect or a small reduction in labor force participation. In addition, studies have shown that the EITC has little or no effect on hours worked by credit claimants already in the labor force.\nThe EITC affects efficiency directly because it changes the behavior of workers that claim it and indirectly because it is funded through the tax system where tax rate differences can also change taxpayer behavior. However, the size of these effects, if any, has not been measured. As described in our 2012 report, a full evaluation of the EITC or any tax expenditure would require information on the total benefits of the credit as well as its costs, including efficiency costs.\nWhen examining the impact the EITC has on fairness or equity, research has tended to focus on how the credit affects poverty rates and tax burdens among different groups of recipients. The EITC has also been shown to be effective in reducing the percentage of low-income working people living in poverty. Nearly all studies that we reviewed show that the EITC has had a substantial effect on reducing poverty on average among all recipients and particularly those with children. For example, the U.S. Census Bureau found that in 2012 the refundable tax credits reduced the poverty rate by 3 percentage points for all claimants and by 6.7 percentage points for claimants with children. However, studies show a much smaller effect on poverty for childless workers. A Congressional Research Service analysis found that in 2012 the EITC reduced unmarried and married childless workers’ poverty rates by 0.14 percentage points and 1.39 percentage points respectively. These differences in the effect on poverty rates are not unexpected given the much smaller credit amounts available for childless workers.\nThe effect of the EITC on vertical equity can be judged based, at least in part, on the distribution of the credit’s benefits by income level. As figure 4 earlier in this report shows, EITC claimants have lower incomes than the population of claimants for the other refundable tax credits. As Figure 4 also shows, a greater share of EITC benefits goes to lower-income taxpayers. More than half (62 percent) of the EITC benefits go to taxpayers making less than $20,000.\nThe EITC’s effect on horizontal equity depends on whether its eligibility rules and the credit rates that apply to different types of taxpayers are viewed as appropriate. For example, the current credit has very different rates for taxpayers with and without children (for 2016, a maximum of $503 for childless workers vs. a maximum of $6,242 for families of three or more children). The result is that the EITC benefits mostly families with children and provides very little benefit to childless workers. This difference in credit amounts may reflect, in part, judgements about horizontal equity because larger families may be viewed as having greater costs to achieve the same standard of living than smaller families. However, some studies have shown that differences in EITC benefits may overstate the difference in costs between childless and other families. For example, one study estimated the credit’s benefits in terms of the reduction in effective tax rates and found that benefits were considerably larger for households with children compared to those without even after family incomes were adjusted to account for family size. When the study compared families with incomes equivalent to $10,000, it found that effective tax rates range from -1.47 percent for a married couple with no children to -39.21 percent for a head-of-household return with two children, a difference of more than a third of income Concerns have been raised that the credit may provide unintended incentives that discourage people from marrying to avoid a reduction in their EITC (the “marriage penalty”). The marriage penalty occurs when married EITC recipients receive a smaller EITC as married couples than their combined EITCs as single tax filers. The EITC can create marriage penalties for low-income working couples who qualify for the EITC if, when they marry, the combined household income rises into the EITC phase-out range or beyond, reducing or completely eliminating the credit. However, while limited, the research on this issue indicates that the EITC’s effects on marriage patterns are small and ambiguous. In addition, a marriage bonus is also possible when two very low-income people marry and their earnings increase but not enough to put them into the phase-out range of the credit.\nThe EITC is a complicated tax provision that is difficult for taxpayers to comply with and IRS to administer. As explained earlier in this report, the difficulties arise from the EITC’s complex rules and formulas. In particular, as described above, the rules that determine whether a child qualifies the taxpayer to claim the credit are a major source of most of the taxpayer compliance burden. However, the participation rate for eligible taxpayers is relatively high when compared to other antipoverty programs and administrative and compliance costs are likely to be lower for the EITC.",
"The CTC was created in 1997 as a nonrefundable tax credit for most families to help ease the financial burden that families incur when they have children. Since then, the amount of the credit per child has increased and the current ACTC was introduced to make the CTC credit partially refundable for more families. The current structure of the CTC/ACTC also subsidizes the costs of rearing children by the $1,000 per child credit and employment by the ACTC’s phase-in income range which increases the amount of credit as the taxpayer’s earned income increases.\nThe CTC/ACTC provides financial assistance to a relatively large number of people in its target population of families with children. According to our analysis of IRS data, the CTC/ACTC was claimed on about 36 million returns in 2013 for an average amount claimed of $1,537. The credit supplies up to $1,000 per child in assistance which may be a significant amount for lower income taxpayers but becomes a decreasing percentage of income as income increases toward the phase-out threshold of $110,000 for taxpayers who are married and filing jointly.\nThere is currently little research evaluating the impact of the CTC/ACTC on how taxpayers respond to the wage incentives. The ACTC encourages work by providing a wage subsidy of 15 cents for every dollar of earnings above $3,000 until the credit maximum of $1,000 per child is reached. Because both the ACTC and EITC subsidize earnings over the same income range, researchers find it difficult to isolate the ACTC’s effects on employment from the similarly structured but larger subsidy provided by the EITC In the absence of any evidence concerning the effectiveness of the credits, no conclusions can be drawn about its effect on efficiency.\nThe conversion of the CTC into the broader partially refundable CTC/ACTC may affect judgments about vertical equity by changing the income distribution of tax credit benefits from what it would be under the CTC alone. The ACTC concentrates more of the benefits of the CTC/ACTC among lower income households. Because the ACTC is refundable and the refundability threshold has been reduced to $3,000, more lower income filers with no or very low tax liability can qualify for the ACTC than qualify for the CTC. As figure 11 shows, the ACTC significantly increases the availability of the tax benefit for lower income taxpayers with children.\nHowever, according to our analysis of IRS data, the combined CTC/ACTC does not provide as great a share of benefits to lower income taxpayers as the EITC. About 22 percent of the CTC/ACTC is claimed by taxpayers with less than $20,000 in income whereas 62 percent of EITC is claimed by taxpayers in this income range. The difference may be due in part to differences in the phase-in rates and ranges. The ACTC phases in at 15 percent beginning when earnings exceed $3,000 while the EITC has no phase-in threshold and can have a phase-in rate as high as 45 percent depending on the number of children. The EITC benefits are more front-loaded for lower income taxpayers than the CTC/ACTC benefits.\nViews differ on the effect of the CTC/ACTC on horizontal equity. Some argue that these families should get this tax relief because the additional children reduce their ability to pay relative to families or individuals without children. Others, however, regard children as a choice that parents make about how they use their resources and horizontal equity requires that people with the same income pay similar taxes. Their view is that parents have children because they get satisfaction from this choice and that subsidies are no more warranted for this choice (on an ability to pay basis) than any other purchase the parents make. This disagreement highlights that, although the credit may promote a social good by providing assistance to families with children, the equity of this approach is still a matter of judgment.\nThe CTC/ACTC shares the complexity of the EITC and other tax provisions directed toward children and families which derives from the rules for determining whether a child qualifies for the tax benefit. Like the EITC, the CTC/ACTC has relationship, age, and residency requirements that contribute to complexity. Applying the rules can be complicated because the CTC/ACTC rules may be similar but not always the same as the EITC. For example, the EITC requires that qualifying children be under 19 years old (or under 24 and in school) and the CTC/ACTC requires that the qualifying children be under 17 years old. To further complicate matters, the CTC/ACTC adds a support test to the age residency and relationship requirements. Furthermore, these family centered provisions are currently structured very differently and the amount of the tax benefits change with changing circumstances. The benefits can change when the parent marries, has an additional child or the child gets older, or their income changes.",
"The AOTC provides financial assistance to students from middle-income families (like its predecessor the Hope credit) who may not benefit from other forms of traditional student aid, like Pell Grants. But the AOTC, through its refundability provisions, also expands financial assistance to students from lower income families. Under the AOTC, claimants can receive up to $2,500 per student in credits for qualifying education expenses with up to $1,000 of the credit being refundable. The AOTC was claimed on about 10 million returns in 2013. The Protecting Americans from Tax Hikes Act of 2015 made the AOTC a permanent feature of the tax code, replacing the nonrefundable Hope credit.\nThe effectiveness of the AOTC in getting financial assistance to its target population depends in part on the incidence of the credit. The AOTC’s benefits may be shifted to the educational institutions if the colleges and universities respond to the availability of the AOTC by increasing their tuition. We identified no current research on this institutional response to the AOTC but there is evidence that institutions have not raised tuition in response to the Hope and Lifetime Learning Credits. However, recent research indicates that colleges may react by reducing other forms of financial aid provided by the colleges so that the credit claimants receive no net benefit from the credits. In contrast to the other education credits, the AOTC may also affect tuition if its refundability makes it more available to lower income claimants. If these students attend schools like community colleges with more scope to raise tuitions because their tuition is initially relatively low, they may face increased tuition and a reduced effective value of their AOTC. In this case, if tuitions rise, the cost of college for students ineligible for the AOTC would go up.\nTo the extent that the AOTC reduces the after-tax cost of education, it provides a benefit that may influence decisions about college attendance. A goal of education tax benefits like the Hope Credit has been to increase college attendance and the AOTC shares some of the education cost reducing features of this credit that could increase attendance. Research on education credits has not focused on the AOTC because, due to its relatively recent enactment, data are less available for the AOTC than other education credits like the Hope and Lifetime Learning Credits. Studies have shown some but not a large impact on college attendance due to these credits and other education tax incentives. For example, a study found that tax-based aid increases full-time enrollment in the first 2 years of college for 18 to 19 years old by 7 percent and that the price sensitivity of enrollment suggests that college enrollment increases 0.3 percentage points per $100 of tax-based aid. The AOTC shares features with other education credits related to the timing of the credit that may limit its effectiveness in promoting college attendance. The AOTC may be received months after education expenses are incurred, making it less useful for families with limited resources to pay education expenses. However, the refundability of the AOTC has made it more accessible to lower income households where it may have a greater impact on college attendance than the Hope Credit. Research indicates that students from lower income households are more sensitive to changes in the price of a college education than higher income households when deciding whether to attend college.\nIf the AOTC can be shown to influence attendance decisions it may also affect efficiency by increasing an activity with a positive externality. Education would have a positive externality if the benefit to society of increased productivity and innovation that is due to a more educated populace is greater than the benefit to the individuals who make the college attendance decision and consider only their private benefit. When this is the case, the result may be under-investment in education from a social perspective. By lowering costs, the credit may increase the private return to investment in education, bringing it closer to the social return.\nThe conversion of the Hope Credit into the partially refundable AOTC may affect judgments about vertical equity by changing the income distribution of tax credit benefits. The refundability of the AOTC has increased the share of the credit’s benefits received by lower income filers when compared to its predecessor, the Hope Credit. According to our analysis of IRS data, about 20 percent of the AOTC in 2013 was claimed by filers making less than $20,000 per year. In the case of the Hope Credit in 2008 (the last year this credit was in effect) only about 6.8 percent of the credit was claimed by taxpayers earning less than $20,000 per year. As mentioned above, this shift to lower income taxpayers also has the potential to make the credit more effective and efficient. The effect on horizontal equity as in the case of the child credits described above depends on judgements about whether taxpayers should pay different taxes based on decisions about whether or not to attend college.\nThe complexity of the AOTC is derived largely from its relationship to other education tax preferences. The AOTC is one of a variety of education tax benefits that students or their families can claim which include the Lifetime Learning Credit and the tuition and fees deduction. These tax preferences differ in terms of their eligibility criteria, benefit levels, and income phase-outs. The value of the tax benefit also depends on the amount of student aid taxpayers or their children receive. Evidence indicates that due to this complexity, taxpayers may not know which education tax preference provides the most benefit until they file their taxes—and calculating the tax benefit of each provision can “place substantial demands on the knowledge and skills of millions of students and families. In addition, as described in our 2012 report, filing for AOTC is complex enough to raise concerns that some taxpayers choose not to claim a tax benefit like the AOTC or are not claiming the tax provision that provides the greatest benefit.",
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"In addition to the contact named above, Kevin Daly, Assistant Director, Susan Baker, Russell Burnett, Jehan Chase, Adrianne Cline, Nina Crocker, Sara Daleski, Catrin Jones, Diana Lee, Robert MacKay, Ed Nannenhorn, Jessica Nierenberg, Karen O’Conor, Robert Robinson, Max Sawicky, Stewart Small, and Sonya Vartivarian made major contributions to this report."
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{
"question": [
"What is the relationship between RTCs and the IRS?",
"Why are these rules complex?",
"What else makes the rules even more complex?",
"What contributes to the complexity of the rules?",
"How do the dollar amounts change over the years?",
"How are audits used by the IRS?",
"What is absent from the IRS's strategy?",
"Why might the IRS be limited in its ability to assess and improve allocations?",
"How does a lack of reliable collections data affect the IRS?",
"What opportunities are being missed by the IRS?",
"How may this specifically hurt the IRS?",
"What are refundable tax credits?",
"What was the GAO asked to do?",
"What was reported by the GAO?",
"What else did the GAO pay attention to?",
"What is recommended by the GAO?",
"How did the IRS respond to these recommendations?",
"Why might it be worth it to engage in gathering collections, despite the costs?"
],
"summary": [
"Eligibility rules for refundable tax credits (RTCs) contribute to compliance burden for taxpayers and administrative costs for the Internal Revenue Service (IRS).",
"These rules are often complex because they must address complicated family relationships and residency arrangements to determine who is a qualifying child.",
"Compliance with the rules is also difficult for IRS to verify due to the lack of available third party data.",
"The relatively high overclaim error rates for these credits (as shown below) are a result, in part, of this complexity.",
"The average dollar amounts overclaimed per year for 2009 to 2011, the most recent years available, are $18.1 billion for the EITC, $6.4 billion for the CTC/ACTC, and $5.0 billion for the AOTC.",
"IRS uses audits and automated filters to detect errors before a refund is sent, and it uses education campaigns and other methods to address RTC noncompliance.",
"IRS is working on a strategy to address EITC noncompliance but this strategy does not include the other RTCs.",
"Without a comprehensive compliance strategy that includes all RTCs, IRS may be limited in its ability to assess and improve resource allocations.",
"A lack of reliable collections data also hampers IRS's ability to assess allocation decisions.",
"IRS is also missing opportunities to use available data to identify potential noncompliance.",
"For example, tracking the number of returns erroneously claiming the ACTC and AOTC and evaluating the usefulness of certain third party data on educational institutions could help IRS identify common errors and detect noncompliance.",
"Refundable tax credits are policy tools available to encourage certain behavior, such as entering the workforce or attending college.",
"The ACTC is sometimes combined with its nonrefundable counterpart, the Child Tax Credit.",
"For this report GAO described RTC claimants and how IRS administers the RTCs.",
"GAO also assessed the extent to which IRS addresses RTC noncompliance and reviewed proposed changes to the RTCs.",
"GAO recommends 1) IRS develop a comprehensive compliance strategy that includes all RTCs, 2) use available data to identify potential sources of noncompliance, 3) ensure reliability of collections data and use them to inform allocation decisions, and 4) assess usefulness of third-party data to detect AOTC noncompliance.",
"IRS agreed with three of GAO's recommendations, but raised concerns about cost of studying collections data for post-refund enforcement activities.",
"However, a significant amount of enforcement activity is occurring in the post-refund environment and use of these data could better inform resource allocation decisions and improve the overall efficiency of enforcement efforts."
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GAO_GAO-12-481
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{
"title": [
"Background",
"Permissible Providers",
"Medicare EHR Program Requirements",
"Medicaid EHR Program Requirements",
"For the First Program Year, Processes Are Being Implemented to Verify Requirements Were Met, and CMS Has Opportunities to Improve Them",
"CMS and Selected States Are Implementing Processes to Verify Whether Providers Met Requirements to Receive Incentive Payments",
"Verification under the Medicaid EHR Program",
"Most Medicare Providers Exempted Themselves from Reporting Certain Measures and Many Reported Others Based on Few Patients",
"Most Providers Exercised Program Flexibility to Exempt Themselves from Reporting on Certain Mandatory Measures",
"Many Providers Reported Clinical Quality Measures Based on Few Patients",
"For the First Program Year, Providers Experienced Challenges and Used Strategies and Services to Facilitate Participation",
"Providers Identified Challenges and Used Strategies to Facilitate First Year Participation",
"Numerous Providers Have Signed Agreements with Regional Extension Centers for Services to Facilitate Participation",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Scope and Methodology",
"Appendix II: How Medicare and Medicaid EHR Program Incentive Payments Are Calculated",
"Appendix III: Meaningful Use and Clinical Quality Measures for the Medicare EHR Program, 2011",
"Appendix IV: Regional Extension Center Program, Goals, and Progress in Helping Providers Demonstrate Meaningful Use",
"Appendix V: Comments from the Department of Health and Human Services",
"Appendix VI: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"Although the Medicare and Medicaid EHR programs are generally similar, there are some differences related to the types of providers that are permitted to participate, the duration and amount of incentive payments and penalties, and information providers must submit to satisfy the programs’ requirements.",
"The types of providers eligible to participate in the Medicare and Medicaid EHR programs—referred to as permissible providers—differ. See figure 1 below.\nBeginning in 2011, the first year of the Medicare and Medicaid EHR programs, the programs have provided incentive payments to eligible providers that met program requirements. Beginning in 2015, the Medicare EHR program is generally required to begin applying a penalty for hospitals and professionals that do not meet the Medicare EHR program requirements. Figure 2 below provides information on the years that incentive payments are available and that penalties, if applicable, will be assessed for professionals and hospitals under the Medicare and Medicaid EHR programs.\nThe amount of incentive payment varies depending on the type of provider (professionals or hospitals) and the program in which the provider participates (Medicare EHR program or Medicaid EHR program). For example, in the Medicare EHR program, professionals cannot earn more than $18,000 in incentive payments in their first year, and, over a 5-year period, payments cannot exceed a total of $44,000. In contrast, in the Medicaid EHR program, professionals cannot earn more than $21,250 in incentive payments in the first year and $8,500 during each of 5 subsequent years for a total of $63,750. (See app. II for more information on the amounts of incentive payments available under both programs and how the amounts are calculated.)\nTo receive incentive payments from either the Medicare or Medicaid EHR To programs, providers must meet eligibility and reporting requirements.do so, providers report certain information to CMS, the states, or to both—a process referred to as “attestation”—by entering certain information into CMS’s or the states’ EHR program web-based attestation tools. Providers that, based on information submitted to CMS and the states, meet the requirements receive incentive payments. Some of the eligibility and reporting requirements for the Medicare EHR program differ from those in the Medicaid EHR program.",
"To receive Medicare EHR incentive payments in 2011, professionals had to meet three eligibility and three reporting requirements, while hospitals had to meet two eligibility and two reporting requirements. (See table 1.)\nOne noteworthy reporting requirement for 2011 was that providers were required to demonstrate meaningful use of certified EHR technology by collecting and reporting information to CMS on various measures established by CMS. Specifically, in 2011, professionals had to report on a total of 20 meaningful use measures, and hospitals had to report on a total of 19 meaningful use measures. This information had to be collected over 90 consecutive days during 2011.\nProfessionals. Of the 20 meaningful use measures for professionals, 15 are mandatory. Of those 15 mandatory measures, 6 measures allow professionals to claim exemptions—that is, they may report to CMS that those measures are not relevant to their patient populations or clinical practices. measures—“report clinical quality measures to CMS”—requires professionals to report on at least 6 clinical quality measures identified by CMS. Professionals have the flexibility to choose the remaining 5 meaningful use measures from a menu of 10 measures.\nOne of the mandatory meaningful use\nHospitals. Of the 19 meaningful use measures hospitals must report, 14 are mandatory. Of those 14 mandatory measures, 3 measures allow hospitals to claim exemptions. Similar to professionals, to satisfy the mandatory meaningful use measure “report clinical quality measures to CMS,” hospitals must report on 15 clinical quality measures identified by CMS. Hospitals have the flexibility to choose the remaining 5 meaningful use measures from a menu of 10 measures.\nSee appendix III for a listing of the meaningful use measures and clinical quality measures for 2011.\nIn order to meet the definition of meaningful use, eligible professionals and hospitals must report on measures specified by CMS. An exclusion for a nonapplicable measure is permitted if the provider meets certain requirements specified in the regulation. 42 C.F.R. § 495.6. In this report we use the term “exemption” to refer to the exclusion of a nonapplicable measure.",
"To receive Medicaid EHR incentive payments during 2011, professionals had to meet seven eligibility requirements, hospitals had to meet six eligibility requirements, and both hospitals and professionals had to meet one reporting requirement. (See table 2.) Compared to the Medicare EHR program, the Medicaid EHR program requirements had two noteworthy differences in 2011.\nProviders had to meet a patient volume requirement. This requirement was established to ensure that providers that receive incentive payments from the Medicaid EHR program serve a minimum volume of Medicaid patients, or, for certain professionals, a minimum volume of needy patients. Specifically, professionals must have a Medicaid patient volume of at least 30 percent unless they are pediatricians or practice predominantly in a federally qualified health center or rural health center; hospitals generally must have a Medicaid patient volume of at least 10 percent.\nProviders only had to adopt, implement, or upgrade to a certified EHR system in 2011 and did not have to demonstrate meaningful use during the first year they participate in the Medicaid EHR program. However, in subsequent years, they must demonstrate meaningful use. individual or group primary care practices with 10 or fewer professionals; public, rural, and critical access hospitals; community health centers and rural health clinics; collaborative networks of small practices; and other settings that predominantly serve medically underserved populations, as defined by each Regional Extension Center.\nONC also provides funding for Regional Extension Centers to provide assistance to certain hospitals—critical access and rural hospitals—to ensure that centers’ services are available in those settings.\nONC’s overall goal for the Regional Extension Center program is to help 100,000 professionals meet the EHR programs’ requirements for meaningful use by 2014 and to help a total of 1,777 critical access and rural hospitals meet the EHR programs’ requirements for meaningful use by 2014. In its agreement with ONC, each Regional Extension Center established its own goal for the number of providers it would assist to help the program meet its overall goal.",
"CMS and the four states we reviewed are implementing processes to verify whether providers met the Medicare or Medicaid EHR programs’ eligibility and reporting requirements and, therefore, qualified to receive incentive payments in the programs’ first year. Although CMS is taking some steps to improve the processes CMS and states use to verify whether providers have met Medicare and Medicaid EHR program requirements, we found that CMS has additional opportunities to assess and improve these processes.",
"For the first program year, CMS is implementing a combination of pre- and postpayment processes to verify whether providers have met all of the Medicare EHR program eligibility and reporting requirements. In addition, the four states we reviewed have implemented or plan to implement a combination of pre- and postpayment processes to verify whether providers have met Medicaid EHR program eligibility and reporting requirements.\nCMS has developed and begun to implement processes to verify whether providers participating in the Medicare EHR program have met all of the program’s eligibility and reporting requirements and thereby qualify to receive incentive payments. In 2011, CMS implemented prepayment processes to verify whether providers have met all three of the Medicare EHR program’s eligibility requirements. These processes consist of automatic checks that are built into CMS’s databases to verify the information submitted by providers when they register for the program.\nCMS also implemented a process to verify, on a prepayment basis, whether providers have met one of the Medicare EHR program’s reporting requirements—to use a certified EHR system. Specifically, CMS built an automatic check to compare the EHR certification numbers for the systems providers reported using during attestation against a list of EHR systems that have been certified by ONC.\nIn 2012, according to CMS officials, the agency plans to implement additional processes to verify, on a postpayment basis, whether a sample of providers has met all three of the Medicare EHR program’s reporting requirements. To conduct these verifications, CMS has developed a risk- based approach that will be used to identify a sample of about 10 percent of professionals and 5 percent of hospitals for audits. planned audit strategy, the agency may request that providers selected for postpayment audits submit documentation, such as patient rosters, EHR screenshots, and reports generated by the EHR system to support data the providers reported to CMS during attestation. If CMS determines during the audits that a provider has failed to meet any one of the reporting requirements, it plans to take steps to recoup incentive payments. CMS officials said that they decided to wait until 2012 to begin conducting audits of providers that received incentive payments in 2011, the first payment year, to ensure that the agency does not unfairly target a disproportionate number of early participants in the Medicare EHR program. For an overview of CMS’s processes to verify whether providers met the Medicare EHR program’s eligibility and reporting requirements, see table 3.\nIn addition, according to CMS officials, the agency plans to conduct a separate audit, beginning in 2012, to verify that providers had the certified EHR systems they attested to using. For these audits, CMS anticipates sampling roughly 20 percent of professionals and 10 percent of hospitals, identified through random sampling as well as some targeted selection.",
"Three of the states we reviewed—Iowa, Kentucky, and Pennsylvania— have implemented processes to verify whether providers have met all the Medicaid EHR program’s eligibility and reporting requirements and thereby qualify to receive incentive payments. The fourth state, Texas, has implemented processes to verify whether providers met most of the program’s eligibility and reporting requirements and is in the process of developing additional verification processes as part of its postpayment audit strategy. Because CMS allows states flexibility in determining how they verify compliance with these requirements, the states vary in terms of whether they use prepayment or postpayment verification processes.\nIn order to verify whether providers have met the Medicaid EHR program’s eligibility requirements, all four states have primarily implemented prepayment processes, some of which are automated checks built into their databases. Iowa, Kentucky, and Pennsylvania also conduct postpayment audits of samples of providers to verify whether they have met requirements that were not checked on a prepayment basis. These states identify samples of providers to be audited using various risk-based approaches. Texas intends to conduct postpayment audits as well, but has not finalized its audit strategy.\nThree states—Iowa, Kentucky, and Pennsylvania—use a combination of pre- and postpayment processes to verify whether providers have met the eligibility requirement regarding the Medicaid patient volume threshold, which is determined by dividing a professional’s number of Medicaid patient visits by their total number of patient visits. For example, they use Medicaid claims data to verify, on a prepayment basis, the professionals’ number of Medicaid patient visits over the reporting period. Then, on a postpayment basis for a sample of professionals, the states use documentation submitted by professionals, such as patient billing reports, to verify their total number of patient visits. Most states, including these three, must rely on provider self-reported information to verify compliance with this requirement, because states typically do not collect data on some of the professionals’ patient visits, such as visits paid for by private insurance.\nTo verify whether providers have met the Medicaid EHR program’s reporting requirement to adopt, implement, or upgrade to a certified EHR system, the four states we reviewed use prepayment processes, postpayment processes, or both. The four states we reviewed have implemented processes, on a prepayment basis, that check the EHR certification numbers reported by providers against a list of EHR systems that have been certified by ONC.steps to verify, on a prepayment basis, compliance with this requirement by reviewing documentation, such as EHR invoices. Iowa and Pennsylvania include a similar verification process as part of their postpayment audits. Texas has not yet determined whether it will conduct additional postpayment verifications. For an overview of the four selected states’ processes to verify whether providers met the Medicaid EHR program’s eligibility and reporting requirements, see table 4.",
"Most providers participating in the first year of the Medicare EHR program through December 8, 2011, exercised program flexibility to exempt themselves from reporting on at least one mandatory meaningful use measure. In addition, many providers also reported at least one clinical quality measure based on few patients.",
"During the first year of the Medicare EHR program through December 8, 2011, most participating providers exercised flexibility allowed under the program to claim an exemption from reporting at least one mandatory meaningful use measure. Specifically, 72.4 percent of professionals and 79.6 percent of hospitals claimed such an exemption. Providers may exempt themselves from reporting certain mandatory meaningful use measures—up to six measures for professionals and up to three measures for hospitals—if they report to CMS that those measures are not relevant to their patient populations or clinical practices.\nWe found that a greater percentage of some professionals reported at least one exemption than other professionals. Specifically, we found that a greater percentage of chiropractors, dentists, optometrists, specialists, and other eligible physicians reported at least one exemption compared to generalists; and a greater percentage of professionals with 2010 Medicare Part B charges at or below the 75th percentile reported at least one exemption compared to those with charges above the 75th percentile.\nWe also found that among specialists, the largest specialty group of participating professionals, over three-quarters claimed at least one exemption. (See table 5.)\nWe found that a greater percentage of some hospitals reported at least one exemption than other hospitals. Specifically, we found that a greater percentage of critical access hospitals reported at least one exemption compared to acute care hospitals, and a greater percentage of hospitals with less than 200 beds reported at least one exemption compared to hospitals with 200 beds or more.\nWe also found that among acute care hospitals, the largest type of participating hospital, slightly over three-quarters claimed at least one exemption. (See table 6.)\nOf the mandatory meaningful use measures for which providers may claim exemptions, we found that the majority of providers claimed an exemption from the mandatory measure “provide patients with an electronic copy of their health information.” Providers may claim an exemption from this measure if they receive no requests from patients for an electronic copy of their health information. This measure was the least frequently reported mandatory measure for both professionals (32.7 percent) and hospitals (30.3 percent). In contrast, the most frequently reported mandatory measure for which exemptions were permitted was “record smoking status for patients 13 years old or older” for both professionals (99.4 percent) and hospitals (99.5 percent).\nOur finding that a majority of providers claimed exemptions from reporting at least one mandatory meaningful use measure is consistent with comments made by stakeholders in response to CMS’s Rule on the Electronic Health Record Incentive Program. Specifically, those stakeholders stated that certain providers, including specialists and small hospitals, would not be able to report all mandatory meaningful use measures, since some measures would be outside the scope of their practice. While CMS currently allows providers the flexibility to claim exemptions from reporting certain mandatory meaningful use measures, in future years of the EHR programs, CMS stated that it may not allow providers the same flexibility. It is unclear what effect, if any, such a change would have on participation levels in future program years.",
"Our analysis of clinical quality measures found that many providers reported at least one such measure based on few patients—less than seven—during the first year of the Medicare EHR program through December 8, 2011. Providers were required to report these measures to satisfy one of the mandatory meaningful use measures—”report clinical quality measures to CMS.” Specifically, 41.3 percent of professionals and 86.9 percent of hospitals reported at least one clinical quality measure based on few patients. Clinical quality measures calculated using few patients may be statistically unreliable, which, according to the American Hospital Association and others, could detract from providers’ abilities to use those measures as meaningful tools for quality improvement.\nWe found that a greater percentage of some professionals reported measures based on few patients than other professionals. Specifically, we found that a greater percentage of chiropractors, dentists, optometrists, specialists, podiatrists, and other eligible professionals reported at least one clinical quality measure that was calculated using few patients compared to generalists; a greater percentage of professionals practicing in urban locations reported at least one clinical quality measure that was calculated using few patients compared to those practicing in rural locations; and a greater percentage of professionals with 2010 Medicare Part B charges at or below the 50th percentile or above the 75th percentile reported at least one clinical quality measure that was calculated using few patients compared to those with charges above the 50th percentile, but at or below the 75th percentile.\nWe also found that about half of specialists, the largest specialty group of participating professionals, reported at least one clinical quality measure based on few patients. (See table 7.)\nWe found that a greater percentage of some hospitals reported measures based on few patients than other hospitals. Specifically, we found that a greater percentage of critical access hospitals reported at least one clinical quality measure that was calculated using few patients compared to acute care hospitals, a greater percentage of government-owned and proprietary hospitals reported at least one clinical quality measure that was calculated using few patients compared to nonprofit hospitals, a greater percentage of hospitals with less than 200 beds reported at least one clinical quality measure that was calculated using few patients compared to hospitals with 200 beds or more, and a greater percentage of hospitals located in rural areas reported at least one clinical quality measure that was calculated using few patients compared to hospitals located in urban areas.\nWe also found that among acute care hospitals, the largest type of participating hospital, more than 80 percent reported at least one clinical quality measure based on few patients. (See table 8.)\nThe American Medical Association and others stated that some providers may experience challenges selecting clinical quality measures to report. CMS has acknowledged that the availability of clinical quality measures that are relevant to providers’ patient populations and clinical practices is important to inform providers’ efforts to improve quality of care and to measure potential impacts of the EHR programs. In an effort to increase the availability of such measures, officials from the Health Information Technology Policy Committee and the Health Information Technology Standards Committee, which advise ONC on the development of meaningful use reporting requirements, noted that additional clinical quality measures may be added to the EHR programs over time. This action would help to ensure that there are a sufficient number of measures that providers can report on.",
"Providers identified challenges to participating in the first year of the Medicare and Medicaid EHR programs and strategies used to help providers participate. Numerous professionals and hospitals have signed agreements with Regional Extension Centers for technical assistance, which includes services to facilitate providers’ participation in the Medicare and Medicaid EHR programs.",
"Acquiring and implementing a certified EHR system are among the first challenges providers face as they take steps to qualify for a Medicare or Medicaid EHR incentive payment. Challenges to acquiring EHR systems described by providers and officials from the American Medical Association and American Hospital Association we interviewed included the following: the cost of purchasing or upgrading to a certified EHR system; obtaining sufficient broadband access, which can affect providers’ abilities to exchange health information; and obtaining buy-in from professionals. Challenges to implementing EHR systems described by providers we interviewed included needing to train staff on how to use the EHR systems and getting professionals to use the systems.\nOfficials we interviewed from hospitals described strategies providers used to overcome some of the challenges related to acquiring and implementing EHR systems. For example, one hospital official stated that, in order to implement a certified EHR system, hospital officials designated “super users” as a strategy to help their professionals transition to the EHR system. For instance, one hospital appointed a nurse as a “super user” who assisted others in learning how to use the EHR system. Additionally, the chief information officer of another hospital stated her organization obtained buy-in from professionals and encouraged them to use the system by presenting the EHR system as a way to improve patient safety and quality of care rather than as only an information technology project.\nOnce a certified EHR system is acquired and implemented, ensuring the system is effectively used to meet the Medicare meaningful use reporting requirements can also be challenging for some providers. Specifically, providers and others we interviewed identified challenges related to capturing data needed to demonstrate meaningful use, such as lacking a workflow that allowed the needed data to be collected electronically at the right time by the right staff member.\nProviders we interviewed noted several strategies they used to capture data in ways which helped them demonstrate meaningful use, including the following: understanding which fields of the EHR system must be completed and collecting additional data, as necessary; revising forms, retraining staff so they knew how to complete the forms, and conducting quality assurance training to ensure that the appropriate data were being captured consistently; and analyzing workflow, including understanding which staff members are to enter information into the EHR system and when data entry must occur.\nOne provider we interviewed elaborated on the strategy she used to change the workflow in her practice so that she could satisfy the meaningful use measure—”provide patients with clinical summaries for each office visit.” She decided that to meet this meaningful use measure she would provide the clinical summary to her patients before they left her office. To do so, she changed her workflow by spending an additional 45 minutes each morning preparing parts of her patient notes in advance of the patient visit and by scheduling additional time in between patient visits in order to complete the clinical summaries.",
"As of December 2011, about 115,000 professionals and about 1,000 hospitals have signed agreements to receive technical assistance from one of the 62 Regional Extension Centers. This assistance includes services to facilitate providers’ participation in the Medicare and Medicaid EHR programs. Of these professionals, 54,241 had implemented an EHR system, of which 4,072 had demonstrated meaningful use. The professionals assisted by the Regional Extension Center program work in targeted settings, such as individual primary care practices or rural health clinics. See figure 4, which illustrates the practice settings of professionals who have agreements with the Regional Extension Centers.\nIn addition, 1,001 rural hospitals and critical access hospitals have signed agreements with a Regional Extension Center for technical assistance, through December 19, 2011. Of these hospitals, 243 had implemented an EHR system and of those, 41 had demonstrated meaningful use. For more information on each Regional Extension Center’s progress in assisting providers to demonstrate meaningful use, see appendix IV.\nRegional Extension Centers offer various services to providers with whom they have agreements to facilitate the providers’ participation in the EHR programs by helping them meaningfully use EHR systems. Providers trying to demonstrate meaningful use generally follow a four-step process, throughout which Regional Extension Centers may provide assistance to providers. These steps are: (1) prepare to participate in the CMS EHR programs, (2) select a certified EHR system, (3) implement the selected EHR system, and (4) demonstrate meaningful use. Examples of the services offered by the Regional Extension Centers during each of these steps are described in figure 5.\nDuring the first step, Regional Extension Center officials can help providers prepare to participate in the EHR programs by explaining those programs’ requirements and helping providers identify how their workflow and processes may change with the introduction of an EHR system. For example, officials from one Regional Extension Center told us they helped providers determine whether they would qualify for the Medicare or Medicaid EHR programs. During the second step, the Regional Extension Centers can help providers select a certified EHR system. For example, officials from one Regional Extension Center told us they shared a vendor evaluation tool with providers, which helped providers evaluate factors such as EHR systems’ capabilities and cost. During the third step, Regional Extension Center officials can help providers implement an EHR system by, for example, suggesting best practices for securing and protecting the privacy of personal health information stored and processed by the EHR system. During the fourth step, the Regional Extension Centers provide services that help providers to meet the EHR programs’ meaningful use criteria. For example, the Regional Extension Centers may help their clients identify approaches for satisfying certain program reporting requirements by helping providers capture and exchange health data.",
"The aim of the Medicare and Medicaid EHR programs is not just to increase EHR adoption, but to support the meaningful use of EHR technology to improve quality and reduce the cost of care. As a result, the programs have the potential to affect the millions of people who receive care through Medicare or Medicaid. Since the programs began in 2011, CMS has issued $3.1 billion in incentive payments to providers. As a new program with particular complexities—such as the number and types of measures providers must report—there are risks to program integrity, and CMS could take steps, beyond those already taken, to assess and mitigate the risk of improper payments and to improve program efficiency. It is encouraging that CMS has awarded contracts to evaluate states’ implementation of the Medicaid EHR program, including their efforts to prevent improper payments. However, CMS, while planning to assess its audit strategy for the Medicare EHR program, has not yet specified time frames for implementing this assessment. As CMS moves forward, it is important that the agency assess whether verifying additional reporting requirements on a prepayment basis could improve the integrity of the Medicare EHR program. Conducting prepayment verifications may be more effective in minimizing improper payments because CMS’s planned postpayment audits will be conducted for only a small sample of providers, whereas CMS’s prepayment verification processes are conducted for all providers that apply for incentive payments. In addition, prepayment verifications help to avoid the difficulties associated with the “pay and chase” aspects of recovering improper payments.\nWe identified two opportunities for CMS to improve the efficiencies of the Medicare and Medicaid EHR programs. First, CMS identified and took action to improve the efficiency of audits under the Medicaid EHR program but did not take a similar action in the Medicare EHR program. Specifically, although CMS suggested that states collect additional information from providers at the time of attestation to improve the efficiency of the postpayment audit process, CMS has not done so for the Medicare EHR program, but acknowledged that this action would be beneficial. Doing so would improve the efficiency of the postpayment audit process for the Medicare EHR program. Second, CMS could offer states the option of having CMS collect Medicaid providers’ meaningful use attestations on their behalf rather than requiring states to collect this information on their own. CMS, by offering to collect this information from all Medicaid providers on behalf of states, as the agency currently does for some Medicaid providers, could alleviate the need for many states to create and maintain similar web-based attestation tools and could potentially yield cost savings at both the federal and state levels.",
"In order to improve the efficiency and effectiveness of processes to verify whether providers meet program requirements for the Medicare and Medicaid EHR programs, we recommend that the Administrator of CMS take the following four actions:\nEstablish time frames for expeditiously implementing an evaluation of the effectiveness of the agency’s audit strategy for the Medicare EHR program.\nEvaluate the extent to which the agency should conduct more verifications on a prepayment basis when determining whether providers meet Medicare EHR program’s reporting requirements.\nCollect the additional information from Medicare providers during attestation that CMS suggested states collect from Medicaid providers during attestation.\nOffer states the option of having CMS collect meaningful use attestations from Medicaid providers on their behalf.",
"We provided a draft of this report to HHS for comment. In its written comments (reproduced in app. V), HHS concurred with three of our recommendations to CMS. Specifically, we are encouraged that HHS said that to help implement these recommendations, CMS will evaluate the effectiveness of the audit strategy for the Medicare EHR program on an ongoing basis and document results quarterly, beginning approximately 3 months after the audits begin. In addition, CMS will evaluate the feasibility of conducting additional prepayment verifications under the Medicare EHR program. Further, CMS will explore collecting additional information from Medicare providers during attestation that CMS has suggested that states collect under the Medicaid EHR program.\nHHS disagreed with our fourth recommendation that CMS offer to collect meaningful use attestations data from Medicaid providers on behalf of the states, citing two reasons. First, HHS does not believe there are significant barriers to states implementing attestation tools. It stated that the 43 states participating in the Medicaid EHR program have established a means for providers to attest to eligibility requirements and the adoption, implementation, or upgrade of their EHR. In HHS’s view, incorporating the meaningful use attestations tools into the states’ existing systems does not pose a barrier in part because HHS says CMS has taken steps to help the states design their attestation tools and has approved designs developed by vendors that the states can use. Second, HHS does not believe that implementing this recommendation would create a streamlined attestation process for Medicaid providers. It states that Medicaid providers would have to provide certain information to CMS and other information to the states, requiring providers to submit data to multiple sites. HHS believes this change could result in confusion and payment delays. In addition, HHS believes a more compelling challenge is designing a way for providers to report clinical quality measures electronically from their EHRs to the states and CMS. HHS stated that CMS established pilots that are intended to help providers leverage existing infrastructure to electronically exchange data on clinical quality measures directly from their EHRs to CMS.\nDespite HHS’s objections, we continue to believe that our recommendation should be implemented. In response to HHS’s first reason, we believe that while some states have created tools to collect Medicaid attestation data, over the long run implementing our recommendation could improve the efficiency of the Medicaid EHR program and thereby minimize additional administrative costs, especially in the program’s future years. Currently, both CMS and states create and maintain meaningful use attestation tools. The Medicaid EHR program requirements in the second year of the program and through the rest of the decade will become increasingly similar to the requirements for the Medicare EHR program as will the information collected from providers by the states and CMS. Having both CMS and states design and maintain systems to collect much of the same information is inefficient. Further, it is expected that in future years, to demonstrate meaningful use, Medicare and Medicaid providers will be required to report additional information, and both CMS and the states will need to expend resources to update the attestation tools used to collect this information, a point we clarified in our report. By collecting meaningful use attestations on behalf of some states and U.S. insular areas, CMS could help ensure effective use of the $300 million that Congress provided for administrative costs of the Medicaid EHR program from 2009-2016.\nIn response to HHS’s second reason, the report notes that under the current process for registering for the Medicaid EHR program, providers must already submit information on eligibility to both CMS and the states. Therefore, providers are familiar with submitting information to multiple sites. Furthermore, CMS currently collects meaningful use attestations for some Medicaid providers and has not reported that the transfer of this information to the states has delayed payments.\nWe agree with CMS that designing a means to electronically transmit meaningful use information, including clinical quality measures, directly from providers’ EHRs to CMS and the states may present challenges. It is encouraging that the agency is attentive to electronic data exchange issues and is working with providers in the Medicare program to identify ways to leverage existing infrastructure to accomplish this goal. However, it is important for CMS to consider all approaches, including collecting meaningful use data on behalf of states, to ensure the Medicare and Medicaid EHR programs are administered as efficiently as possible.\nAs part of HHS’s written response, the department also provided other general comments, which we incorporated as appropriate.\nWe are sending copies of this report to the Secretary of Health and Human Services, the Administrator of CMS, the National Coordinator for Health Information Technology, and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or at [email protected]. Contact points for our Office of Congressional Relations and Office of Public Affairs can be found on the last page of this report. Other major contributors to this report are listed in appendix V.",
"This appendix provides additional details regarding our analysis of (1) measures providers reported to the Centers for Medicare and Medicaid Services (CMS) to demonstrate meaningful use and (2) Regional Extension Center data.\nAnalysis of measures providers reported to CMS to demonstrate meaningful use. We conducted several analyses of data from CMS’s National Level Repository that providers reported to CMS to demonstrate meaningful use under the Medicare electronic health records (EHR) program in 2011. We analyzed data submitted by providers from April 18, 2011, the date CMS began collecting these data, through December 8, 2011.information because they were required to report these data by November 30, 2011, to receive a Medicare EHR incentive payment for 2011. In contrast, the data we analyzed for professionals did not include full-year information because CMS permitted them to submit these data through February 29, 2012, to receive a Medicare EHR incentive payment for 2011. We included all hospitals and professionals that, according to data from CMS’s National Level Repository, had successfully demonstrated meaningful use even though some of those providers had not received Medicare EHR program incentive payments from CMS as of December 8, 2011.\nAs a result, the data we analyzed for hospitals included full-year Specifically, we analyzed meaningful use and clinical quality measures providers reported to CMS and which we obtained from CMS’s National Level Repository to identify the following:\nFrequency of measures reported. We identified the frequency with which providers reported the mandatory meaningful use measures for which providers may claim exemptions. Six measures allow professionals to claim exemptions and three measures allow hospitals to claim exemptions if, according to the providers, those measures are not relevant to their patient populations or clinical practices.\nExtent to which providers claimed allowable exemptions from reporting certain mandatory measures. We determined the percentage of providers that claimed an exemption from reporting at least one mandatory meaningful use measure. As part of this analysis, we examined whether a greater percentage of certain types of providers reported at least one exemption compared to other types of providers.\nExtent to which providers had patients who could be included in the calculation of clinical quality measures. We examined the extent to which providers had few patients who could be included in the calculation of at least one clinical quality measure. Measures that capture a small number of patients may be unreliable measures of quality because relatively small changes in the number of patients who experienced the care processes or outcomes targeted by the measure can generate large shifts in the calculated percentage for the measure. CMS has recognized in other programs that including a small number of patients in the calculation of a measure is a reliability issue. For example, on the agency’s Hospital Compare website, which publicly reports clinical quality measures by hospital, CMS indicates whether the number of patients included in a particular measure calculation was based on less than 25 patients and thus too small to reliably tell how well the hospital was performing. For our analysis, we identified clinical quality measures as unreliable if fewer than seven patients met inclusion criteria for the calculation. The reporting period for the first year a provider demonstrates meaningful use is any 90 consecutive days during the year; for subsequent years, the reporting period is the full year. Assuming a steady patient population, providers that had fewer than seven patients meet inclusion criteria for calculating clinical quality measures during the 90-day reporting period would have fewer than 25 patients meet these criteria during the full-year reporting period. As part of this analysis, we examined whether a greater percentage of certain types of providers reported at least one clinical quality measure based on few patients compared to other types of providers.\nWe also analyzed other data sources to determine whether the reporting of meaningful use and clinical quality measures varied based on providers’ characteristics, such as whether critical access hospitals were more likely than acute care hospitals to claim an exemption from reporting at least one mandatory meaningful use measure. We used Chi-square likelihood tests to determine whether differences in provider characteristics were statistically significant. In particular, we analyzed data from the following sources: CMS’s Online Survey, Certification, and Reporting System (downloaded May 2011); CMS’s National Plan and Provider Enumeration System Downloadable File (downloaded October 2011); the Health Resources and Services Administration’s 2009-2010 Area Resource File (released August 2010); and CMS’s 2010 Medicare Part B claims (downloaded February 2012). Using these data, we examined the following provider characteristics:\nHospital type. We obtained data on hospital type—acute care or critical access hospital—from CMS’s Online Survey, Certification, and Reporting System.\nHospital ownership type. We obtained data on hospital ownership type from CMS’s Online Survey, Certification, and Reporting System. We created the ownership type of proprietary by selecting proprietary; the ownership type of nonprofit by combining voluntary nonprofit – church, voluntary nonprofit – private, and voluntary nonprofit – other; and the ownership type of government-owned by combining the four government designations (federal, state, local, and hospital district or authority).\nHospital number of beds. We obtained data on the number of beds in hospitals, which includes beds that are certified for payment for Medicare and/or Medicaid, from CMS’s Online Survey, Certification, and Reporting System. Using those data, we created four categories for the number of beds: (a) 1 to 49 beds, (b) 50 to 99 beds, (c) 100 to 199 beds, and (d) 200 or more beds.\nProfessional specialty. We obtained data on professionals’ primary specialty from CMS’s National Plan and Provider Enumeration System Downloadable File. Then, with the assistance of a crosswalk that we obtained from CMS that aggregates specialty taxonomy codes into a smaller number of specialties, we created the following seven professional specialty categories: (a) chiropractor, (b) dentist, (c) generalist, (d) optometrist, (e) podiatrist, (f) specialist, and (g) other eligible physician. Of those professionals who demonstrated meaningful use in the Medicare EHR program in 2011, we were unable to identify a primary specialty for 164 professionals (less than 0.7 percent) using the CMS downloadable file. The 900 professionals that were classified as “other eligible physicians” (about 3.8 percent) includes physicians for whom the information on professional specialty needed to classify them into one of the other professional specialty categories was not available in CMS’s National Plan and Provider Enumeration System; however, we determined that those professionals had specialty types that were eligible to receive incentive payments using other CMS databases.\nProfessionals’ Medicare Part B charges. We obtained all 2010 Medicare Part B charges from CMS.\nFor each professional (identified by National Provider Identifier), we summed the amount of Medicare Part B charges over the year. Subsequently, we created four categories by aggregating total charges by professional: (a) less than or equal to the 25th percentile, (b) greater than the 25th percentile and less than or equal to the 50th percentile, (c) greater than the 50th percentile and less than or equal to the 75th percentile, and (d) greater than the 75th percentile. Of those professionals who demonstrated meaningful use in the Medicare EHR program in 2011, information on the amount of Part B charges was missing for 359 professionals (about 1.5 percent).\nProvider location. We obtained zip codes for facility or practice locations for hospitals and professionals from CMS’s Online Survey, Certification, and Reporting System and CMS’s National Plan and Provider Enumeration System, respectively. Then, with the assistance of a zip code to Federal Information Processing Standard code crosswalk file we obtained from CMS, we used the Health Resources and Services Administration’s Area Resource File to identify whether providers were located in a metropolitan area—an area that has at least one urbanized area of 50,000 people. We then categorized providers located in metropolitan areas as being located in urban areas and providers that were not as being located in rural areas. We were unable to match 20 providers’ zip codes to the Area Resource File (which is less than 0.1 percent of participating professionals).\nTo ensure the reliability of the data we analyzed, we interviewed officials from CMS, reviewed relevant documentation, and conducted electronic testing to identify missing data and obvious errors. On the basis of these activities, we determined that the data we analyzed were sufficiently reliable for our analysis.\nAnalysis of Regional Extension Center data. We analyzed data we obtained from the Office of the National Coordinator for Health Information Technology (ONC) in December 2011. The data, which the agency collects from Regional Extension Centers, contains information about the providers to whom the centers provided technical assistance. We determined the number of providers assisted by the Regional Extension Center program as well as the percentage of those providers overall and for each center that had (1) signed an agreement with a center, (2) implemented an EHR, and (3) demonstrated meaningful use. In addition, we determined the types of professionals who had signed an agreement for technical assistance with a center.\nWe made some adjustments to the data we obtained for professionals based on information obtained from officials at ONC. Specifically, we limited our analysis to professionals identified by a Regional Extension Center as being priority primary care providers, which are types of professionals for which ONC reimburses centers for providing technical assistance. This excluded 7,019 professionals (about 5.7 percent) from our analysis. We also excluded from our analysis professionals whose data we determined were unreliable based on information obtained from ONC officials. Specifically, we excluded any professionals who were missing or had anomalous entries for both an individual national provider identifier and an organizational national provider identifier. This excluded 355 professionals (about 0.3 percent) from the analysis. We also excluded another 2 professionals (less than 0.1 percent) who were identified in the data as being a type of professional that was not considered to be a priority primary care provider even though the professional was designated as such in the ONC data.\nWe also made some adjustments to the data we obtained for hospitals based on information obtained from officials at ONC. Specifically, we limited our analysis to hospitals identified by a Regional Extension Center as being a type of hospital targeted for outreach—that is, a critical access hospital or rural hospital. This excluded four organizations (about 0.4 percent) from the analysis.\nTo ensure the reliability of the data we analyzed, we interviewed officials from ONC, reviewed relevant documentation, and conducted electronic testing to identify obvious errors. On the basis of these activities, we determined that the data we analyzed were sufficiently reliable for our analysis.",
"Appendix II: How Medicare and Medicaid EHR Program Incentive Payments Are Calculated Provider type EHR program Professionals Medicare EHR program The amount of incentive payment in any given year is equal to 75 percent of the professional’s Medicare Part B charges for the year, subject to an annual limit which varies by year. The amount of the incentive payment in the first year cannot exceed $18,000 and the total over a 5-year period cannot exceed $44,000.\nMedicaid EHR program The amount of incentive payment that a professional receives in any given year is, in general, a fixed amount; $21,250 in the first year and $8,500 in up to 5 subsequent years and the total amount over a 6-year period cannot exceed $63,750. Professionals must receive an incentive payment by calendar year 2016 in order to receive incentive payments in subsequent years.\nMedicare EHR program For acute care hospitals, the amount of incentive payment in any given year is generally based on the hospital’s annual discharges and Medicare share (i.e., percentage of inpatient days at the hospital in a given year attributable to Medicare patients). Incentive payments are awarded over periods of up to 4 years. To earn the maximum amount, acute care hospitals must first demonstrate meaningful use in fiscal year 2011, 2012, or 2013. For critical access hospitals, the incentive payment amount is generally based on the hospital’s Medicare share and the reasonable costs incurred for the purchase of depreciable assets necessary to administer certified EHR technology, such as computers and associated hardware and software. Critical access hospitals can earn payments for up to 4 years. To earn the maximum amount, critical access hospitals must first demonstrate meaningful use in fiscal year 2011 or 2012.\nMedicaid EHR program The amount of incentive payment that a hospital receives in any given year is generally based on the hospital’s annual discharges and Medicaid share. The number of years over which incentive payments are awarded (between 3 to 6 years) is at the discretion of the state.\nCMS will increase the incentive payments that would otherwise apply by 10 percent each year for Medicare professionals that predominantly furnish services in geographic areas designated as health professional shortage areas, such as areas that have a shortage of primary medical care.",
"To demonstrate meaningful use in the first year of the Medicare EHR program, professionals must report on a total of 20, and hospitals must report on a total of 19, meaningful use measures. For certain meaningful use measures, providers may report to CMS that the measures are not relevant to them; this is referred to as claiming an exemption. Furthermore, to satisfy the requirement for one of the meaningful use measures “report clinical quality measures to CMS,” providers must report on clinical quality measures identified by CMS.the number of meaningful use measures and clinical quality measures providers must report for the first year of the Medicare EHR program. Table 10 describes the meaningful use measures, and table 11 and table 12 describe the clinical quality measures for professionals and hospitals, respectively.",
"Regional Extension Centers report to the Office of the National Coordinator for Health Information Technology (ONC) data that describes the progress they have made in providing technical assistance to professionals or hospitals to help those providers meaningfully use EHRs. The data the Regional Extension Centers report to ONC describe the following three milestones in the technical assistance provided:\nThe professional or hospital signs an agreement with a Regional Extension Center to receive technical assistance.\nThe professional or hospital implemented an EHR which has electronic prescribing and measure reporting functionality.\nThe professional or hospital demonstrated meaningful use, consistent with the Medicare and Medicaid EHR programs’ requirements.\nWhen the program was established, ONC also required each of the 62 Regional Extension Centers to set a targeted numbers of professionals and hospitals each center would assist—that is, the center’s goal for the number of providers it would help meaningfully use EHRs. ONC uses the data the Regional Extension Centers report for each of the three milestones in the technical assistance process as well as the goals each center established to evaluate the effectiveness of individual Regional Extension Centers and of the program as a whole. Tables 13 and 14 list the goals and number of professionals and hospitals, respectively, assisted towards meaningful use by each center.",
"",
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"In addition to the contact named above, E. Anne Laffoon, Assistant Director; Julianne Flowers; Krister Friday; Melanie Krause; Shannon Legeer; Monica Perez-Nelson; Amanda Pusey; and Stephen Ulrich made key contributions to this report."
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"question": [
"In what circumstance does CMS allow providers to exempt themselves from reporting certain measures?",
"How might unreliable measures impact CMS?",
"Why might the CMS acknowledge the relevance of the measures?",
"How have the providers responded to the Medicare EHR program?",
"What did the HITECH create?",
"Why does the CMS administer these programs?",
"What are the projected costs of these programs?",
"How has the GAO examined the HITECH Act?",
"How did the GAO create its report?",
"Why is the GAO in contact with the CMS?",
"How has the HHS responded to these four recommendations?",
"Why does the GAO believe that the fourth recommendation is still important?"
],
"summary": [
"CMS allows providers to exempt themselves from reporting certain measures if providers report that the measures are not relevant to their patients or practices.",
"Measures calculated based on few patients may be statistically unreliable, which limits their usefulness as tools for quality improvement.",
"CMS and others acknowledged that the availability of measures that are relevant to providers’ patients and practices and are statistically reliable is important to provide useful information to providers.",
"Among participants in the first year of the Medicare EHR program, the majority of providers chose to exempt themselves from reporting on at least one meaningful use measure and many providers reported at least one clinical quality measure based on few—less than seven—patients.",
"The Health Information Technology for Economic and Clinical Health (HITECH) Act established the Medicare and Medicaid electronic health records (EHR) programs.",
"CMS and the states administer these programs which began in 2011 to promote the meaningful use of EHR technology through incentive payments paid to certain providers—that is, hospitals and health care professionals.",
"Spending for the programs is estimated to total $30 billion from 2011 through 2019.",
"Consistent with the HITECH Act, GAO (1) examined efforts by CMS and the states to verify whether providers qualify to receive EHR incentive payments and (2) examined information reported to CMS by providers to demonstrate meaningful use in the first year of the Medicare EHR program.",
"GAO reviewed applicable statutes, regulations, and guidance; interviewed officials from CMS; interviewed officials from four states, which were judgmentally selected to obtain variation among multiple factors; and analyzed data from CMS and other sources.",
"GAO is making four recommendations to CMS in order to improve processes to verify whether providers met program requirements for the Medicare and Medicaid EHR programs, including opportunities for efficiencies.",
"HHS agreed with three of GAO’s recommendations, but disagreed with the fourth recommendation that CMS offer to collect certain information on states’ behalf.",
"GAO continues to believe that this action is an important step to yield potential cost savings."
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CRS_R44593
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{
"title": [
"",
"Introduction",
"Purpose of the NFIP",
"Reduction of Comprehensive Flood Risk",
"Risk Mapping, Assessment, and Planning (Risk MAP) and Flood Insurance Rate Maps (FIRMs)",
"Flood Zones",
"Updating Flood Maps",
"Map Corrections",
"State and Local Land Use Controls",
"Flood Mitigation Assistance Grants",
"Primary Flood Insurance through the NFIP",
"Standard Flood Insurance Policies (SFIPs)",
"Mandatory Mortgage Purchase Requirement",
"Preferred Risk Policies (PRPs)",
"Increased Cost of Compliance (ICC) Coverage",
"Servicing of Policies and Claims Management",
"Pricing and Premium Rate Structure",
"Pre-FIRM Subsidy",
"Newly Mapped Subsidy",
"Grandfathering Cross-Subsidy",
"Community Rating System",
"Affordability Study and Framework",
"Nonparticipating Communities and Community Suspension",
"Funding",
"Premium Fees and Surcharges",
"Appropriations and Offsetting Receipts",
"Borrowing from the U.S. Treasury, NFIP Debt",
"NFIP Purchase of Reinsurance",
"Expiration of Certain NFIP Authorities"
],
"paragraphs": [
"",
"The National Flood Insurance Program (NFIP) was created by the National Flood Insurance Act of 1968 (NFIA). The NFIP received a short-term reauthorization through December 8, 2017, a second short-term reauthorization through December 22, 2017, and a third short-term reauthorization through January 19, 2018. The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018. The NFIP lapsed for approximately eight hours during a brief government shutdown in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018. The NFIP received a sixth reauthorization until July 31, 2018, a seventh reauthorization until November 30, 2018, an eighth reauthorization until December 7, 2018, a ninth reauthorization until December 21, 2018, and a tenth reauthorization until May 31, 2019.\nThe last long-term reauthorization of the NFIP was by the Biggert-Waters Flood Insurance Reform Act of 2012 (hereinafter BW-12), from July 6, 2012, to September 30, 2017. Congress amended elements of BW-12, but did not extend the NFIP's authorization further, in the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA). The NFIP is managed by the Federal Emergency Management Agency (FEMA), through its subcomponent the Federal Insurance and Mitigation Administration (FIMA). As of October 2018, the NFIP had more than 5.1 million flood insurance policies providing over $1.3 trillion in coverage. The program collects about $3.6 billion in annual premium revenue. Nationally, as of January 2019, about 22,355 communities in 56 states and jurisdictions participated in the NFIP. According to FEMA, the program saves the nation an estimated $1.87 billion annually in flood losses avoided because of the NFIP's building and floodplain management regulations.\nThis report provides introductory information on key components of the NFIP, ranging from floodplain mapping to the standard flood insurance forms. This report will be updated as significant revisions are made to the NFIP through legislation or administrative action. However, this report does not provide detail on current or future legislative issues for Congress, which are covered in a separate report. CRS also has a separate report on flood insurance and other federal disaster assistance programs.",
"In the original NFIP statute, Congress stipulated that \"a program of flood insurance can promote the public interest by providing appropriate protection against the perils of flood losses and encouraging sound land use by minimizing exposure of property to flood losses.\" Congress had found that postdisaster flood losses, and the subsequent federal disaster relief assistance to help communities recover from those flood losses, had \"placed an increasing burden on the Nation's resources\" and that as a matter of national policy \"a reasonable method of sharing the risk of flood losses is through a program of flood insurance which can complement and encourage preventive and protective measures.\" At the time of establishment of the NFIP, as is generally still the case today, it was found that \"many factors have made it uneconomic for the private insurance industry alone to make flood insurance available to those in need of such protection on reasonable terms and conditions.\"\nThus, the NFIP essentially has two interrelated policy purposes that can be summarized as\n1. to provide access to primary flood insurance, thereby allowing for the transfer of some of the financial risk of property owners to the federal government, and 2. to mitigate and reduce the nation's comprehensive flood risk through the development and implementation of floodplain management standards.\nA core design feature of the NFIP is that communities are not required to participate in the program by any law or other regulation. Rather, communities in the United States voluntarily participate in the NFIP generally as a means of securing access to the primary flood insurance offered by the NFIP. Essentially, the NFIP is structured so that the availability of primary flood insurance through the NFIP (purpose #1 from above) is tied to the adoption and enforcement of floodplain management standards by participating communities (purpose #2). FEMA is only allowed to provide flood insurance to \"those States or areas (or subdivisions thereof)\" where \"adequate land use and control measures\" have been adopted that \"are consistent with the comprehensive criteria for land management and use developed\" by the NFIP. Thus, communities that participate in the NFIP, and therefore whose residents may access the NFIP's primary flood insurance, also adopt through local or state laws minimum floodplain management standards that are described in FEMA regulations.",
"The NFIP accomplishes the goal of reducing comprehensive flood risk primarily by requiring participating communities to\nCollaborate with FEMA to develop and adopt flood maps called Flood Insurance Rate Maps (FIRMs). Enact minimum floodplain standards based on those flood maps.\nIn addition, premiums collected from the sale of insurance in the NFIP finance a Flood Mitigation Assistance (FMA) grant program that reduces overall flood risk. This section of the report briefly discusses each of these means of reducing comprehensive flood risk.",
"FEMA is responsible for undertaking Flood Insurance Studies (FISs) nationwide to identify areas within the United States having special flood, mudslide, and flood-related erosion hazards; assess the flood risk; and designate insurance zones. FEMA develops, in coordination with participating communities, flood maps called Flood Insurance Rate Maps (FIRMs) using these FISs that depict the community's flood risk and floodplain. In BW-12, Congress revised the authorities of FEMA as it relates to flood hazard mapping to formally establish what FEMA has called the Risk Mapping, Assessment and Planning (Risk MAP) process. Though formally authorized in BW-12, FEMA started the Risk MAP process at the request of Congress in 2009. While FEMA is largely responsible for the creation of the FIRM, the community itself must pass the map into its local or state law in order for the map to be effective.",
"An area of specific focus on the FIRM is the Special Flood Hazard Area (SFHA). The SFHA is intended to distinguish the flood risk zones that have a chance of flooding during a \"1 in 100 year flood\" or greater frequency. This means that properties in the SFHA have a risk of 1% or greater risk of flooding every year. Table 1 shows flood-risk zones that are depicted on the FIRMs. Zones A (A1-30), AE, AH, AO, V, VE, VO, and V1-30 constitute the designated SFHA on the community's FIRM. V zones are distinguished from A zones in that V zones are subject to tidal wave action (i.e., coastal flooding). Two other designations for classifying zones in the SFHA are the Zone AR, which is an area where a levee or similar structure is determined not to provide sufficient flood protection, but is undergoing restoration; and the Zone A99, an area where a federal flood protection structure is under construction to provide the necessary flood protection standard.",
"Flood maps adopted across the country vary considerably in age and in quality. While some FIRMs may have last been developed and adopted by a community in the 1980s, especially in rural areas of the country, most communities will have maps adopted within the past 15 to 20 years. All official FIRMs can be accessed, and are searchable by address and location, on a FEMA website called the Map Service Center, and modern FIRMs can be digitally viewed via the Geographic Information System in the National Flood Hazard Layer.\nThere is no consistent, definitive timetable for when a particular community will have their maps revised and updated. FEMA uses a process called the Coordinated Needs Management Strategy to prioritize, identify, and track the lifecycle of mapping needs of Risk MAP. Generally, flood maps may require updating when there have been significant new building developments in or near the flood zone, changes to flood protection systems (e.g., levees and sand dunes), and environmental changes in the community. Because of the variability in how and when a FIRM is updated, for example, one community may be undergoing the process of updating its map while a neighboring community is not, and one community may have had its map last updated in 2016 while a neighboring community had its last revised in 2005, etc.\nThere are statutory guidelines for how FEMA is allowed to develop new FIRMs for a community. These guidelines require, for example, FEMA to conduct extensive communication and outreach efforts with the community during the mapping process and include various minimum waiting periods after intermediary steps are taken in the process. In addition, during this process, communities are asked to submit pertinent data concerning their flood hazards, flooding experience, mitigation plans to avoid potential flood hazards, and estimates of historical and prospective economic impacts flooding has had on the community. Generally, FEMA seeks to make the Risk MAP process a collaborative process with local communities to encourage a joint sense of \"ownership\" of the maps. There are also legal requirements allowing communities and individuals to appeal during the process of updating FIRMs. This appeal process now includes the option, first authorized in BW-12, for communities to appeal to a Scientific Resolution Panel regarding a proposed FIRM.\nIn BW-12, Congress reestablished and reauthorized a council called the Technical Mapping Advisory Council (TMAC). The TMAC is broadly authorized to review and recommend improvements to how FEMA produces and disseminates flood hazard, flood risk, and flood map information. In particular, the TMAC is authorized to recommend to FEMA \"mapping standards and guidelines for—(A) flood insurance rate maps [FIRMs]; and (B) data accuracy, data quality, data currency, and data eligibility.\" Currently, the TMAC estimates that the production of a new or revised FIRM is designed to take three to five years under the Risk MAP program, but can often take as long as six and a half years or longer. The TMAC has suggested that the ideal Risk MAP project timeline is 25 months.",
"After a map is finalized and adopted by a community, it can still be revised to correct for errors in map accuracy. To correct these inaccuracies, FEMA allows individuals and communities to request letters amending or revising the flood map. In general, two primary circumstances may result in changes to the flood map. First, the natural elevation of property may be incorrectly accounted for on a FIRM, and that natural elevation is such that the property should not be considered part of the SFHA. Generally, in this circumstance, an individual or community may request a Letter of Map Amendment (LOMA). Second, a community may feel that a physical development in the community has resulted in a reduction of the flood risk for areas previously mapped in the floodplain. Generally, in this circumstance, the community may request a Letter of Map Revision (LOMR). In either a LOMA or LOMR, the decision to correct a map must be based on scientific information validating the inaccuracy of the current map. In most circumstances, the cost of requesting the map correction is borne by the community or individual.",
"As authorized in law, FEMA has developed a set of minimum floodplain management standards that are intended to\n(1) constrict the development of land which is exposed to flood damage where appropriate, (2) guide the development of proposed construction away from locations which are threatened by flood hazards, (3) assist in reducing damage caused by floods, and (4) otherwise improve the long-range land management and use of flood-prone areas.\nCommunities are required to adopt these minimum floodplain management standards in order to participate in the NFIP. FEMA has set forth the minimum standards it requires for participation in the NFIP in federal regulations. Though the standards appear in federal regulations, the standards only have the force of law because they are adopted and enforced by a state or local government. Key conditions of the NFIP minimum standards include, among many other conditions, that communities:\nrequire permits for development in the SFHA; require elevation of the lowest floor of all new residential buildings in the SFHA to or above the Base Flood Elevation (BFE); restrict development in the regulatory floodway to prevent increasing the risk of flooding; and require certain construction materials and methods that minimize future flood damage.\nLegal enforcement of the floodplain management standards is the responsibility of the participating NFIP community. However, FEMA, often in cooperation with state governments, will conduct community assistance visits (CAVs) to monitor how and if a community is adequately enforcing its floodplain ordinances. Two previous reviews commissioned by FEMA on community enforcement of minimum floodplain standards have estimated that the nationwide rate of community compliance with the standards is 70% to 85%, and that between 58% and 70% of buildings are built in full compliance with the standards. A community that has been found failing to enforce the floodplain management standards may be placed on probation and ultimately suspended from the NFIP (as discussed later in this report). As these standards are just minimum requirements, states and communities can elect to adopt higher standards as a means of mitigating flood risk. In addition, FEMA operates a program, called the Community Rating System, to incentivize NFIP communities to adopt more rigorous floodplain management standards (as discussed later in this report).",
"To reduce comprehensive flood risk, FEMA also operates a Flood Mitigation Assistance (FMA) Grant Program that is funded through revenue collected by the NFIP. The FMA Program awards grants for a number of purposes, including state and local mitigation planning; the elevation, relocation, demolition, or flood proofing of structures; the acquisition of properties; and other activities. In FY2019, the FMA Program was authorized to use $175 million of NFIP revenue. The funding is available until it is expended, so in certain years the amount awarded may exceed the amount authorized by Congress in an appropriation act for a specific fiscal year. A database of approved FMA grants that is available from FEMA indicates that over $905 million in projects was approved between July 1997 and November 2017.",
"",
"FEMA has considerable discretion under the law to craft the details of the flood insurance policies it sells through the NFIP. Currently, there are three policies that the NFIP uses to sell primary flood insurance—the Dwelling, the General Property, and the Residential Condominium Building Association policy forms. Collectively, these Standard Flood Insurance Policies (SFIPs) appear in regulations, and coverage qualifications are generally equivalent. Table 2 displays the maximum available coverage limits for SFIPs by occupancy type. These coverage amounts are set by law. Policyholders are able to elect coverage for both their building property and separate coverage for contents. Renters may obtain contents-only coverage.\nBecause SFIP coverage limits are often less than the value of a structure or the value of the property's contents, policyholders can obtain excess flood insurance to cover losses beyond the coverage limit. However, such excess coverage is not sold by the NFIP, and can only be purchased through the private insurance market.\nWithin the SFIPs sold by the NFIP, there are numerous policy exclusions that are often not understood by policyholders. For example, SFIPs do not provide coverage for alternative living expenses (e.g., the cost of staying in a hotel while a house is being repaired) or business interruption expenses, and SFIPs have limited coverage of basements or crawlspaces. In addition, the SFIP does not cover damage caused by earth movement, including landslides.",
"In a community that participates or has participated in the NFIP, owners of properties in the mapped SFHA are required to purchase flood insurance as a condition of receiving a federally backed mortgage. By law and regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require these property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Examples of the types of lenders that are mandated to issue regulations requiring the purchase of flood insurance related to mortgages include\nfederal agency lenders, such as the Department of Veterans Affairs, or the government-sponsored enterprises (GSEs), Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), or federally regulated lending institutions, such as banks covered by the Federal Deposit Insurance Corporation (FDIC) or the Office of the Comptroller of the Currency (OCC).\nProperty owners falling under this mandate may purchase flood insurance through the NFIP, or through a private company, so long as the private flood insurance provides \"flood insurance coverage which is at least as broad as the coverage provided under a [SFIP] … including when considering deductibles, exclusions, and conditions offered by the insurer.\"\nThe implementation of this requirement has proved challenging, with the responsible federal regulators (the Federal Reserve, Farm Credit Administration, Federal Deposit Insurance Corporation, National Credit Union Administration, and Comptroller of the Currency) issuing two separate Notices of Proposed Rulemaking (NPRM) addressing the issue in October 2013 and November 2016 . The crux of the implementation issue can be seen as answering the question of who would judge whether specific policies met the \"at least as broad as\" standard and what criteria would be used in making this judgment? The uncertainty as to whether particular private policies would meet the standard has been seen as \" at odds with \" greater private participation in the flood insurance marketplace.\nOn February 12, 2019, the regulators announced a final rule implementing the BW-12 \"requirement that regulated lending institutions accept private flood insurance policies\" that takes effect July 1, 2019. Of particular note, the rule\n\"allows institutions to rely on an insurer's written assurances in a private flood insurance policy stating the criteria are met; [and] clarifies that institutions may, under certain conditions, accept private flood insurance policies that do not meet the Biggert-Waters Act criteria.\"\nThe rule does not apply directly to other federal agencies, nor to the GSEs, which would be subject to separate rulemaking.\nNot all mortgages in the SFHA are affected by this mandatory purchase requirement. For example, a personal mortgage loan between two private parties (such as between family members), or a mortgage issued by a private mortgage company that is not then sold on the secondary market to a bank or entity like Fannie Mae, may not require flood insurance. Even if they are not technically required to mandate flood insurance by federal law, the issuing party may still require it as a means of financially securing the property. While the exact percentage of total mortgages requiring flood insurance is unknown, one study suggested at least 77% of all mortgages in SFHAs in 2003 would be subject to the requirement.\nDespite the mandatory purchase requirement, not all covered mortgages carry the insurance as dictated. Though there are no official statistics available from the federal mortgage regulators responsible for implementation of the mandate, a 2006 study commissioned by FEMA found that compliance with this mandatory purchase requirement may be as low as 43% in some areas of the country (the Midwest), and as high as 88% in others (the West). In a 2013 analysis done following Hurricane Sandy, one study found that approximately 65% of properties in New York City required to have insurance through their mortgage had such insurance. A 2017 study of flood insurance in New York City by the same authors reassessed the 2013 data and suggested that the estimate in their earlier study may have slightly overstated the actual take-up rate, which the 2017 study estimated at 61%. The later study found that compliance with the mandatory purchase requirement by properties in the SFHA with mortgages increased from 61% in 2012 to 73% in 2016. The later study also argued that findings for properties without mortgages indicate the effectiveness of the mandatory purchase requirement, as the 37% take-up rate for properties without mortgages in the SFHA was similar to take-up rates outside the SFHA (37% for properties with mortgages and 32% for properties without mortgages).\nThe escrowing of insurance premiums may increase compliance with the mandatory purchase requirement. Federal mortgage regulators have required the escrowing of flood insurance premiums on certain mortgages in compliance with regulations issued after changes to the law made in 1994. Expanding upon existing requirements, Section 100209 of BW-12, as subsequently revised by Section 25 of HFIAA, has required that regulated lenders start escrowing flood insurance for all mortgages, except if the lending institution is under a regulated size or the loan is a subordinate to another loan. This broader implementation of the escrowing provision began in January 2016, per law and regulations.",
"Flood insurance is optional for properties outside the SFHA regardless of whether they have a federally backed mortgage. However, as there is still a risk of flooding outside the SFHA, members of NFIP participating communities with property located in the B, C, or X Zones of a FIRM may voluntarily purchase a lower-cost Preferred Risk Policy. Unlike with properties in the SFHA, an individual may be denied a PRP if there is significant loss history for the property. FEMA encourages the purchase of PRPs both to reduce the financial flood risk of a broader group of individuals, and to expand the policy base of the NFIP writ large, thus improving the fiscal soundness of the NFIP portfolio. A PRP uses the same basic policy forms as properties within the SFHA, but receives discounted rates in accordance with its lower risk profile.",
"The NFIP requires most SFIP and PRP policyholders to purchase what is in effect a separate insurance policy to offset the expense of complying with more rigorous building code standards when local ordinances require them to do so. This increased cost of compliance coverage is authorized in law, and rates for the coverage, as well as how much can be paid out for claims, are set by FEMA. Congress has capped the amount that can be paid for ICC coverage at $75. The ICC policy has a separate rate premium structure, and provides an amount up to $30,000 in payments for certain eligible expenses.\nFor example, when a building is determined by a community to be substantially damaged following a flood, floodplain management standards adopted by local communities can require the building to be rebuilt to current floodplain management requirements, even if the property previously did not need to do so. For instance, the new compliance standard may require the demolition and elevation of the rebuilt building to above the BFE. An ICC claim may then be submitted by the policyholder to offset the cost of complying with the elevation standard. FEMA also makes ICC coverage available if a building has been declared a repetitive loss by a community's floodplain management regulations. However, not all participating NFIP communities have or enforce a \"repetitive loss provision\" that records, declares, and mandates improvements to properties that have experienced repetitive loss. Thus, certain structures that have experienced repetitive loss may not be eligible for ICC payments.\nFEMA has not implemented ICC coverage for two conditions that they are authorized to do so by law. These two conditions are for properties that have sustained flood damage on multiple occasions, if the Administrator determines that it is cost-effective and in the best interests of the NFIP, and for properties for which an offer of mitigation assistance is made under various federal assistance programs. FEMA's decision not to implement these provisions has provoked criticism from some stakeholders of the NFIP.",
"While FEMA provides the overarching management and oversight of the NFIP, the bulk of the day-to-day operation of the NFIP, including the marketing, sale, writing, and claims management of policies, is handled by private companies. This arrangement between the NFIP and private industry is authorized by statute and guided by regulation. There are two different arrangements that FEMA has established with private industry. The first is the Direct Servicing Agent, or DSA, which operates as a private contractor on behalf of FEMA for individuals seeking to purchase flood insurance policies directly from the NFIP. The second arrangement is called the Write-Your-Own (WYO) Program, where private insurance companies are paid to directly write and service the policies themselves. With either the DSA or WYO Program, the NFIP retains the actual financial risk of paying claims for the policy (i.e., underwrites the policy), and the policy terms and premiums are the same.\nCurrently, approximately 13% of the total NFIP policy portfolio is managed through the DSA, and 87% of NFIP policies are sold by the 59 companies participating in the WYO Program. Over the years, the balance between the number of policies serviced by the WYO Program or the DSA has evolved, with the WYOs covering approximately 50% of policies in 1986, and approximately 97% of policies in 2008. Because most purchasers of the NFIP policies never interface directly with a FEMA representative, and only deal with a WYO company or the DSA, they may not be aware that they are actually purchasing insurance from FEMA.\nCompanies participating in the WYO Program are compensated through a variety of methods, as summarized in Table 3 . The Government Accountability Office (GAO) and Department of Homeland Security, Office of the Inspector General (DHS IG) have produced a number of reports investigating how much the WYOs were compensated for the services they provided in support of the NFIP. In BW-12, Congress required FEMA to develop and issue a rulemaking on a \"methodology for determining the appropriate amounts that property and casualty insurance companies participating in the Write Your Own program should be reimbursed for selling, writing, and servicing flood insurance policies and adjusting flood insurance claims on behalf of the National Flood Insurance Program.\" This rulemaking was required within a year of enactment of BW-12. As of April 2019, FEMA has yet to publish a rulemaking to revise the compensation structure of the WYOs.\nFollowing Hurricane Sandy, there were concerns raised regarding the possible systematic underpayment of claims for flood losses through the NFIP. As a result of these issues, FEMA carried out a process by which Hurricane Sandy survivors could resubmit their NFIP claims to be reevaluated by FEMA. FEMA reviewed the resubmitted claims and provided additional claim payments to those deemed warranted in the review, and concluded the Sandy Claims Review Process on March 1, 2018. As of January 29, 2018, approximately 85% of policyholders who requested a review had received additional payments, resulting in approximately $258.6 million in additional claims payments. The remaining 15% of reviewed files received no additional payment. In addition, FEMA settled and litigated lawsuits initiated by claimants following Hurricane Sandy, with 1,631 of the 1,633 court cases settled, resulting in approximately $164 million in settlement payments.",
"Except for certain subsidies, flood insurance rates in the NFIP are directed to be \"based on consideration of the risk involved and accepted actuarial principles,\" meaning that the rate is reflective to the true flood risk to the property. Essentially, FEMA uses several basic characteristics to classify properties based on flood risks. Structures are evaluated by their specific risk zone on a FIRM, the elevation of the structure relative to the Base Flood Elevation (BFE) in each risk zone, and occupancy type (e.g., single family, other residential, nonresidential, and mobile/manufactured homes), along with other specific determinants of risk. In addition, the premium structure includes estimates for the expenses of the NFIP, including servicing of policies. A detailed discussion of the premium rate structure of the NFIP, and how or why it is and is not actuarially sound, is beyond the scope of this report. However, additional resources exist to assist Congress with this issue.",
"While most premium rates in the NFIP are intended to represent the full flood risk of a given structure, Congress has directed FEMA not to charge actuarial rates for properties that were constructed or substantially improved before December 31, 1974, or before the date upon which FEMA has published the first Flood Insurance Rate Map for the community, whichever was later. Therefore, by statute, premium rates charged on structures built before they were first mapped into a flood zone that have not been substantially improved, known as pre-FIRM structures, are allowed to have lower premiums than what would be expected to cover predicted claims. The availability of this pre-FIRM subsidy was intended to allow preexisting floodplain properties to contribute in some measure to prefunding their recovery from a flood disaster instead of relying solely on federal disaster assistance. In essence, the flood insurance could distribute some of the financial burden among those protected by flood insurance and the public.\nAs of September 2016, 817,344 policies received a pre-FIRM subsidy, representing approximately 16.1% of all NFIP policies. Historically, the total number of pre-FIRM policies is relatively stable, but the percentage of those policies by comparison to the total policy base has decreased. The pricing subsidy for pre-FIRM policies is progressively being phased out of the NFIP, as was initially required under Section 100205 of BW-12, as revised by Sections 3 and 5 of HFIAA. Under current law, all premiums for pre-FIRM properties will eventually reach actuarially sound rates (i.e., the rate equivalent structures pay without the subsidy, reflecting true flood risk), but at a different pace of phaseout depending on the property type. Table 4 provides an adaptation of a table from GAO regarding the multifaceted phaseout of the pre-FIRM subsidy following BW-12, as revised by HFIAA. In summary, HFIAA slowed the rate of phaseout of the pre-FIRM subsidy for most primary residences, but retained the pace of the phaseout of the subsidy from BW-12 for business properties and secondary homes. In addition, HFIAA created a minimum and maximum increase in the amount for the phaseout of pre-FIRM subsidies for all primary residences of 5%-15% annually. Unless otherwise noted, the percentage increases are based on the current premium (e.g., a 15% annual increase from the prior year premium), rather than the percentage difference between the current premium and the actuarial rate (i.e., a rate increase of 25% does not mean the pre-FIRM subsidy is eliminated in four years).",
"Congress introduced a new form of subsidy in HFIAA, for owners of properties newly mapped into a SFHA. The newly mapped procedure applies to properties previously in zones B, C, X, D, AR, or A99 (see Table 1 ), which are newly mapped into a SFHA on or after April 1, 2015, if the applicant obtains coverage that is effective within 12 months of the map revision date. The newly mapped procedure does not apply to properties mapped into a SFHA by the initial FIRM for a community entering the NFIP, and certain properties may be excluded based on their loss history. The rate for eligible newly mapped properties is equal to the PRP rate, but with a higher Federal Policy Fee, for the first 12 months following the map revision. After the first year, the newly mapped rate will begin its transition to a full-risk rate, with annual increases to newly mapped policy premiums calculated using a multiplier that varies by the year of the map change. Annual increases are restricted to no more than 18% per year. As of September 2016, 3.9% of all policies received a newly mapped subsidy.",
"Using the authority to set rate classes for the NFIP and to offer lower than actuarial premiums, FEMA allows property owners to maintain their old flood insurance rate class if their property is remapped into a new flood rate class. This practice is colloquially referred to as \"grandfathering,\" \"administrative grandfathering,\" or the \"grandfather rule\" and is separate and distinct from the pre-FIRM subsidy. To understand the grandfather rule, consider a hypothetical property X that is currently mapped into one flood zone (e.g., Zone AE), and is built to the proper building code and standards. If property X then is remapped to a new flood zone (e.g., Zone VE) and has maintained continuous insurance coverage under the NFIP, the owner of property X can pay the flood insurance rate and premium based on the prior mapped zone (i.e., pay the AE rate instead of the higher VE rate). A policyholder with a property may also be grandfathered if the elevation of a base flood is changed in a map, but the property itself does not change flood zones.\nCongress eliminated the practice of offering grandfathering to policyholders after new maps were issued in BW-12, but then subsequently reinstated the practice in HFIAA. FEMA does not have a definitive estimate on the number of properties that have a grandfathered rate in the NFIP, though data are being collected to fulfill a separate mandate of HFIAA. Unofficial estimates suggest that at least 10%-20% of properties are grandfathered, and these figures may increase with time as newer maps are introduced in high population areas.\nFEMA does not consider the practice of grandfathering to be a subsidy for the NFIP, per se, because the discount provided to an individual policyholder is cross-subsidized by other policyholders in the NFIP. Thus, while grandfathering does intentionally allow grandfathered policyholders to pay premiums that are less than their known actuarial rate, the discount is offset by others in the same rate class as the grandfathered policyholder. Although FEMA does not have an estimate of how many properties are paying grandfathered rates, the program tries to recoup lost revenue by charging higher rates for other policies in the SFHA. It is not clear, however, whether the NFIP is increasing other SFHA policy premiums by an amount equal to the discount from other NFIP risk-based rates that are being paid by the grandfathered properties.",
"Through a program called the Community Rating System (CRS), FEMA encourages communities to improve upon the minimum floodplain management standards that are required to participate in the NFIP. The CRS Program, as authorized by law, is intended to incentivize the reduction of flood and erosion risk, as well as the adoption of more effective measures to protect natural and beneficial floodplain functions. FEMA awards points that increase a community's \"class\" rating in the CRS on a scale of 1 to 10, with 1 being the highest ranking. Points are awarded for an array of improvements for how the community informs its public on flood risk; maps and regulates its floodplain; reduces possible flood damage; and provides immediate warnings and responds to flooding incidents. Starting at Class 9, policyholders in the SFHA within a CRS community receive a 5% discount on their SFIP premiums, with increasing discounts of 5% per class until reaching Class 1, and at that level, policyholders in the SFHA can receive a 45% discount on their SFIP premiums. These discounts are not extended to PRPs.\nIn order to participate in the CRS Program, a community must apply to FEMA and document its creditable improvements through site visits and assessments. As of June 2017, FEMA estimated that only 5% of eligible NFIP communities participate in the CRS program. However, these communities have a large number of flood policies, so more than 69% of all flood policies are written in CRS-participating NFIP communities. One can determine if and how highly rated a community is in the CRS Program through the most recent Flood Insurance Manual.\nFor April 2014 premium rates, the National Research Council estimated that the CRS program provided an average 11.4% discount on SFIP premiums across the NFIP. The CRS discount is cross-subsidized into the NFIP program, such that the discount for one community ends up being offset by increased premium rates in all communities across the NFIP. Therefore, for April 2014 rates, the average 11.4% discount for CRS communities was cross-subsidized and shared across NFIP communities through a cost (or load) increase of 13.4% to overall premiums. Thus in some circumstances, the discount provided to communities participating in the CRS Program may be less than the expense of the overall CRS Program.",
"Congress has expressed concern related to the perceived affordability of flood insurance premiums. In BW-12, Congress required FEMA to commission a study with the National Academy of Sciences (NAS) regarding participation in the NFIP and the affordability of premiums. The Affordability Study was not finished by its original deadline (270 days following enactment of BW-12). Congress amended the authorization for the Study while also extending the deadline in HFIAA. The NAS has since completed the Affordability Study report in two parts. In HFIAA, Congress also required FEMA to develop a Draft Affordability Framework \"that proposes to address, via programmatic and regulatory changes, the issues of affordability of flood insurance sold under the National Flood Insurance Program, including issues identified in the affordability study.\" Due 18 months following the submission of the Affordability Study, the deadline for the Framework, based on FEMA's stated date of submittal of the Affordability Study, was September 10, 2017. FEMA published their Affordability Framework on April 17, 2018.",
"FEMA enforces two regulatory conditions—probation and suspension—for removing a participating community from the NFIP. Whether or not a particular community has either been placed on probation or suspended can be found using the NFIP's Community Status Book. Notably, a community cannot be removed from the NFIP because of increased or excess flood insurance claims and losses. Rather, probation and suspension only occur if the community fails to uphold its obligations related to floodplain management.\nA community can be placed on probation by FEMA if it is found that it is failing to adequately enforce the floodplain management standards it has adopted. As established by regulations, probation can result in a fee of $50 being charged to all policyholders in the community while the community is given time to rectify FEMA's concerns regarding their implementation of the floodplain management standards. Ultimately, if the community does not correct its cited deficiencies after given time periods described in regulations, the community will be suspended from the NFIP by FEMA.\nA community can also be involuntarily suspended from the NFIP for either\nfailing to adopt an approved floodplain map and an approved set of floodplain management standards within the time periods required by regulations; or repealing or revising its floodplain management standards to a level below the minimum standards set forth in regulations.\nA suspended community may be reinstated to the NFIP once the relevant errors or deficiencies provoking the suspension have been resolved to meet FEMA's specification.\nCommunities that have been suspended or those communities that do not participate in the NFIP can face significant consequences. Primarily, members of these communities are not able to purchase primary flood insurance through the NFIP, which may result in significant uninsured property risk in that community. However, communities may elect not to participate in the NFIP because they have very little flood risk to begin with, given their particular geography or climate.\nIn addition, if a community does not participate in, or has been suspended from, the NFIP but has been previously mapped by FEMA for flood hazards, it is difficult for the community and policyholders to access other forms of federal assistance for areas in the floodplain. For example, by law, no federal assistance may be provided for acquisition or construction purposes in an area that has been identified as having special flood hazards unless the property is covered by flood insurance. Likewise, federally backed mortgages still require flood insurance for properties in the SFHA, so these property-owners would be required to obtain such insurance in the private market. A community is allowed to leave the NFIP at its will, but the potential consequences of that decision are similar to those if the community has been suspended.",
"The funding for the NFIP is primarily maintained in an authorized account called the National Flood Insurance Fund (NFIF). Generally, the NFIP has been funded through three methods:\nreceipts from the premiums of flood insurance policies, including fees and surcharges; direct annual appropriations for specific costs of the NFIP; and borrowing from the U.S. Treasury when the balance of the NFIF has been insufficient to pay the NFIP's obligations (e.g., insurance claims).\nThis section of the report briefly discusses each of these three methods of NFIP funding.",
"As of November 2018, the written premium on approximately 5.1 million policies in force was about $3.6 billion. Included within the premiums are several fees and surcharges on flood insurance policies mandated by law. First, the Federal Policy Fee (FPF) was authorized by Congress in 1990 and helps pay for the administrative expenses of the program, including floodplain mapping and some of the insurance operations. The amount of the FPF is set by FEMA and can increase or decrease year to year. Since the April 2016 rating period, the FPF has been set at a flat rate of $50 for SFIPs, and $25 for PRPs. Since October 2017, the FPF is also $25 for contents-only policies.\nSecond, a Reserve Fund assessment was authorized by Congress in BW-12 to establish and maintain a Reserve Fund to cover future claim and debt expenses, especially those from catastrophic disasters. By law, FEMA is ultimately required to maintain a reserve ratio of 1% of the total loss exposure through the Reserve Fund assessment. As of January 2019, the amount required for the Reserve Fund ratio was approximately $13.07 billion. However, FEMA is allowed to phase in the Reserve Fund assessment to obtain the ratio over time, with an intended target of not less than 7.5% of the 1% Reserve Fund ratio in each fiscal year (so, using January 2019 figures, not less than approximately $980 million each year). Since April 2016, using its discretion, FEMA has charged every NFIP policy a Reserve Fund assessment equal to 15% of the premium charged for both SFIPs and PRPs. The Reserve Fund assessment has increased from its original status, in October 2013, of 5% on all SFIPs, and 0% on PRPs.\nIn addition to the Reserve Fund assessment, all NFIP policies are also assessed a surcharge following the passage of HFIAA. The amount of the surcharge is dependent on the type of property being insured. For primary residences, the charge is $25; for all other properties, the charge is $250. Starting on April 1, 2019, FEMA will be introducing a 5% surcharge for severe repetitive loss properties. Revenues from these surcharges are deposited into the Reserve Fund.",
"Table 5 displays how Congress has appropriated and authorized offsetting receipts for the NFIP from FY2015 to FY2018. As provided for in law, all premiums from the sale of NFIP insurance are transferred to FEMA and deposited in the NFIF. Congress then authorizes FEMA to withdraw funds from the NFIF, and use those funds for specified purposes needed to operate the NFIP. In addition to premiums, Congress has also provided annual appropriations to supplement floodplain mapping activities. In addition to the mix of discretionary and mandatory funding levels indicated in Table 5 , which are set in appropriations legislation, fluctuating levels of mandatory spending occur in the NFIP in order to pay and adjust claims on affected NFIP policies.",
"Congress has authorized FEMA to borrow no more than $30.425 billion from the U.S. Treasury in order to operate the NFIP. The authorization for this borrowing would be reduced to $1 billion after May 31, 2019, were the NFIP to be allowed to lapse. In January 2017, the NFIP borrowed $1.6 billion due to losses in 2016 (the August 2016 Louisiana floods and Hurricane Matthew). On September 22, 2017, the NFIP borrowed the remaining $5.825 billion from the Treasury to cover claims from Hurricane Harvey, Hurricane Irma, and Hurricane Maria, reaching the NFIP's authorized borrowing limit of $30.425 billion. On October 26, 2017, Congress cancelled $16 billion of NFIP debt, making it possible for the program to pay claims for Hurricanes Harvey, Irma, and Maria. This represents the first time that NFIP debt has been cancelled, although Congress appropriated funds between 1980 and 1985 to repay NFIP debt. FEMA borrowed another $6.1 billion on November 9, 2017, to fund estimated 2017 losses, including those incurred by Hurricanes Harvey, Irma, and Maria and anticipated programmatic activities, bringing the debt up to $20.525 billion. The NFIP currently has $9.9 billion of remaining borrowing authority.\nThe NFIP's debt to the U.S. Treasury cannot be tied directly to any single incident, as any insurance claim paid by the NFIP is in some way responsible for the existing debt of the NFIP (i.e., a dollar paid in claims, and therefore expended by the NFIP, following a minor flooding incident is no different than a dollar paid following a major hurricane). However, the NFIP was forced to borrow heavily to pay claims in the aftermath of two catastrophic flood seasons, the 2005 hurricane season (particularly Hurricanes Katrina, Rita, and Wilma) and Hurricane Sandy in 2012. For example, following Hurricane Sandy, Congress passed P.L. 113-1 to increase the borrowing limit of the NFIP from $20.775 billion to the current $30.425 billion. Prior to Hurricane Katrina in 2005, the NFIP had generally been able to cover its costs, borrowing relatively small amounts from the U.S. Treasury to pay claims, and then repaying the loans with interest.\nThe NFIP's debt is conceptually owed by current and future participants in the NFIP, as the insurance program itself owes the debt to the Treasury and pays for accruing interest on that debt through the premium revenues of policyholders. For example, from FY2006 to FY2016 (i.e., since the NFIP borrowed funds following Hurricane Katrina), the NFIP has paid $2.82 billion in principal repayments and $3.83 billion in interest to service the debt through the premiums collected on insurance policies.\nUnder its current authorization, the only means the NFIP has to pay off the debt is through the accrual of premium revenues in excess of outgoing claims, and from payments made out of the growing Reserve Fund. As required by law, FEMA submitted a report to Congress in 2013 on how the borrowed amount from the U.S. Treasury could be repaid within a 10-year period. Whether or not FEMA will ultimately be able to pay off the debt is largely dependent on future insurance claims, namely if a catastrophic flooding incident such as Hurricanes Harvey, Sandy, or Katrina occurs again and with what frequency. However, using various predictions for both revenues (i.e., premiums) and losses (i.e., insurance claims), FEMA's report on debt repayment indicated even with the most optimistic scenario of future flooding it would take at least 13 years to repay the debt. In more realistic scenarios, the debt would not be paid off for at least 20 years, or it may increase considerably with future catastrophic incidents. For example, in April 2017, CBO projected that the NFIP would have insufficient receipts to pay the expected claims and expenses over the 2018-2027 period and that FEMA would need to use about $1 billion of its then-current $5.825 billion borrowing authority to pay those expected claims. Also in April 2017, FEMA updated some of the assumptions in the October 2015 NFIP Semi-Annual Debt Repayment Progress Report and estimated that at the end of 20 years, the NFIP's net debt would increase by a further $9.4 billion. No projections of the NFIP debt have yet been made that take account of the cancellation of $16 billion of NFIP debt, or the as yet unknown total claims of the 2017 hurricane season.",
"In HFIAA-14, Congress revised the authority of FEMA to secure reinsurance for the NFIP from the private reinsurance and capital markets. In September 2016, FEMA secured its first placement of reinsurance for the NFIP, contracting for reinsurance cover which ran from September 19, 2016, through March 19, 2017, structured into two coverage layers. Under the first layer, the reinsurers would indemnify FEMA $1 million for flood claims losses that exceed $5 million. Under the second layer, the reinsurers would indemnify FEMA $1,000,000 when the total losses from a single flood event exceed $5.5 billion. In January 2017, FEMA purchased $1.042 billion of insurance, to cover the period from January 1, 2017, to January 1, 2018, for a reinsurance premium of $150 million. Under this agreement, the reinsurance covered 26% of losses between $4 billion and $8 billion arising from a single flooding event. The purchase of private market reinsurance reduces the likelihood of FEMA needing to borrow from the Treasury to pay claims. However, since FEMA is withdrawing funds from the Reserve Fund to pay for this reinsurance, it subsequently increases the cost of insurance to policyholders. FEMA's modeling of the NFIP portfolio before the reinsurance purchase suggested that there was a 17.2% chance of losses from an event exceeding $4 billion in 2017. FEMA has already paid over $8.67 billion in claims for Hurricane Harvey, triggering the full 2017 reinsurance.\nIn January 2018, FEMA purchased $1.46 billion of insurance to cover the period from January 1, 2018, to January 1, 2019, for a reinsurance premium of $235 million. The agreement is structured to cover losses above $4 billion for a single flooding event, covering 18.6% of losses between $4 billion and $6 billion, and 54.3% of losses between $6 billion and $8 billion. In August 2018, FEMA entered into its first transfer of NFIP risk to private risk markets through an insurance-linked securities transfer, in the form of a three-year agreement with Hannover Re, a reinsurance company. Hannover Re is acting as a \"transformer,\" transferring $500 million of the NFIP's financial risk to the capital markets by sponsoring issuance of an indemnity-triggered cat bond. Hannover Re will indemnify FEMA for a portion of claims for a single qualifying flooding event that occurs between August 1, 2018, and July 31, 2021. The agreement is structured into two tranches. The first provides reinsurance coverage for 3.5% of losses between $5 and $10 billion, and the second for 13% of losses between $7.5 and $10 billion. FEMA paid a premium of $62 million for the first year of coverage. Unlike the earlier reinsurance purchases, which covered all NFIP flood losses, the catastrophe bond applies only to flooding resulting directly or indirectly from a named storm and covers only the 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Combined with the January 2018 reinsurance placement, FEMA transferred $1.96 billion of the NFIP's flood risk for the 2018 hurricane season to the private sector. FEMA has not claimed on the reinsurance purchased in 2018.\nIn January 2019, FEMA purchased $1.32 billion of insurance to cover the period from January 1, 2019, to January 1, 2020, for a reinsurance premium of $186 million. The agreement is structured to cover losses above $4 billion for a single flooding event, covering 14% of losses between $4 billion and $6 billion, and 25.6% of losses between $6 billion and $8 billion, and 26.6% of losses between $8 billion and $10 billion.",
"The statute for the NFIP does not contain a comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that generally tie to the expiration of key componen ts of the program. Unless reauthorized or amended by Congress, the following will occur after May 31, 2019:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. The authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion.\nOther activities of the program would technically remain authorized following May 31, 2019, such as the issuance of FMA grants. However, the expiration of the key authorities described above would have varied, generally serious effects on these remaining NFIP activities."
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{
"question": [
"What is the NFIP?",
"What is the purpose of the NFIP?",
"Why may communities volunteer to participate in the NFIP?",
"What does the FEMA do?",
"What does the FEMA manage?",
"How do FIRMs vary?",
"What are SFHAs?",
"What is required by communities in order to help regulate SFHA development?",
"How does FEMA encourage these communities to become more involved?",
"What else does the FEMA do?",
"What may happen to communities that fail to adopt FIRMs?",
"What may happen to communities that do not participate in the NFIP?",
"What other challenges do individuals in these communities face?",
"What policies does the NFIP insurance use?",
"What is required by law for the SFHA property owners?",
"How can community members purchase PRPs?",
"How are NFIP policies conducted?",
"How are these policies serviced?",
"What does the Congress provide for the NFIP?",
"How else does Congress intervene with the NFIP?",
"What other charges are included by NFIP?",
"What were the consequences of Congress cancelling $16 billion of NFIP debt?",
"What portion of money is currently owned by NFIP?"
],
"summary": [
"The National Flood Insurance Program (NFIP) was established by the National Flood Insurance Act of 1968 (NFIA, 42 U.S.C. §4001 et seq.), and was most recently reauthorized to May 31, 2019, through a series of short-term reauthorizations.",
"The general purpose of the NFIP is both to offer primary flood insurance to properties with significant flood risk, and to reduce flood risk through the adoption of floodplain management standards.",
"Communities volunteer to participate in the NFIP in order to have access to federal flood insurance, and in return are required to adopt minimum standards.",
"FEMA manages a Risk Mapping, Assessment and Planning (Risk MAP) process to produce Flood Insurance Rate Maps (FIRMs).",
"The NFIP is managed by the Federal Emergency Management Agency (FEMA), through its subcomponent the Federal Insurance and Mitigation Administration (FIMA).",
"FIRMs vary in age across the country, and are updated on a prioritized basis.",
"Depicted on FIRMs are Special Flood Hazard Areas (SFHAs), which are areas exposed to a 1% or greater risk of annual flooding.",
"Participating communities must adopt a flood map and enact minimum floodplain standards to regulate development in the SFHA.",
"FEMA encourages communities to enhance their floodplain standards by offering reduced premium rates through the Community Rating System (CRS).",
"FEMA also manages a Flood Mitigation Assistance (FMA) grant program using NFIP revenues to further reduce comprehensive flood risk.",
"Participating communities that fail to adopt FIRMs or maintain minimum floodplain standards can be put on probation or suspended from the NFIP.",
"In communities that do not participate in the NFIP, or have been suspended, individuals cannot purchase NFIP insurance.",
"Individuals in these communities also face challenges receiving federal disaster assistance in flood hazard areas, and have difficulties receiving federally backed mortgages.",
"NFIP insurance uses one of three types of Standard Flood Insurance Policies (SFIPs).",
"Any federal entity that makes, guarantees, or purchases mortgages must, by law, require property owners in the SFHA to purchase flood insurance, generally through the NFIP.",
"In moderate risk areas, community members may purchase Preferred Risk Policies (PRPs) that offer less costly insurance.",
"The day-to-day sale, servicing, and claims processing of NFIP policies are conducted by private industry partners.",
"Most policies are serviced by companies that are reimbursed through the Write Your Own (WYO) Program.",
"Congress has provided appropriations to the NFIP for some of the cost of Risk MAP.",
"Congress also authorizes the use of premium revenues for other NFIP costs, including administration, salaries, and other expenses.",
"NFIP premiums also include other charges, such as a Federal Policy Fee, a Reserve Fund assessment, and a surcharge to help fund the NFIP.",
"In October 2017, Congress cancelled $16 billion of NFIP debt, making it possible for the program to pay claims for Hurricanes Harvey, Irma, and Maria.",
"The NFIP currently owes $20.525 billion to the U.S. Treasury, leaving $9.9 billion in borrowing authority from a $30.425 billion limit in law."
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CRS_RL32783
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{
"title": [
"",
"Most Recent Developments",
"Overview and Context of the FY2005 Supplemental",
"Previous Funding for the \"Global War on Terror\"",
"Main Elements in the FY2005 Request",
"Defense Request",
"Foreign Policy Request",
"Other Supplemental Requests",
"Immigration Provisions—Congressional Action8",
"Real ID Act",
"Mikulski Amendment",
"Additional Visas",
"Additional Funds for Border Security and Immigration Control",
"Craig Amendment, AgJOBS Bill",
"Chambliss Amendment",
"Cross-Cutting Issues in the FY2005 Supplemental",
"Iraq and Afghanistan Security Forces Fund",
"Congressional Action",
"Supplemental Requests that May Fail to Meet the \"Emergency\" Test",
"Congressional Action",
"Defense Department Request and Congressional Review",
"Conference Action—Summary",
"Resolution of Funding Differences",
"Expanding Military Benefits",
"Actions Affecting Weapon System Plans",
"Accountability Concerns",
"Senate and House Floor Amendments to Defense Request",
"Future Cost and Accountability Issues",
"Congressional Action",
"Accountability Concerns",
"Size and Composition of DOD Request",
"Congressional Action—Funds for Personnel and Operations",
"Higher Survivor Benefits",
"Congressional Action—Conference Bill Increases Benefits",
"Conference Eligibility Standard",
"Retroactive Increase in Benefits",
"Future Increases in Death Benefits",
"",
"Other Benefits Increases",
"Recapitalization, Modularity and Construction Costs Grow",
"Procurement and Modularity Requests",
"Military Construction Request",
"Congressional Action—Approach to Procurement Differs",
"Full Funding of Army Modularity Request",
"Congressional Action—Military Construction Concerns",
"New Flexible Accounts for Afghan and Iraqi Security Forces",
"Congressional Action—Conferees Oversight Concerns",
"Flexible Funds to Provide Support to Allies",
"Congressional Action—Conferees Cut Support to Allies",
"DOD Request for FY2005 by Appropriation Account",
"",
"Foreign Policy Supplemental Request and Congressional Review",
"Congressional Action—Summary",
"Conference Consideration",
"House Consideration",
"Senate Consideration",
"Key Provisions in Conference, House, and Senate Bills",
"U.S. Diplomatic and USAID Operations in Iraq",
"Congressional Action",
"Afghanistan Reconstruction, Counternarcotics, Police Training, and Other Activities",
"Congressional Action",
"Sudan North-South Peace Support",
"Congressional Action",
"Darfur Region and Eastern Chad",
"Congressional Action",
"Global War on Terrorism-Related Programs",
"Congressional Action",
"U.N. Peacekeeping Operations",
"Congressional Action",
"Palestinian Aid",
"Congressional Action",
"Ukraine Aid",
"Congressional Action",
"Broadcasting to Arab and Muslim Audiences",
"Congressional Action",
"Coordinator for Reconstruction and Stabilization",
"Congressional Action",
"Tsunami Recovery and Reconstruction",
"Congressional Action"
],
"paragraphs": [
"",
"On May 3, House-Senate conferees concluded negotiations on H.R. 1268 , the emergency FY2005 supplemental appropriation, agreeing to an $82 billion total. The House passed the conference agreement on May 5 (368-58), followed by the Senate on May 10 (100-0). President Bush signed the bill ( P.L. 109 - 13 ) on May 11. As approved, the $82 billion conference agreement is roughly the same as the President's overall request, but with numerous changes in funding allocations and policy provision, including the attachment of immigration legislation. On April 21, the Senate passed H.R. 1268 ( S.Rept. 109 - 52 ), providing $81.3 billion, about $780 million less than the President's $82 billion request and about $80 million below the House level. The House approved its bill on March 16 ( H.Rept. 109 - 16 ).\nP.L. 109 - 13 provides $75.86 billion for the defense-related portion, about midway between the House total of $76.83 billion and the Senate total of $74.78 billion which was close to the Administration's request. The enacted bill provides higher benefits to survivors of those who die and have died in combat or combat-related activities. For State Department and foreign aid programs, the final measure falls about $500 million, or 8%, below the President's request for new appropriations. A $1 billion rescission of previous aid to Turkey brings the \"net\" foreign policy total to $1.5 billion less than proposed. The conference bill is slightly higher than amounts approved by the Senate, and $450 million more than included in the House bill for international affairs. P.L. 109 - 13 fully or nearly fully funds the U.S. embassy in Iraq, contributions to U.N. peacekeeping missions, and humanitarian assistance for the Darfur region of Sudan, and adds over $150 million for global food aid needs, general Africa refugee relief requirements, and support for Haiti.\nThe enacted bill includes most of the House-proposed provisions from H.R. 418 , the REAL ID Act of 2005, which sets minimum standards for state-issued drivers licenses that can be accepted for federal purposes (e.g., to board aircraft); expands the scope of terror-related activity that makes an alien inadmissible or deportable and tightens criteria for asylum, and allows the Secretary of Homeland Security to waive all laws in order to construct barriers at U.S. borders. P.L. 109 - 13 also includes the Mikulski amendment proposed by the Senate that would permit additional non-agricultural seasonal workers in FY2005 and FY2006.",
"The FY2005 supplemental is the fifth of the Bush administration to focus on the global war on terrorism and homeland security. As emergency funding, these requests have not been subject to limits on spending in annual budget resolutions. In the case of both foreign assistance and Defense Department appropriations, some funding to combat terrorism has been included in regular as well as previous supplemental appropriations acts.",
"Thus far, in response to Administration requests, Congress has provided $268.7 billion in emergency supplemental funding for the \"global war on terror,\" including military operations in Iraq and Afghanistan, enhanced security for defense installations, and foreign aid spending for reconstruction in Iraq and Afghanistan and related activities. If enacted, this request would bring the total amount of war-related funding in this administration to $350.6 billion. The bulk of these funds have been and continue to be for military operations as the United States enters its fourth year of operations in Afghanistan and its third year of operations in Iraq.\nIn addition to the FY2005 supplemental request, funds for the Department of Defense (DOD) have been provided for Iraq and Afghanistan and the \"global war on terror\" in four previous supplementals as well as regular appropriations acts. For DOD, funds provided by Congress for the period FY2001 thru FY2004 totaled $176.2 billion. Congress also appropriated $25 billion to cover war costs in the initial months of FY2005 as well as any shortfalls in FY2004. DOD obligated $2 billion of those funds in FY2004. Thus, the total cost projected by DOD for FY2005 is $98 billion—$23 billion already provided and $74.9 billion requested. That total is over 45% higher than the $64.9 billion provided to DOD in the FY2004 Supplemental. If Congress provides the monies requested, DOD would have received between FY2001 through FY2005, a total of $276 billion for these missions. With the funds included in the conference bill, DOD would have received between FY2001 through FY2005, a total of about $277 billion for these missions.\nOn the foreign policy side, the supplemental increases the U.S. foreign policy budget from $29.7 billion enacted in FY2005 to $34.5 billion, an increase of 16%. It would also pushes the FY2005 amount above the $33.6 billion international affairs budget request for FY2006. Except for FY2004, which included the $18.5 billion Iraq reconstruction aid package, the FY2005 total—both the regular and the supplemental—represent the largest foreign policy budget, in real terms, since fiscal 1985, and is roughly 41% higher than the international affairs budget (nominal) immediately prior to the 9/11 attacks.",
"Table 1 provides an overview of the request. This table does not include the funding already received by DOD for war-related costs for FY2005, which is shown in later tables.",
"The DOD request included $16.9 billion for military personnel and $32.5 billion for operations and maintenance that together total $44.9 billion. Of that total, about $35.5 billion is directly associated with operations in Iraq and $9.4 billion with Afghanistan according to the Defense Department justification material. In addition, the request included $5.7 billion to train and equip Iraq's security forces and $1.3 billion for Afghanistan's security forces. Including those funds, the total for Iraq was $41.2 billion and for Afghanistan, $10.7 billion.\nDOD did not allocate the remaining funds by mission—e.g. for depot maintenance or recruiting and retention, additional military personnel or Army and Marine Corps restructuring. About $5 billion of DOD's procurement request was for the Army's modularity initiative, and the Marine Corps restructuring, both designed to create additional units, which can be more easily deployed independently. The remainder of DOD's procurement was for a variety of items to upgrade primarily Army units, as well as $2.7 billion for force protection items; the request also included $5.0 billion for classified programs (see Table 1 ).",
"The President's request for $6.3 billion in FY2005 supplemental funding would support a broad range of foreign policy activities:\nU.S. diplomatic costs in Iraq Afghanistan reconstruction and counternarcotics programs Darfur humanitarian relief and peace implementation aid for Sudan War on Terrorism assistance, including funds for Jordan and Pakistan Palestinian aid Ukraine assistance U.N. peacekeeping contributions Broadcasting programs in the Middle East Tsunami recovery and reconstruction",
"The Administration's supplemental request also included several additional items addressing homeland security and global war on terrorism matters:\nDefense Nuclear Nonproliferation—$110 million for the deployment of radiation detection equipment and the training of law enforcement personnel at four overseas posts designed to provide officials with the means to detect, deter, and interdict illicit trafficking in nuclear and other radioactive materials. Coast Guard operating expenses—$112 million to finance Coast Guard port security and law enforcement capabilities in the Persian Gulf, and $49 million for acquisition, construction, and improvements for a major refit, renovation, and subsystem replacement of the Coast Guard's 110-foot Patrol Boats. FBI—$80 million to expand the Terrorist Screening Center and to cover costs of FBI personnel stationed in Iraq. Drug Enforcement Administration—$8 million to support DEA's participation in the Counternarcotics Implementation Plan for Afghanistan; and Director of National Intelligence (DNI)—$250 million for additional personnel and a new building for the new DNI who is to oversee the intelligence budget. Capitol Police—$60 million, as requested by the Legislative Branch. The Judiciary—$100 million, as requested by the Judiciary Branch, for costs associated with additional case workload.",
"The Administration did not include any immigration provisions in its requests, but in floor debate, the Senate focused on three proposals, adopting the Mikulski amendment to increase visas for foreign temporary non-agricultural workers and failing to vote cloture and limit debate on the Chambliss and Craig amendments, which proposed alternative approaches to dealing with foreign agricultural workers. The Senate also adopted floor amendments on border security funding and employment-based immigration.\nFor its part, the House included the Real ID Act, which, among other things, tightens standards for asylum and creates standards for drivers licenses when they are used as a form of federal identification, provisions that could affect immigrants. The Senate-passed bill did not include the REAL ID Act. The conferees retained the immigration provisions passed by both chambers, with some re-working of certain provisions as discussed below.",
"The House-passed version of H.R. 1268 contained many of the immigration provisions that had been in the House-passed Intelligence Reform and Terrorist Prevention Act of 2004 passed in the 108 th Congress that were dropped in the final version ( P.L. 108 - 454 ). Passed by the House on February 10, 2005, the Real ID Act of 2005 ( H.R. 418 ) included those House provisions which were then added to the House version of H.R. 1268 .\nAmong other things, the REAL ID Act provisions makes the following major changes:\nmodify the eligibility criteria for asylum and withholding of removal, a specific form of deportation that assumes that the alien would be persecuted if forced to return to the country he or she fled; limit judicial review of certain immigration decisions; eliminate the Breach Bond Account which is used to fund detention of aliens who violate the law and institute new practices for bonds aimed at assuring the appearance of aliens for removal; provide additional waiver authority over laws to ensure the expeditious construction of barriers and roads along land borders, including a 14-mile wide fence near San Diego; expand the scope of terror-related activity making an alien inadmissible or deportable, as well as ineligible for certain forms of relief from removal; require states to meet certain minimum security standards in order for the drivers' licenses and personal identification cards they issue to be accepted for federal purposes; and require the Secretary of Homeland Security to enter into its aviation security screening database the appropriate background information of any person convicted of using a false driver's license for the purpose of boarding an airplane.\nThe conferees generally accept the Real ID Act, but modify the asylum and withholding of removal, a type of deportation, and dropped the section on bonds. The compromise more closely follows current standards that allow asylum seekers to demonstrate multiple motives for their persecution. The compromise also eliminates an annual 10,000 cap on the number of asylum recipients who can become legal residents. The REAL ID Act provisions are in Division B of the conference report.",
"Senator Barbara Mikulski offered an amendment based on the \"Save Our Small and Seasonal Businesses Act\" ( S. 352 ). The Mikulski amendment increases the availability of visas for foreign temporary nonagricultural workers, known as H-2B workers, by exempting returning H-2B workers from the statutory cap of 66,000 annually, if the workers have already been approved and successfully held the H-2B visa in the past three years. This provision would expire at the end of FY2006.\nThe Mikulski amendment would cap at 33,000 the number of H-2B slots that would be available during the first six months of a fiscal year. It also would require DHS to submit specified information to Congress on the H-2B program on a regular basis. In addition, the Mikulski amendment would impose a new fraud-prevention and detection fee on H-2B employers, and would authorize DHS to impose additional penalties on H-2B employers in certain circumstances. On April 19, the Senate voted to invoke cloture and limit debate on the Mikulski amendment and then passed the amendment, as modified, by 94-6. The Mikulski amendment is Title IV of Division B of the conference report.",
"The conferees include two Senate-adopted amendments to revise immigration law pertaining to employment-based immigration. One of these amendments reserves 10,500 of the 65,000 temporary H-1B visas available annually for Australian nationals to perform services in specialty occupations under a new E-3 temporary visa. The other amendment would make up to 50,000 permanent employment-based visas available for foreign nationals coming to work as nurses. These amendments are §501 and §502, respectively, of Division B, Title V, of the conference report.",
"The conferees include $176 million for additional border patrol and $454 million for immigration enforcement activities in response to the recommendation of the 9/11 Commission and action by the Senate. The House bill did not include these funds.",
"Provisions proposed by Senator Craig, and based on S. 359 , the \"Agricultural Job Opportunities, Benefits, and Security Act of 2005\" (AgJOBS bill) were not included in the Senate bill. The provisions would streamline the process of bringing in foreign workers under the H-2A temporary agricultural worker program but the Senate failed to invoke cloture and limit debate, an action requiring 60 votes and the amendment was determined to be non-germane.",
"Senator Saxby Chambliss offered an amendment to H.R. 1268 entitled the \"Temporary Agricultural Work Reform Act of 2005\" that was also not included in the Senate bill. Like the Craig amendment, the Chambliss amendment would streamline procedures for bringing in H-2A workers, and create a new temporary worker program, called the \"blue card program,\" which would be open to current unauthorized agricultural workers who have been in the United States since April 1, 2005, and meet other requirements. On April 19, the Senate failed to invoke cloture and limit debate on the Chambliss amendment by a vote of 21 to 77 and the amendment was determined to be non-germane.",
"While Members raised concerns regarding individual elements of the supplemental request, two matters cut across both the defense and foreign policy portions of the proposal: 1) funds for Iraq and Afghanistan security forces; and 2) \"emergency\" designation of selected requests.",
"Within the Defense Department portion of the supplemental, the Administration requested $1.3 billion for Afghan security force assistance and $5.7 billion for Iraq security forces. These funds would support training, equipping, and deploying of military, protective services, and border personnel, and in the case of Iraq, police training. The resources would be provided to and solely under the authority of the Secretary of Defense to transfer to the Combined Forces Command—Afghanistan and to the Multi-National Security Transition Command—Iraq. Although the Defense request included some general allocations of where funds would be spent, it did not include any details about plans for the number or type of forces, or the schedule anticipated for training Iraqi or Afghan forces and in the request, all the funds would be available for any expense related to training and equipping of those forces until funds are expended. This request was similar to other recent DOD requests for flexibility to use funds for a general purpose, such as support of allies in or around Iraq and Afghanistan.\nAlthough most of the past Iraq security forces assistance has been managed on the ground by the Defense Department, the authority and control of funds remained initially with the Coalition Provisional Authority (CPA), whose head reported to the Secretary of Defense, and since June 28, 2004, with the State Department. The supplemental proposal would shift this authority from the Department of State to DOD, and move funds from the jurisdiction of the Foreign Operations Appropriations Subcommittees to the Defense Subcommittees.\nIn approving $18.4 billion for the Iraq Relief and Reconstruction Fund (IRRF) in P.L. 108 - 106 , the FY2004 Emergency Supplemental Appropriation, Congress earmarked $3.2 billion for security and law enforcement activities. As security challenges increased through the first half of 2004 and the January 2005 Iraq elections approached, the Administration, in September 2004, sought to re-prioritize IRRF spending allocations to shift funds from lower priority activities to more urgent, immediate needs. The White House proposed an increase for security and law enforcement programs to $5.05 billion. Because the proposed transfers exceeded authorities provided in P.L. 108 - 106 , the Administration needed congressional approval. Congress granted these transfers in P.L. 108 - 309 , the first Continuing Appropriations for FY2005.\nSince late 2004, the Administration has programmed the Iraq security and law enforcement funds to address a number of key activities, primarily managed by the Defense Department, but with some responsibility granted to the Departments of State and Justice and USAID:\nPolice training and technical assistance—$1.8 billion (Departments of State, Defense, and Justice). Border enforcement—$ 441 million (DOD). Facilities Protection Service—$53 million (DOD). Iraqi Armed Forces (IAF) facilities—$691 million (DOD). IAF equipment—$641 million (DOD). IAF training and operations—$433 million (DOD). Iraqi National Guard operations and personnel—$232 million (DOD). Iraqi National Guard equipment—$92 million (DOD). Iraqi National Guard facilities—$359 million (DOD). Iraqi Security Forces Quick Response program—$120 million (DOD). Commander's Humanitarian Relief and Reconstruction—$86 million (DOD, Multinational Force-Iraq, and USAID).\nFor Afghanistan, security assistance funding since early 2002 has been provided exclusively through the Foreign Operations Subcommittee regular Foreign Military Financing (FMF) and Peacekeeping (PKO) accounts. FMF aid finances the acquisition of military articles, services, and training, supports U.S. regional stability goals, and enables friends and allies to improve their defense capabilities. Policy direction and funding allocations fall under the responsibility of the State Department, while DOD executes the program on the ground. Broadly, PKO activities support non-U.N. voluntary operations, but in the case of Afghanistan, Peacekeeping appropriations have been used to pay Afghan National Army (ANA) salaries. Thus far, Congress has appropriated over $1.1 billion in FMF and PKO support for Afghanistan, FY2002-2005. Similar to Iraq security assistance, FMF funds have focused on ANA training and equipping. Unlike the Iraqi program, Afghan police training and support has been funded separately out of the State Department's International Narcotics Control and Law Enforcement (INCLE) account, and would remain under the State Department's jurisdiction under the supplemental proposal. The supplemental, however, seeks to shift the source of ANA training and equipping from FMF/PKO accounts to DOD resources, and to place authority of the program under the Secretary of Defense rather than the Secretary of State.\nDuring early review of the supplemental proposal, a number of concerns were raised about this shift from the State Department to DOD for funding and management of Iraqi and Afghanistan security forces assistance. Some noted that this diverges from long-standing, historical practice of State Department and country ambassador control of a key foreign policy tool in U.S. relations with allies and other partner nations. While defense personnel may implement the programs, some argued that it was important to maintain civilian authority over the program, especially over foreign police assistance.\nIn response to these concerns, Secretary of State Rice defended the proposal by noting that Iraq, in particular, is a unique, war zone situation where the United States needs to maintain a coherent strategy for training and equipping Iraqi security, police, and border forces. She said that often these personnel operate along side American military forces and that it made sense to have the Defense Department in charge of training. She also remarked that the situation in Afghanistan was different, and that police training would remain under the jurisdiction of the State Department. But, she added, Afghanistan also remains a war zone and it is important for Afghan security forces to be fully integrated in their operational efforts. Secretary Rice further pledged that the Administration had established the \"tightest\" possible coordination mechanisms, placing the chief of mission in charge of ensuring close collaboration between the agencies.",
"The conference version provides the full amount requested for Iraq and Afghan Security Forces, as did the House-passed and Senate-reported versions, but requires additional congressional oversight and involvement of the Secretary of State. The conference bill requires that the Secretary of Defense notify congressional defense committees at least five days in advance of any transfers made from this appropriation and report to the same committees on a quarterly basis regarding the details of all transfers. The bills further require that these funds are available \"with the concurrence of the Secretary of State.\" The conference version includes report language calling for extensive reporting on \"strategies for success\" for Iraqi Security Forces but dropped the Senate-proposed statutory reporting requirements and does not require additional reporting on the Afghan Security Forces Fund.",
"Appropriations that are designated as \"emergency\" requirements do not count against congressionally-set discretionary budget ceilings, formally or informally, but add to costs incurred by the government and cause the current budget deficit to grow. Several Members of Congress, including key appropriation committee leaders, put the Administration on notice that they will look closely at the supplemental proposal, especially for items that do not represent true \"emergencies;\" that is requirements that did not exist or were unforseen during consideration of the regular FY2005 appropriations or that could wait and be debated during FY2006 appropriation deliberations.\nThe FY2006 Administration request includes proposals to tighten the definition of emergency requirements that exempt items from enforcement mechanisms in the Budget Enforcement Act. The Administration is proposing that emergency requirements be defined as \"a necessary expenditure that is sudden, urgent, unforeseen, and not permanent.\" The Administration also proposes that this definition \"encompass contingency operations that are national security related,\" and specifically says that \"Military operations and foreign aid with costs that are incurred regularly should be a part of base funding and, as such, are not covered under this [emergency] definition.\"\nThis issue came up in recent hearings held by the Senate Budget Committee and the Senate Appropriations Committees. In the Senate Budget Committee hearing of March 1, 2005, some members questioned Administration witnesses about whether all elements in the FY2005 supplemental were appropriately classified as emergency spending—such as $5 billion for Army modularity and $300 million for recruiting and retention—and other members argued that the definition of emergency spending should be one-time expenditures.\nWithin the foreign policy portion of the request, Members questioned the \"emergency\" nature of several proposals. For some time, the State Department recognized the need for construction of a new embassy in Baghdad but did not propose funds in the regular FY2005 budget. Instead, the Department sought $658 million in the supplemental. Likewise, it was widely recognized in 2004 that insufficient peacekeeping funds had been requested in the regular appropriation proposal, yet the Administration did not amend its pending request to cover what it now calls a $780 million gap in peacekeeping requirements.\nAdditional assistance for Jordan, Pakistan, and Ukraine was also questioned by some as to whether the needs represent a true emergency or could be addressed during consideration of FY2006 funds. Portions of the Afghan reconstruction supplemental request were also scrutinized, especially since the $2 billion proposal follows about a $1 billion appropriation for FY2005 and a similar request for FY2006. Further, the $400 million providing support for coalition members with troops deployed in Iraq and Afghanistan and for other \"partner\" countries in the war on terrorism was also challenged as new initiatives that would be more appropriately considered as part of the regular FY2006 appropriation process. Some argued that longer-term tsunami related reconstruction assistance should be debated later in the regular FY2006 Foreign Operations bill.\nIf not dealt with in the FY2005 supplemental under an \"emergency\" designation, however, these foreign policy items could be added to pending FY2006 international affairs appropriation requests that seek 13% higher spending compared with enacted levels for FY2005. This would place additional pressure on the Administration to defend an already sizable foreign policy increase that some believe will be closely scrutinized by Congress.\nWithin the Defense request, some members questioned whether funds for the Army's modularity initiative launched in the fall of 2003 to create 10 additional brigades that would be more deployable individually fits the emergency criteria. Others questioned whether the funds for 30,000 additional Army personnel is appropriately considered a temporary, emergency request rather than a longer-term need. Funding for modularity and additional military personnel was approved, however, by the conferees and both houses. Other members questioned whether the cost of DOD's military operations in Iraq and Afghanistan is, in fact, unanticipated or unpredictable since those operations are entering their third and fourth year respectively, and monthly operational costs have averaged about $5 billion for some time.",
"While the President won approval for most of his supplemental request with an \"emergency\" designation, a few areas are not funded due to the non-emergency nature of the program. In particular, P.L. 109 - 13 trims funds for Afghanistan reconstruction by about $222 million, economic programs for southern Sudan by $63 million, and U.N. peacekeeping contributions by $100 million. Conferees, like both the House and Senate, offset portions of the foreign policy supplemental spending by rescinding $1 billion in FY2003 economic aid for Turkey that has not been obligated.\nDuring earlier debate on H.R. 1268 , the House Appropriations Committee determined that assistance for Jordan, Pakistan, Ukraine, the Palestinians, portions of Afghanistan reconstruction, and USAID operating expenses in Iraq did not fit the criteria for an emergency designation. Nevertheless, the Committee believed they warranted support and offset these non-emergency items with the Turkey aid rescission. The Committee's report noted that emergency assignments were limited to funds responding \"to a situation which poses direct threat to life and property, is sudden, is an urgent and compelling need, is unpredictable, and is not permanent in nature.\"\nThe House-reported measure also denied funding for several foreign policy activities that the Committee felt would be more appropriately addressed during the regular FY2006 appropriations review. Most notably, the legislation excluded $570 million in reconstruction support and $66 million in counter-narcotics programs for Afghanistan that the Committee said it would take up during debate on the FY2006 Foreign Operations measure. As mentioned above, however, folding these items into consideration of the regular FY2006 spending bill is likely to intensify the challenges of meeting the President's $22.8 billion Foreign Operations appropriations request.\nDuring House floor debate on March 16, lawmakers adopted an amendment by Representative Upton prohibiting the use of funds in the bill for embassy security, construction, and maintenance. Supporters argued, that among other things, the Baghdad embassy request should have been proposed as part of regular FY2005 and FY2006 appropriation bills and should not be assigned the emergency designation. In the Senate, a parallel amendment offered by Senator Coburn, would have reduced funding for the U.S. embassy in Iraq from $592 million to $106 million. The Senate tabled the Coburn amendment 54-45.\nAlthough several members questioned whether the Army's modularity initiative was a legitimate emergency expense, the House appropriators stated in their report that they felt \"compelled to fully fund the Army's request,\" in order to help the Army face \"significant challenges,\" and \"mitigate the stress on the current active-duty combat forces.\"\nFor future funding of military operations in Iraq and Afghanistan, the conference bill retains sense of the Senate language that calls on the Administration to submit by September 1, 2005, a budget amendment, by appropriation account, to cover FY2006 military operations, as well as detailed cost estimates and an estimate of costs in the following year.\nQuestions has also been raised by both houses and by the conferees about whether military construction requests—which typically take some time to build—fit the emergency category (see below). Senate appropriators questioned whether all proposed military construction projects were appropriately emergency requests, and cut several overseas projects for Bagram Airbase in Afghanistan which they suggested should be considered during the regular defense authorization and appropriations process when the issue of establishing a long-term U.S. presence could be debated. During Senate floor debate, Senator Byrd also questioned whether building a new prison facility in Guantanamo for detainees qualified as an unanticipated emergency. An amendment to cut funding for Guantanamo was defeated by a vote of 27 to 71.\nUnlike the House measure, H.R. 1268 , as passed by the Senate, designated all amounts as an emergency.",
"In the FY2005 Supplemental, the Administration requested a total of $74.96 billion. The Defense Department request was in addition to the $25 billion already provided in the FY2005 DOD appropriations act ( P.L. 108 - 287 ) for war-related costs in the initial months of the fiscal year. Of that $25 billion, $2 billion was obligated for FY2004 expenses, leaving $23 billion available for FY2005. That brings the total amount anticipated by DOD for Iraq and Afghanistan and other expenses in FY2005 to $98.0 billion or 45% higher than the amount appropriated in FY2004.\nSeveral major defense issues were raised during consideration of the FY2005 supplemental:\nincreasing accountability for costs in the global war on terror; changing the composition of the Defense request; enhancing death benefits for service members; the emergency nature of investment funding for restructuring; oversight of flexible funds to support allies; implications of military construction funding.",
"In the conference report on H.R. 1268 ( H.Rept. 109 - 72 ), the conferees close the $2.0 billion gap between the House and Senate version by providing $75.86 billion for the Defense Department—midway between the House total of $76.82 billion and the Senate total of $74.78 billion which was close to the Administration's request. The conferees expand death benefits for survivors of service members who die in combat or combat-related activities, adopting the eligibility standard in the Senate bill for those who were to receive an additional $150,000 in life insurance payments.\nThe conference version also provides $765 million to cover these higher benefits that would be available both retroactively and in the future. However, these new benefits would lapse as of September 30, 2005, unless the defense authorizers include provisions in their consideration of the FY2006 defense request. The conference version of H.R. 1268 also includes a new insurance rider for traumatic injury protection that would provide from $25,000 to $100,000 both retroactively and in the future; this provision will go into effect 180 days after enactment.\nAs approved by both houses, the conferees provide the full $7.0 billion requested to train Afghan and Iraqi security forces. The conferees chose, however, to convert the detailed statutory reporting requirements in the Senate version report to report language which calls on the Administration to develop and provide Congress with \"strategies of success\" and performance indicators to assess the state of security in Iraq and better judge how to allocate resources and the plans for U.S. troop levels. The conference version retains Sense of the Senate language calling on the Administration to submit its request for FY2006 military operations in a budget amendment by September 1, 2005, and to provide overdue reports that are to include detailed cost estimates.\nThe conference version prohibits DOD from cancelling the C-130J transport aircraft and from retiring the 12 th carrier, the Kennedy, as proposed by the Senate. The conference, like both houses, provides the full amount requested for the Director of National Intelligence, including $181 million for a new building.",
"The conferees provide about $1.0 of the $2.0 billion added by the House to DOD's supplemental procurement request for purchasing Army and Marine Corps trucks, tactical vehicles (e.g. HMMWVS), night vision and other protective gear that DOD included in its FY2006 request that would otherwise be included in DOD's FY2006 request.\nThe conferees provide about $1 billion below the request for Operation and Maintenance funds by cutting DOD's request for funds to reimburse allies (lift and sustain funds) and by transferring funds from the Afghan and Iraq Security Forces Funds to cover Army training costs that the Army had requested separately.\nThe conferees cut DOD's $1.4 billion request for military construction funds by about $300 million because of concerns that the projects did not meet an emergency criteria and that the projects could signal a long-term U.S. presence in the region when agreements with host nations have not yet been reached. The conferees fund all projects in the United States to support unit restructuring plans of the Army and Marine Corps and add funds for facilities to support Marine Corps restructuring.",
"The conference version increases benefit levels and expands eligibility beyond that requested by the Administration.\nFor benefits for survivors , the conferees provide higher benefits to survivors of those who die either in combat areas or in combat-related activities such as training, the standard proposed by the Senate for the higher insurance levels. The bill includes $765 million to fund these benefits. Retroactive to October 7, 2001, survivors of those eligible would receive an additional $238,000 above current levels. For the future, members could increase their life insurance from $250,000 to $400,000 in $50,000 increments with premiums paid by DOD for members in combat areas. Spouses would have to be notified in writing if the service members opts for less than the maximum level (see Table 5 ). The higher death gratuity would be available immediately but the higher insurance levels would only go into effect 90 days after enactment. For those who die in that intervening 90 days, DOD would pay an additional $150,000 equivalent to the higher insurance levels that would ultimately be available. Both the higher insurance levels and the higher death benefit would, however, lapse on September 30, 2005, unless the defense authorizers make changes in the FY2006 defense authorization. The conference bill drops the Senate proposal to provide Federal employees who are activated reservists with additional pay to make up the difference between their military and civilian salaries but includes meal and telephone services for soldiers recuperating from Afghan or Iraq-incurred injuries but the provision lapses on September 30, 2005. The conferees provide the Senate-proposed extension of basic housing allowance for dependents of those who die in the Iraq and Afghan theater for a year rather than six months—estimated to cost $3 million cost in FY2005, $33 million through FY2010, but the provision lapses on September 30, 2005. The conferees include the Senate-proposed traumatic injury protection rider of up to $100,000 to service members enrolled in Servicemembers Group Life Insurance (SGLI) retroactive to October 7, 2001 for those injured in the Iraq and Afghan theaters that would go into effect 180 days after enactment—estimated to cost $46 million in FY2005 and $106 million through FY2010. The conferees adopt the Senate-provision to provide travel for family members of servicemembers hospitalized in the United States for injuries but the provision lapses on September 30, 2005.",
"The conferees adopt the Senate-proposal to prevent DOD from terminating the C-130J program, an aircraft used for intra-theater lift and other missions. The Air Force plans to terminate the C-130J program because of cost increases and problems in meeting requirements, which could cost as much as $1.6 billion in termination costs. The Senate amendment to require the Navy to keep 12 carriers rather than retire one as planned until after completion of DOD's Quadrennial Defense Review, and requires the Navy to make available \"necessary funding\" from the amounts in the supplemental to extend the life of the U.S.S. John F. Kennedy as \"the Navy considers appropriate.\" The Defense Department considers 11 carriers to be sufficient because ships are being deployed for longer periods and have greater capability. The conferees also adopt the Senate provision that prohibits DOD from spending funds for a winner-take-all competition for the DD(X) destroyer as is being considered by DOD.",
"The conferees state their concerns about accountability in report language (see above) but drop the Senate-proposed statutory reporting requirements for the Iraq Security Forces Fund. The conference bill retains the Sense of the Senate language calling on the Administration to submit future war costs in the Defense Department's regular appropriations act, a provision also included in the FY2004 Supplemental, and reiterates a requirement that DOD report its costs for Iraq and Afghanistan, semi-annually as required in the FY2004 supplemental and the FY2005 DOD Appropriations Act.\nThe conference version of H.R. 1268 provides the $7.0 billion requested for the Afghan and Iraq Security Fund accounts and require that transfers of funds\nhave the concurrence of the Secretary of State; are sent to defense committees five days in advance; are summarized in quarterly reports to the defense committees; and that DOD provide measures for stability and security in Iraq and estimate planned rotations of U.S. forces rather than the statutory reporting of the Senate version. Both houses provide several hundred million less than requested for coalition and other support for allies working with U.S. military forces.\nSenate amendments are listed in Table 2 and House amendments in Table 3 . Additional details on the issues above are in individual sections and a summary of funding differences by account is in Table 5 .",
"During floor debate, the Senate considered some 35 amendments and the House 11. Table 2 and Table 3 list many of those amendments.",
"As part of the current debate about U.S. involvement in Iraq, the long-range cost of operations in Iraq and Afghanistan and accounting for those costs continued to be significant issues. The Administration has not provided a projection of DOD costs for FY2006-FY2011 that was required by January 1, 2005, in the FY2005 DOD Appropriations Act. The Congressional Budget Office recently published an illustrative long-term cost estimate that assumes that military personnel deployed or supporting operations in Iraq, Afghanistan and enhanced security for defense installations remain at today's level of about 300,000 through FY2006, then decline gradually to 74,000 by FY2010, and remain at that level through FY2015. Based on those assumptions, CBO estimated that the cost for DOD from FY2006-FY2010 would be $260 billion and the ten-year cost through FY2015 would be $393 billion. Typically, CBO's estimates are lower than DOD requests.\nCRS has estimated that DOD has already received $201.2 billion for Iraq, Afghanistan, and enhanced security through previous enacted appropriations. With the $75.6 billion for war-related costs in the conference version of the supplemental, if CBO's estimate of $260 billion were to be accurate, DOD's costs could total $537 billion by FY2010.\nThe Democratic staff of the House Budget Committee (HBC) recently issued a report specifically projecting the future costs of the Iraq war (i.e. excluding Afghanistan and enhanced security) under two scenarios. One scenario envisions that the United States withdraws all forces from Iraq within four years or by 2009, a scenario which Secretary of Defense Rumsfeld told reporters that he expected to be the case. Based on that scenario, the study estimated Iraq costs could total $461 billion including $287 billion in DOD costs and $175 billion in interest costs of the Federal government because of the additional borrowing necessary to pay for the war. Assuming a more gradual withdrawal of forces for Iraq as assumed by CBO, this analysis estimated costs through FY2015 would total $646 billion, including $430 billion in DOD costs and $217 billion in additional interest costs.",
"Although the Administration did not include any funds for war-related expenses in the FY2006 defense request, the recently-passed FY2006 budget resolution includes a reserve Fund of about $50 billion for FY2006 but no war-related funding for later years. In a recent estimate, CBO reported that the deficit in FY2005—including an estimate of war-related spending—would total $394 billion in FY2005 and $370 billion to $375 billion in FY2006. Several members expressed concerns about the lack of information about future costs of the war and occupations. The conference version of H.R. 1268 includes sense of the senate language in Sec. 1024 that finds precedent for including the cost of ongoing military operations in annual budget requests, calls on the President to submit a budget amendment for FY2006 with detailed cost estimates for ongoing military operations, and an estimate of cost for the next 12 months.",
"Attempts on the House side to add amendments during markup and floor debate to set up investigating committees or a special commission modeled on the World War II Truman Commission that would investigate war-time contracting failed to be added to H.R. 1268 . During floor debate, members raised concerns about where and how the Department of Defense has spent the $200 billion already appropriated for the \"global war on terror\" in light of recent reports by auditors about misuse of funds and DOD's lateness in submitting reports on war costs. The conference bill includes Senator Byrd's sense of the Senate amendment to include war and occupation costs in DOD's regular appropriations, following various precedents, and to require DOD to submit reports on costs that are overdue that passed by a vote of 61 to 31.\nDOD has not yet sent Congress two reports on war costs and other matters that were required by statute and due on April 1 and October 31, 2004; nor has DOD delivered an estimate of costs for FY2006-FY2011 that was due January 1, 2005. An amendment offered by Congressman Tierney to set up a select committee of the House made up of 15 members to investigate the awarding and implementation of contracts was ruled out of order and a follow-up amendment to provide $5 million to be used for such a commission was rejected by a vote of 236 to 191 (see Table 3 above).\nThe House later adopted by voice vote the Moran amendment which reduced and then added $1 million to funding for Operation and Maintenance Defensewide with the intent—as voiced on the floor—that these funds would be used by the Defense Department to provide Congress with information about its standards for success in Iraq. The conference version also requires that DOD submit a report on uparmoring HMMWVS within 60 days and every 60 days thereafter until termination of the Iraq conflict. In Section 1031, the conference bill includes Senate language that prohibits obligation of funds to subject any person in custody or under U.S. control to torture or cruel or degrading punishment.",
"The Defense Department request for FY2005—including the $25 billion in funds previously provided in the FY2005 regular DOD Appropriations Act ( P.L. 108 - 287 )—totaled $98.0 billion or over 45% more than the $65.1 billion provided in the FY2004 Emergency Supplemental ( P.L. 108 - 106 ). The total request included several major types of expenses as shown in Table 4 :\nRecurring costs for military operations a 17% increase from $60.2 billion in FY2004 to $70.5 billion in FY2005; Investment costs, a six-fold growth from $3 billion in FY2004 to almost $18 billion in FY2005 to replace equipment damaged or lost in battles, recapitalize equipment for units returning to the United States who leave their equipment behind, and buy additional equipment for units to improve capability or add force protection; Support for other nations , a five-fold increase from $2 billion to $11.5 billion including funds to train and equip Afghan and Iraqi security forces, funds to pay for cooperative operations in the war on terrorism by Jordan and Pakistan (coalition support), DOD counterdrug programs in Afghanistan, administrative costs in Iraq, and the Commanders Emergency Response Fund (CERP), a program providing funds directly to unit commanders to distribute for local needs.\nMuch of the year's operating costs were already been provided in the $25 billion included in Title IX of the FY2005 DOD Appropriations Act ( P.L. 108 - 287 ). Combined with peacetime appropriations for FY2005, CRS estimated that DOD could finance or cash flow war-related expenses through May 2005. Recently DOD requested a transfer of funds to cover ongoing costs and raised concerns about its needs for new funds. Of the total request, about 70% was for operational costs—higher pay for active-duty forces who are deployed, the cost of activating reservists, higher operating tempo costs, higher depot maintenance costs to repair equipment reflecting wear and tear on equipment, and classified programs. In the FY2005 supplemental request, recurring costs for military operations increased by $10 billion or 17%. About $3.5 billion was for higher than anticipated fuel costs, and another $3.5 billion for higher operating tempo.\nMilitary personnel costs were comparable to FY2004 reflecting force levels in FY2005 similar to those the previous year. The Defense Department anticipated that forces in Iraq will decline from a highpoint of about 160,000 before the Iraqi elections to 138,000 or about 20 brigades. Force levels in Afghanistan are expected to remain at about 18,000 or three brigades. DOD continued to provide little information about the roughly 300,000 military personnel either deployed or supporting Iraq and Afghan operations, as well as enhanced security for defense installations. The justification did not say how many reserve personnel are expected to be activated, on average, for FY2005, or the number of personnel likely to be deployed more than once in three years for active-duty forces or more than once in five years for reserves, the policy standard set by DOD. As of the end of FY2004, one-third of all those deployed had served two or more deployments suggesting that these DOD policies are currently not being met.\nThe FY2005 Supplemental request included about $1.7 billion for the cost of an additional 30,000 active-duty military personnel authorized by Congress for FY2005 in order to reduce stress on current forces. Some Members suggested that these additional personnel will be needed on a long-term basis rather than temporarily because of Afghanistan and Iraq and hence that this expense should be included in DOD's regular budget rather than the supplemental.\nThe Defense Department argued that the additional personnel will only be needed temporarily until additional units are created by the Army's modularity initiative in FY2007, additional military spaces are freed up through converting military billets to civilian slots, and \"re-balancing\" or changing the skill mix of active and reserve Army units to increase skills now needed in greater numbers is completed. Military police, civil affairs and intelligence personnel billets are to be increased while artillery personnel and others are decreased.",
"The conference version provides about $500 million more than the request for military personnel primarily to fund higher death benefits in the bill (see section below). Both bills reduce DOD's $31 billion in operation and maintenance (O&M) funding (excluding Tsunami relief and the Afghan and Iraq Security Funds) by about $1 billion primarily by reducing the Administration's request for funds to reimburse allies for their participation in the \"global war on terror\" (see section below) and for a duplicate request from DOD to provide train and equip funds in both the Army O&M account and the Iraq Security Forces Fund. Unlike previous supplementals, DOD's FY2005 request applied savings in FY2005 from $1.1 billion in peacetime training of Army forces and $159 million training for Marine Corps forces to wartime costs.",
"DOD's FY2005 Supplemental request included $376 million to provide higher death benefits to the families of those killed in action in Iraq and Afghanistan including funds to pay higher benefits retroactively. Under the Administration's proposed language, for the future, the Secretary of Defense could designate those areas where service members who died in action or as a result of related injuries or illness would be eligible to receive a death gratuity of $100,000 rather than the current $12,420 level. In addition, the Administration proposed to increase the limit on Servicemembers Group Life Insurance (SGLI) from the current $250,000 to $400,000.\nBoth changes would be applied retroactively to October 7, 2001 for those who died while serving in the Iraq and Afghan theater of operations; thus, survivors of those killed would receive an additional $238,000 including $88,000 in a death gratuity and $150,000 in higher insurance payments (see Table 5 ).\nThere was considerable debate in Congress about who should receive these proposed enhanced benefits. In testimony, General Myers, Chair of the Joint Chiefs of Staff and the Chiefs of the individual services each voiced personal opinions that these enhanced benefits should be available to any service member who died regardless of the circumstances. Several bills have been introduced by members of Congress to provide such benefits including the Standing with Our Troops Act of FY2005 and the Heroes Act.",
"The conference bill raises the level of life insurance from $250,000 to $400,000 and increases the death gratuity from $12,000 to $100,000 for survivors of service members who die in combat or combat-related activities. The conferees adopt a broader eligibility standard than proposed by the Administration which restricted the higher benefits to Iraq and Afghanistan but narrower, in some cases, than was included in other versions of H.R. 1268 (see Table 5 ).",
"The conference version adopts the same eligibility criteria for both future and retroactive benefits and for both the higher insurance levels and the higher death gratuity. In other words, retroactively, survivors of all service members who die in combat or combat-related activities would receive an additional $238,000 to match the higher insurance levels available in the future (+$150,000) and the higher death benefits (+ $88,000). For those eligible, the death benefit increases from $12,000 to $100,000 and members could purchase life insurance of up to $400,000 rather than today's $250,000. For those serving in combat areas, DOD would pay the premiums for the additional $150,000 of insurance.",
"The House version gave an additional $150,000 to survivors of active duty service member who dies from injury or illness \"in the performance of duty,\" a coverage broader than ultimately adopted. It is not clear who would have been covered under this new standard. In floor debate, Congressman Obey (author of the amendment adopted) suggested that the House version would cover deaths of active-duty members who die while \"in the line of duty\" but not those who die while off-duty, such as in a drunken driving accident. The cost of the higher benefit was also not clear and could range from $95 million to $300 million according to Representative Obey, and up to $500 million more than in the request according to OMB. Additional funds were not provided in the House bill.\nThe Senate appropriators adopted a different eligibility criterion that would have given $150,000 to survivors of members who die in the Afghan or Iraqi theater or to those who die of \"combat-related activities,\" a standard currently defined in statute to include hazardous duty, conditions simulating war or an instrumentality of war. The Senate bill added about $400 million to DOD's military personnel accounts for the broader benefits that would apply retroactively and in the future.\nBy voice vote on April 13, 2005, the Senate adopted the Kerry amendment, which increased the death gratuity from $12,000 to $100,000 for all active-duty service members retroactively to October 12, 2001, broader than the House version which provided the gratuity only to those who died in the Afghan and Iraqi theaters.",
"In the House version, service members in the future could increase their coverage under Servicemembers Group Life Insurance (SGLI) from $250,000 to $400,000 (in increments of $50,000). Service members who opt out of the full coverage had to get written concurrence from his or her spouse. The Senate-reported bill also raised the maximum insurance level to $400,000. The conference version, like the House and Senate bill and the Administration request, all require that spouses be informed if the member opts for insurance less than the maximum. The conference version adopted the Senate proposal that for those serving in a combat zone, DOD—rather than the service member—pay the premium for $150,000 in coverage.\nThe House-passed version of the bill also raised the one-time death gratuity from $12,420 to $100,000 for all service members who dies in the future rather than leaving it to the discretion of the Secretary of Defense to decide whose survivors would receive the higher payment. The Senate-passed bill adopted the same eligibility, rejecting the reported version which limited eligibility to those dying in combat or combat-related activity (see Kerry amendment passed by voice vote).",
"",
"The conference bill adds a traumatic injury rider to DOD's life insurance policy that would provide from $25,000 to $100,000 that can be purchased by members; benefits would be available retroactively. The provision goes into effect 180 days after enactment. The conference bill rejects the provision where the federal government would make up the difference between military and civilian pay for reservists who are federal civilian employees. Other Senate proposals to provide free mails and telephone benefits for recuperating service members and expand eligibility for travel by family members are in the conference version (see Table 2 above). DOD will need to draw funds from other activities to cover these benefits.",
"In the FY2005 supplemental, DOD requested a total of $17.8 billion for investment, substantially above the $3 billion in the FY2004 supplemental (see Table 3 ). This $17.8 billion included:\n$16.1 billion for procurement; $0.5 billion for research, development, test and evaluation projects (RDT&E); and $1.3 billion for military construction, $1 billion for construction overseas, and $0.3 billion for the Army's modularity initiative.\nThis funding was directed at several new DOD thrusts: a major push to provide additional equipment for units not only to replace battle losses, but also to improve capability, increase equipment, and add force protection equipment; accelerate the Army's plans to reorganize and reequip Army and Marine Corps units; and build barracks and other facilities both within Afghanistan and Iraq and in surrounding countries.",
"The $16.1 billion in procurement was for the following purposes: $1.3 billion to replace battle losses; $5.1 billion to provide additional equipment for deploying and returning forces; $2.7 billion for additional force protection equipment; $4.1 billion for Army modularity equipment; and $250 million for Marine Corps Force Structure Review Group Initiative, a similar reorganizing initiative.\nA major issue raised was the funding requested for the Army's modularity initiative that was originally announced by Chief of Staff General Schoomaker in August 2003 as part of the Army's transformation. Some Members questioned whether this expense passes the test of emergency supplementals where funding is requested for urgent and unanticipated requirements. The Army appears to have accelerated its conversion plans announced last February, intending now to reorganize not only three active brigades but also convert five rather than one brigade and three National Guard brigades. This may explain part of the increase in funding from the $2.8 billion in the February 2004 plan to the $5.0 billion in the new supplemental. DOD announced that it plans to Fund the Army's modularity initiative in supplementals in both FY2005 and FY2006, and then transfer that funding to the Army's regular budget starting in FY2007.\nCritics suggested that modularity expenses are more appropriately considered a regular expenditure because they are a predictable, organizational change announced over a year and a half ago. Therefore, these costs, according to some analysts, should be included in DOD's regular appropriations where they would compete with other programs. The Army argued that the modularity initiative is intended not only to transform Army units to be more lethal and more transportable, but that the additional units will decrease the stress on Army forces by providing more units to deploy.\nThe Army also requested many procurement items that would be used to upgrade equipment or provide additional equipment for both deploying units and returning units who are leaving their equipment behind. This type of expense is not normally considered an incremental cost of contingencies as defined in DOD's financial regulations. DOD, in its justification material, argued that the additional capabilities are necessary to deal with the dangers posed by the ongoing insurgency. Some $2.7 billion of the procurement was for additional force protection equipment, including not only additional armored Humvees, and add-on kits for other tactical vehicles, but also a wide variety of other equipment for soldiers, such as night vision goggles, and other devices intended to improve the military's capability to deal with improvised explosive devices (IEDs).",
"The new request also included $1.3 billion for military construction, about $1 billion overseas and about $0.3 billion associated with the Army's modularity initiative (e.g. providing additional barracks for newly-formed units). Some of the military construction in and around Iraq and Afghanistan was controversial because it was perceived to signal a long-term U.S. presence, for example, replacing temporary tents with concrete barracks. Facilities may also be constructed at a time when the U.S. has not negotiated bilateral agreements with a permanent Iraqi government as is customarily the case for overseas U.S. military construction projects. The justification for some projects—for example, constructing a supply road in Iraq to link to a new Kuwaiti route that avoids urban areas—was also less convincing than other projects, such as concrete billets, which were justified on safety grounds or force protection.",
"The conference bill includes over $1 billion of the $2.0 billion in additional funding added by the House to DOD's request. Procurement totaled $17.4 billion. Much of the additional funds would accelerate Army purchases of trucks, upgrades to Abrams tanks, additional uparmored HMWVVs, other force protection, and other equipment, which would otherwise be funded in the FY2006 regular DOD appropriations bill. That may make it easier to cut the FY2006 regular appropriations bill.\nIn its report, H.Rept. 109-16 , the HAC stated that these additions are intended to fulfill \"emergent requirements in force protection, force restructuring and recapitalization ...\" and to \"accelerate programs for which funding has been requested.\" Although some would argue that these additions are justified because they would be required later, others would argue that these items are not appropriately categorized as emergency requirements.",
"The conferees, like both houses, fully Fund the Army's $5 billion request for modularity, accepting the House rationale that the funds are \"needed to mitigate stress on the current active duty combat force by creating at least 10 additional combat brigades,\" and that supplemental funds would ensure that equipment would be available prior to deployment for units \"that will deploy to either Iraq or Afghanistan in the next two troop rotations scheduled for later this year and in 2006.\"",
"The conferees mirrored the concerns of the House and Senate about the Administration's $1.0 billion request for overseas military construction—whether the projects fit the emergency criteria and whether the projects signaled a long-term presence prematurely rather than being projects of a temporary and expeditionary nature, is appropriate.\" The conference bill cuts overseas military construction by $300 million and adds $32 million to meet Marine Corps restructuring needs. The SAC noted that it was more difficult for construction projects to meet the emergency test of a supplemental because of the duration of the \"global war on terror\" and the long lead times typical for construction.\nThe \"expeditionary\" nature of the U.S. presence suggests that temporary facilities \"should be the rule rather than the exception\" in the committee's view. In those cases where there may be a case for an \"enduring presence in the region,\" that should be part of a long-term plan, emergency appropriations would make emergency funding less appropriate, the committee argues. The panel concluded that projects which have that character \"should be requested in the normal budget process, in which both authorization and appropriations committees have an opportunity to carefully consider the request.\"\nIn light of these concerns, the conferees (like the Senate) cut four military construction projects—a $57 million fuel tank farm and a $32 million prime power generation plant at Bagram Airfield in Afghanistan, a $75 million aerial port in Kuwait, and a $66 million project to improve the Al Dhafra Air Base in the United Arab Emirates. The House had signaled its displeasure with DOD by prohibiting obligation of some of the funds until DOD submitted an overdue comprehensive master plan for basing of U.S. forces; DOD submitted the plan in mid-March 2005 but reportedly did not address Iraq.",
"The FY2005 supplemental proposed to establish two new accounts to train Afghan and Iraqi security forces ranging from Army to police forces:\n$1.3 billion in the Afghan Security Forces Fund; and $5.7 billion in the Iraq Security Forces Fund.\nFor both funds, language of the request would have allowed the Secretary of Defense to use the funds until funds are expended \"notwithstanding any other provision of law ... to provide assistance to the security forces of [Afghanistan or Iraq] including the provision of equipment, supplies, services, training, facility and infrastructure repair, renovation, and construction, and funding.\" This language would have exempted DOD from any restrictions applying to current training of foreign military forces and would have allowed the Secretary of Defense or his designee to use these funds for any purpose and for any type of security force—Army, national guard, or police. Nevertheless, the Administration stated that it does not intend to use these funds for training Afghanistan police forces, and requested $400 million elsewhere in the supplemental for the State Department's International Narcotics Control and Law Enforcement office to support such police training.\nThe train and equip provision would effectively transfer policy and funding authority from the Secretary of State, where authority for training foreign military forces is currently lodged, to the Secretary of Defense. In recent testimony, Secretary of State Rice supported this transfer and Secretary of Defense Rumsfeld argued that the authority reflects the current wartime situation. This transfer would remove this traditional foreign policy tool from the jurisdiction of the Secretary of State.\nThe authority requested, and the DOD justification material provided, was broader than currently available to the Secretary of State. DOD provided only an illustrative breakdown of the funds but no details about the number and types of personnel, the rate of training anticipated, the types of equipment to be purchased, or the specific uses of the funds. The State Department, especially within its quarterly report on the Iraq Relief and Reconstruction Fund, provided substantial details regarding how it has used and plans to use in the future funds to train and equip foreign military forces.\nAccording to DOD, the $5.7 billion for Iraqi security forces that would cover costs through July 2006, may be distributed to:\n$3.1 billion for front line security forces including up to two mechanized divisions; $809 million for support forces; $1.5 billion for police and other forces; $180 million for \"quick response\" funding; and $104 million for institutional training.\nThese funds would be in addition to the $5 billion already provided in Iraq Relief and Reconstruction Funding that was provided to the State Department in the FY2004 Supplemental, and $210 million in \"train and equip\" funds provided through DOD.\nThere was considerable debate in Congress about the effectiveness of training of Iraqi security forces thus far. In testimony on February 16, 2005, before the Senate Appropriations Committee, Secretary of Defense Rumsfeld reported that 136,000 Iraqi forces had been trained thus far, including 57,000 Ministry of Defense Forces (army, national guard, intervention forces, special operations, air force and navy) 79,000 Ministry of Interior forces (police, civil intervention, emergency response forces, border enforcement, highway patrols, dignitary protection, special police commandos). DOD's justification material stated that thus far, Iraq's transitional government has fielded over 90 battalions but that \"All but one of these battalions, however, are lightly equipped and armed, and have very limited mobility and sustainment capabilities.\"",
"The conferees drop the Senate's statutory reporting requirements for the Iraq Security Forces fund in favor of report language. Both the SAC and the House approve DOD request for $1.3 billion to train and equip Afghan security forces and $5.7 billion to train and equip Iraqi security forces but add several reporting requirements. Although the proposed language would still provide the funds to the Secretary of Defense \"notwithstanding any other provision of law,\" the funds would be available until the end of FY2006 rather than until expended.\nIn addition, DOD would need to have the concurrence of the Secretary of State on the use of the money and to notify congressional defense committees in writing five days in advance of transfers from the funds, and report on transfers quarterly. The original DOD language did not include any notification or reporting requirements. DOD would still have the prerogative to distribute these funds to any activities related to training and to any type of security forces from the Army to police as well as being able to receive contributions from other nations for these purposes. The detailed statutory reporting requirements in the Senate version of H.R. 1268 were included as report language (see H.Rept. 108 - 72 ).",
"In addition to its requests for $7.0 billion in flexible funds for Iraq and Afghanistan security forces, the Administration requested $2.9 billion in other types of support for allies in the \"global war on terrorism.\" Those funds included:\n$1.37 billion for coalition support to \"key cooperating nations,\" who provide logistical and military support; $627 million for \"Lift and Sustain\" funds for security forces in Iraq, Afghanistan and other nearby nations; $825 million for the Commander's Emergency Response Program (CERP) in which military commanders Fund local projects; $250 million to reimburse the services for providing equipment to the Afghan Army; $99 million to set up a new Special Operations Training Center in Jordan; and $257 million for DOD's counternarcotics program.\nSince the 9/11 attacks, DOD has received substantial funds in these flexible accounts that may be distributed to U.S. allies in and around Iraq and Afghanistan to reimburse them or provide logistical support for their participation in the \"global war on terror.\" Although the DOD request would have required concurrence of the Secretary of State and 15-day advance notification to congressional committees reporting for coalition support—as was included in previous supplementals—the request included no reporting for funds provided for \"lift and sustain,\" for the Commanders Emergency Support Program, or for DOD's counternarcotics programs. The State Department also receives counternarcotics funds (see below).",
"The conferees reduce DOD's request for funds to reimburse allies by several hundred million but less than proposed by the House. For example:\nthe conferees provide $500 million for \"lift and sustain,\" an additional source of funds for Afghan, Iraq, and neighboring security forces rather than the $600 million requested and in the Senate version and the $300 million in the House bill; the conferees provide $1.2 billion for \"coalition support\" for Pakistan, Jordan, and other cooperating nations in the \"global war on terror,\" $150 million less than the request but above the House level; and both bills support the $854 million request for the Commanders Emergency Response Program (CERP), a program where unit commanders dispense funds locally.",
"Table 6 below shows DOD's estimate and Congressional action of the FY2005 Supplemental request. To provide context, the table shows total DOD needs for FY2005 including both the amount provided in Title IX and the current FY2005 Emergency Supplemental Request, as well as DOD's obligations, or contractual costs in FY2004 based on accounting reports. In FY2004, DOD obligated all of the funds appropriated.\nThe lion's share of the request was for the Army, a reflection of the predominant role of ground forces in Iraq and Afghanistan. The greatest difference between FY2004 and FY2005's estimate was the amounts requested for investment accounts—procurement, RDT&E, and military construction—and DOD's request for $7.0 billion to train and equip Afghan and Iraqi forces.\nThe conferees provide $1 billion more for the Army compared to the request and the Senate level but less than the House's add of $1.8 billion. Similarly, the Marine Corps receives about $$300 million more than the request and the Senate level but less than the $630 million proposed by the House. Both services play the major role in Iraq and Afghanistan. The Navy's request is cut by $300 million. The totals for Defense-wide and the Air Force are close to the request (see Table 6 below).",
"",
"The President sought $6.3 billion in FY2005 supplemental funding supporting a broad range of foreign policy activities:\nU.S. diplomatic costs in Iraq Afghanistan reconstruction and counternarcotics programs Darfur humanitarian relief and peace implementation aid in Sudan War on Terrorism assistance, including funds for Jordan and Pakistan Palestinian aid Ukraine assistance U.N. peacekeeping contributions Broadcasting programs in the Middle East Tsunami recovery and reconstruction\nIf enacted as proposed, FY2005 total spending for foreign policy programs would have increased by roughly 50% over levels approved the international affairs budget immediately prior to the 9/11 attacks. Even with Congressional reductions to the foreign policy portion of the supplemental, FY2005 international affairs spending, including the supplemental, is 41% higher than before 9/11 (see Table 7 ).",
"",
"As reported on May 3, and subsequently approved in the House and Senate, H.R. 1268 provides $5.78 billion in new appropriations for State Department, foreign aid, tsunami relief, and other foreign policy activities. This represents a $512 million, or 8% reduction to the President's $6.3 billion request. Conferees, as had earlier House and Senate-passed versions of H.R. 1268 , offset part of these costs by rescinding $1 billion in FY2003-appropriated funds for aid to Turkey that had not yet been obligated. As a result, the \"net\" appropriation for foreign policy programs in H.R. 1268 is $4.78 billion, or $1.5 billion below the request. The entire amount is designated as emergency appropriations.\nBeyond congressional decisions to reduce selected supplemental requests, the conference agreement and the $512 million cut may have significant implications for Congress' consideration later this year of regular FY2006 appropriations for Foreign Operations and the State Department. In some cases, House and Senate Appropriation Committees had expressed the view that some supplemental requests did not require immediate funding and could be addressed during the debate on FY2006 appropriation bills. This is particularly relevant to the funds proposed for Afghanistan reconstruction and economic aid programs in southern Sudan. Earlier, Congress approved a budget resolution for FY2006 ( H.Con.Res. 95 ) that assumes a reduction in the President's foreign policy funding request of about $2.4 billion, or 7%. If House and Senate Appropriation Committees add to the pending FY2006 request some of the items not approved in the FY2005 supplemental conference agreement, the challenge of meeting the budget resolution target for international affairs program will be an even greater challenge.",
"H.R. 1268 , as passed by the House on March 16, approved $4.92 billion for additional foreign policy programs. This level was $1.37 billion less than requested. During House Appropriations Committee markup on March 8, the panel excluded items that it felt were not well justified, could be funded by other international donors, or did not require immediate funding and could be considered as part of the regular FY2006 appropriation. The House Committee further redesignated $995 million as non-emergency spending and offset these costs by rescinding $1 billion in unspent economic aid appropriated in FY2003 for Turkey. This brought the \"net\" total for foreign policy programs in the House version of H.R. 1268 to $3.92 billion. During House floor debate, Members approved an amendment by Representative Jackson adding $100 million in humanitarian relief for the Darfur region in Sudan.",
"The Senate passed its version of H.R. 1268 on April 21, providing $5.74 billion in new appropriations for foreign policy activities, a level about $350 million less than the President's request, but over $800 million more than passed the House. Like the House, the Senate version of H.R. 1268 offset the foreign policy total by rescinding $1 billion in FY2003-enacted economic aid for Turkey, bringing the \"net\" amount down to $4.74 billion. But unlike the House, the Senate measure designated the entire foreign policy portion as an \"emergency\" appropriation. The Senate considered over 20 amendments related to foreign policy items in the supplemental, altering the Committee-reported bill in several key ways.\nIn particular, the Senate, in adopting two amendments offered by Senator Byrd and Senator Ensign, shifted about $550 million from international peacekeeping and Iraq and Afghanistan mission operations to bolster U.S. border security. Conversely, the Senate added $320 million in food assistance to provide additional resources for humanitarian crisis in Darfur and elsewhere, and to replenish food aid accounts which had previously been diverted for emergency purposes. Eight amendments were approved concerning tsunami-affected countries, including a provision allowing up to $45 million, as requested, debt deferral or rescheduling. Among other amendments, the Senate:\nfully funded the request for the State Department's Office of the Coordinator for Reconstruction and Stabilization and for the ready-response corps, offset by a reduction for the Global War on Terrorism Partners Fund; added $5 million for democracy programs in Lebanon, offset by a further reduction in the Partners Fund; added $20 million in aid to Haiti; and designated $90.5 million in peacekeeping funds for Darfur.\nThe Senate rejected one amendment—by Senator Coburn—that would have reduced funding for the U.S. embassy in Iraq from $592 million, as proposed by the Committee, to $106 million. See Table 9 for further information on other amendments.",
"Major recommendations included in H.R. 1268 as agreed to by conferees, and previously passed by the House and Senate, include:\nAfghanistan reconstruction and police training—$1.78 billion, $262 million less than requested. This level fell between the House-passed measure ($1.4 billion) and the Senate ($2.05 billion). The conference agreement further fully funds counter-narcotics activities, but reduces policy training by $40 million. Darfur humanitarian aid—at least $238 million, roughly the amount proposed by the President. The conference agreement, however, adds $90 million in food aid world-wide, some of which might be available for Darfur, and permits the transfer of $50 million in support of African Union peacekeeping operations in the region. The House measure had increased the funding level for Darfur to $342.4 million. The Senate version approved $242 million, as requested, but added an additional $320 million in food assistance, some of which could be used in Darfur, and $90 million that could have been transferred to meet humanitarian and peacekeeping needs. Sudan peace implementation aid—$37 million, as had been included in the House measure. Conferees delete $63 million in rehabilitation and reconstruction funding. The Senate bill had included the entire $100 million request. Palestinian aid—$200 million, as requested and passed in earlier House and Senate votes. The conference measure sets aside $50 million, similar to the Senate version, for Israel to help facilitate the movement of Palestinian people and goods in and out of Israel. Conferees recommended that none of the funds be available for direct financial support to the Palestinian Authority. Pakistan military aid—$150 million, as requested. Jordan economic and military aid—$200 million, as requested. Iraq embassy—$592 million, $66 million below the request. This is the same level as in the Senate bill, while the House measure included an amendment that baring the use of the funds for construction of the embassy. Peacekeeping—$680 million, $100 million below the request. The conference amount is higher than both the House ($580 million) and Senate ($442 million). The Senate figure could have been reduced further due to an authority to transfer $90.5 million for African Union peacekeeping support in Darfur and humanitarian needs in that region. Tsunami relief and prevention—$656 million for relief and $25.4 million for prevention, the same as in the Senate bill. The House-passed amount was slightly higher. The conference agreement provides authority (but not the $45 million requested) to defer and reschedule debt owed by tsunami-affected countries. The House bill had not granted such authority. Partners Fund and Solidarity Fund—No funds are provided for the Partners Fund ($200 million proposed), while the full $200 million request for the Solidarity Fund is included. In addition, the conference agreements adds $30 million for other Global War on Terror security assistance, as determined by the President. The House had denied all funding for these purposes, while the Senate approved $225.5 million for the two contingency funds. Ukraine aid—$60 million, as requested and including in the Senate measure. The House had approved $33.7 million. In addition, similar to the Senate, the conference agreement provides $10 million for other regional aid requirements in Belarus and the North Caucusas. Haiti assistance—$20 million, of which $2.5 million for criminal case management, case tracking, and the reduction of pre-trial detention in Haiti, similar to the Senate position. The $20 million had not been requested or included by the House. Iraqi families and communities affected by military operations—$20 million for civilians who have suffered losses due to military activities, similar to a Senate-added provision. These funds will be drawn from the $18.44 billion appropriated in P.L. 108-106 , the FY2004 emergency supplemental for Iraq reconstruction.\nEach of these elements and others are discussed in more detail below. Table 10 (below) summarizes the spending request.",
"The supplemental request included a total of $1.37 billion for U.S. Mission operations in Baghdad ($690 million), the construction of a new embassy compound ($658 million), USAID operating expenses in Iraq ($24 million) and USAID Inspector General costs in Iraq ($2.5 million).\nFor U.S. Mission operations and embassy construction, the supplemental funds are intended to cover costs for the balance of FY2005 and most expenses in FY2006. Previously, Congress appropriated in several spending measures $991 million for Mission operations for FY2004 and FY2005, of which $769 million remained for this year. The Administration estimates that the State Department will need $1.06 billion in FY2005 to manage activities of about 1,000 American personnel located in Bagdad and four regional offices. The State Department sought $290 million for Mission operations, including logistics and security, for the rest of FY2005, and $400 million for \"extraordinary\" security and logistical expenses in FY2006. The regular FY2006 budget, submitted to Congress on February 7, 2005, includes $65 million that will serve as a \"funding base for basic embassy operations\" and assumes that the U.S. Mission in Baghdad will reach a \"basic operations\" status at some point in the future.\nThe State Department plans to build the new embassy over the next 24 months and argues that it needs the entire funding now so Mission staff can move out of temporary facilities as quickly as possible as promised to the new Iraqi government. The $658 million sought represents the entire estimated construction costs, plus \"reasonable\" contingency amounts to manage possible risks of the project. According to the Department, planning for the new embassy would be completed by March 15, 2005, with an anticipated contract award date of mid-May 2005, subject to passage of the supplemental. Under this time schedule, the project would be completed in May 2007. Critics note, however, that Congress has already appropriated about $20 million in previous supplementals specifically for construction of the embassy. Moreover, they say, plans for a new facility were far enough along in calendar 2004 that the Administration should have amended its FY2005 regular appropriation request to accommodate the sizable funding additions needed for embassy construction. To them, the proposal does not meet the test of an \"emergency\" requirement.",
"The conference agreement on H.R. 1268 provides $690 million for Iraq Mission operations and USAID operating and IG costs, $27 million less than requested. Conferees further settled on $592 million for construction of a new embassy in Baghdad, a level $66 million below the request. Conferees added a $250,000 earmark for a contribution to a scholar-rescue program that would bring Iraqi and Afghan scholars, whose lives are threatened in their home countries, to the United States and place them in host universities.\nThe matter of funding for a U.S. embassy in Baghdad was one of the most contentious elements of the supplemental debate. Initially, the House Appropriations Committee had recommended a reduction of $66 million for embassy construction (the same as in the conference agreement), stating that even with this cut, remaining funds would be sufficient for the compound to be constructed within the Administration's two-year schedule. During floor debate, however, the House adopted (258-170) an amendment by Representative Upton, prohibiting the use of any funds in the bill for embassy security, construction, or maintenance. Supporters of the amendment argued that since planning for a new Baghdad facility had been underway for at least a year, this should not be funded as an emergency requirement. Instead, the Administration should have submitted a proposal for consideration in the regular FY2005 appropriation or requested funds in the regular FY2006 spending measure. Before adoption of the Upton amendment, the White House had expressed concern over the Committee's $66 million cut for embassy construction. Officials argued that full funding of the $658 million request was important for a \"secure work and living environment for Americans serving in Baghdad,\" and that construction postponement would delay the movement of U.S. staff into \"more safe, secure, and functional facilities.\"\nThe Senate supported State Department construction plans for a graduated design that could be scaled back as requirements in Baghdad change. The $592 million provided—$66 million less than the request—was, in the Committee's view, sufficient given reduced mission staffing levels. During floor debate, the Senate tabled (54-45) an amendment by Senator Coburn that would have reduced funding for the embassy to $106 million, an amount that supporters of the amendment argued was needed immediately, but contended that the balance could be addressed in regular appropriation bills.\nH.R. 1268 , as passed in the Senate, also cut funds for State Department operating costs in Iraq and Afghanistan. A floor amendment by Senator Byrd set funding for diplomatic and consular programs at $357.7 million, about $400 million below the President's request for both missions. This reduction came as an offset to fund additional U.S. border security needs in the Byrd amendment.",
"The supplemental proposed $2.046 billion for Afghanistan out of foreign policy budget accounts. By comparison, enacted FY2005 appropriations for economic, law enforcement, and security assistance to Afghanistan total about $1 billion, and between $1 billion and $1.1 billion is proposed for FY2006. The Administration argues that the supplemental is necessary in order to support the newly elected Karzai government plan for the upcoming Parliamentary elections and to complete high impact projects that could be done in the near term. The supplemental funds for Afghanistan are divided into several components.\nU.S. Mission operations and security—$60 million. Infrastructure and economic development—$795.8 million. These funds would be used to continue ESF-funded secondary road construction ($125 million), power transmission and generation capacity ($300 million), health sector reforms and services ($69 million), school construction and teacher training ($68 million), Provincial Reconstruction Teams (PRTs) infrastructure ($75 million), clean water and agriculture projects ($82 million), and other reconstruction activities. Capacity-building of the Afghan government, including strengthening democratic institutions—$265 million. This would cover government salaries, infrastructure, support for parliamentary elections, and other rule of law and democracy promotion activities. Included is $25 million to complete the Kabul airport. Anti-terrorism training and protection—$17.1 million for providing security for President Karzai. Congress approved $18.8 million in the regular FY2005 Foreign Operations appropriations for similar programs funded under the Non-Proliferation, Anti-Terrorism, Demining, and Related Programs (NADR) account for Afghanistan. For FY2006, the State Department seeks an additional $18.4 million for NADR account activities. Police training—$400 million. These funds are intended to accelerate on-going efforts that will be expanded further by FY2006 requested appropriations. Activities include Task Force Police training ($285 million), police equipment ($74 million), and salary payments ($40 million). Counternarcotics (eradication and interdiction)—$260 million. Of this total, $95 million would cover costs already incurred to begin crop eradication, establish a National Interdiction Unit, and support public information programs. The balance of $165 million would expand efforts for eradication ($89 million), interdiction ($51 million), law enforcement ($22 million), and public information ($3 million). Authority is also sought to transfer up to $46 million of the amount to ESF programs, presumably in support of alternative livelihood activities. Counternarcotics (alternative livelihood programs)—$248.5 million. A portion ($139 million) of this amount would replenish reconstruction and development aid accounts that had been drawn on previously to address alternative livelihood activities. The balance ($110 million) would be used to expand programs into a total of seven provinces.\nIn total, including Defense Department and DEA accounts, the FY2005 supplemental sought $773 million for counternarcotics in Afghanistan and Central Asia.",
"Conferees approved $1.78 billion for Afghan programs covering U.S. mission costs, reconstruction, counter-narcotics, police training, and security for President Karzai. This level is about mid-way between Senate ($2.05 billion, the same as the request) and House ($1.4 billion) amounts. The conference measure redistributes the funds differently than had been requested. U.S. mission operations, counter-narcotics activities, and President Karzai's security detail are fully funded, while conferees reduced police training from $400 million to $360 million. The most debated element of the Afghanistan request was the portion for economic reconstruction. The conference measure trims about $220 million of the President's $1.1 billion request, finding that some projects did not fit the \"emergency\" nature of the supplemental. The conference level, however, assumes full funding for health programs and expenses of provisional reconstruction teams. Conferees recommend $5 million for women-led NGOs in Afghanistan and $5 million for displaced persons, as provided by the Senate, and earmarks $2.5 million to assist families and communities of Afghan civilians who have suffered losses due to military operations. The Senate bill had included a $5 million earmark for this purpose.\nIn earlier action, the House-passed bill rejected $46 million for aerial eradication efforts and denied funding for several reconstruction projects, including money for the Kabul Airport, a new law school in Kabul, a power plant, industrial parks, a courthouse, and a community housing project. Some of the projects, the House Appropriations Committee noted, will be reviewed during consideration of the regular FY2006 Foreign Operations appropriations. In its report on H.R. 1268 , the Committee said that it expected that some of these projects could be financed by other countries, the Asian Development Bank, and the World Bank.\nThe Senate measure shifted $46.5 million of the request from operation and maintenance (O & M) of a helicopter fleet to eradicate illicit crops to a pilot program to train local Afghan police forces. The Committee noted in its report that an earlier reprogramming proposal for procuring the helicopters had been denied, making the O & M funds unnecessary.",
"The Administration requested $100 million for immediate support of the January 9, 2005 Comprehensive Peace Agreement between the government in Khartoum and the Sudan People's Liberation Movement in the south. In justifying the request, the State Department noted that when FY2005 appropriation decisions were finalized, a peace accord was uncertain. The supplemental programs, officials said, would help ensure that the peace agreement is effectively implemented.\nMost of the supplemental proposal targeted needs in southern Sudan. The proposal included $22 million for assisting the National Commissions required under the peace accords and supporting governance and political party development, $10 million for security sector reform in southern Sudan, $63 million for rehabilitation and reconstruction, primarily in southern Sudan, and $5 million for UNHCR, International Organization for Migration, and NGO repatriation programs for Sudanese refugees. The $100 million total supplemental requested for Sudan compares with about $200 million allocated for all activities in FY2005 and $112 million proposed for FY2006.\nThe supplemental proposal for Sudan also reflects a new initiative proposed more broadly in the regular FY2006 budget request for post-conflict, fragile countries. The Administration recommends shifting assistance that has traditionally been channeled through USAID's Development Assistance account to the Transition Initiative (TI) account. TI funds are available under more flexible programming authorities than regular development assistance, and according to the Administration, will permit more effective and better targeted types of support that post-conflict states require in the near-term. Four countries—Sudan, Ethiopia, Afghanistan, and Haiti—are scheduled for this funding transfer in the FY2006 request. Included in the $100 million, the supplemental proposal also seeks $63 million for Sudan rehabilitation and reconstruction under the TI account.",
"While fully supporting the requests for security, governance, and refugee repatriation programs, the conference agreement, like the House-passed bill, does not include $63 million for reconstruction programs in southern Sudan. The Senate measure provided the full $100 million requested for programs related to the Comprehensive Peace Agreement.",
"The supplemental sought $242 million for emergency humanitarian relief for the Darfur region of Sudan and for eastern Chad. These funds would add to the roughly $375 million currently allocated or planned for emergency programs with existing FY2005 funds. As the crisis worsened throughout 2004, the demands for a broader U.S. response exceeded those assumed in the FY2005 budget request, according to the Administration. The supplemental request included $48.4 million in refugee aid, $44 million for both replenishing previously expended disaster relief funds and meeting new emergency shelter, clean water, and medical requirements in the region, and $150 million in food aid. The food aid request was intended to relieve some of the current pressure on the enacted FY2005 food assistance budget in meeting not only the needs in Darfur, but in a number of crisis situations around the world.",
"Conferees approved at least $238 million for Darfur-related support (roughly the level requested), although this total could climb if the Administration decides to allocate additional food aid to the region or transfer peacekeeping funds for the African Union's operation in Darfur. The conference agreement adds $90 million in food aid that can be used globally to address emergency shortfalls. Some of this additional amount could be used in Darfur if the situation warrants. The Senate bill had added more—$320 million—in food assistance, amounts that also could be used worldwide, including Darfur. Conferees also permit the transfer of $50 million in support of African Union peacekeeping operations in the region. These funds would be drawn from the State Department's assessed U.N. peacekeeping account from which U.S. contributions might be drawn for a U.N. mission in Darfur.\nPreviously, the House-passed supplemental added $100 million—for a total of $342.4 million—to the Administration's request for humanitarian assistance to the Darfur region. The initial House Committee draft bill had provided $92.4 million. During Appropriations Committee markup, the House panel voted 32-31 to approve an amendment by Representative Jackson to restore $150 million in food assistance that had been requested but not made part of the Chairman's draft bill. Earlier, however, the Committee had rejected (29-30) a more expansive amendment by Representative Jackson that would have provided the additional food aid, plus $100 million for more refugee and disaster relief in the Darfur region. Subsequently, during debate on March 15, the House adopted by voice vote an amendment by Representative Jackson adding the same $100 million for Darfur that had been rejected in Committee.\nH.R. 1268 , as passed in the Senate, provided $242.4 million directly for humanitarian aid for the Darfur region and eastern Chad, the same as the request. In addition, two floor amendments could have pushed this figure higher. As noted above, an amendment by Senator Kohl added $320 million in food assistance for Darfur and to meet other emergency and non-emergency food aid needs around the world. A second amendment by Senator Corzine made available $90.5 million out of the Contributions to International Peacekeeping account specifically for Darfur. Of this total, $50 million could be transferred to support African Union peacekeeping activities in the region, while $40.5 million could be transferred for additional humanitarian relief needs in Darfur.",
"The Administration proposed $750 million in direct aid for Jordan, Pakistan, and other coalition partners in the war on terrorism, some of which has been challenged for representing an open-ended contingency resource that lacks sufficient controls and congressional oversight.\nJordan economic and military aid—$200 million. These funds, which would be evenly split between economic and military aid, are justified as necessary to help Jordan offset the costs of hosting Iraq training initiatives, address increasing threats from Iraqi insurgents and problems on the Syrian and Saudi borders, and high oil prices. The supplemental package would come on top of $452 million already appropriated for Jordan in the regular FY2005 appropriation and $456 million requested for FY2006. Pakistan military aid—$150 million. As part of a multi-year, $3 billion Presidential aid pledge to Pakistan, the Administration requested in the regular FY2005 appropriation $700 million for Pakistan, $300 million of which would support military activities. Congress directly appropriated $148.8 million (post rescission) of the military aid request and authorized the President to draw an additional $150 million from prior-year unobligated appropriations. The Administration thus far has not acted on the transfer authority, arguing that it does not want to adversely affect other key aid programs. Instead, the President sought an additional direct appropriation of $150 million that he did not receive in the FY2005 enacted spending measure. The Administration's Pakistan aid request for FY2006 again totals $700 million, with $300 million proposed for military aid. Solidarity Fund—$200 million. The supplemental proposed $200 million in military and security assistance for countries that have deployed troops in Afghanistan and Iraq to meet \"extraordinary\" defense costs of such operations. According to State Department officials, the funds would not be used to directly reimburse these countries for costs sustained in Iraq and Afghanistan. Such reimbursements are provided through DOD's Coalition Support Fund. Rather, the Solidarity Fund would help partners address general budget problems related to their presence in both countries by repairing or replacing defense articles and supporting a number of countries currently or about to deploy forces. Global War on Terrorism Partners Fund—$200 million. This new account would provide economic aid to countries supporting the U.S. in the Global War on Terror. It would be constructed as a contingency Fund, exempt from restrictions and conditions in any other provision of law, from which the Secretary of State could transfer resources to any Federal agency in support of the objectives of the Fund. Secretary of State Rice told the Senate Appropriations Committee on February 17, 2005, that the need for such a Fund became clear after the regular FY2005 appropriation had been submitted. She noted that a number of countries, although not deploying troops in Iraq or Afghanistan, had taken steps, such as securing their borders from terrorist infiltration, to take pressure off U.S. forces.\nThese proposals to support coalition partners have raised a number of concerns among Members of Congress. Some question whether circumstances have changed to justify additional aid to Jordan and Pakistan, especially given the large aid packages approved for both countries in the regular FY2005 appropriation and congressional approval of a transfer authority to accommodate $150 million in military aid for Pakistan. Others also ask why financial support for countries with troops on the ground in Iraq and Afghanistan was not part of the FY2005 regular request or proposed for FY2006. Another concern relates to possible redundancy between the proposals outlined above and the roughly $2.2 billion in the DOD portion of the supplemental for similar support to coalition partners.\nThe request for creation of the Global War on Terrorism Partners Fund drew particular challenges from several Members due to its broad flexibility and lack of specificity for how the funds would be directed. This request followed recent efforts by the Administration to gain congressional approval of a flexible contingency Fund that could be drawn on to respond to complex foreign emergencies. Congress has rejected these types of requests four times in the past three years. The Administration seeks $100 million for a Conflict Response Fund for FY2006, although the focus of that account would be on post-conflict and weak states, not partners in the War on Terror.",
"The conference agreement fully supports the Solidarity Fund with $200 million, plus adds an additional $30 million peacekeeping funds to meet other Global War on Terror purposes. Conferees, however, do not approve resources for the Partners Fund. In addition, the conference measure, like House- and Senate-passed bills, provides the full amount requested for additional assistance to Pakistan and Jordan.\nPreviously, the House had denied the $400 million requested for the Partners Fund and the Solidarity Fund, while the Senate bill provided partial funding. The Senate measure included the full $200 million in peacekeeping resources for the Solidarity Fund, recommending the assistance be provided to Poland, Romania, Bulgaria, El Salvador, Ukraine, Mongolia, Georgia, Lithuania, Slovakia, the Czech Republic, and Albania. The Senate-reported bill provided $40 million for the Partners Fund, urging support for Yemen, the Krygyz Republic, Morocco, El Salvador, Mongolia, and Djibouti. During floor debate, however, the total for the Partners Fund was reduced to $26.5 million in order to increase amounts for the State Department's Office of the Coordinator for Reconstruction and Stabilization and to add $5 million for democracy programs in Lebanon.",
"The Administration sought $780 million to support a number of existing, recently established, and prospective U.N. peacekeeping missions. According to officials, in addition to the $484 million FY2005 enacted peacekeeping appropriation, there remains a $780 million \"gap\" in current funding requirements. This, officials said, occurred because new U.N. operations—in Cote d'Ivoire, Burundi, and Haiti—and an anticipated operation in Sudan arose after the FY2005 budget was submitted in early 2004. The Administration, however, did not seek a budget amendment during congressional consideration of the regular FY2005 appropriation. The conference committee on the Commerce, Justice, and State Department funding measure noted its concern that the U.S. had voted to support the expansion or the creation of new U.N. operations without submitting a plan for covering the costs of such commitments. The Administration's FY2006 request was $1.035 billion, an amount that reflects these new and expanded U.N. peacekeeping operations.",
"Conferees include $680 million for U.N. peacekeeping missions, $100 million less than requested. The approved amount could be cut further if the President used $50 million for African Union peacekeeping operations in Darfur, as the legislation permits. The conference total is higher than either House- or Senate-passed bills. The House supplemental provided $580 million, including the use of up to $55 million for the establishment of a Sudan war crimes tribunal. H.R. 1268 , as passed by the Senate, included $533 million, after two floor amendments shifted $147 million to support enhanced U.S. border security. Unlike the House, however, the Senate measure denied funds for a Sudan war crimes tribunal. The conference agreement makes no mention of appropriations for the tribunal.",
"In his State of the Union address on February 2, 2005, the President announced a $350 million aid package for the West Bank and Gaza, $200 million of which is proposed in the FY2005 supplemental. The FY2006 request includes the balance of $150 million. The funds would be available, notwithstanding any provision of law, and the Administration says that some of the funds—although none in the supplemental request—would be channeled directly to the Palestinian Authority (PA), including support for training and equipping civilian security services. Existing law includes several restrictions and conditions on aiding the PA related to concerns over accountability, transparency, and corruption. Secretary of State Rice defended the proposal, including the need for direct PA funding, arguing that the U.S. needs to move quickly to help the Palestinians prepare for governing Gaza following Israeli withdrawal. Regular U.S. assistance for the West Bank and Gaza has averaged about $75 million annually and generally channels aid through non-governmental organizations. The President, however, waived restrictions on direct aid to the PA in December 2004 and July 2003 in order to permit a portion of U.S. assistance to support Palestinian Authority costs.",
"The conference agreement provides the full $200 million requested and approved by the House and Senate for the Palestinians, but with significant restrictions and resource allocation requirements. Of the total amount, $50 million will support Israeli-built checkpoints aimed at reducing the bottlenecks at these checkpoints and facilitate the movement of Palestinian people and goods in and out of Israel. Conferees further specify projects, managed by NGOs, for which funds are available. The measure further recommends $3.5 million for the Holy Family Hospital in Bethlehem and $2 million for healthcare activities undertaken by Hadassah, the Women's Zionist Organization of America. The $50 million set-aside for Israel and the other earmarks were recommended by the Senate, but not included in the House bill.\nIn addition, conferees state that the bill does not include any direct financing for the Palestinian Authority, and that the President's waiver that he exercised in December 2004 to provide such direct aid to the PA with FY2005 regular appropriations does not extend to the supplemental funds. It appears, however, that the President could issue a new waiver, based on authority granted in the General Provisions of Division D of P.L. 108 - 447 , the FY2005 Consolidated Appropriations Act. During earlier consideration of H.R. 1268 , the House had prohibited use of any supplemental funds for direct aid to the PA. The Senate bill had not included such a restriction, although the Senate Appropriations Committee reminded the Administration of existing conditions on West Bank/Gaza aid and PA restrictions included in the FY2005 Foreign Operations appropriations ( P.L. 108 - 467 ), and that they would apply to supplemental funds as well. Unlike the House-passed measure, however, the Senate provision would have allowed the President to use the national security waiver authority provided in P.L. 108 - 467 for direct aid to the PA with supplemental funds if he made such a determination in the future.",
"Following the recent elections in Ukraine, the Administration proposed $60 million in supplemental economic support for Kiev. The additional resources would support anti-corruption and rule of law programs ($19 million), economic reforms ($13 million), civil society outreach ($10 million), HIV/AIDS activities ($4.5 million), nuclear safety ($5.5 million), parliamentary election assistance ($5 million), and political transition aid for the new government ($3 million). These amounts would come on top of the $79 million regular appropriation for FY2005. The State Department proposes $88 million for FY2006.",
"The conference agreements provides the full $60 million request for Ukraine, the same as the Senate, but above the House-passed level of $33.7 million. In its report on H.R. 1268 , the House Appropriations Committee stated its intent that the funds be used for programs that will demonstrate quickly U.S. support for the Yushenko government and assist in the upcoming parliamentary elections. The Senate bill recommended an increase of $3.65 million in planned support for Ukrainian civil society organizations. Conferees further add $5 million each for democracy programs in Belarus and for humanitarian and conflict mitigation needs in Chechnya, Ingushetia, and elsewhere in the North Caucasus. The Senate had included a similar provision.",
"The supplemental included $4.8 million for the Voice of America, the Middle East Broadcasting Networks, and the International Broadcasting Bureau supporting programming in the Middle East, South Asia, and Europe, especially in countries with significant Muslim and Arab populations. An additional $2.5 million would support an upgrade of transmitting systems located in Tajikistan and boost broadcasting signals to Pakistan and Central Asia.",
"The conference bill, like the Senate measure, fully supports both items. The House had included the $4.8 million for broadcasting activities, but rejected the request for transmitting systems upgrades.",
"In mid-2004, the State Department created a new Office of the Coordinator for Reconstruction and Stabilization (O/CRS), an entity designed to strengthen U.S. capacity to prepare for and respond to post-conflict reconstruction situations and to help weak states. The supplemental included $9.4 million for start-up personnel costs of the Office that was not budgeted in the regular FY2005 appropriation. The request for FY2006 proposes about $24 million to expand the O/CRS by 57 positions. The supplemental request further included $7.8 million to development an initial corps of civilian staff to create a ready-response capacity within the State Department.",
"Conferees settled on $7.7 million for the Office of the Coordinator for Reconstruction and Stabilization, with the expectation that funds will be used for personnel in Washington and Sudan. This is less than half the amount requested. Through an amendment by Senator Lugar, the Senate had supported the entire $17.2 million requested, while the House had recommended $3 million, exclusive for the Coordinator's Office.",
"The tragedy of the December 26, 2004 tsunami that took the lives of perhaps as many as 200,000 people in 12 southeast Asian, South Asian, and east African nations has elicited over $12 billion in aid pledges and commitments from governments, multilateral institutions, and private individuals. The United States made an early pledge of $350 million for immediate relief efforts, but the Administration increased this amount by seeking $600 million in its request for a $950 million FY2005 supplemental. Of this total, $120 million would replenish USAID emergency aid accounts that had been drawn in support of the initial American government response. Likewise, the supplemental also proposed $226 million to make similar reimbursements to Defense Department accounts that were used in the immediate aftermath of the tsunami.\nThe largest portion of the Tsunami Recovery and Reconstruction supplemental account—$581 million—would be used for small transition and longer term large infrastructure activities. Of this amount, up to $45 million could be used to provide debt relief to the affected countries if their governments request such debt reduction. An additional $22.6 million would support creation of tsunami warning systems in the region, activities carried out by the National Oceanic and Atmospheric Administration and the U.S. Geological Survey. Out of the total $950 million request, $701 million falls under international affairs budget accounts managed by USAID and the State Department.",
"The conference agreement reduces the Tsunami Recovery and Reconstruction Fund by $45 million, the amount proposed for possible debt relief for tsunami-affected countries. The legislation, however, grants authority for the Administration to defer or reschedule debt owed by these nations. The Senate measure also supported this debt relief authority while the House had not included it. Additional earmarks for specific tsunami-related activities included in the conference bill are:\n$5 million for environmental recovery activities, as recommended by the Senate; $10 million for projects creating new economic opportunities for women, as recommended by the House; $1.5 million for programs that protect women and children from violence, trafficking, and exploitation, as suggested by the Senate; $1.5 million for the needs of people with physical and mental disabilities, less than the $12 million recommended by the Senate; $20 million for microenterprise programs, similar to a Senate provision; $12.5 million for projects focusing on the needs of children; $25 million to prevent and control the spread of the Avian influenza virus, similar to a Senate recommendation.\nConferees did not include a Senate earmark of $3 million for teacher training programs in Aceh and Sri Lanka where there has been a high death rate among teachers.\nPreviously, tsunami relief issues were a particular focus of debate during House floor consideration of H.R. 1268 . The House defeated (voice vote) an amendment by Representative Tancredo that would have barred the use of any funds in the bill for tsunami relief. The amendment's author believed that the more than $1 billion in private donations for victims of the tsunami represent a significant outpouring of American support for relief and recovery efforts, and that given existing budget constraints and disaster needs in the U.S., further American taxpayer funds were not warranted. Opponents noted that a portion of the request would repay foreign aid accounts from which immediate tsunami relief assistance had been drawn, and would disrupt these other aid activities if funds were not restored. Moreover, they argued, the enormity of the tsunami destruction, extensive loss of life, and the long-term reconstruction requirements justified the full U.S. government pledge.\nIn further debate, the House adopted (voice vote) an amendment offered by Representative Maloney that increased the Tsunami Fund by $3 million. Although not directly stated in the text of the amendment, the intent of its supporters was to provide $3 million for a U.S. contribution to the U.N. Population Fund (UNFPA) related to organization's work in tsunami-affected countries. In order to cover the additional costs of responding to unanticipated tsunami disaster needs, UNFPA issued a $28 million \"flash appeal\" to which supporters of the amendment hope the United States would respond with a $3 million contribution. Other Members noted, however, that the text of the amendment did not direct the Administration to use the $3 million as a UNFPA contribution, but only to supplement the Tsunami Recovery and Reconstruction Fund. Conferees do not include the extra $3 million added by the Maloney amendment and make no reference to UNFPA in the conference report.\nU.S. funding for UNFPA has been a controversial issue for some time because of the organization's continuing programs in China, where most agree that coercive family planning and involuntary sterilization activities have been applied by the government for many years. The Bush Administration determined in July 2002 that UNFPA was in violation of U.S. law (the \"Kemp-Kasten provision\" in annual Foreign Operations appropriations) banning contributions to organizations that are involved in the management of coercive family planning programs. Executive branch determinations have blocked U.S. transfers to UNFPA, FY2002-FY2004, and a review of the FY2005 funding status is expected later this year."
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"question": [
"How is the money allocated by the Administration's request?",
"How will funds not be subject to limits in annual budget resolutions?",
"What would be the effects of the DOD's request for the FY2005 total appropriation?",
"What did the OMB director Bolton argue?",
"How did people respond to the Defense Department for the Army's initiative to re-organize Army units?",
"What was the issue for foreign aid and Iraq diplomatic facilities?",
"Under what conditions would the foreign policy items be added to the pending FY2006 bills?"
],
"summary": [
"The Administration's request included $74.96 billion for the Department of Defense, $5.6 billion for reconstruction and other foreign aid, $950 million for Tsunami relief, and $770 million for other activities.",
"If enacted as an emergency appropriation, as requested, the funds would not be subject to limits in annual budget resolutions but would add to the size of the U.S. budget deficit.",
"Taking into account the funds already provided, DOD's request would bring its FY2005 total appropriation to about $100 billion, which is over 45% higher than the amount provided in the FY2004 supplemental (P.L. 108-106).",
"While OMB Director Joshua Bolten argued that the request was an emergency for \"known and urgent requirements,\" that could not be met with existing funds, some Members questioned whether this characterization fit some elements in the request.",
"Some questioned whether the $5 billion requested by the Defense Department for the Army's initiative to re-organize Army units was an unanticipated emergency since it was announced in the fall of 2003; others argued that the initiative was a war-related expense because it was expected to relieve war-induced stress on Army forces.",
"For foreign aid and Iraq diplomatic facilities, the issue was whether the requests represented true emergencies or could wait for later consideration.",
"If not dealt with in the FY2005 supplemental under an \"emergency\" designation, however, these foreign policy items could be added to the pending FY2006 international affairs appropriation bills and would place additional pressure on the Administration to defend an already sizable foreign policy increase proposed for next year."
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CRS_R42611
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{
"title": [
"",
"Introduction",
"Section 1: Oil Sands—Overview",
"Oil Sands Estimates and Locations",
"Oil Sands Extraction Processes",
"Mining",
"In Situ",
"Properties of Oil Sands-Derived Crudes Compared to Other Crudes",
"Section 2: Keystone XL Pipeline—Overview",
"Federal Requirements to Consider the Pipeline's Environmental Impacts",
"Presidential Permit Requirements for Cross-Border Pipelines",
"Identification of Environmental Impacts During the NEPA Process48",
"Identification of Environmental Impacts During the National Interest Determination",
"Consideration of Environmental Impacts Outside of the United States",
"Other Oil Pipelines from Canada",
"Section 3: Selected Environmental Issues",
"GHG Emissions Intensity of Oil Sands Crude Oils61",
"Life-Cycle Assessments",
"GHG Life-Cycle Assessments of Canadian Oil Sands",
"Canadian Oil Sands Compared to Other Crude Oils",
"GHG Emissions Intensities of Fossil Fuels",
"Climate Change Concerns",
"The 2014 FEIS GHG and Climate Change Analysis",
"Keystone XL and the Global Carbon Budget",
"Oil Spills",
"Oil Sands Crudes and Pipeline Spills",
"Corrosion",
"Erosion",
"Volatility",
"Keystone XL Pipeline Operating Parameters",
"Keystone XL Spill Frequency and Volume Estimates",
"U.S. and Alberta Pipeline Spill Data",
"Impacts of Spills of Oil Sands Crude",
"Spill Behavior",
"Cleanup Issues",
"Toxicity",
"Other Modes of Oil Transportation",
"Oil Sands Extraction Concerns",
"Land Disturbances",
"Water Resources and Quality Issues",
"Appendix. Additional Information"
],
"paragraphs": [
"",
"The proposed Keystone XL pipeline has received considerable attention in recent months. If constructed, the pipeline would transport crude oil (e.g., synthetic crude oil or diluted bitumen) derived from oil sands resources in Alberta, Canada, to refineries and other destinations in the United States. Policy makers continue to debate various issues associated with the proposed pipeline. Although some groups have raised concerns over previous oil pipelines—Alberta Clipper and the Keystone mainline pipelines, both of which are operating—the Keystone XL proposal has generated substantially more interest among environmental stakeholders.\nBefore the Keystone XL pipeline can be constructed, its owner/operator, TransCanada, must receive a Presidential Permit, which is issued by the State Department. The decision of whether to issue this permit has provided (and continues to provide) a rallying point for environmental groups who have voiced various concerns over the construction of the pipeline and/or further development of the oil sands.\nThe Presidential Permit application—submitted by TransCanada—for the pipeline's construction represents a singular decision made by the Administration about whether or not the pipeline would serve the national interest. Such a decision requires the identification of factors that would inform that determination, as well as an assessment of the resulting impacts of both building and not building the pipeline.\nStakeholders who raise concerns with the pipeline project are not a monolithic group. Some raise concerns about potential local impacts, such as oil spills. Some highlight the oil extraction impacts in Canada. Some argue the pipeline would have national energy and climate change policy implications. For these stakeholders, the Presidential Permit decision has been seen as a gauge of the Administration's support for reducing domestic fossil fuel use and greenhouse gas emissions. Thus, the pipeline proposal has provided a vehicle to galvanize advocates interested in climate change mitigation, particularly the reduction or replacement of fossil fuel use.\nArguments supporting the pipeline's construction also cover a range of issues. Proponents of the Keystone XL Pipeline, including high-level Canadian officials and U.S. and Canadian petroleum industry stakeholders, base their arguments supporting the pipeline primarily on increasing the security and diversity of the U.S. petroleum supply and economic benefits, especially jobs. An analysis of these issues is beyond the scope of this report. For more discussion of these and other issues, see CRS Report R41668, Keystone XL Pipeline Project: Key Issues , by [author name scrubbed] et al.\nThis report focuses on selected environmental concerns raised in conjunction with the proposed pipeline and the oil sands crude it will transport. As such, the environmental issues discussed in this report do not represent an exhaustive list of concerns and issues. Moreover, many of the environmental concerns are not unique to oil sands. One could compose analogous lists for all forms of energy: coal, natural gas, nuclear, biofuels, conventional crude oil. Therefore, the oil sands/pipeline issues discussed in this report, when practicable, will be compared to other energy sources, particularly conventional crude oil development.\nSection One provides an overview of oil sands by addressing the following questions: what are oil sands; how are they extracted; how do oil sands crude oils compare to other crude oils? Section Two provides an overview of the Keystone XL pipeline, including a project description; a discussion of the federal requirements to consider environmental impacts from the pipeline, including the Department of State's national interest determination, obligations pursuant to the National Environmental Policy Act, and a list of recent milestones in the national interest determination process; and information about other international oil pipelines. Section Three discusses selected environmental issues, including greenhouse gas emissions intensity, related climate change concerns, pipeline oil spill risks, and two oil sands extraction concerns: land disturbance and water resources. An Appendix provides a list of agencies with jurisdiction or expertise relevant to pipeline impacts.\nThis report is intended to complement other CRS reports that address different aspects of the Keystone XL proposal, including the following:\nCRS Report R41668, Keystone XL Pipeline Project: Key Issues , by [author name scrubbed] et al.\nCRS Report R42124, Proposed Keystone XL Pipeline: Legal Issues , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. CRS Report R42537, Canadian Oil Sands: Life-Cycle Assessments of Greenhouse Gas Emissions , by [author name scrubbed].\nCRS Report R43415, Keystone XL: Greenhouse Gas Emissions Assessments in the Final Environmental Impact Statement , by [author name scrubbed].",
"The term oil sands generally refers to a mixture of sand, clay and other minerals, water, and a very dense and highly viscous (i.e., resistant to flow) form of petroleum called \"bitumen.\" At room temperature, oil sands bitumen has the consistency of cold molasses. This property makes it difficult to transport.\nBitumen can also be processed into a fuel, because it is a form of crude oil that has undergone degradation over geologic time. At some point, the bitumen may have been lighter crude oil that lost its lighter, more volatile components due to natural processes.\nCompanies developing oil sands reserves currently must process or dilute the bitumen before it can be transported. This processed/diluted bitumen falls into three general categories:\nUpgraded bitumen, or synthetic crude oil (SCO). SCO is produced from bitumen at a refinery that turns the very heavy hydrocarbons into a lighter material. Diluted Bitumen (DilBit). DilBit is bitumen that is blended with lighter hydrocarbons, typically natural gas condensates, to create a lighter, less viscous, and more easily transportable material. DilBit may be blended as 25% to 30% condensate and 70% to 75% bitumen. Synthetic bitumen (Synbit). Synbit is typically a combination of bitumen and SCO. Blending the lighter SCO with the heavier bitumen results in a product that more closely resembles conventional crude oil. Typically the ratio is 50% synthetic crude and 50% bitumen, but blends, and their resulting properties, may vary significantly.\nFigure 1 illustrates the proportions of crude oil types that Canada has exported to the United States in recent years. The figure indicates that \"blended bitumen\" exports, which include both DilBit and Synbit, have nearly tripled in the past six years. They are also expected to constitute most of the growth in oil sands production in the foreseeable future. Canadian crude oil imports accounted for approximately 33% of U.S. crude oil imports in 2013, up from 28% in 2012.",
"Resource estimates indicate that oil sands deposits are located throughout the world in varying amounts ( Figure 2 ). By far, the two largest estimated deposits of oil sands are in Canada, particularly the Province of Alberta, and in Venezuela's Orinoco Oil Belt ( Figure 2 ). As stated by the U.S. Geological Survey, the \"resource quantities reported here … are intended to suggest, rather than define the resource volumes that could someday be of commercial interest.\" For a variety of reasons (e.g., technology and economics), less than 0.4%—based on information in 2007—of the estimated oil sands resources are currently being produced.\nPerhaps a more useful estimate of oil resources is \"proven reserves.\" According to the Energy Information Administration (EIA), proven energy reserves are \"estimated quantities of energy sources that analysis of geologic and engineering data demonstrates with reasonable certainty are recoverable under existing economic and operating conditions.\" The Government of Alberta estimates that its proven oil sands reserves are approximately 170 billion barrels, which accounts for 97% of Canada's total proven oil reserves, 7%-10% of the total estimated resource in Canada's geologic basin ( Figure 2 ).\nFigure 3 illustrates the estimated proven oil reserves for the top 15 nations in 2012. Canada ranks third behind Venezuela and Saudi Arabia, due to its supply of oil sands in Alberta. Note that proven reserve estimates can change dramatically over a relatively short time ( Figure 3 ). EIA data indicate that Canada's proven reserve estimate increased from approximately 5 billion barrels of oil (BBO) in 2002 to 175 BBO in 2003. Similarly, Venezuela's estimated proven reserves increased from 73 BBO in 2000 to 298 BBO in 2013. The increases resulted from the addition of oil sands in Canada and extra-heavy oil in Venezuela to the total estimated proven reserves for each country.",
"Oil sands extraction processes are generally divided into two categories: mining and in situ operations, which are described below. Figure 4 identifies the locations of areas accessible to mining and in situ sites of oil sands in Alberta. According to the Government of Alberta, 80% of the Canadian oil sands are accessible by in situ methods only.\nThe year 2012 was the first year in which in situ operations accounted for a larger percentage (55%) of oil sands production than mining. The Canadian Association of Petroleum Producers (CAPP) projects in situ production to increase its share of production in coming years, accounting for approximately 62% of total production by 2020. Both processes are briefly discussed below.",
"Oil sands deposits that are less than about 250 feet below the surface can be removed using conventional strip-mining methods. The strip-mining process includes removal of the overburden (i.e., primary soils and vegetation), excavation of the resource, and transportation to a processing facility. Nearly all mined bitumen is currently upgraded to synthetic crude oil.",
"Oil sands deposits that are deeper than approximately 225 feet are recovered using one of three in situ methods: primary production, cyclic steam stimulation (CSS), and steam-assisted gravity drainage (SAGD). CSS and SAGD, which accounted for approximately 75% of Alberta's in situ recovery in 2012, involve injecting steam into an oil sands reservoir. The steam heats the bitumen, decreasing its viscosity and enabling its collection. Based on 2012 data, SAGD accounts for the greatest percentage of in situ recovery and is the preferred method of recovery for most new projects. SADG involves a top well for steam injection and a bottom well for bitumen production. Figure 5 provides an illustration of this process.\nIn contrast to bitumen from mining operations, which generally produce synthetic crude oil, the vast majority of bitumen from in situ operations becomes DilBit.",
"Crude oil is a complex mix of hydrocarbons, ranging from simple compounds with small molecules and low densities to very dense compounds with extremely large molecules. Three key properties of crude oils include the following:\nAPI Gravity. API gravity measures the weight of a crude oil compared to water. It is reported in degrees (\") by convention. API gravities above 10\" indicate crude oils lighter than water (they float); API gravities below 10\" indicate crude oils heavier than water (they sink). Although the definition of \"heavy\" crude oil may vary, it is generally defined by refiners as being at or below 22\" API gravity. Sulfur Content. Sulfur content in crude oil is an indication of potential corrosiveness due to the presence of acidic sulfur compounds. Sulfur content is measured as an overall percentage of free sulfur and sulfur compounds in a crude oil by weight. Total sulfur content in crude oils generally ranges from below 0.05% to 5.0%. Crudes with more than 1.0% free sulfur or other sulfur-containing compounds are typically referred to as \"sour,\" below 0.5% sulfur as \"sweet.\" Total Acid Number. Total Acid Number (TAN) measures the composition of acids in a crude which can gauge its potential for corrosion, particularly in a refinery. TAN value is measured as the number of milligrams (mg) of potassium hydroxide (KOH) needed to neutralize the acids in one gram of oil. As a rule-of-thumb, crude oils with a TAN greater than 0.5 are considered to be potentially corrosive due to the presence of naphthenic acids.\nTable 1 compares Alberta's different oil sands crudes with other crude oils extracted in the United States and around the world. The data indicate that all oil sands crudes would be considered heavy crudes. Heavy crudes are found throughout the world, including the United States. The data indicate that oil sands crudes resemble other heavy crudes in terms of sulfur content and TAN.",
"As originally proposed by TransCanada in September 2008, the Keystone XL pipeline would have involved two major segments ( Figure 6 ). The first segment—approximately 875 pipeline miles in the United States—would cross the U.S.-Canadian border into Montana, pass through South Dakota, and terminate in Steele City, NE. The second segment—approximately 485 miles and labeled as the \"Gulf Coast Project\" in Figure 6 —would connect an existing pipeline in Cushing, OK, with locations in southern Texas.\nFollowing action from Congress, DOS, and state governments (see Table 2 for details), DOS ultimately denied TransCanada's initial permit application in January 2012. TransCanada then proceeded with construction of the Gulf Coast Pipeline. That segment did not require a permit from DOS because it does not cross a U.S. border. (See \" Presidential Permit Requirements for Cross-Border Pipelines ,\" below.) The Gulf Coast Pipeline Project became operational on January 22, 2014.\nIn May 2012, TransCanada submitted a new permit application to DOS for the proposed Keystone XL Pipeline. That application is for only the 875-mile northern pipeline segment.\nOnce complete, the entire Keystone XL pipeline system would have the capacity to deliver 830,000 barrels per day (bpd), a substantial flow rate compared to other U.S.-Canada import pipelines ( Table 3 in the section below, \" Other Oil Pipelines from Canada \"). Assuming the pipeline were to deliver this maximum capacity each day of the year, it would transport approximately 300 million barrels per year, a considerable volume when compared to the 420 million barrels of DilBit and synthetic crude oil Canada exported to the United States in 2013 ( Figure 1 ).\nThe 36-inch-diameter pipeline would require a 50-foot-wide permanent right-of-way along the route. Approximately 88% of the pipeline right-of-way would be on privately owned land; the remaining 12% is owned by local, state, or federal governments. Rangeland and agricultural land comprise most of the land crossed by the proposed pipeline. Additional facilities associated with the pipeline system include pump stations (with associated electric transmission interconnection facilities), mainline valves, and delivery metering facilities.\nThe Keystone XL pipeline and the Gulf Coast Project would combine with two existing pipeline segments to complete TransCanada's Keystone Pipeline System. This system is depicted in Figure 6 . These existing segments include the following:\nThe Keystone Mainline: A 30-inch pipeline with a capacity of nearly 600,000 bpd that connects Alberta oil sands to U.S. refineries in Illinois. The U.S. portion runs 1,086 miles and begins at the international border in North Dakota. The Keystone Mainline began operating in June 2010. The Keystone Cushing Extension: A 36-inch pipeline that runs 298 miles from Steele City, NE, to existing crude oil terminals and tank farms in Cushing, OK. The Cushing Extension began operating February 2011.",
"The DOS decision-making process related to a Presidential Permit application is subject to environmental review requirements established pursuant to the National Environmental Policy Act (NEPA, 42 U.S.C. §4321 et seq.). Compliance with NEPA is intended, in part, to assure that DOS fully identifies and considers any significant environmental impacts associated with the issuance or denial of a permit to construct, operate, and maintain the pipeline system and associated facilities. The analysis of impacts prepared during the NEPA process is intended to inform the federal decision-making process. As a result, compliance with NEPA must be documented and demonstrated before DOS can make a final decision on the Presidential Permit.\nIssues that arose and environmental impacts identified during DOS efforts to process TransCanada's application for a Presidential Permit ultimately resulted in the denial of its 2008 permit application. With TransCanada's 2012 reapplication for a permit to construct the newly configured Keystone XL pipeline project, the Presidential Permit process and NEPA compliance process began anew.\nGenerally, federal agencies have no authority to control siting of oil pipelines, even interstate pipelines. Instead, the primary siting authority for oil pipelines generally would be established under applicable state law (which may vary considerably from state to state). However, in accordance with Executive Order 13337, a facility connecting the United States with a foreign country, including a pipeline, requires a Presidential Permit from DOS before it can proceed.\nKey elements of the Presidential Permit process, including DOS efforts to identify environmental impacts associated with the TransCanada's 2008 and 2012 permit applications are discussed below (and summarized in Table 2 ). Included in that discussion are relevant activities and requirements associated with DOS compliance with NEPA and its obligation to determine whether the proposed pipeline would serve the national interest.",
"A decision to issue or deny a Presidential Permit application is based on a determination that the proposed project would serve the \"national interest.\" This term is not defined in applicable Executive Orders. However, when discussing the 2008 permit application, DOS stated, \"Consistent with the President's broad discretion in the conduct of foreign affairs, DOS has significant discretion in the factors it examines in making a National Interest Determination. The factors examined and the approaches to their examination are not necessarily the same from project to project. \"\nMore recently, DOS stated that its national interest determination will involve \"consideration of many factors including: energy security; environmental, cultural, and economic impacts; foreign policy; and compliance with relevant federal regulations and issues.\"\nIn addition, DOS stated that some of the key factors it considered in past decisions include the following:\nenvironmental impacts of the proposed projects; impacts of the proposed projects on the diversity of supply to meet U.S. crude oil demand and energy needs; the security of transport pathways for crude oil supplies to the United States through import facilities constructed at the border relative to other modes of transport; stability of trading partners from whom the United States obtains crude oil; relationship between the United States and various foreign suppliers of crude oil and the ability of the United States to work with those countries to meet overall environmental and energy security goals; impact of proposed projects on broader foreign policy objectives, including a comprehensive strategy to address climate change; economic benefits to the United States of constructing and operating proposed projects; and relationships between proposed projects and goals to reduce reliance on fossil fuels and to increase use of alternative and renewable energy sources.\nDOS may consider additional factors to inform its national interest determination for a given project. However, pursuant to E.O. 13337, for each permit application it receives for an energy-related project, DOS must request the views of the Attorney General, Administrator of the Environmental Protection Agency (EPA), and Secretaries of Defense, the Interior, Commerce, Transportation, Energy, and Homeland Security (or the heads of those departments or agencies with relevant authority or responsibility over relevant elements of the proposed project). DOS may request the views of additional federal department and agency heads, as well as additional local, state, or tribal agencies, as it deems appropriate for a given project. DOS must also invite public comment on the proposed project.\nIf, after considering the views and assistance of various agencies and the comments from the public, DOS finds that the proposed project would serve the national interest, then a Presidential Permit must be issued. Specific to the Keystone XL pipeline, in its 2012 Presidential Permit application, TransCanada states the following:\nThe project will serve the national interest of the United States by providing a secure and reliable source of Canadian crude oil to meet the demand from refineries and markets in the United States, by providing critically important market access to developing domestic oil supplies in the Bakken formation in Montana and North Dakota, and by reducing U.S. reliance on crude oil supplies from Venezuela, Mexico, the Middle East, and Africa. The project will also provide significant economic and employment benefits to the United States, with minimal impacts on the environment.\nTo ensure that environmental impacts are considered before final agency decisions are made, NEPA requires an environmental impact statement (EIS) must be prepared for every major federal action that may have a \"significant\" impact upon the environment. With respect to the Presidential Permit applications submitted by TransCanada for Keystone XL, the State Department concluded that approval of a permit did require the preparation of an EIS. Analysis included in the EIS is intended to identify any significant impact of the proposed pipeline, including anticipated impacts of taking no action (e.g., denying the permit) and potential mitigation measures or protections necessary to reduce the potential for adverse environmental impacts. DOS uses that assessment of environmental impacts, with other factors, to determine if the project does, in fact, serve the national interest.",
"The DOS review of a Presidential Permit application explicitly requires compliance with multiple federal environmental statutes. Environmental requirements identified within the context of the NEPA process have drawn considerable attention.\nPursuant to NEPA, when considering an application for a Presidential Permit, DOS must take into account environmental impacts of a proposed facility and directly related construction. The EIS for the proposed Keystone XL Pipeline project identifies significant impacts associated with the construction, connection, operation, and maintenance of the pipeline and its associated facilities. In August 2011, DOS issued a final EIS that identified reasonably foreseeable impacts associated with approving or denying a permit for the Keystone XL pipeline, as proposed in 2008. On January 31, 2014, DOS released the final EIS prepared for the 2012 permit application.\nEIS preparation is done in two stages, resulting in a draft and final EIS. NEPA regulations require the draft EIS to be circulated for public and agency comment, followed by a final EIS that incorporates those comments. The agency responsible for preparing the EIS, in this case DOS, is designated the \"lead agency.\" In developing the EIS, DOS must rely on information provided by TransCanada. For example, TransCanada's original permit application included an Environmental Report which was intended to provide the State Department with sufficient information to understand the scope of potential environmental impacts of the project.\nIn preparing the draft EIS, the lead agency must request input from \"cooperating agencies,\" which include any agency with jurisdiction by law or with special expertise regarding any environmental impact associated with the project. The original Keystone XL permit process involved 11 federal cooperating agencies, including the Environmental Protection Agency (EPA), as well as state agencies. Table A-1 (in the Appendix ) provides a list of various agencies and their roles in the pipeline permitting process.\nIn addition to its role as a cooperating agency, EPA is also required to review and comment publicly on the EIS and rate both the adequacy of the EIS itself and the level of environmental impact of the proposed project. EPA's role in rating draft EISs for the Keystone XL pipeline project had a significant impact on the NEPA process for TransCanada's 2008 Presidential Permit application.\nOn March 1, 2013, the State Department released the draft EIS for the 2012-proposed Keystone XL Pipeline project as a supplement to the final EIS prepared for the 2008 Presidential Permit application (released in August 2011). In contrast to EISs prepared for the 2008 permit application, EISs prepared for the 2012 permit application evaluated potential impacts associated with a pipeline route from Montana to Steele City, NE, that avoids the Nebraska Sand Hills and excludes the proposed Gulf Coast Project. The EISs expand upon and update information included in the 2011 final EIS prepared for the 2008 permit application.\nEPA provided comments on the draft EIS for the 2012 permit application. It rated the draft EIS as \"EO-2\" (Environmental Objections—Inadequate Information). EPA stated that, while the agency believes the draft EIS strengthens the analysis presented to date in the NEPA process, it recommended several improvements to the analysis of the proposed project's impacts and to mitigate certain impacts. The recommendations for improvements to the EIS fell broadly into categories regarding the analyses of GHGs, pipeline safety, alternative pipeline routes, and community and environmental justice impacts.\nOn January 31, 2014, the State Department released the final EIS for the 2012 permit application. Any additional or revised analysis included in the final EIS reflects DOS's response to comments from the public, EPA, and any federal, state, tribal, or local agency. With the release of the final EIS, DOS begins the process to determine whether the project will serve the national interest.",
"Generally, the NEPA process is considered complete when (or if) the federal agency issues a final Record of Decision (ROD), formalizing the selection of a project alternative. However, for a project subject to a Presidential Permit, issuance of a final EIS marks the beginning of the DOS process to make its national interest determination. For previous Presidential Permits, a ROD and National Interest Determination (NID) were issued as the same document.\nWith the publication of the final EIS, the process to make the NID begins. As required in Executive Order 13337, DOS will seek input from selected federal agencies to determine whether issuance of a Presidential Permit for the pipeline would serve the national interest. Those agencies have 90 days to submit relevant information to DOS. DOS also provided a 30-day public comment period, ending on March 7, 2014.\nIssuance of the ROD and NID involve distinctly different, but interrelated requirements. Under NEPA, DOS must fully assess the environmental consequences of an action and potential project alternatives before making a final decision. NEPA does not prohibit a federal action that has adverse environment impacts; it requires only that a federal agency be fully aware of and consider those adverse impacts before selecting a final project alternative. That is, NEPA is intended to be part of the decision-making process, not dictate a particular outcome.\nThe NID, however, does dictate a particular outcome—approval or denial of a Presidential Permit. Issuance of a Presidential Permit is predicated on the finding that the proposed project would serve the national interest. While NEPA does not prohibit federal actions with adverse environmental impacts, a project's adverse environmental impacts may lead the DOS to determine that the project is not in the national interest. To illustrate the relationship between the NEPA process and NID process, Table 2 summarizes milestones in the Presidential Permit process for TransCanada's 2008 and 2012 permit application.",
"NEPA does not require DOS to identify or analyze environmental impacts that occur within another sovereign nation that result from actions approved by that sovereign nation. However, to further the purpose of the NEPA, Executive Order 12114 \"Environmental Effects Abroad of Major Federal Actions,\" requires federal agencies to prepare an analysis of significant impacts from a federal action abroad. This order does not, however, require federal agencies to evaluate the impacts of projects outside the United States when that project is undertaken with the involvement or participation of the foreign nation in which the project is undertaken—as is the case with Canada's participation in the Keystone XL pipeline project. While it is not subject to it, as a matter of policy, DOS uses the order as guidance and includes information in the final EIS regarding the environmental analysis conducted by the Canadian government.\nApart from any obligation under NEPA, however, DOS may take into consideration extraterritorial project impacts, as it deems necessary, as part of its national interest determination. For example, as noted above, factors DOS considered in making its determination for past pipeline projects included the proposed project's impact on broader policy objectives, including a comprehensive strategy to address climate change, and the relationships between the proposed project and U.S. goals to reduce reliance on fossil fuels and to increase use of alternative and renewable energy sources. In its January 2012 denial of TransCanada's initial Presidential Permit application, DOS did not specifically cite these issues as playing a role in its determination. However, these issues continued to generate concern among some stakeholders. It is uncertain whether or the degree to which environmental impacts abroad will affect DOS's determination that the proposal will serve the national (i.e., U.S.) interest.",
"As illustrated in Figure 7 , multiple pipelines connect Canadian oil resources with the United States. Several of these pipelines have been constructed in recent years.\nTable 3 identifies pipelines that have applied for a Presidential Permit in the past six years. The table indicates that the Keystone XL permit process timetable, which is ongoing, has substantially exceeded prior permit process timetables.\nWhen DOS issued the Presidential Permit for the first Keystone pipeline project in 2008, DOS concluded that the project \"would result in limited adverse environmental impacts\" and would serve the national interests of the United States for the following reasons:\nIt increases the diversity of available supplies among the United States' worldwide crude oil sources. Increased output from the [Western Canada Sedimentary Basin] can be utilized by a growing number of refineries in the United States that have access and means of transport for these increased supplies.\nIt shortens the transportation pathway for a portion of United States crude oil imports. Crude oil supplies in Western Canada represent the largest and closest foreign supply source to domestic refineries that do not require marine transportation.\nIt increases crude oil supplies from a source region that has been a stable and reliable trading partner of the United States and does not require exposure of crude oil in high seas transport and railway routes that may be affected by heightened security and environmental concerns.\nIt provides additional supplies of crude oil to make up for the continued decline in imports from several other major U.S. suppliers.\nSome stakeholders may point to these statements as reasons to issue a Presidential Permit to the XL proposal.",
"Environmental issues related to the Keystone XL pipeline and the oil sands crude oil it would carry cover a wide spectrum. These issues involve both local/regional concerns—some in the United States, some in Canada—and national/global concerns. This section does not provide an exhaustive list of environmental issues. Instead, this section discusses several key issues, including the following:\ngreenhouse gas emissions intensity; climate change policy; oil spill risk; and oil sands extraction impacts.",
"Greenhouse gas (GHG) emissions, primarily carbon dioxide (CO 2 ) and methane, are emitted during a variety of stages in oil sands production. Although all fossil fuel development activities—and other forms of energy to varying degrees—emit GHG emissions, some have raised concern that oil sands have a higher emissions intensity than other forms of crude oil. In this context, emissions intensity means GHG emissions per units of production (e.g., barrels).\nOther stakeholders, including the Alberta government and industry associations, argue that this conclusion is overstated, asserting that GHG emissions from oil sands crude oil are comparable to some other global crudes, some of which are produced and/or consumed in the United States. The issue has generated considerable debate, attention, and analyses from multiple parties.\nThis section (1) describes the tool—life-cycle assessments—used for comparisons; (2) discusses the oil sands life-cycle assessment results; and (3) compares oil sands emissions intensities with other crude oils.",
"A life-cycle assessment (LCA) is an analytic method used for evaluating and comparing the environmental impacts of various products. LCAs can be used to identify, quantify, and track emissions of CO 2 and other GHG emissions arising from the development of hydrocarbon resources, and to express them in a single, universal metric: carbon dioxide equivalent (CO 2 e) per unit of fuel or fuel use. The results of an LCA can be used to evaluate the GHG emissions intensity of various stages of the fuel's life cycle, as well as to compare the emissions intensity of one type of fuel or method of production to another.\nGHG emissions profiles modeled by most LCAs are based on a set of boundaries commonly referred to as \"cradle-to-grave,\" or, in the case of transportation fuels such as petroleum, \"Well-to-Wheel\" (WTW). WTW assessments for petroleum-based transportation fuels focus on the emissions associated with the entire life cycle of the fuel. This includes\nextraction; transportation; upgrading and/or refining; distribution of refined product (e.g., gasoline, diesel, jet fuel); and combustion of the fuel.\nInclusion of the final combustion phase allows for the most complete picture of crude oil's impact on GHG emissions, as this phase can contribute up to 70%-80% of WTW emissions. However, other LCAs, such as well-to-tank (WTT) assessments, may focus solely on production and/or extraction.\nBoth study types are valid, but they tell different stories. Focusing on the WTT assessment would show oil sands crudes' emissions intensities to be considerably higher than conventional oils, because the assessment is weighted more proportionally to the production phase. Focusing on the WTW assessments returns values for the emission intensity differences which are less pronounced due to the inclusion of the combustion phase.",
"A number of published and publicly available studies have attempted to assess the life-cycle GHG emissions data for Canadian oil sands crudes. The studies examined in this report include the LCAs analyzed by DOS in its 2014 FEIS. A CRS survey of these studies reveals the following:\n1. Canadian oil sands crudes are generally more GHG emission-intensive than other crudes they may displace in U.S. refineries, emitting an estimated 17% more GHGs on a life-cycle basis than the average barrel of crude oil refined in the United States; 2. compared to selected crude oil imports, Canadian oil sands crudes emit an estimated 2%-19% more GHGs on a life-cycle basis (well-to-wheels (WTW)); and 3. they emit an estimated 9%-102% more GHGs on a well-to-tank (WTT) basis, which omits the combustion phase.\nThese dramatically different ranges highlight the importance of LCA boundaries and data presentation. When a comparison is expressed on a WTT basis rather than on a WTW basis, GHG emissions from Canadian oil sands crudes show values that are significantly higher than reference crudes. This difference is due to the omission of the combustion phase, which generates the vast majority of GHG emissions and generally yields minimal variance among different crude oils.\nThe studies identify two main reasons for the range of increases in GHG emissions intensity:\noil sands are heavier and more viscous than lighter crude oil types on average, and thus require more energy- and resource-intensive activities to extract; and oil sands are compositionally deficient in hydrogen, and have a higher carbon, sulfur, and heavy metal content than lighter crude oil types on average, and thus require more processing to yield consumable fuels by U.S. standards.\nFigure 8 presents a summary of the WTW GHG emissions estimates for various Canadian oil sands crude types and production processes as reported by several studies. Variability among the estimates is the result of each study's design and input assumptions.",
"Many of the LCA studies examined by DOS compared the GHG emission intensity of Canadian oil sands crude oil to other crude oils. Figure 9 presents the results of one of the more comprehensive studies, which was prepared by the U.S. Department of Energy's National Energy Technology Laboratory (NETL) in 2009. NETL compared WTW GHG emissions of reformulated gasoline across various crude oil feedstocks. NETL concluded that WTW GHG emissions from gasoline produced from a weighted average of Canadian oil sands crudes are approximately 17% higher than that from gasoline derived from the average mix of crudes sold or distributed in the United States in 2005 ( Figure 9 ). This corresponds to an increase in WTT (i.e., \"production\") GHG emissions of 80% over the 2005 average production emissions for imported transportation fuels to the United States (18 gCO 2 e/MJ).\nSimilar to the LCAs of Canadian oil sands crudes, assessments of other global crude oil resources are bounded by specific design factors and input assumptions that can affect the results.\nParties from both sides of the issue may be able to use results from one or more of the above studies to advance their positions. For example, some stakeholders often use WTT comparisons to highlight the GHG emissions intensity of the oil sands extraction process. On the other hand, other groups often point out that the GHG emissions intensity of oil sands is comparable to other heavy crudes that are used and/or produced in the United States. Both assertions are supported by the analyses, but the above results suggest that these assertions may not tell the complete story.\nThe data underlying the assertions are generated by conducting LCAs. Although LCAs have emerged as an important analytical tool for comparing the GHG emissions of various hydrocarbon resources, LCAs retain many variables and uncertainties. The life-cycle of hydrocarbon fuels is complex and differs by fuel. LCAs rely on a large number of analytical design features that are needed to model their emissions. As noted above, certain factors that could alter the results (e.g., land use changes and combustion of co-products) may be omitted, due, in part, to their additional complexity. Therefore, comparing results across resources or production methods may be problematic.",
"How does the GHG emissions intensity of oil sands compare to other fossil fuels, particularly coal? Authoritative analyses that provide such comparisons are sparse. One study from a peer-review journal compares the GHG emissions intensity of oil sands with other fossil fuels. The study found that oil sands crude oil emissions intensity is slightly less than emissions intensity from underground coal mining, but surpasses the life-cycle emissions intensity from surface coal mining. Figure 10 illustrates this result. CRS added the line with the arrows to focus one's attention on the comparison described above.\nOne must be cautious when singling out oil sands crudes, because other heavy crude oils would also be comparable to coal's emissions intensity, as indicated in Figure 9 . Regardless, the relative comparison in Figure 10 may draw the attention of certain stakeholders. If heavier crudes, such as those derived from oil sands, were to replace crude oils in the United States with less GHG emissions intensity, the emissions intensity of the U.S. energy portfolio would—all things being equal—increase. Such a result would make GHG emissions reductions more difficult.",
"During a June 2013 speech, President Obama stated that an evaluation of the \"net effects of the pipeline's impact on our climate\" would factor into the State Department's national interest determination in order to determine if the project would \"significantly exacerbate the problem of carbon pollution.\" Therefore, the 2014 FEIS GHG emission and climate change discussion has generated considerable debate among stakeholders. The first section below discusses the DOS analysis in its 2014 FEIS of GHG emissions related to the proposed pipeline and potential climate change impacts.\nThe second section discusses oil sands development and its potential impact on the so-called \"global carbon budget.\" Many stakeholders have raised concerns that the pipeline's approval would facilitate further development of oil sands, a potential outcome, they argue, that runs counter to maintaining a specific carbon budget.",
"Among the various impacts identified in the project's environmental impact statement are those involving GHG emissions. As required under NEPA, the 2014 FEIS identifies anticipated direct and indirect impacts of the project as proposed by TransCanada as well as various project alternatives, including analysis of the \"no action alternative\" (i.e., an assessment of the impacts associated with denying TransCanada's permit application). The 2014 FEIS finds the following:\nthe GHG emissions released during the construction period for the project would be approximately 0.24 million metric tons of carbon dioxide equivalents (MMTCO 2 e) due to land use changes, electricity use, and fuels for construction vehicles (equivalent to 0.004% of U.S. annual GHG emissions); the GHG emissions released during normal operations would be approximately 1.44 MMTCO 2 e/year due to electricity use for pumping stations, fuels for maintenance and inspection vehicles, and fugitive emissions (equivalent to 0.02% of U.S. annual GHG emissions); the total, or gross, life-cycle GHG emissions (i.e., the aggregate GHG emissions released by all activities from the extraction of the resource to the refining, transportation, and end-use combustion of refined fuels) attributable to the oil sands crude transported through the proposed pipeline would be approximately 147 to 168 MMTCO 2 e per year (equivalent to 2.2%-2.6% of U.S. annual GHG emissions); the incremental, or net, life-cycle GHG emissions (i.e., GHG emissions over-and-above those from the crude oils expected to be displaced in U.S. refineries) is estimated to be 1.3 to 27.4 MMTCO 2 e per year (equivalent to 0.02%-0.4% of U.S. annual GHG emissions); but according to the State Department's market analysis, \"approval or denial of any one crude oil transport project, including the proposed project, is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios.\"\nThe 2014 FEIS presents the crude oil market analysis separately from the GHG emissions assessment. By determining that the most likely scenario is one in which oil sands production would be unaffected by expected market conditions, the Final EIS implies that the \"incremental\" life-cycle GHG emissions attributable to the oil sands crudes transported through the proposed pipeline are negligible. With this determination, the only difference in estimates between competing scenarios would be attributable to the operational GHG emissions of the alternative modes of transportation (e.g., GHG emissions from rail cars, trucks, or tankers versus the pipeline). The FEIS reports that the annual operational emissions attributed to the \"no action\" alternatives range from 4.0 to 4.4 MMTCO 2 e per year (an increase of 29%-42% over the 3.1 MMTCO 2 e per year in operational emissions for the proposed project inclusive of the existing southern leg).\nSome stakeholders have questioned many of the conclusions in the 2014 FEIS and argue that the project may have greater climate change impacts than the DOS projects. They contend that there is nothing presumed or inevitable about the rate of expansion for the Canadian oil sands. Current oil sands projects face a challenging financial environment, and up-front production costs and price differentials are comparatively higher for oil sands crudes, making new investment sensitive to changes in supply costs and global prices. Commentators have highlighted the many reported instances where current price discounts for oil sands crudes have dampened investment and project development, including questions about whether rail transport will be used if the pipeline is not built. They stress that oil market projections and transportation options are rife with uncertainty, and that the proposed Keystone XL Pipeline could have a much more significant impact on expansion if a number of key variables differ from the DOS assumptions. These variables include lower global oil prices than projected; higher rail costs than projected; higher new project costs than expected; greater competition from shale oil and tight oil plays; and future carbon pricing or procurement policies in the United States or Canada. Any decrease or delay in oil sands development could have significant impacts on the rate of growth in global GHG emissions both directly (by curtailing production) and indirectly (by allowing more time for the development of energy-efficiency strategies, the promulgation of climate policies, and the deployment of lower-carbon energy technologies).\nOn the other hand, other stakeholders agree with a market analysis similar to the one outlined in the 2014 FEIS. They argue that as long as there is strong global demand for petroleum products, resources such as the Canadian oil sands will be produced and shipped to markets using whatever route necessary. They see future investment affected only in scenarios where the global price of oil falls below supply costs for an extended period of time. They see current production affected only in scenarios that assume all pipeline transport capacity is frozen and no other transport capacity (such as rail or tanker) is available. They contend that incentives are too great for oil sands producers and the Canadian and Albertan governments to leave the oil in the ground; and that once the oil is extracted, the market would likely respond by adding adequate transport capacity over time. They contend that scaling up transport is logistically and economically feasible, based on past and present evidence in the Powder River Basin and the Bakken, as well as the oil sands region itself. Furthermore, they estimate that GHG emissions intensities for the Canadian oil sands are currently within the range of many other heavy crude oils, and that in the future Canadian oil sands emissions intensities will only decrease (due to efficiency improvement and technological advances), while those of other crudes around the world will likely increase (due to a heavier resource base). They note also that the government of Alberta has implemented policies to help mitigate and reduce the GHG emissions associated with oil sands production. These include (1) a mandatory GHG intensity reduction program for large industrial emitters, (2) a fund for clean energy investment that is capitalized by the reduction program, and (3) dedicated funding for the construction of large-scale carbon capture and sequestration (CCS) facilities.",
"Some stakeholders are concerned with the effect that Canadian oil sands development would have on what is referred to as the \"global carbon budget.\" The global carbon budget is a scientifically estimated maximum amount of net worldwide GHG that could be emitted without exceeding a proposed temperature target of 3.6°F above pre-industrial levels (a 2°C target). Some consider that such a temperature target would avoid the worst effects of greenhouse-gas induced climate change, and it has been agreed as a political consideration in international negotiations to address climate change under the United Nations Framework Convention on Climate Change. If this estimation is correct, all countries' emissions (net of any sequestration or \"sinks\") would have to stay within a given carbon budget to avoid exceeding the 2 o C temperature cap. Based on studies published during the past several years, the International Energy Agency (IEA) and the U.N. Intergovernmental Panel on Climate Change (IPCC), among others, have estimated carbon budget scenarios. The IPCC finds that in order to have at least a 66% chance of limiting global warming to, or below, 2°C above pre-industrial levels, no more than 1 trillion tons of carbon can be released into the atmosphere from the beginning of the industrial era through the end of this century. The report estimates that 531 billion tons of that budget have been emitted as of 2011 and that current global GHG emissions are on track to reach the threshold in 2040. Similarly, the IEA estimates that \"no more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2°C goal.\"\nSome have argued that the DOS Final EIS does not properly consider the potential impact of using up the shared global carbon budget, estimating that the capacity of the proposed Keystone XL project is equivalent to the net oil production growth budgeted by the IEA for the entire OECD Americas region. Others have calculated that the GHG emissions from oil sands projects currently producing or under construction would themselves reach the 2°C threshold if all the oil sands resources were consumed.\nAs with the assessment of incremental life-cycle GHG emissions, an understanding of the \"incremental carbon budget\" that can be attributable to the proposed Keystone XL pipeline would be dependent upon a market analysis that examines whether approval or denial of any one crude oil transport project, including the proposed project, would significantly impact the rate of extraction in the oil sands. For example, if extraction is likely to occur regardless of whether the pipeline is built, then the approval or denial of the pipeline may have little effect on total net carbon emissions. Conversely, if oil sands extraction is dependent on the pipeline, then incremental carbon emissions could be high.\nThere is no political agreement in the United States on a domestic carbon budget, on the appropriateness of the global 2°C target, or on the validity of any target. Some stakeholders may contend that the project is such a large increment of emissions that it should be \"the line in the sand\" for making a climate-protective decision. Conversely, others may argue that the project's share of incremental emissions is small and therefore not a significant addition of risk. Some policy makers may not be sure of where any lines should be drawn or whether the project is the \"right\" place to draw one, especially one drawn unilaterally by the United States.",
"A primary environmental concern of any oil pipeline is the risk of a spill. Based on experience with pipelines historically, the Keystone XL pipeline will likely lead to some number of oil spills over the course of its operating life, regardless of design, construction, and safety measures. However, the frequency, volume, and location of spills are unknown. Some contend that oil spill risks are understated; others contend that pipeline risks are overstated.\nPipeline integrity concerns—whether real or perceived—were magnified by a 2010 pipeline spill in Michigan and a 2013 pipeline spill in Arkansas, both of which involved oil sands crude oil. A key question for policy makers is whether the Keystone XL would impose a greater or lesser risk of an oil spill than another oil pipeline. In particular, do the properties of oil sands crude oil entail a greater risk of a pipeline spill than other crude oils? If an oil spill occurs, how would an oil sands crude oil spill differ from other crude oil spills? In addition, how do the oil spill risks from a pipeline compare to other modes of oil transportation. These issues and other spill-related topics are discussed below.",
"Some environmental groups have argued that the pipeline would pose additional oil spill risks due to the material being transported. One vehicle for these arguments was a 2011 report from several environmental groups. In that report, the authors asserted that certain characteristics of DilBit may pose greater risks of a spill than other crude oils. Other organizations, including Canadian agencies, questioned these conclusions. To examine these issues, Congress enacted P.L. 112-90 , which, among other provisions, directed the Secretary of Transportation to:\ncomplete a comprehensive review of hazardous liquid pipeline facility regulations to determine whether the regulations are sufficient to regulate pipeline facilities used for the transportation of diluted bitumen. In conducting the review, the Secretary shall conduct an analysis of whether any increase in the risk of a release exists for pipeline facilities transporting diluted bitumen.\nPursuant to that act, the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) contracted with the National Academy of Sciences' National Research Council (NRC) to conduct a study. In June 2013, the NRC issued a report (hereinafter, NRC report) that analyzed whether transportation of DilBit by pipelines poses an increased likelihood of release compared to other crude oils. The central findings of the report included the following:\nThe committee does not find any causes of pipeline failure unique to the transportation of diluted bitumen. Furthermore, the committee does not find evidence of chemical or physical properties of diluted bitumen that are outside the range of other crude oils or any other aspect of its transportation by transmission pipeline that would make diluted bitumen more likely than other crude oils to cause releases.\nThe following sections discuss these and related issues in greater detail.",
"The 2013 NRC report describes internal pipeline corrosion as an electrochemical process that typically causes damage to the bottom of the pipeline when water is present. Some have argued that DilBit pipelines may be more likely to fail than other crude oil pipelines because the bitumen mixtures they carry are \"significantly more corrosive to pipeline systems than conventional crude.\" Crude oil properties of particular interest are acidity and sulfur content, which are discussed below.\nAcid ity\nCrude oil acidity is generally measured by total acid number (TAN). As indicated in Table 1 (above) Canadian DilBit TANs range between 0.92 to 2.49. This range is generally higher than lighter crude oils, but comparable with other heavy oils.\nIt is well-established that the presence of naphthenic acids in high TAN crudes can considerably increase corrosion potential in the parts of refinery distillation units operating at high temperature—above 570\"F. However, pipeline transportation of DilBit is expected to occur at much lower temperatures: the operating temperature for Keystone XL is expected to be between 42\"F and 135\"F. Moreover, DilBit pipeline corrosion rates may not have a direct correlation with TAN values. There is evidence of more than 1,000 napthenic acid varieties with varying corrosivity, which may comprise a single TAN number. TAN values depend upon the specific content and types of compounds in specific crudes—which may vary significantly from crude to crude. Some testing of pipeline steels has shown that Canadian oil sands crudes exhibit \"very low corrosion rates\" despite high TAN numbers, in part because they contain other \"inhibitor\" compounds that reduce the corrosivity of the bitumen. Therefore, it is uncertain whether refiners' experiences with corrosion from high TAN crudes can be directly extended to DilBit transmission pipelines.\nSulfur Content\nSulfur content may be another indicator of crude oil corrosivity. Crude oils sent to U.S. refineries typically contain 0.5% to 2.5% sulfur. As indicated in Table 1 , DilBits have sulfur contents substantially above this range—between 3% and 5%—as do other heavy crude oils. In some sour crudes (> 1% sulfur content), sulfur content may indicate hydrogen sulfide (H 2 S), which acts as a corrosive acid when dissolved in water.\nHowever, the NRC report states that most of the sulfur in bitumen is contained in stable compounds, instead of the corrosive H 2 S. Figure 11 provides a comparison of H 2 S content in selected DilBits with other crude oils. The figure indicates that (based on the samples tested) the DilBit samples contained relatively lower concentrations of H 2 S than the other tested crude oils.",
"In the context of pipeline transport, erosion is a mechanical process in which solid particles in the crude oil damage pipeline walls. Some have raised this process as a particular concern for DilBit pipelines.\nThe 2013 NRC report compared the sediment contents in various DilBit blends with light, medium, and heavy Canadian crude oils. Figure 12 illustrates the results of this comparison. As the figure indicates, the sediment contents in DilBit blends are similar to those in other Canadian crude oils.\nMoreover, crude oils with high solids content are also generally filtered to meet the quality specifications set by pipelines and refiners. The 2013 NRC report points out that Canadian pipeline regulations require that sediment and water content in crude oil not exceed 0.5% by volume, while U.S. regulations allow ratios up to 1% by volume. Crude oil pipeline imports from Canada would be meeting the more stringent standards of Canada during their transit within the United States.",
"According to the NRC report, a liquid that has a relatively high fraction of hydrocarbons with high vapor pressure can theoretically increase the potential for a process known as column separation—the transformation of the liquid into a vapor phase. Such an event can create a pressure surge, which can increase the potential for pipeline damage, if a pipeline is already weakened by corrosion, cracking, or deformities from earlier mechanical damage.\nDuring the 2011 EIS process, some contended that the \"instability of DilBit can render pipelines particularly susceptible to ruptures caused by pressure spikes.\" However, the NRC report stated that DilBit does not contain a high percentage of light (high vapor pressure) hydrocarbons and thus the potential for column separation \"should be indistinguishable from that of other crude oils.\"",
"Some parties have expressed concern about the Keystone XL pipeline operating parameters, particularly the operating temperature and pipeline pressure. In general, parties contended that the Keystone XL pipeline would be operating at temperatures and pressures well above conventional crude oil pipelines.\nIn the 2014 FEIS, DOS states that the operating temperature is \"expected to be approximately between 42°F and 135°F.\" However, one of the parameters unique to Keystone XL (\"Special Condition 15,\" discussed below) appears to allow for temperatures higher than 150°F, subject to specific testing results and PHMSA approval. Although the FEIS does not discuss whether or not operating temperatures will approach or breach 150°F during the pipeline's operation, Special Condition 15 appears to allow that possibility.\nAs to the operating pressure, DOS states the following: \"the design of the proposed Project pipeline system is based on a maximum 1,308 pounds per square inch gauge (psig) discharge pressure at each pump station.... There would be situations where, due to elevation changes, the hydraulic head created would result in a maximum operating pressure of up to and including 1,600 psig.\"\nHow do the Keystone XL operating parameters compare to other DilBit pipelines? The NRC collected operating parameter data from five Canadian pipeline operators transporting DilBit. The highest reported operating temperature was 122°F and the highest reported operating pressure was 1,440 psig. Thus, both the \"expected\" maximum temperature (135°F) and the potential maximum operating pressure (1,600 psig) of the Keystone XL pipeline would exceed operating parameter data presented in the NRC report. It is uncertain whether or not these potential temperature and pressure differences are a cause for concern.\nDOS states that the proposed pipeline would satisfy the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) regulations (49 CFR Part 195) that apply to hazardous liquid pipelines. In addition, Keystone agreed to implement 57 additional measures (\"Special Conditions\") developed by PHMSA. In consultation with PHMSA, DOS determined that incorporation of those conditions \"would result in a degree of safety over any other typically constructed domestic oil pipeline system under current code and a degree of safety along the entire length of the proposed pipeline system, similar to that required in [High Consequence Areas (HCAs)] as defined in 49 Code of Federal Regulations (CFR) 195.450.\"\nDOS compares the Special Conditions with existing regulatory requirements in Appendix B to the 2014 FEIS. The degree of safety provided by the additional 57 measures has been a subject of debate. The primary author of the 2011 environmental groups' report argued that only 12 of these conditions actually differ in some way from minimum requirements.",
"Oil spill frequency and volume estimates for the Keystone XL project have been a subject of debate during the permit process. Comparing various estimates is difficult, because the estimates may or may not\n1. include different years of underlying data; 2. apply to different pipeline segments (e.g., the 875-mile northern U.S. portion or the entire 1,938-mile pipeline from Canada to the Gulf Coast); 3. apply to different components of the pipeline (e.g., the mainline or the mainline and supporting equipment, such as tanks and valves); and 4. include additional assumptions or adjustments.\nIn the 2014 FEIS, DOS used PHMSA data to analyze crude oil pipeline spill incidents that occurred between 2002 and 2012. DOS stated that \"Although the results were not a direct indicator of the nature of possible incidents that could occur in association with the proposed [Keystone XL pipeline], they could be used to provide insight into what could potentially occur with respect to spill volume, incident cause, and incident frequency.\"\nBased on the PHMSA data, DOS calculated spill frequency rates and average volumes for crude oil. The PHMSA records do not differentiate between types of crude oil: heavy, light, etc. Table 4 provides the spill frequency and volume estimates for individual components of the pipeline system: mainline pipeline, tanks, mainline valves, and other components, such as pump station equipment. For example, the table indicates that mainline pipelines and tanks have a lower frequency of spills than valves and other components, but a higher average spill volume.\nUsing the frequency rates and average volumes listed in Table 4 , DOS estimated the annual spill frequency (0.46 releases per year) and volume (518 barrels per year) that would result from the entire Keystone XL pipeline project—1,938 miles from its origin in Canada to the Gulf Coast. This estimate only includes the spill frequency and volume estimate for mainline pipelines greater than 16\" in diameter. By comparison, Table 4 provides the estimated number of spills and spill volume that would occur along the 875-mile northern segment of the Keystone XL pipeline (the segment under consideration for a Presidential permit). The table lists the individual component estimates as well as an estimate for the entire system. For instance, based on PHMSA data , a spill from the KXL mainline would occur 0.22 times per year (or once about every five years); a spill from any of the components, including the mainline, would occur 1.88 times per year.\nSome would argue that using the PHMSA data as a guidepost for Keystone XL incidents would overestimate spill frequency, because the data include older pipelines that may have been built to less stringent standards. Moreover, pipeline proponents contend the Special Condition would provide additional protection from incidents. In the 2014 FEIS, DOS states that \"the application of the Special Conditions and various studies that indicate more modern pipelines are less likely to leak, it is reasonable to expect a sizable reduction in spills when compared to the historic spill record.\"\nOn the other hand, the spill frequency for the existing Keystone pipeline, which began transporting approximately 590,000 bpd of oil sands crudes in 2010, has exceeded the historical spill frequency estimate. Based on DOS analysis in the 2014 FEIS, Keystone operators reported 12 incidents during the first year of operation. Although the vast majority of the incidents were minor, one incident resulted in a spill of approximately 400 barrels (16,800 gallons). According to DOS, \"11 of the 12 reported incidents resulted in a small spill, eight of which were less than 1 bbl.... all reported first-year incidents for the existing Keystone pipeline system involved discrete elements of the pipeline system (i.e., pumping stations, mainline valves); none involved mainline pipe or tanks.\"",
"Some stakeholders have argued that a comparison of oil spill data from Alberta and the United States indicates that internal corrosion has led to substantially more oil spills in the Alberta pipeline system than the U.S. system. They reason that this difference is likely related to high proportion of oil sands crudes, which have been in the Alberta system since the 1980s. In contrast, the first dedicated oil sands crudes pipeline in the United States, the Alberta Clipper, began operating in 2010.\nBoth the NRC report and DOS have pointed out that existing pipeline spill data are limited in their ability to analyze potential risks associated with the transportation of oil sands crude oils compared to other crude oils. The NRC report stated the following:\nThe information contained in the U.S. and Canadian incident records is insufficient to draw definitive conclusions. One reason is that the causal categories in the databases lack the specificity needed to assess the particular ways in which transporting diluted bitumen can affect the susceptibility of pipelines to failure. Another reason is that incident records do not contain information on the types of crude oil transported and the properties of past shipments in the affected pipeline. Because many pipeline releases involve cumulative and time-dependent damage, there is no practical way to trace the transportation history of a damaged pipeline to assess the role played by each type of crude oil and its properties in transport.\nDOS pointed out that a comparison of U.S. and Alberta oil spill data is problematic for various reasons. In particular, the scopes of the data collected in each nation are different. Canadian data includes smaller spills and spills from certain pipelines not covered by PHMSA regulations. To address these discrepancies in data collection, PHMSA prepared a comparison of pipeline incidents of similar scopes between the two databases for the 2011 FEIS. The comparison indicated that internal corrosion failures (per 1,000 miles of pipeline) were approximately 30% higher in the U.S. system (0.42 vs. 0.32). Regardless, such comparisons are challenging, if not impossible, considering the range of potential factors—pipeline age, enforcement, etc.—that may affect the underlying data. For this reason, the above comparison might be described as preliminary. DOS did not include this table in its 2014 FEIS, but states that \"incident statistics from Alberta show that incident frequencies and corrosion-based incidents are similar for pipelines in the United States and Alberta.\"",
"If an oil spill occurs, its impacts would depend on multiple factors, including the type of oil spilled, the volume of oil spilled, and the location of the spill. Although location is generally considered the most important factor, EPA stated (in comments during the EIS process) that spills of oil sands crude (e.g., DilBit) may result in different impacts than spills of other crude oils.\nThe 2013 NRC report did not examine this particular issue and CRS is not aware of an authoritative study that has assessed this topic. Although parallels may be drawn between the possible behavior of conventional crudes and DilBit, studies are scarce regarding spills of heavy crudes with the specific composition of Canadian heavy crudes.",
"The behavior of crude oil spills and the fate of crude oil in the subsurface have been studied extensively around the world for a wide range of conventional crudes and other petrochemicals in both experimental settings and actual spills (e.g., Bemidji, MN, in 1979). These include studies of specific chemical components that may be present in DilBit (e.g., benzene). Based on extensive experience with other crudes and DilBit constituents, analysts may claim considerable confidence in models of DilBit behavior around groundwater. For example, the Canadian Energy Resources Conservation Board has stated that \"DilBit should behave in much the same manner as other crude oils of similar characteristics.\"\nAll spilled oil begins to \"weather\" or separate into different components over time. For a land spill, the heavier and more viscous components (i.e., the asphaltenes) would likely remain trapped in soil pores above the water table. It is also likely that the lighter constituents would partly evaporate and not be transported down through the soil with the heavier components.\nHowever, if an oil spill reached the water table, some of the more soluble portions would likely dissolve into the groundwater and be transported in the direction of regional groundwater flow. The ultimate extent, shape, and composition of a groundwater contaminant plume resulting from a DilBit spill would depend on the specific characteristics of the soil, aquifer, and the amount and duration of the accidental release.",
"The heavier components of a DilBit spill would be difficult to remove from the soil during cleanup operations, and may require wholesale soil removal instead of other remediation techniques. The 2014 FEIS states\nDilBit intermixed with sediment and trapped in the river bed and shoreline results in a persistent source of oil and has the potential to present additional response and recovery challenges.\nThese challenges may come at a higher cost. In an oil spill model prepared for EPA, the model estimates that spills of heavy oil will cost nearly twice as much to clean up as comparable spills of conventional crude oil.\nRecent pipeline oil spills have generated interest among policy makers and stakeholders. For example, a 2010 Enbridge pipeline spill released approximately 850,000 gallons of oil sands crude oil into Talmadge Creek, a waterway that flows into the Kalamazoo River (Michigan). The spill demonstrates particular challenges associated with heavier crude oil spills, like oil sands crude oils. As of the date of this report, response activities continue, because, according to EPA, the oils sands crude \"will not appreciably biodegrade.\" The oil sands crude oil is submerged at the river bottom, mixed with sediment, and EPA has ordered Enbridge to dredge the river to remove the oiled sediment. As a result of this order, Enbridge estimated in December 2013 its response costs would be approximately $1.122 billion.",
"Crude oils may contain multiple compounds that present toxicity concerns. DOS stated that \"based on the combination of toxicity, solubility, and bioavailability, benzene was determined to dominate toxicity associated with potential crude oil spills.\" Benzene and other BTEX compounds (benzene, toluene, ethyl benzene, and xylene) are generally in greater proportions in the lighter crude oils and particularly in refined products like gasoline. In its 2011 FEIS, DOS compared the BTEX content of crude oil derived from oil sands (DilBit and DilSynBit) with conventional crude oils from Canada. The BTEX content of oil sands crudes ranged from 5,800 parts per million (ppm) to 9,100 ppm. The BTEX contents of conventional crude oils ranged from 5,800 ppm to 29,100 ppm.\nOther toxic compounds of concern in crude oils are polycyclic aromatic hydrocarbons (PAHs). Generally, PAHs are more toxic than BTEX and evaporate at a slower rate, but they are less soluble in water. The National Research Council's Oil in the Sea report stated that with weathering/evaporation and the resulting loss of BTEX, PAHs become more important contributors to the remaining oil's toxicity.\nUnlike BTEX, the 2011 and 2014 FEIS documents do not include a comparison of PAH concentrations across different crude oils. DOS states that PAH concentrations of crude oils that would be transported in the Keystone XL pipeline are unknown, because this information is proprietary. Some commenters, including EPA, took issue with this during the 2011 EIS review process.\nHeavy metals may also be a concern. A 2011 NRDC report states that DilBit contains quantities of heavy metals, particularly vanadium and nickel, that are \"significantly larger\" than conventional crude oil. Assuming conventional oil means lighter crudes, this statement is largely correct. However, the heavy metal concentrations in DilBit are similar to some other heavy crude oils, such as Mexican and Venezuela crudes that are processed in Gulf Coast refineries. Most, if not all, of this crude oil arrives in the United States via vessel.",
"Although pipelines and oil tankers transport the vast majority of oil within the United States, other modes of transportation have increased in recent years ( Figure 13 ). As Figure 13 illustrates, the volume of crude oil carried by rail increased by 423% between 2011 and 2012; the volume moving by barge, on inland waterways as well as along intracoastal routes, increased by 53%; and the volume of crude oil shipped by truck rose 38% between 2011 and 2012. Some portion of these recent increases is likely related to the status of proposed Keystone XL pipeline.\nEach mode of oil transportation involves some risk, and each has historically resulted in oil spills. Figure 14 illustrates the relative risk of oil spills by mode of transportation, comparing spill volume to the volume/distance transported. Over the period 1996-2007, railroads consistently spilled less crude oil per ton-mile than trucks or pipelines; barges and domestic tanker ships have much lower spillage rates than trains. However, the data in the figure precede the recent dramatic increase in oil by rail transportation.\nIn addition, in its 2014 FEIS the State Department used PHMSA and Coast Guard data to compare oil spill frequency and volume by mode of transportation. Between 2002 and 2009, DOS found that\n1. pipeline transport has the highest number of barrels released per ton-mile compared to rail and marine transport; and 2. rail transport has the highest number of reported releases per ton-mile compared to pipeline and marine transport.",
"Although local/regional impacts from Canadian oil sands development may not directly affect public health or the environment in the United States, stakeholders often highlight the environmental impacts that pertain to the region in which the oil sands resources are extracted. DOS points out that, pursuant to NEPA or applicable Executive Orders, DOS NEPA analysis need not include the environment or activities outside of the United States (see \" Consideration of Environmental Impacts Outside of the United States \"). However, DOS included—\"as a matter of policy\"—a summary of information regarding environmental analyses and regulations related to the Canadian portion of the proposed Keystone XL Project and Canadian oil sands production. This inclusion reflects the level of interest these issues have received in recent years.\nThe scope and degree of the extraction-related impacts is a subject of some debate. A comprehensive assessment of extraction-related concerns is beyond the scope of this report. The following sections include discussions of two selected topics: land disturbance and water resource issues.",
"Both oil sands mining and in situ operations can disturb the land to varying degrees. For example, land disturbances from mining operations include\nclearance and excavation of a relatively large surface area, storage of removed overburden (e.g., vegetation soil), and construction of tailings ponds to contain extraction process wastestreams.\nIn contrast, many stakeholders associate in situ operations with \"minimal land disturbances.\" For example, the 2014 FEIS states that \"in situ recovery is less disturbing to the land surface than surface mining and does not require tailings ponds.\" However, some research suggests the comparison between the two processes is more complicated. A 2009 study described the different impacts from the two processes in the following manner:\nSurface mining and in situ recovery affect the landscape in different ways. Land use of surface mining is comprised largely of polygonal features (mine sites, overburden storage, tailing ponds and end pit lakes); whereas in situ development is mostly defined by linear features that extend across the lease area (networks of seismic lines, access roads, pipelines and well sites).\nAlthough the actual extraction site at in situ operations impacts substantially less land than at mining sites, some contend that in situ processes may ultimately create a larger disturbance, because the dispersed nature of in situ operations increases landscape fragmentation. In addition, one study finds that in situ operations disturb more land (per unit of oil) than mining, when natural gas requirements are considered. As noted above, in situ operations require energy (i.e., natural gas) to generate the steam needed to extract the underlying resource. According to the study, the land disturbances from the natural gas development contribute a major portion of in situ's total land disturbance.\nHow does land disturbance from oil sands operations compare to conventional oil development? Almost all forms of energy production disturb the land to some degree. A 2010 study compared land disturbances from Alberta oil sands operations with conventional oil development in Alberta and California. Figure 15 illustrates the results. The figure indicates that in situ oil sands operations have a substantially higher energy yield—energy produced per disturbed land (measured in petajoules per hectare)—than other sources. However, when natural gas use is included in the estimate, in situ operations' energy yield decreases substantially, making its energy yield equivalent to conventional oil development from California, but still greater than oil sands mining operations in Canada. The Alberta Chamber of Resources estimates that in situ production requires approximately four times the quantity of natural gas used for surface mining on a production volume basis. Therefore, the factor of natural gas plays an important role in energy yield estimates.\nAnother factor in land disturbance assessments is the type of land disturbed. The Alberta oil sands are located within Canada's boreal forest, a large ecosystem that supports a wide range of biodiversity and provides key ecological services. For example, the boreal forest has been described as the \"world's largest and most important carbon storehouse.\" The 2010 study that provided data for Figure 15 also estimated the carbon storage in the lands overlying the various resources (e.g., California oil, Alberta oil sands). The study estimated that the soil carbon ratio (tons of carbon per hectare) and biomass carbon ratio was approximately five and four times greater, respectively, in oil sands areas than in California oil sites.\nA further consideration is the fate of the land after the resources are extracted. In Alberta, an environmental law requires an oil sands development company to demonstrate that it has reclaimed the land to an \"equivalent capability.\" Subsequent regulations have expanded on the meaning of this phrase: \"The ability of the land to support various land uses after conservation and reclamation is similar to the ability that existed prior to an activity being conducted on the land, but that the individual land uses will not necessarily be identical.\"\nThe Alberta reclamation requirement is not unique. The United States has similar requirements that may apply in certain instances. For example, the Bureau of Land Management (BLM) has reclamation regulations that apply to oil and gas operations on federal lands. BLM guidance states:\nThe long-term objective of final reclamation is to set the course for eventual ecosystem restoration, including the restoration of the natural vegetation community, hydrology, and wildlife habitats. In most cases, this means returning the land to a condition approximating or equal to that which existed prior to the disturbance. The operator is generally not responsible for achieving full ecological restoration of the site.\nA comparison between the U.S. and Canadian reclamation requirements and their applications is beyond the scope of this report. However, data from Alberta indicate that reclamation has not kept pace with land disturbance. Data from 2012 indicate that approximately 7% of the total disturbed area has been permanently reclaimed. Of the permanently reclaimed land, 2% has been certified per Alberta requirements (equating with 0.14% of the total disturbed area). The 2010 Royal Society of Canada report stated, \"Because of the very small amount of land certified to date relative to the large area that has been disturbed in the oil sands region, there is major skepticism as to whether reclamation to an equivalent land capability can be achieved in a reasonable time frame.\"\nSubsequent to that report, a 2012 study from the Proceedings of the National Academy of Sciences assessed pre- and post-reclamation data at several oil sands mining sites. The study found that lost wetlands were not being replaced, resulting in a \"dramatic loss of carbon storage and sequestration potential.\"",
"While the water resource impacts from oil sands development are generally considered a Canadian domestic issue, other stakeholders view the environmental consequences of oil sands development as part of the global discussion about the long-term implications of unconventional oil and gas. At issue is whether oil sands development may harm the water resources and aquatic ecosystems and species of the northern Alberta and the northern territories.\nBoth oil sands in situ and surface mining techniques have water resource impacts. In situ processes use groundwater that is brought to the surface and heated, then reinjected for the underground steam-based separation of the oil from the sand. Freshwater use in in situ extraction has declined due to increased recycling and use of treated brackish water. Surface mining operations withdraw water from the north-flowing Athabasca River. This water is heated for use in a complex process that separates the oil from the sands. Process waste streams are collected in tailings ponds or lakes, which can cover a substantial area. Following extraction through in situ or surface mining, the bitumen recovered must be treated, typically upgraded to synthetic crude oil. This treatment requires both cooling water and process water.\nMining also results in significant land disturbance. As discussed earlier, remediation of the disturbed land is addressed in Alberta statute and regulations. The extent and effectiveness of remediation in terms of long-term restoration and protection of water resources is a subject of on-going debate. Additionally, ongoing mine site maintenance during extraction operations requires capturing and disposing of surface water and groundwater entering the site. The potential wetlands and associated migratory bird impacts from changes in surface water and groundwater regimes that result both from direct water use in-situ and mining operations and indirectly through long-term changes to the landscape also are concerns.\nOn a direct water use per unit of energy basis, the oil sands production and upgrading processes appear to be more water intense than most conventional oil production and oil and gas from shale and tight formations, below the water intensity of U.S. oil shale, and considerably below the (rainfall or irrigation) water intensity of biofuels from corn, sugarcane, soybean, and switchgrass feedstocks. The freshwater intensity of in situ oil sands production is generally lower than oil sands mining; however, while more water efficient, in situ production leaves in place (i.e., unrecovered) a considerable portion of the petroleum resources. The current direct water efficiency of oil sands production may improve as new technologies are employed.\nMuch of the concern with oil sands development (and other types of unconventional oil and gas development) is the concentration of water use and impacts within a limited geographic area. One concern is that water use for oil sands mining reduces river flows, particularly during low flow periods. To manage these concerns, oil sands operators are required to obtain water withdrawal licenses, and a water management framework was developed to protect in-stream flows in the Athabasca River. The framework identifies how water withdrawals are to be reduced during low flow periods. A report by an expert panel of the Royal Society of Canada concluded that \"water use at current levels does not threaten viability of the Athabasca River system if the Water Management Framework … is fully implemented and enforced.\" Another concern is groundwater depletion. The expert panel report found that \"there needs to be greater attention directed to regional groundwater resources\" which currently are not well characterized, and that there was no evidence of a framework to limit groundwater extraction.\nIn addition, the issue of water quality has generated considerable debate. Results from the Regional Aquatic Monitoring Program (RAMP) are often highlighted as evidence of the minimal impacts to water resources due to oil sands development. RAMP describes itself as \"an industry-funded, multi-stakeholder environmental monitoring program\" that began in 1997. A 2011 RAMP Technical Report stated that \"differences in water quality measured in fall 2011 between all test and one of the upper baseline stations in the Athabasca River were classified as Negligible-Low compared to the regional baseline conditions.\"\nHowever, results from several peer-reviewed studies contradict the RAMP conclusions. For example, a 2012 study found that the oil sands operations \"substantially increase[] the loadings of toxic PPE [priority pollutant elements] to the Athabasca River and its tributaries.\" Moreover, seven PPE—cadmium, copper, lead, mercury, nickel, silver, and zinc—exceeded Canada or Alberta guidelines for aquatic life protection. In addition, another 2012 study concluded that the \"lake sediments in the Athabasca oil sands region register a clear PAH legacy with the pace and scale of industrial development of the region's tremendous bitumen [oil sands] deposits.\"\nSome of these contradictory findings may be addressed by the Joint Implementation Plan for Oil Sands Monitoring, established by the Canadian and Albertan governments in October 2012. According to the plan, it \"builds on a foundation of monitoring that is already in place, and is intended to enhance existing monitoring activities.\" Among other objectives, the plan seeks to \"improve analysis of existing monitoring data to develop a better understanding of historical baselines and changes.\"",
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"question": [
"Why have many stakeholders voiced concern about the potential climate change consequences?",
"Why would an evaluation of the net effects factor in the DOS's national interest determination?",
"How has this affected the FEIS?",
"What has been concluded by the FEIS?",
"What has the FEIS said in terms of the crude oil transport project?",
"What have groups argued?",
"What did the National Academy of Sciences National Research Council state in its examination?",
"What does the EPA state?",
"What do the other environmental concerns pertain to?",
"What are some potential impacts on this region?",
"What are Canadian oil sands developments unlikely to do?",
"How does this change the attitude of local Canadian impacts?"
],
"summary": [
"Due to oil sands' increased emissions intensity, many stakeholders have voiced concern about potential climate change consequences associated with oil sands development.",
"In June 2013, President Obama stated that an evaluation of the \"net effects of the pipeline's impact on our climate\" would factor into the Department of State's (DOS's) national interest determination in order to determine if the project would \"significantly exacerbate the problem of carbon pollution.\"",
"Thus, DOS's 2014 Final Environmental Impact Statement (FEIS) has received considerable attention.",
"Among other conclusions, the FEIS estimated that the incremental (i.e., net) life-cycle GHG emissions associated with the pipeline would be 1.3 million to 27.4 million metric tons of carbon dioxide per year (0.02%-0.4% of U.S. annual GHG emissions).",
"In addition, the FEIS stated that the \"approval or denial of any one crude oil transport project, including the proposed project, is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios.\"",
"Some groups have argued that both the pipeline's operating parameters and the material being transported through it impose an increased spill risk.",
"The National Academy of Sciences National Research Council examined this issue in a 2013 report, stating that it did not \"find any causes of pipeline failure unique to the transportation of diluted bitumen [oil sands crude].\"",
"However, according to the Environmental Protection Agency (EPA), spills of oil sands crude may result in different impacts than spills of other crude oils.",
"Other environmental concerns pertain to the region in which the oil sands resources are extracted.",
"Potential impacts include, among others, wildlife and ecosystem disturbance and water resource issues.",
"In general, these local/regional impacts from Canadian oil sands development are unlikely to directly affect public health or the environment in the United States.",
"Within the context of a Presidential Permit, the mechanism to consider local Canadian impacts is unclear."
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GAO_GAO-12-429
|
{
"title": [
"Background",
"IAE Has Evolved over Two Stages",
"Initial Strategy Was to Assemble a Portfolio of Standardized Systems",
"Since 2008, IAE Has Sought to Consolidate Its Portfolio",
"Progress Made in Developing SAM, but Cost Increases and Schedule Delays Could Jeopardize Program Completion",
"GSA Has Made Progress in Developing SAM",
"IAE Has Experienced Cost Growth",
"Cost Growth and Resource Constraints Prompted GSA to Delay the SAM Schedule and Defer Costs",
"Consequences of Higher SAM Development Costs Threaten IAE Going Forward",
"Increased IAE Costs Challenge Program",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Scope and Methodology",
"Appendix II: Integrated Acquisition Environment (IAE) Data Systems",
"Data system",
"Description",
"Vendor information",
"Data system",
"Description",
"Vendor information",
"Data system",
"Description",
"Vendor information",
"Data system",
"Description",
"Vendor information",
"Data system",
"Description",
"Vendor information",
"Data system",
"Description",
"Vendor information",
"Data system",
"Description",
"Vendor information",
"Data system",
"Description",
"Vendor information",
"Appendix III: Comments from the General Services Administration",
"Appendix IV: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"The federal acquisition process involves a number of steps that are common to all government agencies such as solicitation, evaluation, and contract award. Agencies are increasingly leveraging electronic data systems to streamline acquisitions and reduce costs. According to GSA officials, as these systems gained greater use within the government, some agencies developed their own unique data systems to support acquisition activities. These systems served specific roles in the acquisition process, such as contractor registration or performance tracking. There was little coordination in data systems across the government. Agencies created their own systems based on different standards which meant that information could not be readily shared. These stove-piped systems resulted in higher costs to the government; created inefficiencies; and made it confusing for government workers, vendors, and the public to use the systems.\nIAE was initiated to integrate, standardize, and streamline some of the many different acquisition data systems used throughout the government. The program was charged with identifying how information systems could be used to integrate the acquisition functions common to different agencies and to implement governmentwide data systems. Common acquisition functions include, for example, posting contract opportunities, registering contractors who are interested in doing business with the government, assessing contractor past performance, and tracking and reporting contract actions. Bringing disparate data systems together and providing a shared services resource to enter and retrieve acquisition information should help to eliminate unnecessary and repetitive steps in the acquisition process and reduce information technology costs.\nWhen IAE began, OMB directed GSA to execute and manage the initiative. GSA officials said that they worked with other government agencies that would use IAE’s systems and established a collaborative governance structure that would allow agency users to set the initiative’s priorities and budget. The Acquisition Committee for E-Gov (ACE), a subcommittee of the Chief Acquisition Officer’s Council, provides overall governance for IAE. The ACE has several responsibilities, including providing strategic direction for IAE, approving IAE’s annual budget and work plan, and ensuring IAE investments align with E-Gov business goals. The ACE is currently co-chaired by representatives from the Departments of Defense and Interior.",
"IAE has developed in two stages using different acquisition strategies. Initially, GSA focused on establishing a portfolio of standardized governmentwide systems through an acquisition strategy known as “adopt, adapt, acquire.” Using this strategy, GSA adopted or adapted existing agency-specific systems for governmentwide use. If there was no viable system that could be adapted or adopted to meet an identified need, GSA acquired a new system. GSA also established an IAE funding strategy that consisted of contributions from agencies that use IAE systems. In 2008, to further eliminate redundancy, reduce costs, and improve efficiency, GSA began consolidating its portfolio of systems into one integrated system called the System for Award Management (SAM). Unlike the existing systems (sometimes called “legacy” systems) in which a single contractor designed, developed, and operated each of them, IAE relies on multiple vendors to perform these same tasks for SAM. The intent of this approach is to enhance competition and innovation and for the government to own the software associated with the system. SAM will be developed in phases. In each phase, capabilities from selected IAE systems will be added to SAM and those legacy systems will then be shut down.",
"During the first IAE stage, GSA worked to create a portfolio of governmentwide systems through an acquisition strategy known as “adopt, adapt, acquire.” GSA and OMB officials surveyed various government stakeholders to develop an inventory of existing data systems and to identify additional data-related needs of the government. Using this information, the ACE directed GSA to adopt or adapt existing agency-specific systems for governmentwide use. For example, the Central Contractor Registration (CCR) database, where contractors register certain business information prior to being considered for contract awards, was a Department of Defense (DOD) system that IAE adopted for governmentwide use in 2003. GSA officials believed DOD’s system met the government’s requirements, and adopting it was a better alternative than developing a new system. The Federal Procurement Data System – Next Generation (FPDS-NG) is an example of a system that IAE adapted. FPDS, the FPDS-NG predecessor, was initially implemented in 1978 and in 2003 GSA hired a vendor to modernize the system.\nWhen no existing systems could be adopted or adapted for governmentwide use, IAE’s strategy was to acquire new systems from software developers. For example, GSA contracted with IBM in 2004 to develop and operate the Online Representations and Certifications Application (ORCA) database, for firms to submit certifications on matters such as firm size and ownership status. Table 1 identifies the portfolio of systems that were included in the first stage of IAE up through 2008 and whether each system was adopted, adapted, or acquired.\nShortly after IAE was established, GSA and the ACE created a funding structure in which agencies contribute to the program based on their level of contracting activity. GSA negotiated memorandums of understanding (MOU) with the 24 departments and agencies covered by the Chief Financial Officers Act to collect funding contributions, which pay for the development, operations, and maintenance of IAE’s portfolio. When developing its annual budget, GSA estimates what the cost of operating IAE will be and then determines each agency’s contribution based on its contracting activity (number and value of contracts) the prior year. For example, DOD is the largest agency in terms of the number and value of contracts awarded and therefore contributes the most, 65 percent of the total. The Federal Funding Accountability and Transparency Act of 2006 (Transparency Act) created new reporting requirements for federal loan and grant recipients that increased the use of certain IAE systems. For example, to comply with the Transparency Act, OMB required grant recipients to register in CCR. In 2008, GSA negotiated separate MOUs with 22 departments and agencies for additional contributions to fund the higher costs associated with providing greater support to grant and loan recipients. Overall, since 2002, about $396 million has been allocated to IAE, as shown in table 2.\nAnother key component that supports the IAE systems is GSA’s contract with Dun & Bradstreet for the use of the Data Universal Numbering System (DUNS) and other services to verify and standardize information on contract, grant, and loan recipients. GSA uses the DUNS numbers as unique identifiers for organizing and tracking these entities, including making linkages between parent and subsidiary businesses, within and across the IAE systems. The federal government has used DUNS numbers since 1978, and the Federal Acquisition Regulation (FAR) has required all prospective government contractors to obtain DUNS numbers since 1998. Since 2003, OMB has also required prospective grant recipients to obtain DUNS numbers. IAE’s contract with Dun & Bradstreet also supports the use of DUNS numbers for other government- wide information systems, such as USASpending.gov. GSA’s current contract with Dun & Bradstreet was awarded in 2010 and is valued at over $135 million for up to 8 years. The Dun & Bradstreet contract is the largest IAE contract.",
"In December 2008, the ACE approved a proposal to aggregate the IAE data systems into a new System for Award Management (SAM). GSA officials said that while the existing IAE systems had provided benefits, additional efficiencies could be achieved. For example, the systems contained overlapping data, had separate sign-on procedures, and each system had different hardware, software, and helpdesks. Consolidating the IAE portfolio was intended to reduce costs by eliminating redundancy, streamlining acquisition processes, and consolidating infrastructure.\nGSA is relying on an acquisition strategy to develop SAM that is different from what it has used in the past when GSA turned to a single contractor to develop, operate, and support each IAE system. SAM will be split into multiple components with separate contractors responsible for (1) system design and operations, (2) software development, (3) hosting services, and (4) help desk support (see table 3). The new approach to developing SAM is intended to address lessons learned from past IAE systems. Unlike the legacy systems, the government will own the SAM software as open-source code, the system architecture, and all supporting hardware. IAE officials believe that an open-source approach to software and development will result in lower costs to the government because IAE will be able to avoid sole-source modifications to the system and competitively award future enhancement contracts. GSA officials said that in the past, system enhancements were expensive, in part because the incumbent contractors knew that GSA’s only alternative to a sole-source enhancement contract was to develop a new system. Also, GSA officials said the plan to consolidate help desk services into one single contractor is an effective way to control cost and service levels.\nWith SAM, the system design contractor (IBM) will be responsible for developing the system architecture, defining technical requirements, specifying data migration procedures for each of the legacy systems, and operating and maintaining SAM. Once IBM has specified the technical requirements and data migration procedures for the legacy systems, a second contractor will be responsible for writing the software code that will make up SAM. GCE will write the code for the first phase and GSA will competitively award software contracts for the subsequent phases. IBM will then test and validate the software, implement the system migration, and begin operating and maintaining the new SAM system. A third contractor (Qwest) will provide hosting services, which involves providing a secure facility to physically house SAM and power and Internet connectivity. GSA will provide the hardware (hard drives, servers, and other equipment) and software (operating system, databases, and other software licenses) for the hosting facility. Finally, a fourth contractor (HP) will be responsible for providing a consolidated help desk to support SAM users.\nGSA initially planned to migrate IAE systems to SAM in four phases based on groups of legacy IAE systems (see table 4).\nGSA and ACE officials viewed a phased approach as having less risk than replacing all the legacy systems at the same time. The timing of each phase was generally established to coincide with expiring legacy system contracts. As each phase is completed, the capabilities of the systems in that phase will be added to SAM and the legacy systems will be shut down. As discussed above, each development phase requires contributions from the four SAM contractors, with GSA managing the various contracts. GSA officials anticipate that additional systems may be added to SAM in the future. For example, the contract with IBM includes an option to migrate the Past Performance Information Retrieval System (PPIRS), which provides access to past performance information on contractors, to SAM. In addition, FedReg has been merged with the Central Contractor Registration (CCR) and will be included in phase 1.",
"GSA and its contractors have made progress in developing SAM and phase 1 is scheduled to be completed in May 2012. GSA also has worked with contractors to establish a hosting center for the system and a help desk to support users. However, since 2009, the costs of developing SAM have grown significantly. The higher development costs were primarily due to the failure to adequately execute the SAM hosting strategy as initially planned. To a lesser extent, external factors, including recent statutory requirements and policy changes, have contributed to higher operational costs as well by increasing the demand for help desk services. While IAE costs were increasing, the program also experienced a significant funding shortage in fiscal years 2011 and 2012. In response to rising costs and resource constraints, GSA officials have delayed SAM’s development schedule and taken other actions to reduce or defer other costs.",
"GSA has made progress in consolidating the IAE systems. Specifically, phase 1 of SAM is nearly complete and GSA has created a consolidated hosting environment and established a single help desk called the Federal Service Desk (FSD). GSA and its contractor, IBM, have completed the overarching design of SAM as well as the phase 1 technical requirements. GSA officials also report that the agency has purchased the hosting hardware and software needed for phase 1 and IBM is preparing to make the hosting facility operational in time to launch phase 1. Phase 1 is scheduled to go live in May 2012 and will replace three IAE systems—CCR, ORCA, and EPLS. Officials report that the phase 1 software developer is currently working closely with IBM to coordinate the testing and validation of the phase 1 software. IBM has begun developing the phase 2 requirements and GSA is in the process of competing the phase 2 software development contract. Phase 3 efforts have not yet begun. GSA officials told us FSD currently provides help desk services for most of the IAE data systems. Help desk responsibility for three systems remains with their legacy vendors. GSA officials expect help desk services for these remaining systems to transition to FSD as they become part of SAM.",
"Costs of the various SAM components have increased significantly over the past 3 years. GSA did not develop a formal cost baseline when SAM development was started, so we compared the initial contract value for GSA each of the SAM components to the current contract estimates.currently estimates that the various SAM-related contracts will cost $181.1 million. This represents an increase of $85 million, nearly 90 percent, over the initial contract award amounts which totaled about $96 million (see fig. 1).\nMost of the cost growth, about $65 million, is due to higher than expected hosting costs. Hosting consists of a secure facility with Internet connectivity; the hardware on which the system will be installed; the operating system and other software necessary to operate the code that will make up SAM; and the operation and maintenance of the hosting environment. GSA estimated in 2008 that hosting costs for the IAE systems were $2.8 million and that annual costs would be much less than that after moving to a single hosting environment. However, we estimate that SAM hosting costs will average $8 million to $9 million per year. The higher costs are largely due to GSA omitting key components from its contracting strategy for acquiring hosting services. GSA’s initial strategy was to contract with a single company for all of these hosting services. However, shortly after beginning SAM development, IAE awarded a contract (to Qwest) for a more limited set of hosting services that only included the hosting facility and Internet connectivity.GSA did not include the hosting hardware, software, and operation and maintenance services that were needed. Program officials told us that at the time they believed that the multiagency telecommunications contract used to obtain hosting services from Qwest did not offer the comprehensive services that were needed. Officials also said they thought IBM was responsible for providing these items, but later realized that was not the case. GSA decided to purchase the hosting hardware and software itself under existing GSA schedule contracts at an estimated cost of $29 million. After negotiations with IBM, GSA modified IBM’s contract in June 2011, adding $36 million to the $74 million contract price to have IBM install and operate and maintain the hosting hardware and software in Qwest’s facility. It took GSA more than a year to finalize its current hosting approach and program officials said they have purchased hosting hardware and software through 13 different contracts instead of just 1 contract as intended under their original hosting strategy.\nIt is not clear why The help desk function, FSD, also experienced cost growth over its first years of operation as the expected cost has nearly doubled to $33 million. Most of this growth appears to have resulted from factors outside of GSA’s control. GSA officials told us the FSD contract price is driven by the amount of support activity provided under the contract. The higher costs reflect a greater than expected demand associated primarily with one data system, CCR. This system serves as a registry for any organization that wants to do business with the federal government. Several events occurred that substantially increased the number of CCR help desk calls. Both the Federal Funding Accountability and Transparency Act of 2006 (Transparency Act) and the American Recovery and Reinvestment Act of 2009 (Recovery Act) included provisions that increased or had the effect of increasing the number of CCR registrants. Specifically, the Transparency Act contained requirements for a single searchable website with data on federal loan, grant, and contract recipients, which prompted the government to require grant recipients to register in CCR. The Recovery Act temporarily increased the number of loan and grant recipients, which also led to greater numbers of CCR registrants. Also, in late 2008, the CCR login process changed in response to actions taken by DOD to improve password security measures. As a result of these changes, there was a drastic rise in help desk activity from CCR customers.",
"While SAM costs were beginning to increase, the program also did not receive funding increases it requested. Up through fiscal year 2010, IAE was primarily funded through agency contributions. When the ACE approved SAM development in 2008, program officials believed that agency contributions would be sufficient to cover the development costs. However, GSA had underestimated its funding needs and soon after the start of SAM development, GSA officials recognized that the amount of agency contributions was insufficient to pay to operate the existing IAE systems and develop SAM over the next several years. GSA officials told us they consulted with OMB and considered various funding options to pay for the development of SAM, including increased agency contributions, a separate appropriation request, or user fees. Ultimately, with OMB’s support, GSA decided to seek additional funding through an appropriation and requested $15 million for fiscal year 2011. The program GSA also requested a $38 received $7 million of the requested amount.million appropriation in fiscal year 2012 for SAM, but did not receive any appropriations from Congress for the year. GSA has made a $21 million appropriation request for fiscal year 2013.\nGSA officials responded to rising costs and limited resources by modifying and delaying the SAM schedule, and deferring payments or reducing contract requirements where possible. One of the most significant changes was GSA’s decision to not transition FPDS-NG to the SAM contract as an interim step prior to FPDS-NG being fully integrated into SAM. Under the SAM design contract, FPDS-NG was scheduled to be transitioned in June 2010 from the FPDS-NG legacy contractor to IBM. IBM then would have been responsible for operating and maintaining FPDS-NG “as-is” under the SAM contract and GSA could have ended the FPDS-NG legacy contract. GSA officials said that the transition did not occur because they had neglected to account for the hardware and software required to host FPDS-NG in the new SAM hosting facility and could not afford to buy these components. Instead, GSA awarded a follow-on contract to the FPDS-NG legacy contractor that cost an unanticipated $5.4 million in fiscal year 2011 and is expected to cost another $3.8 million in fiscal year 2012 and a similar amount annually through 2015.\nGSA also delayed the schedule for moving the other IAE systems to SAM. In 2010, GSA expected to complete all of the development phases of SAM in early 2014, but under the current schedule the final phase will be completed in 2015, 20 months later than planned (see fig. 2).\nThere was a 5-month delay in implementing phase 1. Delays for phases 2 and 3 are much longer, and GSA officials cited the higher costs for hosting services as the main reason for delaying the phases. Phase 2 has While the systems included in also recently been split into subphases.phase 2a have been delayed for several months, GSA officials said they can complete this phase with available resources because the systems in phase 2a will not require a significant investment in hosting hardware and software. Phase 2b will not be completed until mid-2014, approximately 2 years later than originally planned, in part because GSA cannot afford the estimated $21 million necessary to complete the phase. Furthermore, the migration of FPDS-NG is not scheduled to be completed until 20 months later than planned, in 2015.\nIn addition to delaying SAM’s development schedule, GSA officials said they have taken other steps to defer or reduce costs. In 2011, GSA modified the payment schedule for the Dun & Bradstreet DUNS contract to delay payments from fiscal year 2011 to fiscal year 2012. Under the original contract, GSA was scheduled to make an $18 million payment in August 2011. To free up funds in fiscal year 2011, GSA negotiated a modification with Dun & Bradstreet that allowed GSA to pay only $3.8 million in 2011 and deferred the remaining payments to later years. In addition, GSA cut FSD costs by reducing the required level of services stated in the contract. For instance, GSA capped the number of calls the contractor needs to respond to every month, which program officials said has reduced costs and made it easier to estimate future costs. However, the cap on calls may reduce the responsiveness of the help desk to users. GSA officials said they also stopped making investments in the legacy systems and stopped making all but the most minor of changes to the systems. For example, GSA officials said they would fix hyperlinks on the system websites and make other small corrections, but would avoid making larger changes to the legacy systems unless absolutely necessary.",
"Schedule delays and other GSA actions taken in response to cost growth and funding shortages are likely to lead to further cost increases that pose a risk to IAE. Delaying the SAM schedule will require GSA to continue operating the legacy IAE systems, in some cases for years longer than originally expected. At the same time, GSA must contend with higher hosting and help desk costs that will extend over several more years. While GSA has taken some steps to reduce these costs, it has not reevaluated whether its current acquisition strategy, including its approach to acquire hosting services, is still the most cost-effective approach to implement SAM. In addition, although the SAM development phases have been pushed out several years, GSA has not modified its development contract with IBM to reflect these changes. The program continues to pay the same fixed-price amount to the contractor for system development activities as well as operation and maintenance of SAM, even though there was little to operate and maintain for the first 2 years of development.",
"GSA delayed the SAM development schedule in response to cost growth and reduced funding, but those delays will result in additional cost increases as GSA has to extend the life of the legacy systems. For example, the decision to not transition FPDS-NG to the IBM contract as originally planned could increase GSA’s costs by approximately $16 million as GSA will have to continue operating FPDS-NG for 5 years longer than expected. Similarly, the 2-year delay in migrating FedBizOpps into SAM means that GSA will have to spend $2.8 million on FedBizOpps in fiscal year 2012. Assuming costs remain the same, continuing to operate FedBizOpps for 2 additional years will increase costs by approximately $5.6 million. Schedule delays may also increase FSD costs. GSA officials said that the majority of the help desk calls are associated with CCR whose migration has been delayed 5 months. In addition to paying the CCR legacy vendor to continue operating CCR for 5 additional months, GSA will also have to pay the FSD vendor to continue supporting CCR.\nGSA is also grappling with higher SAM development costs, but has not assessed whether its current acquisition approach is still cost-effective. For example, GSA abandoned its initial hosting strategy without evaluating the cost or schedule implications of doing so. The initial strategy to use a single contractor to provide consolidated hosting services was intended to achieve cost savings, but the revised approach, which relies on multiple contractors, has proven to be much more costly than expected and led to schedule delays. Hosting costs are now a primary impediment to moving forward because GSA cannot afford to purchase the hardware and software necessary to complete phases 2 and 3. In addition, according to program officials, GSA efforts to procure hosting hardware and software have resulted in 13 different contracts, the management of which has required additional program support resources.\nGSA also continues to pay the SAM development contractor, IBM, essentially the same amount called for in the original contract even though schedule delays have pushed work out into the future. IBM’s contract includes responsibility for designing as well as operating and maintaining SAM. According to the fixed-price contract, SAM will be developed in phases, yet the payment schedule specified that IBM was to be paid a set amount each month (approximately 3 percent of the total contract price) for all activities under the 36-month base contract. This payment schedule may have been appropriate under GSA’s initial plan, but the development schedule changed shortly after the contract was awarded and much of the work to migrate systems into SAM will occur much later than planned. While the SAM transition and migration schedules have changed considerably, GSA has not adjusted IBM’s payment schedule to reflect the current development schedule. For example, IBM was not responsible for operating any IAE systems until the Excluded Parties List System (EPLS) was transitioned to the SAM contract in July 2011—17 months into the contract. By that time, GSA had already paid IBM $6.3 million of the $20.3 million contract price for SAM operation and maintenance. GSA and IBM officials noted that payments to date have been for planning and preparing to migrate the legacy systems to SAM. However, under the original schedule, IBM would have performed these services as well as operated FPDS-NG for the same cost. Similarly, GSA has paid more than half of the contract price for phase 2 migration activities even though phase 2 is not scheduled to be completed until May 2014.\nWe raised issues about the increasing cost with SAM, and the viability of the hosting approach and the development contract structure with GSA officials and they recently told us that GSA has initiated an internal review, called a TechStat, of IAE. A TechStat is intended to be an evidence-based review of underperforming information technology investment during which agency leadership reviews a program, examines performance, and develops corrective actions as necessary. Program officials said their current focus is on completing phase 1 of SAM, but they may revisit their hosting strategy once the phase is completed. GSA officials also told us that they will begin negotiating with IBM to change the contract to reflect current schedule changes and available funding.",
"GSA’s effort to consolidate the IAE legacy systems into SAM has the potential to reduce agency costs, eliminate redundancy, and streamline government acquisition processes. Two years into development, however, SAM is in trouble due to higher costs that planned funding levels do not cover. Most of the cost growth seen to date is largely the result of mistakes the program made. Rather than using a consolidated hosting strategy as initially proposed, the program adopted a piecemeal approach involving multiple sources that will cost about $65 million more than expected. The need for additional resources to cover the increase in hosting costs, however, coincided with significant funding shortfalls in the past 2 years and now the program cannot afford to develop SAM as planned.\nDespite dramatically different circumstances marked by higher costs and constrained resources, GSA has not reassessed its business case for SAM. Specifically, GSA has not assessed whether developing SAM is still a better option than maintaining the status quo or whether the current development strategy, involving multiple vendors, is more cost-effective than using a single vendor. Ensuring there is a sound business case for moving forward will be critical before establishing an acquisition strategy to address the program’s problems. Also, while GSA has taken steps to reduce costs, by delaying development and deferring some costs to the future, there may be more that can be done to stretch available resources. For example, in light of higher hosting costs than expected, GSA has not reevaluated whether its hosting strategy is the most cost- effective approach. In addition, GSA has not modified the primary SAM development contract to align payments with program schedule delays. Although GSA officials recently indicated they will begin negotiating changes to the development contract, it continues to pay the contractor for operation and maintenance activities even though many of the IAE systems will not be migrated into SAM for several years. Tying contract payments to the migration of the data systems and schedule milestones would ensure that the government is not paying for work that has not yet been accomplished.",
"To ensure that GSA has a sound approach for providing IAE services in the future, we recommend that the Administrator of GSA take the following two actions:\nReassess the SAM business case to compare the costs and benefits of various alternatives such as: terminating SAM development and continuing to operate the legacy systems, maintaining the current acquisition approach to developing SAM, pursuing a different acquisition strategy for SAM, such as using a single contractor to develop and operate the system.\nIf the results of this assessment support continuing the current acquisition approach, then: reevaluate the hosting strategy to ensure that it is the most cost- effective approach that can be supported with available resources, and take steps to ensure that the SAM development contract payments are more closely aligned with the program schedule and delivery of capabilities.",
"We provided a draft of this report to GSA and OMB. In its written comments, GSA concurred with our recommendations and indicated that it will take appropriate action. GSA added that it has established an integrated project team that will reassess and develop a broad plan covering both SAM and the IAE program as a whole. GSA’s written comments appear in appendix III. GSA also provided technical comments that we incorporated, as appropriate. OMB informed us that it did not have comments on the draft.\nWe are sending copies of this report to interested congressional committees, the Administrator of General Services and the Director of the Office of Management and Budget. In addition, this report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have questions about this report, please call me at (202) 512-4841. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV.",
"To determine how the General Services Administration (GSA) developed the Integrated Acquisition Environment (IAE) initiative, we interviewed IAE officials and analyzed relevant documents. Specifically, we interviewed former and current IAE officials and the two Acquisition Committee for E- Gov (ACE) co-chairs from the Departments of Defense and Interior. These individuals described the acquisition strategy and governance structure that IAE developed in its early years. We verified these accounts with historical documents, such as internal newsletters and minutes from the ACE meetings that documented IAE’s development. To learn about the acquisition strategy IAE used to develop the System for Award Management (SAM), we interviewed IAE officials, reviewed IAE presentations, and analyzed SAM contract documents. We interviewed officials from IAE and the Office of Management and Budget (OMB) to learn about the program’s funding arrangement, obtained historical funding documents, and reviewed four of the interagency memorandums of understanding (MOU) used to fund IAE.\nTo determine the progress IAE has made in implementing SAM, we interviewed IAE officials and two of the contractors that are implementing SAM—IBM and GCE. We also reviewed IAE presentations, agency memorandums and communications, and analyzed SAM-related contracts. Due to lack of a formal cost baseline when SAM development started, we focused on the growth of the individual contracts of SAM, such as the IBM contract and the help desk contract. To determine SAM’s schedule growth, we used the original schedule created by IBM shortly after the contract was awarded and compared that to the latest schedule IAE officials provided us.\nTo understand and analyze the challenges IAE is facing in their consolidation, we interviewed officials from GSA, IAE, and OMB and analyzed SAM-related contracts. We also discussed IAE’s acquisition strategy with information technology contractors such as IBM and GCE. In order to understand IAE’s budget issues, we analyzed budget documents identifying projected funding and expenditures. We also analyzed the structure of IBM’s contract and verified our findings with IAE officials.\nWe conducted this performance audit from September 2011 to March 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"",
"Central Contractor Registration (CCR)",
"CCR originally was a Department of Defense (DOD) data system that was brought into the Integrated Acquisition Environment (IAE) portfolio in 2003 and adapted for use across the federal government. CCR is the primary registrant database for the U.S. government. The government uses CCR to collect, validate, store, and disseminate data in support of agency acquisition and award missions. According to the Federal Acquisition Regulation, prospective contractors must register in CCR prior to the award of a contract. Also, to register in CCR, a firm must have a Dun & Bradstreet Data Universal Number System (DUNS) number.",
"The General Services Administration (GSA) has a contract with Northrop Grumman Information Technology to operate and maintain CCR. This contract ends September 2012.",
"Electronic Subcontracting Reporting System (eSRS)",
"The Electronic Subcontract Reporting System (eSRS) was created in 2005 and intended to streamline the small business subcontracting program reporting process and provide the data to agencies in a manner that will enable them to more effectively manage the program. The Small Business Administration partnered with the IAE and other agency partners to develop the eSRS system. The eSRS is an Internet-based reporting tool that eliminates the need for contractors to submit and process Individual Subcontracting Reports (SF 294) and Summary Subcontracting Reports (SF 295) in hard copy. In 2007, the eSRS implemented an interface with FPDS-NG, which permits contractors to enter a contract number into eSRS and have the contract data retrieved from FPDS-NG for use in the subcontracting reports.",
"IAE has a contract with Symplicity, the original developer of eSRS, to provide operation and maintenance of eSRS. This contract will expire in September 2012, and IAE has plans to enter an interim contract with the same vendor until the system is migrated to SAM.",
"Excluded Parties List System (EPLS)",
"The purpose of EPLS is to provide a single comprehensive list of individuals and firms excluded from receiving federal contracts or federally approved subcontracts and from certain types of federal financial and nonfinancial assistance and benefits. Contracting officers use EPLS to determine whether to enter into a transaction with a specific contractor. EPLS is also available to the general public.",
"In 2011, IBM assumed responsibility to maintain and operate EPLS under the System for Award Management (SAM) contract.",
"Federal Business Opportunities (FedBizOpps)",
"FedBizOpps is the single point of entry for federal buyers to publish and for vendors to find federal business opportunities over $25,000 across departments and agencies. Vendors can conduct ad hoc searches or set up automatic queries to notify them when opportunities meeting their criteria are posted.",
"IAE has a contract with Symplicity to operate and maintain FedBizOpps. IAE plans to exercise the two option years on the current contract, signed in 2011, and to extend it again until FedBizOpps is migrated to SAM.",
"Federal Agency Registration (FedReg)",
"In response to GAO’s classification of intragovernmental transactions as a governmentwide material weakness, OMB and the IAE collaborated with DOD to create FedReg in 2003. FedReg collects standard data on federal agency buyers and sellers who perform intragovernmental transactions. FedReg sends data on buyers and sellers to the Intragovernmental Transaction Exchange and Intragovernmental Transaction System to assist in tracking all intragovernmental transactions. FedReg also serves as a sort of government “Yellow Pages,” providing information on federal sellers of goods and services. All federal entities engaged in intragovernmental buying or selling must be registered. FedReg is now embedded within CCR.",
"GSA has a contract with Northrop Grumman Information Technology to operate and maintain FedReg (and CCR). This contract ends September 2012.",
"Federal Procurement Data System – Next Generation (FPDS-NG)",
"The Federal Procurement Data System-Next Generation is a database that provides information on government contracting actions over $3,000, procurement trends, and achievement of socioeconomic goals, such as small business participation. In fiscal year 2011, there were nearly 17,000,000 transactions recorded in FPDS-NG. FPDS-NG has been the primary governmentwide contracting database since 1978, and it serves as the backbone for other government contracting data systems. Since 1982, GSA has administered the database on behalf of the Office of Federal Procurement Policy.",
"GSA awarded the FPDS-NG contract to Global Computer Enterprises, Inc., in 2011, and can exercise option years through 2015.",
"Wage Determinations OnLine.Gov (WDOL)",
"WDOL provides a single location for federal contracting officers to obtain Service Contract Act and Davis-Bacon Act wage determinations. These acts require contractors and subcontractors to pay no less than the locally prevailing wages for services contracts and public works projects. In addition to wage determinations, the site also provides information on labor standards, federal and agency acquisition regulations, agency contracting processes, and other related information.",
"WDOL is physically maintained by the National Technical Information Service, an agency of the Department of Commerce.",
"Online Representations and Certifications Application (ORCA)",
"This application enables prospective government contractors to electronically submit required certifications and representations for responses to government solicitations for all federal contracts, instead of using hard copies for individual awards. The representations and certifications can be considered current for up to one year. These representations and certifications include certifications of socioeconomic status, affirmative action compliance, and compliance with veterans’ employment reporting requirements.",
"IBM has been the vendor for ORCA since its inception in 2004. In 2011, IBM assumed responsibility to maintain and operate ORCA under the SAM contract.",
"",
"",
"",
"In addition to the contact name above, John Oppenheim (Assistant Director); Marie Ahearn; E. Brandon Booth; Jillian Fasching; Madhav Panwar; Jeffrey Sanders; Benjamin Shattuck; Roxanna Sun; Robert Swierczek; and Rebecca Wilson made key contributions to this report."
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{
"question": [
"What did the GSA begin to do in 2001?",
"Why would GSA acquire a new system?",
"What did these efforts result in?",
"What were the intentions of developing the SAM?",
"What did IAE do that was distinct from existing systems?",
"What was the purpose of this approach?",
"What has GSA established?",
"How have costs changed?",
"What has accounted for the cost growth?",
"What else can be an explanation for the cost growth?",
"What has higher costs led to?",
"How have GSA officials responded to the rising costs?",
"What creates risks for IAE?",
"What has the GSA failed to complete?",
"Why are reevaluations important in this case?",
"What else has not happened, despite the push of the SAM development phases?",
"How has the program dealt with the prices?",
"How will aligning contract payments affect the government's role?",
"How much does the government spend on contracts?",
"How does the government ensure that these contracts are well-managed?",
"How have data systems implemented their steps?",
"Why was the IAE initiated?",
"What purpose does the IAE serve?"
],
"summary": [
"In 2001, GSA began establishing a portfolio of standardized government-wide data systems through an acquisition strategy known as “adopt, adapt, acquire.”",
"GSA adopted or adapted existing agency-specific systems for government-wide use, or if no viable system met an identified need, GSA acquired a new system.",
"These efforts resulted in a portfolio of nine data systems. In 2008, GSA began consolidating its portfolio of systems into one integrated system called the System for Award Management (SAM).",
"In developing the system, GSA hoped to eliminate redundancy, reduce costs, and improve efficiency.",
"Unlike the existing systems that were each designed, developed, and operated by a single contractor, IAE relies on multiple vendors to perform these same tasks for SAM.",
"The intent of this approach is to enhance competition and innovation and for the government to own the software associated with the system.",
"GSA also has established a computing center to host SAM and a help desk to support users.",
"Since 2009, however, IAE costs have increased by $85 million, from about $96 to $181 million.",
"Most of the cost growth is due to GSA omitting hardware and other key components in acquiring a hosting infrastructure for SAM.",
"External factors, including recent statutory requirements and policy changes, also have contributed to higher costs by increasing the use of the IAE systems beyond what was anticipated.",
"Higher costs led to the need to supplement existing funding, but the program did not receive all of the additional funding it requested.",
"In response to rising costs and limited funding, GSA officials have delayed SAM’s development schedule by almost 2 years, and taken other actions to reduce or defer costs where possible.",
"Higher costs and constrained resources pose a risk to IAE going forward.",
"While GSA has taken some steps to reduce costs, it has not reevaluated the business case for SAM or determined whether it is the most cost effective alternative.",
"Such a reevaluation is particularly important in light of the increased infrastructure costs, which are now a major impediment to completing SAM.",
"In addition, although the SAM development phases have been pushed out several years, GSA has not modified its primary development contract to align the payment schedule with the delays.",
"The program has continued to pay the same fixed price amount to the contractor for SAM development, operation, and maintenance even though there was little to operate and maintain for nearly 2 years.",
"Aligning contract payments with schedule milestones will ensure that the government is not paying for work that has not yet been accomplished.",
"The U.S. Government spends more than $500 billion each year on contracts.",
"To ensure contracts are managed effectively, the government has established policies and procedures for advertising, awarding, administering, and reporting on them.",
"Historically, data systems used to implement these steps have been fragmented and duplicative, with multiple systems across different agencies providing similar services.",
"The Integrated Acquisition Environment (IAE) was initiated in 2001 to bring together different data systems into a unified system.",
"It is intended to reduce duplication and information technology costs, and create a more streamlined and integrated federal acquisition process."
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GAO_GAO-18-424
|
{
"title": [
"Background",
"DOD’s MWR Program Categories and Funding Sources",
"DOD’s MWR Program Funding Targets",
"Budget, Funding, and Accounting Processes for MWR Programs",
"Budget Processes",
"The Services Did Not Consistently Meet One of the Two Appropriated Funding Targets and Are Taking Steps to Address This, but DOD Has Not Comprehensively Evaluated the Targets to Ensure They Are Appropriate",
"The Services Generally Met the Funding Target for MWR Category A Mission- Sustaining Programs",
"The Services Did Not Consistently Meet the Funding Target for MWR Category B Community Support Programs, but Are Taking Steps to Meet the Target in the Future",
"DOD Has Not Comprehensively Evaluated the Funding Targets to Ensure They Are Appropriate",
"DOD Has Established an Oversight Structure and Performance Measures for MWR Programs but Has Not Developed Measurable Goals for Determining Whether MWR Programs Are Cost-Effective",
"DOD Has Established a Structure to Provide Oversight of MWR Programs",
"DOD and the Services Have Performance Measures to Assess MWR Programs but These Measures Lack Measurable Goals for Determining Cost- Effectiveness",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Department of Defense’s Morale, Welfare, and Recreation Program Categories",
"Appendix II: Comments from the Department of Defense",
"Appendix III: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"",
"DOD Instruction 1015.10, Military Morale, Welfare, and Recreation (MWR) Programs, establishes policy, assigns responsibilities, and prescribes procedures for operating and managing programs for military MWR programs. Specifically, the policy states that the services are to establish MWR programs in order to maintain individual, family, and mission readiness and that these programs are an integral part of the military and its benefits package. The Office of USD(P&R) oversees DOD’s MWR programs, develops policy, and oversees MWR programs’ funding. DOD’s instruction specifies the purpose of, the funding sources for, and the activities within each of MWR’s three designated program categories—all of which are summarized below in table 1. For a complete listing of the activities by program category, see appendix I.\nEach service supports MWR programs with a mix of appropriated and nonappropriated funding. According to officials, the services allocate appropriated funding amounts for MWR purposes, which primarily supports Category A and B programs. Nonappropriated funding is government money from sources other than amounts appropriated by Congress and may be generated in a number of ways to support MWR programs. For example, bowling programs, marinas, and golf programs generate nonappropriated funding revenue through participation fees for recreational activities paid by servicemembers and their families. Services must use any nonappropriated funding generated from or associated with MWR programs within their MWR programs.",
"According to DOD Instruction 1015.10, the MWR programs are divided into three distinct categories, two of which also have specific funding targets. According to DOD’s 2016 report to Congress on appropriated funding support for MWR programs, the funding targets are intended to ensure that the services adequately fund MWR programs instead of requiring the servicemembers and their families to pay out of their own pockets for costs that should be borne by appropriated funding. While DOD Instruction 1015.10 establishes minimum funding targets for MWR Category A and B programs, it directs that the basic funding target, regardless of program category, is to use appropriated funding for 100 percent of costs for which they were authorized. While DOD’s Instruction allows the services to use appropriated funding for 100 percent of authorized costs, according to service officials this is generally not possible given budget constraints. Therefore, for MWR Category A mission sustaining programs, the DOD instruction establishes the funding target—stating that DOD is to use appropriated funding amounts for a minimum of 85 percent of total expenditures. For the MWR Category B community support system programs, the DOD instruction establishes the funding target as DOD’s use of appropriated funding amounts for a minimum of 65 percent of total expenditures. For the MWR Category C recreational activities for servicemembers and their families, appropriated funding support should generally be limited because this category has the highest capability of generating nonappropriated funding revenues.",
"",
"The services have annual budget processes for MWR programs that vary based on whether appropriated or nonappropriated funding is being used. For MWR programs supported by appropriated funding, according to officials, the services submit and validate program requirements through DOD’s Planning, Program, Budgeting, and Execution process. DOD and service guidelines for certain MWR programs as well as annual service- issued budget guidance provide input for determining MWR programs’ requirements. Service officials from the Army, the Marine Corps, and the Air Force also stated that they determine program requirements using input from installations and service components, while service officials from the Navy stated that they use a budget model along with performance measures and budget guidance to determine program requirements. The requirements are then submitted to higher level components within the services for review, adjustment, and approval. Once the services validate the requirements, they are provided to the Office of the Secretary of Defense for inclusion in the President’s Budget. Figure 1 provides an overview of the general process the services use to budget for appropriated funding support of MWR activities.\nBudget processes and authorities for nonappropriated funding, or program-generated revenue, vary by service. Specifically, the services maintain nonappropriated funding budgets and budget approvals at different levels within the service organization. For example, officials stated that Marine Corps and Air Force installations maintain and manage nonappropriated funding generated at their locations while Army and Navy installations submit nonappropriated funding and budgets to a higher level of command, Installation Directorates for the Army and Regions for the Navy, as well as the service headquarters component. The services plan for and manage their nonappropriated funding budgets based on a number of factors, including revenue generated; projected revenues; and the amount, if any, of appropriated funding available. Figure 2 provides an overview of the general process the services use to approve and manage nonappropriated funding generated within the service.\nEach service uses processes to provide funds for the implementation of its MWR programs. Service officials stated that during program execution the services execute their programs and make adjustments to their budgets based on funding authorized from appropriated funding and nonappropriated funding sources. Commanders have authority over budget implementation and the guidelines and parameters for commanders vary by service. For example, according to Army officials, during the fiscal year Army commanders can change MWR program budgets and have some flexibility to move funding to other non-MWR command priorities. Installations report to the services actual expenditures and income generated, which are included in the services’ annual reports. Figure 3 provides an overview of the general process the services use to provide funding for MWR programs.\nEach service uses accounting processes for its MWR programs. According to service officials, accounting is handled differently at each service depending on the service’s organizational structure. According to service officials, the Navy and the Marine Corps centrally manage their MWR accounting processes at their service headquarters; the Army manages its accounting process at its headquarters and at the Defense Financial and Accounting Services Nonappropriated Financial Services; and the Air Force manages its accounting process at its Secretariat and at the service components. According to service officials, program managers at the service headquarters and activity level are able to review financial data, such as expenditures and revenues, for MWR programs on a recurring basis. DOD’s Instruction 1015.10 states that the services should identify appropriated and nonappropriated funding accounts in annual budgets, and the services have designated codes to categorize expenditures. Service officials stated they use the codes to report annually to USD(P&R) on MWR programs’ expenditures for both appropriated and nonappropriated funding.",
"The services generally met the funding target for fiscal years 2012 through 2017 for MWR Category A mission-sustaining programs, but did not consistently meet the target for Category B programs that provide community support systems to servicemembers and their families during the same time period. Service officials said they are taking steps to meet the Category B target, such as restoring targeted levels of appropriated funding support in future budget planning. Data indicate that the services are getting closer to meeting the target. However, DOD has not comprehensively evaluated the funding targets, which were established more than 20 years ago, to ensure they currently are appropriate.",
"For MWR Category A mission-sustaining programs, the services generally met the 85-percent target for appropriated funding support. Specifically, the Navy and the Air Force consistently met or exceeded the 85-percent funding target in fiscal years 2012 through 2017, and the Army met or exceeded the target every year except for fiscal year 2012 when it reported that 84 percent of its Category A programs were supported with appropriated funds. The Marine Corps exceeded the minimum funding target for Category A programs in fiscal years 2012 through 2017, but consistently fell below the target with appropriated funding support ranging from 77 percent to 84 percent from fiscal years 2013 through 2016. Table 2 provides additional detail on the extent to which each service met the 85-percent funding target for MWR Category A mission- sustaining programs in fiscal years 2012 through 2017.",
"For MWR Category B community support programs, the services missed the 65-percent target for appropriated funding support with increasing frequency from fiscal years 2012 through 2017. Service officials stated that constrained budgets and competing priorities have made it difficult to allocate the appropriated funding needed to support their programs. However, service officials said they are taking steps to meet the Category B funding target in the future. Specifically, we found that the services collectively missed the funding target over 60 percent of the time from fiscal years 2012 through 2017. All four services missed the funding target in fiscal years 2015 and 2016 with appropriated fund support ranging from 55 to 63 percent. Most recently, in fiscal year 2017 the Army met the 65-percent funding target, but the Navy, the Marine Corps, and the Air Force fell below the 65-percent funding target with appropriated funding support ranging from 60 percent to 62 percent. Although the Air Force did not meet the 65-percent target for fiscal years 2012–2017 citing resource issues, Air Force leadership has increased appropriated funding for the MWR programs each year to help get closer to meeting the Category B funding target. Air Force officials said they plan to continue to increase funding each year so they can meet the target in the future. Table 3 provides additional detail on the extent to which each service met the 65-percent funding target for MWR Category B community support programs in fiscal years 2012 through 2017.\nThe USD(P&R) monitors the services’ compliance in meeting the targets. When a funding target is missed, USD(P&R) officials said a memorandum is sent to the services that asks for a detailed plan on how they will achieve the required level of appropriated funding support for the missed target in the future, and these officials said that each service has provided such a plan when they fell below the 65-percent funding target. In instances when a service does not respond to the initial request for a remediation plan, USD(P&R) officials said a second memorandum is sent notifying the service that they missed the funding target and that they need to submit a plan detailing how they intend to come into compliance. For example, in fiscal year 2015 the Army did not meet the 65-percent funding target for Category B programs. In June 2016, the Assistant Secretary of Defense for Manpower and Reserve Affairs sent the Army a memorandum asking it to submit a plan on how it would meet the target. After not receiving a response, the Assistant Secretary of Defense for Manpower and Reserve Affairs sent the Army a second memorandum in September 2016 that noted the missed target and reiterated the need to submit a plan for achieving compliance with designated funding targets. Following the second memorandum, the Army issued a memorandum in December 2016 stating it would fully fund Category A and B programs to the required targets in fiscal year 2017. Following these communications, in February 2018, the Army sent USD(P&R) its fiscal year 2017 program and metric report showing that it had successfully met the Category A and B funding targets as planned.\nService officials said they are taking steps to meet the Category B target, and data from fiscal years 2015 through 2017 indicate that the services are getting closer to meeting it. However, in the prior years when the services have not met appropriated funding targets for Category B programs, officials said that the services have relied on nonappropriated funding as supplemental support to help ensure that such programs continue to operate. Specifically, according to USD(P&R) officials, the services have used nonappropriated funding—that is, revenue generated largely through user fees incurred by servicemembers and their families— to cover MWR program costs for which appropriated funding was authorized. However, the use of nonappropriated funds to cover shortfalls in appropriated funding support for MWR programs has been a long- standing issue about which Congress has previously expressed concern. Specifically, in House Report 104-563, which accompanied H.R. 3230, a bill for the National Defense Authorization Act for Fiscal Year 1997, the House Committee on National Security established the annual DOD Category A and B MWR programs reporting requirement to Congress, after receiving testimony from the services’ MWR managers and noting a disparity in the degree of appropriated funding support afforded these programs particularly in the area of Category A and B programs. While the committee recognized that shortfalls in appropriated funding support for MWR programs requires the use of nonappropriated funding to meet requirements, it also stated that the use of nonappropriated funding resources—soldier, sailor, airman, and Marine money—to subsidize appropriated funding activities should be minimized.\nWhile the Army met the Category B funding target for fiscal year 2017, the Navy, the Marine Corps, and the Air Force have each submitted plans and briefed USD(P&R) on how they plan to meet the target in the future. Navy officials said that they acknowledged the Navy’s challenges with meeting the Category B funding target and, as a result, began assessing their Category B programs to eliminate those that had limited use, consolidate some where possible, and implement operational efficiencies. Marine Corps officials indicated that the Marine Corps is committed to preserving valuable MWR programs and restoring appropriate levels of appropriated funding support in future budget planning. Specifically, the Marine Corps plans to readdress appropriated funding levels in the budget planning process in 2019. However, Marine Corps officials noted they may continue to have challenges meeting the 65-percent funding target in fiscal year 2018. Air Force officials said they will continue to advocate for retaining established MWR program funding in the budget process. Air Force officials said that for fiscal years 2014 through 2017, Air Force leadership has increased appropriated funding for the MWR programs each year to help get the Air Force closer to meeting the Category B funding target.",
"DOD has not comprehensively evaluated the funding targets for Category A and B programs, which were instituted more than 20 years ago, to ensure they are appropriate. Standards for Internal Control in the Federal Government recommends that management periodically review policies and procedures for continued relevance and effectiveness in achieving an entity’s objectives. According to USD(P&R)officials, a limited evaluation took place prior to 1995 that resulted in the Category A funding target in DOD’s instruction being changed from 100 percent to 85 percent. USD(P&R) officials said that the Category A appropriated funding target was changed because some of the activities within the category have expenses, such as for the food and beverage elements, that are able to generate revenue and thus not authorized to use appropriated funds.\nUSD(P&R) officials stated that since that time there have been no further evaluations of the Category A or Category B targets and agree that it is time to evaluate the current relevance of the targets. Specifically they noted the considerable changes to the budgeting and funding environment that have taken place in the more than 20 years since the Category A funding target was modified. In addition, officials told us they also agree that it is time to evaluate the relevance of the Category B funding target, which has never been modified. Specifically, officials said that the services’ extended engagement in overseas conflicts and constrained budgets have resulted in an operating environment that is substantially different from the peacetime setting in which the targets were first established.\nMoreover, Standards for Internal Control in the Federal Government requires management to document internal controls to meet operational needs. Documentation of controls, including changes to controls, is evidence that controls are identified, capable of being communicated to those responsible for their performance, and capable of being monitored and evaluated by an entity. Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel, as well as a means to communicate that knowledge as needed to external parties, such as external auditors. As previously stated, officials stated that the Category A funding target was updated sometime prior to 1995; however, officials did not have any specific documentation related to this change. Furthermore, USD(P&R) officials said the targets were developed so long ago that there is a general lack of information on the funding targets’ origins and that they are not sure of the process or methodology that was used to develop them.\nThe amount of time that has passed since Category A’s target was modified, recent challenges in meeting the Category B target, and the general lack of information on the funding targets’ origins raise concerns about the appropriateness and continued relevance and effectiveness of the targets in achieving MWR programs objectives. Until DOD comprehensively evaluates the appropriateness of current targets for Category A and B programs and, based on its evaluation, documents any changes it makes to its funding targets, DOD cannot be certain that the targets reflect the current operating environment and do not pose undue financial burden on the servicemembers.",
"",
"DOD has established a structure that specifies roles, responsibilities, and procedures for overseeing MWR programs. Specifically, DOD Instruction 1015.10 assigns roles and responsibilities for oversight of MWR programs to the USD(P&R), the Secretaries of the military departments, and the Chiefs of the military services (i.e., the Chiefs of Staff for the Army and the Air Force, the Chief of Naval Operations, and the Commandant of the Marine Corps). In addition, the services’ respective policies assign roles and responsibilities for MWR program oversight to the commander level. Table 4 summarizes the general oversight roles and responsibilities for DOD’s MWR programs.\nThe first level of oversight responsibility for MWR programs is assigned to the USD(P&R). Specifically, responsibilities include the development of department-level policies, program goals, performance measures, funding targets, and the oversight of appropriated and nonappropriated funding and expenditures for all MWR programs. To help ensure consistent quality, USD(P&R) monitors the services’ compliance in meeting minimum MWR funding targets and performance measures. As previously discussed, if a service misses a funding target, USD(P&R) officials said they ask that service to submit a remediation plan that summarizes its intent to meet the target in the future, as USD(P&R) did in fiscal year 2015 when several services missed appropriated funding targets for Category A and B activities.\nThe second level of oversight is assigned to the Secretaries of the military departments who are responsible for designating a central point of contact within their respective service to facilitate MWR programs policy compliance, coordinating with USD(P&R), and establishing funding priorities and strategy for MWR programs. For example, service officials we met with from the military departments said they have designated their respective Assistant Secretary Offices for Manpower and Reserve Affairs as the central point of contact for the services’ MWR programs.\nThe third level of oversight is assigned to the Chiefs of the military services who are responsible for the development of overall goals and uniform quality measures, which could include performance measures, for MWR programs consistent with the performance measures set by DOD in its instruction. For example, the Commander, Navy Installations Command has developed uniform quality measures for the Navy MWR Fitness program based on items such as customer satisfaction, usage rates, and equipment maintenance, among other things. According to officials, these quality measures provide a common tool to measure customer satisfaction and the quality of each installation’s MWR Physical Fitness program. Additionally, these Chiefs are also responsible for helping to ensure MWR programs are resourced with appropriated and nonappropriated funding according to financial categories and for identifying their respective appropriated and nonappropriated accounts in annual budgets to meet DOD funding goals. Service Chiefs are also responsible for ensuring that military installations operate customer-driven MWR programs that are determined locally by market analysis.\nLastly, the services’ respective policies assign roles and responsibilities for MWR program oversight to the commander level. Additionally, according to service officials, commanders assist with preparing an annual briefing for USD(P&R) on their MWR programs, which includes initiatives, challenges, program trends, and financial information. For example, in fiscal year 2017, each of the services reported on new initiatives to support MWR programs for servicemembers and their families, some of which are highlighted in table 5.",
"DOD Instruction 1015.10 identifies six broad categories of performance measures that the services use to assess their respective MWR programs. However, these measures do not include measurable goals, which are needed to assess the cost-effectiveness of the 55 activities that currently make up the MWR programs. Specifically, DOD identifies six broad performance measure categories in its instruction and, according to service officials, the services collect and use various types of information within these categories to periodically assess and adjust these activities, as appropriate. Table 6 summarizes the types of information that DOD requires the services to collect across the six categories established in its instruction.\nIn addition to the information that is to be collected across these six broad categories, DOD established separate, more specific performance measures for 2 of the 55 activities—namely, for Physical Fitness and for Library Programs and Information Services. For the Physical Fitness activity, the services are required to submit annual reports to DOD on their compliance with meeting more specific performance measures in a variety of areas such as administrative operations, staff qualifications, facility equipment, and child play areas. Similarly, DOD requires the services to report on a variety of areas related to the Library Programs and Information Services activity, such as library operation plans, customer programs and service, and technology infrastructure. Unlike the broad measures contained in DOD’s Instruction, the specific performance measures DOD established for the Physical Fitness and Library Programs and Information Services activities tell the services exactly what information to collect and report in each performance measure category instead of the services having to develop specific measures on their own.\nIn an effort to better evaluate MWR programs, the services also have efforts underway that include the following to develop specific performance measures for their programs beyond the broad performance measures contained in DOD Instruction 1015.10.\nArmy. Army officials told us that they partnered with the Army Public Health Center to build evidence-based MWR programs. Based on this review, the Army found that Army MWR Community Recreation and Fitness programs have not been formally evaluated as directed by DOD Instruction 1015.10 requirements to measure and assess programs. Additionally, the Army found that, while the Army Office of the Assistant Chief of Staff for Installation Management provides program oversight, it does not possess the capability to conduct program evaluations. According to the results of the Army Public Health Center report issued in June 2017, the Army initiated a three- phase approach for evaluating its MWR programs. The report showed that assessing the evaluability of the Army MWR programs is phase one. According to the Army, these evaluations will enable the Army to validate program outcomes and better position itself to compete for scarce resources. The report also showed that many of the 13 Army MWR programs selected for review do not have direct links between activities and the priority outcomes with behavioral, social, and physical health, and that they do not have sufficient outcomes data that have been consistently collected. Army officials said that phase two will include the development of formal evaluation plans for selected evaluable MWR programs. Lastly, Army officials said that phase three will be the execution of the evaluation for two selected MWR programs, which is on target to be completed by December 2018. While Army officials are learning how to evaluate programs through this partnership with the Army Public Health Center, they said that they have also learned that these endeavors are costly. Officials said that a very modest program evaluation requires approximately $300,000 to $500,000. Army officials also stated that program evaluation requires support and participation by those organizations and people that deliver the programs. Furthermore, according to Army officials, resource reductions at the operational level (garrisons) are increasingly restrictive, preventing them from collecting critical information to support this multiphase effort.\nNavy. Navy officials said that they use the MWR Enterprise Modeling System, which is based on performance measures that have been developed and routinely reviewed and updated by headquarters, regional, and installation program managers. The MWR Enterprise Modeling System is used as the baseline for the annual MWR performance data call that measures actual program performance against performance standards. Navy officials said that the performance measures provide the business strategy and guidance to ensure efficient, effective and market-driven delivery of programs and services.\nMarine Corps. Marine Corps officials said they collaborated with the RAND Corporation to provide an analytically rigorous assessment framework to evaluate program performance. The RAND Corporation provided draft measures of performance. Marine Corps officials said that the RAND Corporation also provided a user guide that outlines an evaluation methodology and ensures consistent and standard application. Marine Corps officials said that they are reviewing the draft measures to determine appropriate data collection and have drafted an implementation plan. Specifically, Marine Corps officials said that they plan to brief Marine Corps installations in June 2018 on the performance measures they plan to collect data from, which will begin in fall 2018.\nAir Force. Air Force officials said that they are building off the work that the RAND Corporation undertook for the Marine Corps and have also started collaborating with the RAND Corporation. The objective of the Air Force study is to develop an evidence-based evaluation framework for MWR programs that identifies immediate and mid-term outcomes that contribute to airman and family readiness and resilience. Specifically, the goal is to provide the Air Force with logic models and performance measures that are tied to each of the programs and services in the MWR portfolio. Air Force officials said they expect to finish this study by June 2018. However, the officials noted that implementing the performance measures will be a challenge since these types of MWR programs are difficult to measure and hard to capture data for.\nWhile both the broad and specific measures established by DOD and the services can provide useful context about the status of individual MWR activities, they do not contain measurable goals that service officials could use to compare program results with costs to determine whether an individual activity is cost-effectively operating. Because the services’ efforts to develop specific performance measures are in early stages of development it is too early to determine whether these efforts will result in measurable goals that can be used to assess the cost-effectiveness of the MWR programs.\nDOD’s Financial Management Regulation specifies that performance measurement should include program accomplishments in terms of outputs and how those outputs effectively meet intended agency mission goals. Further, cost itself can be a performance metric, but should also be combined with an effectiveness measure, such as the percentage of a goal achieved at a level of expected performance, to ensure that the resulting output is cost effective. Additionally, through our prior work on performance measurement, we have reported that performance goals and measures should align with an agency’s goals and mission. However, in reviewing DOD Instruction 1015.10, we found no mention of any goals, mission, objectives, or purpose for the MWR programs. There is one section entitled “policy” in the instruction that included items that resemble goals. Specifically, the instruction stated that MWR programs: 1. are an integral part of the military and benefits package; 2. build healthy families and communities and provide consistently high- quality support services that are commonly furnished by other employers or by state and local governments to their employees and citizens; 3. encourage positive individual values and aid in recruitment and retention of personnel; and 4. promote esprit de corps and provide for the physical, cultural, and social needs; general well-being; quality of life; and hometown community support of servicemembers and their families.\nUSD(P&R) officials who have responsibility for developing MWR program goals acknowledged that these policy items function as strategic goals but were not clearly identified as such in the instruction and also acknowledged that the instruction does not include measurable goals for assessing cost-effectiveness. In addition, USD(P&R) officials said that they are starting a review of DOD Instruction 1015.10 and did not know yet whether they would make any changes to the goals or expand the reporting requirement to include all 55 activities. Until DOD develops performance measures that include measurable goals, DOD officials and other decision makers, such as Members of Congress, may find it difficult to determine whether the MWR programs and the activities that make up the MWR programs are meeting servicemember needs in a cost-effective manner.",
"DOD’s multibillion dollar MWR programs provide a wide range of benefits for servicemembers and their families that ultimately help support military missions and readiness, both in times of war and peace. DOD has established funding targets for providing appropriated funding support for Category A and B MWR programs. However, the funding targets have not been comprehensively evaluated in the last 20 years to determine their current relevance. Until DOD comprehensively evaluates the appropriateness of current funding targets and documents any changes made to the targets, DOD’s funding targets may not reflect the current operating environment, and may be posing an undue burden on the servicemembers. DOD has also not developed performance measures with measureable goals that would allow it to assess the cost- effectiveness of its MWR programs. Without performance measures that include such measurable goals, it will be difficult for DOD and Congress to determine whether the individual activities and overall MWR programs are meeting desired outcomes in a cost-effective manner.",
"We are making the following two recommendations to DOD.\nWe recommend that the Secretary of Defense ensure that the USD(P&R), in consultation with the Secretaries of the military departments, comprehensively evaluate the funding targets for Category A and B MWR programs and document any changes made to the targets and the methodology used. (Recommendation 1)\nWe recommend that the Secretary of Defense ensure that the USD(P&R), in consultation with the Secretaries of the military departments, develop measurable goals for its MWR programs’ performance measures to determine the programs’ cost-effectiveness. (Recommendation 2)",
"We provided a draft of this report to DOD for review and comment. In its comments, DOD concurred with our recommendations and noted actions that it is taking. DOD’s comments are reprinted in their entirety in appendix II. DOD also provided technical comments, which we incorporated into the report as appropriate.\nWe are sending copies of this report to the appropriate congressional committees; the Secretary of Defense; the Secretaries of the Army, the Navy, and the Air Force; the Commandant of the Marine Corps; and the Under Secretary of Defense for Personnel and Readiness. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3604 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff members who made key contributions to this report are listed in appendix III.",
"",
"",
"",
"",
"In addition to the contact named above, Kimberly A. Mayo, Assistant Director; Rebekah Boone; Mae Frances Jones; Felicia Lopez; Stephanie Moriarty; Cynthia Saunders; John W. Van Schaik; Paul Seely; Carter Stevens; and Roger Stoltz made key contributions to this report."
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{
"question": [
"What categories received funding targets by the DOD?",
"Why were these targets created?",
"How much of the category fundings have been met in the past years?",
"What is the projected plan to meet the target for Category B programs?",
"How helpful are these steps?",
"What is the current status of the evaluation of the targets?",
"How has the lack of evaluation affected DOD's future plans?",
"What hesitations does the DOD possess?",
"What is being held back until the DOD makes its evaluation?",
"What has and has not been established by the DOD?",
"What has the DOD officials stated about the DOD's MWR policy?",
"How are activities within the categories assessed?",
"What have the assessments revealed about the categories?",
"What is known about the status of the services?",
"Why is it unclear whether or not the MWR programs are effective?",
"How does the MWR programs help servicemembers and their families?",
"How are the fundings checked and overseen?",
"What targets have been set by the DOD?",
"Why were there no targets set for Category C?",
"What is included in the House Report 115-200?",
"What has been assessed by the GAO?",
"What was analyzed by the GAO in order to create this assessment?"
],
"summary": [
"The Department of Defense (DOD) established funding targets for two categories of Morale, Welfare, and Recreation (MWR) programs—Category A, which promotes the physical and mental well-being of servicemembers, and Category B, which funds community support systems for servicemembers and their families.",
"These targets are intended to ensure that the military services adequately fund these programs with appropriated funds instead of requiring servicemembers and their families to pay fees out of pocket to cover program costs.",
"In fiscal years 2012-2017, the military services generally met the DOD-set target to provide 85 percent of appropriated funding for Category A programs but not the 65-percent target for Category B programs.",
"Service officials said they are taking steps to meet the Category B target, such as by restoring targeted levels of appropriated funding support in future budget planning.",
"Data GAO reviewed indicate that these steps are helping the services get closer to meeting the target for Category B.",
"DOD has not comprehensively evaluated the targets, established more than 20 years ago, to ensure that they are appropriate.",
"DOD officials said they agree that it is time to evaluate the relevancy of the targets as the current operating environment is fundamentally different than when the targets were established 2 decades ago.",
"Further, DOD officials said that they are unsure of the process or methodology used to originally develop the targets because they have no documentation supporting these decisions.",
"Until DOD comprehensively evaluates the appropriateness of the targets and, based on its evaluation, documents any changes made, it cannot be certain that the targets reflect the current operating environment and do not pose undue financial burden on servicemembers.",
"DOD established oversight structures and performance measures for MWR programs, but has not established measurable goals to assess the cost-effectiveness of the 55 activities that make up MWR programs.",
"DOD officials responsible for developing MWR program goals acknowledged that DOD's MWR policy does not include measurable goals for assessing the cost-effectiveness of program activities, and do not currently have plans to make any changes to the goals.",
"Service officials told GAO that they collect and use various types of information within the categories to assess specific activities.",
"While both the categories established by DOD and the service-specific efforts provide useful context about the status of individual MWR activities, they do not replace the need for measurable goals that can be used to assess whether the programs are operating cost-effectively.",
"The services are in the early stages of developing more specific performance measures, but it is too early to determine whether these efforts will result in measurable goals that can be used to assess cost-effectiveness.",
"Until DOD develops performance measures that include measurable goals, it cannot ensure that MWR programs meet servicemember needs in a cost-effective manner.",
"DOD's MWR programs provide servicemembers and their families with three categories of programs: Category A (e.g., fitness and libraries), Category B (e.g., camping and performing arts), and Category C (e.g., golf).",
"DOD oversees the percentage of appropriated funding allocated to MWR programs by category and measures the military services' compliance with established funding targets.",
"DOD set the targets at 85 percent for Category A and 65 percent for Category B.",
"DOD did not set a target for Category C since this category has the ability to generate revenue from user fees.",
"House Report 115-200 accompanying a bill for the National Defense Authorization Act for Fiscal Year 2018 includes a provision for GAO to review DOD' s MWR programs.",
"GAO assessed the extent to which (1) the services have met DOD's established funding targets for each category of MWR programs and DOD has comprehensively evaluated the relevance of its targets, and (2) DOD has oversight structures and performance measures that include measurable goals, including those for cost-effectiveness, by which to review MWR programs.",
"GAO analyzed MWR program information for fiscal years 2012-2017 and compared DOD's MWR policy with guidance for using measures and evaluating goals."
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CRS_R41880
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{
"title": [
"",
"Introduction",
"Evolution of the Private Sector Role in U.S. Development Assistance",
"Globalization and Development",
"U.S. Government Development Partners",
"USAID—Global Development Alliances/Private Sector Alliances",
"State Department—Global Partnership Initiative",
"Other Bilateral Agencies",
"Foreign Donor and Multilateral Development Partnerships",
"Potential Benefits of Public-Private Partnerships",
"Potential Concerns About Partnerships",
"Issues for Congress",
"Cost Savings",
"International Commitments",
"Emphasis on Non-aid Development Strategies",
"Budget and Procurement Issues",
"Interagency Leadership",
"Limitations on Congressional Oversight"
],
"paragraphs": [
"",
"In the last decade, the concept of government partnerships with the private sector has frequently appeared in international development literature and U.S. development policy discussions. Goal 8 of the United Nations' Millennium Development Goals is to \"develop a global partnership,\" with an emphasis on working with the private sector to increase global access to information technology and pharmaceuticals. The \"transformational diplomacy\" initiative in the George W. Bush Administration included \"engaging the private sector\" among its six areas of focus. The Obama Administration's U.S. Global Development Policy, announced in September 2010, aims to \"leverage the private sector, philanthropic and non-governmental organizations, and diaspora communities.\" U.S. development activities in the last decade reflect this emphasis. The U.S. Agency for International Development (USAID) alone reports participating in 1,600 public-private partnerships (PPPs) with more than 3,000 different partners between 2001 and 2012. Some observers view such partnerships as part of a broad ongoing transformation of how foreign aid is implemented, bringing nontraditional actors and ideas into development practice. Others view PPPs as an experiment that has not proven itself preferable to traditional approaches to development assistance.\nThis report discusses the evolution of private sector involvement in U.S. foreign assistance programs over recent decades, how globalization has driven the modern approach to development partnerships, potential benefits and drawbacks of PPPs, and how partnerships are being used by other bilateral donors and multilateral development agencies. The report then discusses partnership-related issues that may be of interest to Congress as part of the foreign assistance authorization and reform process.",
"USAID and other U.S. agencies have worked with the private sector for decades, but they have expanded their means of engaging the private sector over time. Starting in the mid-1970s, USAID began using nonprofit nongovernmental organizations (NGOs) as development program implementers more frequently, primarily as an alternative to full government staffing. The shift allowed for greater flexibility, and arguably cost savings, while maintaining full government control of development policy and programs.\nIn the 1980s, the Reagan Administration's foreign aid policies focused on supporting indigenous for-profit private enterprises as a means of improving economic development processes and outcomes. The Private Enterprise Initiative, begun in 1981, focused largely on improving the policy environment for indigenous private enterprise in developing countries, but it also explored ways to use the private sector to implement traditional aid programs. This approach was also reflected in the establishment of several enterprise funds, beginning in 1989, which primarily used USAID funds to invest in small and medium-sized private businesses, initially in Central and Eastern Europe, as a means of spurring private sector development in countries transitioning toward market-based economies. Microenterprise programs, through which USAID supports local financial institutions or organizations providing small loans and support services to small entrepreneurs, first became popular in this period as well.\nThese models of private sector engagement continue to this day. Government aid agencies work with private entities both as implementing partners and drivers of economic growth in which to invest. In the last decade, however, a new model of public-private engagement in development has emerged. Rather than funding private entities to implement USAID-designed programs, or investing in the growth of private enterprise within a developing country (both approaches are ongoing), the new model is designed to take advantage of the growing presence of international corporations, foundations, and other private entities in developing countries through formal relationships marked by common objectives, mutual resource contributions, and shared risk. This is the type of activity, now commonly referred to as a public-private partnership (PPP), addressed in this report. Nevertheless, there is no official definition of PPP in the international development context, and an understanding of the wide range of activities that are referred to as PPPs is important for understanding the debate around PPP efficacy.",
"The rise of PPPs in development assistance is closely related to significant changes in the flow of funds to developing countries in recent decades. Liberalized trade policies and information technology innovations have led to a surge in global actors. Private financial flows to developing countries—including commercial lending, charitable giving, and money transfers between family members—are now significantly and consistently higher than official development assistance, a dramatic change from just 10 years ago. Foreign aid from government donors accounted for only 18% of the estimated $703 billion in total financial flows between the Organization for Economic Cooperation and Development (OECD) member countries and developing countries in 2010 ( Figure 1 ).\nLooking at U.S. financial flows to the developing world in 2010, official flows (development aid from the government) accounted for only about 9%. Private capital flows, remittances, and philanthropy made up the bulk. The quality of private flow data is questionable, and some analysts assert that much of the private flow is not going to the least-developed countries, where official aid is still paramount. Still, the trend is unmistakable. Donor governments are no longer the key foreign players in many developing countries. Aid policies and priorities are affected by evolving trade, investment, and migration trends and policies. In this changing context, PPPs are viewed by many policymakers as an opportunity to leverage private resources toward solving problems that hinder development and business interests alike.",
"Among U.S. agencies involved in international development, USAID took the early lead in developing and implementing a PPP model. Under the Obama Administration, the State Department has become more active in development-related PPPs as well, and, more recently, the Millennium Challenge Corporation has applied the new partnership model in the development of its country compacts. While agencies may vary in their partnership priorities and processes, there is significant overlap. In fact, many large PPPs include multiple U.S. agencies as partners.",
"USAID is the primary U.S. agency promoting international development. The agency has been the U.S. government leader on PPPs for development since establishment of the Global Development Alliance (GDA) Secretariat within USAID in 2001. The Secretariat was tasked with developing partnership models that could become a new standard for USAID programs. It was intended to link growing private financial flows in developing countries to U.S. development assistance programs, enabling both private and public gains by promoting common interests. USAID reports participating in more than 1,600 PPPs since 2001, with more than 3,000 distinct partners. Private partners include corporations, universities, and foundations and other nonprofit organizations.\nUSAID uses PPPs in every development sector. For example, in the Jordan Education Initiative, USAID brought a dozen private sector technology companies, including Cisco and Dell, together with the Jordanian Ministry of Education's program to modernize curriculum content and broadband information technology as a key step to education reform. USAID contributed $11.25 million to the partnership between 2005 and 2007, while the private partner contributions were valued at $25.6 million. In the Sustainable Tree Crops Alliance, USAID brought together public and private stakeholders in the cocoa industry, including Mars, Hershey, Nestlé, and other international chocolate processors. The project was designed to improve the income of small tree crop farmers and the environmental sustainability of cocoa production systems in West and Central Africa through technology transfer, marketing, and institutional innovations. USAID contributed $2.18 million to the effort in 2002, while other partners contributed $7.55 million.\nTable 1 and Table 2 , below, show the objective and partner roles for two fairly typical USAID PPPs. The text box below (\"Innovation in Partnership: African Diaspora Marketplace [ADM]\"), in contrast, highlights a more innovative partnership model focused on leveraging the knowledge and resources of developing country nationals who reside in the United States.\nThe GDA Secretariat was intended to be a temporary entity that would be phased out when the GDA business model was mainstreamed throughout USAID. However, mainstreaming did not occur as quickly as planned, and in 2005, rather than disappear, the Secretariat evolved into the Office of Global Development Alliances, later into the Private Sector Alliance Division of USAID's Office of Development Partners, and most recently the Global Partnerships Division (GP) of the Office of Innovation and Development Alliances (IDEA). PPPs have arguably become an integral part of program planning and development strategy at many U.S. missions abroad. Efforts to institutionalize the alliance concept have been bolstered in recent years by new foreign service officers, hired through the Development Leadership Initiative, who have been trained and designated as alliance builders before beginning their first overseas assignments. Efforts in the international community to broaden the donor-centric aid model to engage a broader range of development stakeholders have strengthened the mainstreaming effort as well.\nThe GP Division in Washington continues to assist mission staff in developing strategic alliances, serves as a point of contact for private sector entities wishing to engage in partnerships, and focuses on advancing knowledge of best practices in alliance building and evaluation. In recent years, the GP Division (once PSA) has also focused on identifying opportunities to improve alliance efficiency through establishing Global Framework agreements with companies that collaborate with USAID in a specific sector or type of activity in multiple countries. For example, USAID works with Cisco and Hewlett-Packard in more than 60 countries to provide information technology training that creates job opportunities and lays the foundation for a global information technology infrastructure. As of September 2013, USAID had Global Frameworks with Starbucks, Coca-Cola, Intel, Evensen Dodge, Bayer Pharma, the Packard Foundation, Green Mountain Coffee, General Mills, Kraft, the MacArthur Foundation, PepsiCo, the Alliance for Green Revolution in Africa, Project C.U.R.E., Swiss Re, Unilever, DSM, the World Cocoa Foundation, and Microsoft Corporation as well.",
"State has a long history of working with the private sector, but its current PPP strategy stems from Secretary of State Condoleezza Rice's \"transformational diplomacy\" initiative in 2006, which included engaging the private sector among its objectives. In accordance with the recommendation of the Advisory Committee on Transformational Diplomacy's working group on partnerships, a Global Partnership Center (GPC) was created at State in 2007 within the Bureau for Resource Management. The stated goal was to \"expand the Department's use of partnerships that achieve policy, programmatic and management objectives by leveraging the resources, expertise and creative culture of private sector and non-governmental entities.\" As with USAID's GDA, the GPC was focused on mainstreaming the use of PPPs as a tool throughout the department, rather than establishing and managing its own partnerships.\nIn January 2009, soon after the Obama Administration took office, the GPC became the Global Partnership Initiative (GPI), housed within the Office of the Secretary of State and led by a Special Representative for Global Partnerships. The change appears to indicate the importance that the Obama Administration places on what then-Secretary of State Clinton called the \"new generation of partnerships.\" The elevation within State was intended to make the division more effective in leading State efforts, in addition to providing more clout in interagency efforts. The transition, however, did not come with any additional resources.\nWhile the State Department often supports partnerships that have development objectives, its interests are primarily diplomatic. Common objectives of State Department PPPs are enhancing the United States' reputation and visibility abroad and building relationships between people with common interests that transcend political and cultural divisions. For example, the Global Women's Mentoring Partnership, begun in 2006, places emerging women leaders from all over the world in three-week mentoring programs in the United States with women chosen as Fortune 's Most Powerful Women Leaders. State provides grants to an NGO to manage program logistics and vets candidates through overseas posts, while Fortune provides mentors with appropriate expertise and experience whose companies pay for the international air travel and per diem expenses of the participants. In the 2008 Breast Cancer Global Congress, State partnered with the Avon Foundation to organize a one-day forum in Germany to connect experts and public health representatives from more than 40 countries to share ideas and encourage public-private initiatives related to the treatment of breast cancer. Currently, GPI is focusing on four broad \"flagship partnerships,\" under which a variety of partnership activities fall:\nAccelerating Markets Partnership, a collaboration between business, government and civil society intended to bring innovation and pooled resources to business challenges to increase economic value along with positive social and environmental impact. The partnership is being implemented first in Brazil, with a focus on the housing and the environment sectors. International Diaspora Engagement Alliance (IDEA), which promotes and supports diaspora-centered initiatives in entrepreneurship, volunteerism, philanthropy, diplomacy, and social innovation, including annual Global Diaspora Forums since 2011 and diaspora business plan competitions in Africa, Latin America, the Caribbean, and the Pacific Islands.\nGlobal Alliance for Clean Cookstoves (see text box below).\nPartnership for a New Beginning (PNB), established in 2010 to bring together American private sector leaders and their counterparts in Muslim communities. State does not provide funds to support PNB partnerships, but describes its role as the convener of the alliance, which includes the Aspen Institute, Coca-Cola, and the Stonebridge Group among its leading partners.\nUnlike USAID, the State Department often plays the role of convener or facilitator for alliances, rather than a resource partner. It contributes leadership, credibility and a broad ideological framework for partnership activities that are implemented and largely supported by other entities, including other U.S. agencies.",
"While USAID and State are the key U.S. players in development PPPs, several other U.S. agencies work with the private sector on international development issues. The Millennium Challenge Corporation (MCC) is in many ways well positioned to utilize PPPs for development, as the agency works in countries that have shown a commitment to open markets and fighting corruption, and should be attractive to private investors. MCC encourages private sector engagement during the formation of country compacts as a means of leveraging additional resources and enhancing sustainability. The agency has a \"Private Sector Initiative Toolkit\" that gives guidance on four types of private sector engagement, including risk-sharing infrastructure activities with private companies, such as co-financing of a wastewater treatment plant expansion in Jordan. However, most MCC work with the private sector does not reflect the development alliance model promoted at State and USAID, but rather involves the contracted outsourcing of public services, such as the maintenance of a rehabilitated airport in Mali or the provisions of health or sanitation services.\nThe U.S. Trade and Development Agency (USTDA) and the Overseas Private Investment Corporation (OPIC) also use PPPs in their mission to advance both economic development and U.S. commercial interests in developing and middle-income countries. USTDA supports infrastructure development and fair trade by providing technical assistance, feasibility studies, and \"reverse\" trade missions intended to spur private investment by filling information gaps and improving the business environment. For example, USTDA provided $540,000 to the Georgian International Energy Corporation to fund a study, conducted by a U.S. company, to examine the possibility of recovering methane from coal mines in Georgia. OPIC provides U.S. businesses with financing, guarantees, political risk insurance, and other support to enable investment in emerging markets, which may lead to economic growth and jobs within both the United States and developing countries. For example, OPIC has worked with public and private partners to provide political risk insurance to Apache Corp., a U.S. natural gas producer, to allow it to continue gas and oil development in Egypt after the Arab Spring made such insurance difficult to obtain. While such activities are PPPs, development professionals disagree over whether they are foreign assistance activities, given the strong emphasis on supporting U.S. commercial interests. This type of partnership, however, appears to align well with the Administration's view that development policy must extend beyond aid to promote trade and private investment.\nJust about every U.S. agency involved in foreign assistance is also involved in development PPPs, often as partners in alliances created or managed by USAID. For example, the Department of Agriculture is a partner in the Sustainable Forest Alliance, contributing its forestry expertise to efforts to combat illegal logging in the Amazon. The Department of Energy provides technical and financial support to the Clean Cities Program, a PPP that promotes alternative fuel vehicles. The Department of Justice has partnered with USAID and local entities in the Criminal Justice Strengthening Alliance in South Africa.",
"In addition to the United States, most other major bilateral aid donors are increasingly working with the private sector as well. Some of these activities are quite similar to USAID alliances, such as a BMZ (German development agency) partnership with Kraft Foods to benefit small-scale cocoa farmers in Côte d'Ivoire through market-oriented sustainable production techniques. Others focus on helping their national businesses establish a foothold in developing countries, much like USTDA activities, and to provide funding directly to corporate partners. The Canadian development agency uses PPPs, for instance, to support investment studies and pilot programs, covering up to 75% of the cost of viability studies and startup investments of Canadian firms in developing countries. One example is a CIDA-funded study to explore the viability of a Canadian business to drill hand-pumped water wells and provide related maintenance and repair services in Togo. The United Kingdom's Department for International Development (DFID) uses \"challenge funds,\" through which private businesses apply for grants to help establish new business ventures or improve the development impact of existing ventures, in developing countries. The African Enterprise Challenge Fund, for example, awards competitive grants to private sector companies anywhere in the world to support new and innovative business models in Africa, while the Food Retail Industry Challenge Fund provides grants to partnerships that bring UK grocery retailers together with African food producers to establish \"fair trade\" supply chains.\nMultilateral development institutions have also made increasing efforts in the past decade to leverage private sector resources to achieve development goals, in various forms. The United Nations launched the UN Global Compact in 2000, with the goal of aligning international business practices with broad UN priorities, including the Millennium Development Goals. The compact counts more than 6,000 companies from 135 countries as participants, but is more about promoting corporate social responsibility than partnership between specific public and private entities. The work of the World Bank's International Finance Corporation (IFC), which provides finance and advisory services to private sector enterprises in most developing countries, could also be considered a multilateral PPP model. IFC bills itself as a convener of private sector players in development, bringing foundations and charitable organizations together with businesses to address shared development goals.",
"PPPs have become more common because both public and private partners believe PPPs achieve shared goals more effectively than each partner could by acting alone. Commonly cited advantages of PPPs include the following:\nShared Risks and Resources. While development officials are quick to point out that PPPs are not primarily a means of saving taxpayer dollars, sharing the cost and financial risks of development activities is a key attraction of modern partnerships that involve joint resource contributions. Both the government and private entities are sometimes willing to participate as partners in a project they would not be able or willing to support in its entirety. Partnership may also allow for project implementation on a larger scale, and for cost savings based on scale, resulting in each partner achieving a greater development return on its investment (or a diluted cost of failure). Sustainability. A common criticism of traditional development activities is that they never become self-sustaining and fade away when government funding ends. PPPs attempt to avoid this problem by tapping into core business interests and making sustainability profitable. In the SUCCESS Alliance, for example, small Vietnamese cocoa farmers were integrated into Mars's global supply chain, having elevated their cocoa production and processing to international standards with assistance from USAID, Mars, and the World Cocoa Foundation. In theory, market demand should sustain the partnership and the improved farmer incomes. While the sustainability argument seems logical and is supported by anecdotal evidence, there has been no comprehensive study of how PPP sustainability compares to that of non-PPP approaches. Market Access/Networks. Corporations and private entities often have networks of customers, suppliers, supporters, and employees that can broaden the reach of a development program beyond where a development agency could go. By partnering with MTV in several regional alliances, for example, USAID tapped into a vast global audience of young people for its messages against human trafficking and promoting HIV/AIDS prevention in the EXIT alliance. MTV, for its part, saw an opportunity for positive public relations and an association with USAID that could potentially enhance its reputation in developing countries. Technology and Intellectual Property. Effective use of technology, which many experts believe is crucial to economic development, can be a daunting challenge in developing countries. Through partnering with Cisco, Microsoft, and other global technology companies, development agencies are able to overcome technical, legal, and financial barriers to accessing certain technology. The technology companies, in turn, are developing relationships and support infrastructure to position themselves to compete for the next generation of technology consumers, many of whom will live in developing countries. Cutting-Edge Business Practices. While USAID and other federal aid agencies can provide technical expertise in a wide range of development sectors, they often do not have the specialized industry knowledge that a private company has. In Guatemala's Inclusive Market Alliance for Rural Entrepreneurs (IMARE), for example, Walmart supplies crucial market information that augments the impact of technical assistance and access to credit provided through NGO partners by enabling better farm planning and quality control of targeted crops. More than 600 rural small-scale farmers earned higher incomes by selling to the region's largest retailer, while Walmart strengthened its supply chain. In partnering with Sesame Street , USAID gained access to advanced pedagogy and production capacity, while Sesame Street was able to extend its global reach into more developing countries. Reputation Enhancement. Positive public relations are often a significant consideration for corporate entities entering into PPPs. Partnering with a U.S. government entity can lend legitimacy to a private entity, and association with development activities can enhance a corporation's reputation for being socially responsible. The Small Export Vegetable Alliance in Zambia, for example, was inspired in part by private sector partner Agroflora's desire to project a more populist image. The company was concerned that land seizures in neighboring Zimbabwe could spread to Zambia and affect its business if it was not seen as benefitting smallholder Zambian farmers. Participating organizations and corporations may also anticipate that partnerships will improve their relationships with national and community leaders.",
"The advantages of partnerships from a business perspective are sometimes viewed as points of concern from the development perspective. While many development experts see PPPs as having the potential to be mutually beneficial, some are also wary of unbalanced partnership relationships and the resource demands of partnership management leading to a number of potentially negative impacts. Among the most often-cited concerns are the following:\nManagement Burdens and Inadequate Evidence of Value Added. Most PPPs require more time and effort to design and implement than traditional contract-based development programs. Considerable effort is required to manage the partner relationships and fulfill the reporting needs. It is difficult to judge whether this effort is justified by development impact because evaluation efforts to date—of both PPPs and traditional development projects—have not been particularly useful for demonstrating whether or not PPPs have more development value than other approaches to development assistance. Without a standard definition of PPP within and across government development agencies, meaningful evaluation of PPPs as a development tool has been difficult, and critics have asserted that development resources may be better directed toward more proven aid models. Distortion of Development Priorities. Some development officials are concerned that opportunities to access private resources through partnerships can pull mission staff away from established country plan priorities. The availability of private funding, they argue, is hard to ignore, even when a proposed partnership does not fit well within an established mission priority. Given very limited staff resources at many USAID missions, the opportunity cost of following through on PPPs that are not necessarily aligned with stated mission priorities can be high. To guard against this, agencies often seek private sector participation in existing development programs and plans. However, lack of private sector involvement in the initial planning phase is often cited as hindering PPP effectiveness and sustainability. Disadvantage to Least-Developed Countries and Individuals. Some development experts have expressed concern that the type of private capital flows that have spurred modern PPPs are concentrated in the relatively advanced developing countries. They assert that the emphasis on leveraging these flows through PPPs could steer more aid resources to these countries at the expense of the poorest countries, particularly in sub-Saharan Africa, where opportunities for such partnerships may be limited. It has been suggested by analysts, for example, that WHO's participation in GAVI has hindered its commitment to bringing traditional vaccines to the hardest-to-reach populations, as it diverts resources toward supporting new vaccines for better-served communities. The majority of PPPs created by USAID and other U.S. bilateral agencies are funded through mission budgets rather than a central account, reducing the potential for PPPs to influence country and regional funding levels. Still, some argue that the use of PPPs, particularly those involving global corporate partners, can increase development disparities within countries by introducing international standards. The concern that those who are relatively well off and better able to meet international standards will prosper, while those who cannot—often the most poor and least educated—will fall farther behind, is common to almost all aspects of globalization. Unfair Advantage to Private Partners. PPPs raise potential concerns about taxpayer funds supporting private interests and possibly creating unfair advantages for private participants. However, there are risks as well as potential benefits to partners, and USAID neither gives money to private partners nor guarantees any share of a partnership's product. For example, while Starbucks may benefit from establishing a positive reputation among Rwandan coffee growers through participating in an alliance with USAID to improve coffee production practices in the country and establish growers' cooperatives, the Rwandan cooperatives may still sell their improved products to Dunkin' Donuts if it makes a better offer. Bad Bedfellows. While PPPs can enhance the reputation of all involved, there is the potential for damage to U.S. agencies through association with disreputable private sector entities. USAID tries to avoid such problems by vetting potential corporate partners for social responsibility using a due diligence process, but concerns persist. Some development professionals are uneasy, for example, about USAID partnering with extractive companies in Angola, the Democratic Republic of the Congo, and Ghana because of the corruption and exploitation often associated with these industries. On the other hand, partnerships could incentivize more responsible business practices. One official explains that USAID partners only with companies that agree to support and conform to the Extractive Industries Transparency Initiative and other recognized industry best practices related to transparency, human rights, security, and environmental practices. Threat to American Jobs. Observers have expressed concern that PPPs may in some circumstances support the outsourcing of American jobs to developing countries. This could be particularly true for partnerships that link developing country producers with global supply chains, creating potential competition with American suppliers, or partnerships that promote employment skills and training that may put beneficiaries in competition with American workers. For example, USAID has been criticized by Members for partnering with technology and outsourcing companies in Sri Lanka to provide advanced information technology training to local workers, who are then provided on-the-job training in business process outsourcing and call center support by partner companies. USAID was funding an English language training component of the program in Sri Lanka, which has been suspended, further raising concerns about competition with American workers. Such concerns are not unique to PPPs, however. Foreign assistance programs have always had to strike a balance between improving economic opportunities in developing countries (with the objective of supporting U.S. humanitarian, commercial, and security interests) and ensuring that such assistance does not create a competitive disadvantage for Americans.",
"The 113 th Congress may consider U.S. foreign assistance programs from a variety of perspectives. The Administration's Quadrennial Diplomacy and Development Review (QDDR) and Presidential Policy Directive on Global Development initiated reforms related to aid efficiency and effectiveness that are ongoing. The 113 th Congress may play a significant role in this process through appropriations legislation and oversight hearings. Moreover, significant fiscal constraints have many legislators looking at foreign assistance programs as potential sources of savings. Public-private partnerships are one approach to foreign assistance that Congress is likely to consider as part of a broader review of foreign aid policies and activities. As part of that consideration, the following issues may be of particular interest and relevance to lawmakers.",
"PPPs appeal to many observers as a potential means for government to do more with less by sharing the cost burden of development among a broader range of stakeholders. The State Department's Global Partnership Initiative (GPI) was originally proposed as a \"force multiplier for appropriated funding,\" and to \"yield efficiencies and cost savings,\" while USAID's Global Development Alliance (GDA) concept sought to \"create a bigger pie\" for development assistance. Partnerships to date have been evaluated largely by the amount of private development funds they have leveraged. However, officials most active in partnership building are slow to tout any cost savings from this approach, arguing that the most strategic partnerships are those that do not necessarily leverage the greatest funding but bring technology, networks, or skills that would not otherwise be accessible to official development activities. Furthermore, the staff time needed to negotiate and adequately monitor PPPs can be substantially more than is required for traditional forms of aid implementation, and these costs are not reflected in leverage ratios. Nevertheless, in the face of budget constraints, the 113 th Congress may look to private sector engagement as a means of sustaining development programs while reducing official aid levels. The Administration suggested such an approach in recent budget proposals, requesting reduced funding for the African Development Foundation and the Inter-American Foundation while suggesting that they could maintain current program levels through partnerships with the U.S. government and the private sector.",
"PPPs can have both a positive and negative impact on meeting the United States' international development commitments. Increasing use of PPPs can support, in part, the global partnership goals of the Millennium Declaration. When partnerships involve other official development agencies, they can also support donor coordination goals, consistent with commitments in the Paris Declaration on Aid Effectiveness, which the United States signed in 2005. However, an increasing use of PPPs could undermine other international donor commitments. For example, in supporting the Paris Declaration and the follow-on Accra Action Agenda and Busan Partnership, the United States committed to making greater use of recipient country budget and procurement systems and supporting recipient country development programs rather than independent projects that are not incorporated into recipient country budget and policy processes. Some might argue that providing assistance through PPPs could further undermine that effort by emphasizing the common goals of donors and private sector interests rather than the common goals of donor and recipient country governments, and by using private resources that cannot be \"on-budget.\"",
"The Obama Administration's global development policy, officially announced in September 2010, acknowledges the roles and responsibilities of the many nonofficial entities that have a stake in international development. Much of its emphasis on PPPs, however, seems to be focused on trade policy and the promotion of foreign direct investment as tools for economic growth and development. This approach is consistent with the policy's emphasis on foreign aid as a single component of a broader U.S. development strategy. Increasing attention to non-aid drivers of development, prompted by both strategic and budgetary pressures, may bring new support to partnership models oriented more toward trade and investment promotion than traditional assistance projects. USAID's Private Capital Group for Africa, a relatively new platform to facilitate greater private investment in Africa, is one example of this move toward broader private sector engagement. Some observers also anticipate the Overseas Private Investment Corporation may take a more prominent role in U.S. development policy in the coming years, reflecting a shifting emphasis in private sector engagement. OPIC reauthorization legislation may be considered in the 113 th Congress, and some development experts have proposed that Congress take this opportunity to expand OPIC's authorization and reform its rules to enable the agency to play a more significant role in mobilizing private investment in developing countries.",
"Many development officials involved in partnerships report that the standard foreign assistance procurement rules and the unpredictability of future year budgets are significant obstacles to partnership formation. Procurement regulations and processes, particularly at USAID, have long been considered overly bureaucratic and a reflection of a risk aversion at the agency that some call prudent and others view as driving the agency into obsolescence. The procurement system is sometimes challenging in the context of modern PPPs, resulting in agencies having a hard time being proactive with the private sector. Agency officials report that it is hard to maintain a long-term relationship with private partners because of competition requirements, and slow approval processes make companies feel uncertain about commitment. Procurement reforms are a key component of the ongoing USAID Forward reform agenda, but a progress report indicates that change has been slow with regard to PPPs. While the USAID Forward goals include investing 10% of mission program funding in PPPs by FY2015, the agency was far short of that goal, at 1.7%, in FY2012.\nThe annual appropriations process also makes it hard to plan and commit to multiyear time frames. The lack of predictability increases transaction costs and raises uncertainly to a level where, some officials report, corporate partners do not see government agencies as dependable partners. USAID's original GDA utilized an incentive fund, set aside for PPPs, as a means of making funding more predictable. Funds were provided out of the Development Assistance appropriations account and were intended to encourage partnership building and smooth the process by making funds more readily available. The prevailing view, however, was that the incentive fund distorted mission objectives and kept PPPs out of the mainstream.",
"While USAID was long the U.S. government leader on PPPs for development, other agencies have become more active in this field in recent years. The State Department has moved toward a leadership role on PPPs with the GPI, which was established, in part, to coordinate international PPPs for the whole of government. The QDDR addressed but did not resolve the interagency issue, stating that \"State and USAID will standardize the partnership process through a uniform partnership template\" and \"create a central database of all existing partnerships so that U.S. agencies and potential partners know what we are doing, with whom, and where.\" In recent years, the two agencies appear to have developed a compatible if not uniform approach to PPPs. State has established broad partnership platforms, such as the International Diaspora Engagement Alliance and the Accelerating Markets Partnership, and USAID and other agencies develop partnerships in support of these platforms when there are opportunities consistent with their mission. With respect to a central database, a joint State/USAID data call was reportedly issued in fall 2012 to implement this requirement, but the resulting data are not yet publically available. Congress may seek greater organizational clarity as part of foreign aid reform legislation, or may be asked to provide funding or authorities to implement additional integration measures.",
"PPPs may pose potential challenges to congressional control and oversight of development activities, as Congress does not have the same control over private funds as it does over appropriated funds. Theoretically, this means that development officials could work around congressional restrictions on agency activities by developing PPPs in which restricted activities are funded and carried out by private partners. Such concerns are largely hypothetical, but they raise the issue of how Congress can best manage public resources involved in PPPs. A further challenge to oversight stems from inconsistent data quality associated with private partner contributions. USAID Inspector General audits in 2005 and 2009, for example, found that data on private partner contributions to USAID alliances did not meet the agency's data quality requirements and may not be reliable for use in decision making within the agency and, presumably, by Congress. While the agency has revised its guidance and reporting process in response to these audits, the ongoing difficulty of applying consistent valuation standards across a diverse array of partnerships has led the Private Sector Alliances office to agree to add a disclaimer of sorts when reporting public-private partnership resource data, noting the nature and limitations of the available information."
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"question": [
"What has been the trajectory of the resources in the past decades?",
"Why are development assistance agencies working with private sector entities?",
"Why are private sector partners valuable to the government?",
"How are modern public-private partnerships viewed?",
"Why would partnering with private sectors be beneficial?",
"What might a private sector gain through partnership?",
"How are PPPs viewed after a decade?",
"What has prompted these mixed reviews?",
"What are others’ opinions on the PPPs?",
"What are some concerns about the PPPs' outcomes on jobs?",
"How are partnership proponents viewed?"
],
"summary": [
"The flow of private sector resources to developing countries has increased significantly in recent decades.",
"Seeking opportunity in this changing environment, government development assistance agencies such as the U.S. Agency for International Development and the State Department are working with private sector entities in unprecedented ways to determine when and if such partnerships can lead to improved development results.",
"As explained in the Obama Administration's 2010 Quadrennial Diplomacy and Development Review (QDDR), \"private sector partners can add value to our missions through their resources, their capacity to establish presence in places we cannot, through the technologies, networks, and contacts they can tap, and through their specialized expertise or knowledge.\"",
"Modern public-private partnerships (PPPs), characterized by joint planning, joint contributions, and shared risk, are viewed by many development experts as an opportunity to leverage resources, mobilize industry expertise and networks, and bring fresh ideas to development projects.",
"Partnering with the private sector is also widely believed to increase the likelihood that programs will continue after government aid has ended.",
"From the private sector perspective, partnering with a government agency can bring development expertise and resources, access to government officials, credibility, and scale.",
"Now a decade after the formation of USAID's Global Development Alliance (GDA), PPPs for development have received mixed reviews.",
"PPPs require significant effort to create and manage, and critics argue that inadequate data exist to demonstrate that these efforts are the most effective way to use limited development resources.",
"Others have expressed concern about partnerships diverting resources away from proven development programs or recipients.",
"Still others are concerned that PPPs, particularly those involving corporate partners and focusing on trade and economic growth, may lead to outsourcing of U.S. jobs.",
"Some feel that the goal of mainstreaming the PPP model as a tool for development has been achieved, while others contend that the potential for using PPPs in development has only begun to be realized and that expanded partnerships are the future of development assistance."
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GAO_GAO-13-619
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{
"title": [
"Background",
"Missions and Organizations Involved in Accounting for Missing Persons",
"Missing Persons Accounting Process",
"Leadership Weaknesses and Fragmented Organizational Structure Undermine DOD’s Capability and Capacity to Accomplish Missing Persons Accounting Mission",
"Development of Community-wide Plan Is Impeded by a Fragmented Approach to Planning and Disputes among Community Members",
"DOD Guidance Does Not Clearly Articulate Roles and Responsibilities for All Accounting Community Organizations",
"DOD Does Not Have Agreements in Place to Conduct Missing Persons Operations Outside of PACOM’s Area of Responsibility",
"DOD Accounting Community Has Not Established Criteria to Prioritize Potentially Recoverable Missing Persons from Conflicts Other Than the Vietnam War",
"Some Communication Efforts Are Ad Hoc, and Required Personnel Files Have Not Been Fully Developed",
"Accounting Community’s Fragmented Organizational Structure Exacerbates Weaknesses in Leadership",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Questionnaire to Accounting Community Members",
"Appendix II: Scope and Methodology",
"Appendix III: Noninteractive Graphic and Text for Figure 1",
"Appendix IV: Noninteractive Graphic and Text for Figure 4",
"Appendix V: Comments from the Department of Defense",
"Appendix VI: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"",
"DOD’s current missing persons accounting mission began largely in response to public concerns raised during and after the Vietnam War. The mission originally focused on recovering missing persons from the Vietnam War. It has evolved over time into an enduring mission for the department. In 1994, DOD was required to provide certain assistance to the families of missing persons from the Korean Conflict and the Cold War. In 1996 the scope of the missing persons mission expanded to include DOD contractors. In 2000 members of the armed forces who were lost in the Pacific theater during World War II flight operations were added to the mission. In 2009 all World War II losses, along with Persian Gulf War losses and those from any other conflicts designated by the Secretary of Defense, were added to the mission.\nMany organizations play a role in DOD’s efforts to account for missing persons. Section 1509 of Title 10 of the United States Code defines DOD’s Prisoners of War/Missing in Action accounting community as including the following members who are assigned roles by statute or by DOD directives and instructions:\nThe Deputy Assistant Secretary of Defense (DASD) for Prisoner of War/Missing Personnel Affairs is responsible for, among other things, exercising policy, control, and oversight for the entire process of accounting for missing persons; monitoring and advocating for program funding requirements and resources for the mission; and leading and coordinating related communications efforts, such as the public outreach program. The DASD reports to USD Policy, who is responsible for developing, coordinating, and overseeing the implementation of DOD policy to account for personnel unaccounted for as a result of hostile acts.\nThe Defense Prisoner of War/Missing Personnel Office (DPMO) was established within DOD in 1993 to provide centralized management of Prisoner of War/Missing in Action (POW/MIA) affairs in order to enhance the efficiency, effectiveness, and responsiveness of DOD’s efforts in addressing these issues. DPMO’s mission is to lead the national effort to account for personnel—including members of the armed forces on active duty, DOD civilian employees, or employees of a DOD contractor—who are missing as a result of hostile action, and the mission establishes the conditions necessary to recover those who become isolated during operations. DPMO is responsible for, among other things, overseeing archival research and standardizing procedures for methodology and prioritization; rendering final analytic judgments as to what constitutes fullest possible accounting for each case by identifying possibilities for future action, or determining when no further pursuit is possible; and defining, maintaining, and enumerating accounting lists. The DPMO Director is responsible for overseeing the execution of DPMO’s mission and duties. In addition, the DASD for Prisoner of War/Missing Personnel Affairs serves as the DPMO director and reports to USD Policy in that capacity as well.\nThe Joint Prisoner of War/Missing in Action Accounting Command (JPAC) is responsible for conducting operations in support of achieving the missing persons accounting mission. In 2003 JPAC was established as a Joint Command by the merger of the Joint Task Force-Full Accounting with the Central Identification Laboratory – Hawaii in order to achieve unity of command, permanence of operational elements, and efficiency and effectiveness in the use of DOD’s resources, as well as to strengthen the command and control of military forces in achieving the fullest possible accounting. JPAC’s functions include analysis, archival research, investigations, recoveries, repatriations, identifications, and reporting. The Central Identification Laboratory is the laboratory component of JPAC. JPAC reports to the U.S. Pacific Command (PACOM).\nThe past conflict accounting section of the Armed Forces DNA Identification Laboratory conducts DNA analyses of remains of missing persons from past military conflicts for JPAC and its laboratory component, the Central Identification Laboratory, and maintains the past conflict accounting family reference sample database, to include processing of all DNA references. The Armed Forces DNA Identification Laboratory is part of the Armed Forces Medical Examiner System, which reports to the Army Surgeon General.\nThe Life Sciences Equipment Laboratory provides technical and analytical support to the accounting community, and is primarily tasked by JPAC’s Central Identification Laboratory to analyze and identify life science equipment-related artifacts that have been recovered and may potentially be related to missing persons cases. The Life Sciences Equipment Laboratory is part of the Air Force Materiel Command.\nThe service casualty offices serve as the primary liaison for families concerning missing persons recovery and accounting. Officials from these offices also assist families and help explain the methods used to account for their missing loved ones. Additional activities include gathering family DNA reference samples, coordinating responses to family inquiries and concerns, and maintaining family contact information.\nIn addition to these members of the missing persons accounting community, several other organizations play a role in the missing persons accounting process, including the following:\nThe Office of the Under Secretary of Defense for Personnel and Readiness coordinates casualty matters among the military services, other federal agencies, non-profit organizations, and family support groups. In addition, this organization provides policy guidance to the military services and other agencies on casualty reporting, recording, notification, and legislation affecting casualty matters, and develops issuances on mortuary affairs. Additionally, this organization develops policy requiring personnel recovery in DOD component education and training programs.\nThe Chairman of the Joint Chiefs of Staff is responsible for monitoring program funding requirements and resources for the execution of the personnel accounting mission, and for supporting joint manning requirements for joint accounting organizations in coordination with PACOM.\nThe Office of the Under Secretary of Defense for Intelligence coordinates with other non-DOD intelligence organizations and agencies and appropriate DOD agencies as necessary to promote intelligence information-sharing and to support missing persons accounting operations. According to Defense Intelligence Agency officials, the Office of the Under Secretary of Defense for Intelligence has delegated responsibility for coordinating on missing person accounting operations to the Defense Intelligence Agency.\nThe State Department assists the accounting community by providing diplomatic support on an as-needed, country-by-country basis, according to State Department officials. These officials explained that each State Department country desk coordinates with DPMO and JPAC when their diplomatic support is requested.\nFamily and veterans organizations serve as constituency groups to the accounting community. The accounting-for goal and other accounting community mission requirements were developed in part with support from several of these organizations. DOD’s policy is to establish and maintain an open dialogue with non-federal entities and private citizens and offer them advice regarding how they can responsibly assist official efforts to recover missing persons and bring closure to families, without giving preferential treatment to any entity or individual.",
"Accounting for persons missing from past conflicts is a multi-step process, as summarized below in figure 1.\nAs of May 2013, DOD reported that more than 83,000 persons remained missing or unaccounted for from past conflicts in Vietnam, Korea, the Cold War, the Persian Gulf, and World War II. As shown in figure 2 below, missing persons from World War II comprise more than 73,000, or about 88 percent, of this total. Of the missing from all conflicts, DPMO estimates that about 44,000 are believed to have gone missing on land, and about 39,000 over water. Missing persons are believed to be located within the areas of responsibility of every geographical combatant command. For example, more than 1,400 persons were reported missing somewhere within the Northern Command area of responsibility, in areas that include the United States and Canada.\nSince the early 1970s, DOD has identified the remains of and accounted for approximately 1,910 previously missing persons. Of the 1,910 missing persons who were accounted for as of May 15, 2013, 999 persons, or about 52 percent, were from the Vietnam War; 652, or about 34 percent, were from World War II; 239, or about 13 percent, were from the Korean War; and 19, or about 1 percent, were from the Cold War; and 1 person was from Iraq and other conflicts. Figure 3 below shows, by conflict, the number of missing persons accounted for from 1993, when DPMO was created, through July 18, 2012.\nDPMO conducts periodic updates and annual government briefings for families of missing persons. These events are designed to keep family members informed of the U.S. government’s worldwide mission to account for those still missing, as well as to discuss in detail the latest information available about specific cases. DPMO invites family members who live within a 350-mile radius of these events, which are held up to eight times a year in major metropolitan areas. In addition, DPMO invites families to the annual briefings held for the Vietnam and Korean/Cold War conflicts. Service casualty offices coordinate case reviews with family members attending these briefings. At these meetings, government officials from the accounting community make formal presentations, hold question and answer sessions, and meet one-on-one with family members.\nAn additional purpose of family outreach is to obtain DNA samples, known as family reference samples, from family members of missing persons. DOD often uses DNA transferred from mother to child, known as mitochondrial DNA sequencing, or various forms of nuclear DNA testing to support an identification or, conversely, to help exclude individuals. For example, in cases where there may be commingling of remains, scientists will use mitochondrial DNA sequences to divide the commingled remains into smaller groups, and will then use nuclear DNA to further distinguish individuals. To correlate remains with a specific individual known to be missing, scientists determine the mitochondrial and/or nuclear DNA sequence from an extract taken from a bone or tooth that was recovered. By comparing that sequence to a family reference sample, they can either exclude or provide supportive evidence of the maternal relationship to a particular family. To do this, scientists need a database with both mitochondrial and nuclear DNA samples from the families of the unaccounted-for servicemembers.",
"While DOD has made some progress in promoting collaboration and communication among members of the missing persons accounting community, its capability and capacity to accomplish its missing persons accounting mission is being undermined by longstanding top-level leadership weaknesses and a fragmented organizational structure. Leadership from both the Under Secretary of Defense for Policy (USD Policy) and PACOM have not been able to resolve disagreements between key members of the accounting community. DOD Directive 2310.07E assigns to USD Policy responsibility to develop, coordinate, and oversee implementation of policy to account for personnel unaccounted-for as a result of hostile acts. In addition, the Deputy Assistant Secretary of Defense for Prisoner of War/Missing Personnel Affairs (DASD), under USD Policy, has statutory responsibility for policy, control, and oversight of the entire accounting process. PACOM officials told us that the directive assigns responsibility to USD Policy to develop and coordinate policy on personnel accounting, and that PACOM has not been required or called upon to resolve or mediate any issues between DPMO and JPAC. However, the directive requires PACOM, among other things, to establish clear, direct, and expeditious lines of communication on personnel accounting matters between JPAC and the DASD, and to work in consonance with the DASD, DPMO, and other stakeholders, as appropriate, to search for, recover, and identify remains of personnel unaccounted for as a result of hostile acts. Therefore, PACOM, like USD Policy, has a coordinating role to play in the accounting community. We have previously reported that collaborating agencies benefit from having overarching plans to align activities and resources; clearly defined roles and responsibilities; agreements articulated in formal documents; frequent communication; and a single designated leader. However, as of June 2013, DOD had not completed a community-wide plan enabling it to increase its capability and capacity to account for missing persons so that the community has sufficient resources to ensure that at least 200 missing persons are accounted for annually beginning in fiscal year 2015. While members of the accounting community have credited the current DASD with improving areas such as trust and communication, we found that problems persist and impede DOD’s efforts to ensure the effective and efficient accomplishment of the mission. Specifically, we identified issues related to planning, roles and responsibilities, conducting operations outside of PACOM’s area of responsibility, having criteria to prioritize cases, communication, and other areas discussed below. Moreover, the fragmented organizational structure—with each member of the accounting community reporting to a different line of authority—has exacerbated these problems, such that a majority of accounting community members believe that alternative structures would be more effective.",
"While DOD has made some progress in drafting a community-wide plan to increase its capability and capacity, as of June 2013 DOD had not completed a community-wide plan. Community-wide planning to meet the accounting-for goal established by Congress has been impeded by disputes and by a lack of coordination among members of the missing persons accounting community, with DPMO and JPAC developing two competing proposed plans, neither of which encompassed the entire community. DOD programmed funding for JPAC’s proposed plan, but key parts of this plan are not being realized. In the absence of a community- wide plan, the members of the accounting community have had varied success in independently identifying and obtaining resources to help meet the goal. Until DOD finalizes a plan that encompasses the support and participation of all accounting community members, these members will be challenged to obtain the resources necessary to increase their capability and capacity to meet the accounting-for goal, and DOD’s ability to achieve that mandated increase may be at risk.\nDisputes and a lack of coordination characterized the initial response of the missing persons accounting community to the increased accounting- for goal, as illustrated by the development of competing proposed plans by two key accounting community organizations, DPMO and JPAC. We have previously reported that overarching plans can help agencies better align their activities, processes, and resources to collaborate effectively to accomplish a commonly defined outcome. However, in response to the accounting-for goal established by Congress, USD Policy and PACOM allowed for the development of and supported two competing proposed plans for obtaining additional funding and resources to meet the mandated capability and capacity, even though neither proposed plan encompassed the entire accounting community. PACOM officials said that although they review and comment on JPAC products, PACOM has no control over the plans of DPMO, which is not a PACOM subordinate organization.\nPub. Law No. 111-84, § 541 (2009).\nJPAC’s capability and capacity to support an increased number of operations in PACOM’s geographic area of responsibility. The second proposed plan, developed by JPAC and PACOM, called for JPAC to increase its capability and capacity and have responsibility for worldwide investigations and recoveries—that is, both inside and outside of PACOM’s geographic area of responsibility; and also called for the creation of a satellite remains identification laboratory in the continental United States, under JPAC’s control. The other accounting community members and their resource needs were not mentioned in either proposed plan. According to DPMO officials, in May 2010 USD Policy intended to recommend the DPMO proposed plan as the better approach for DOD to select.\nJPAC disputed USD Policy’s proposal to recommend the DPMO plan and, according to JPAC officials, expressed the view that a better solution which focused on would be to continue to pursue its proposed plan,what JPAC alone would need to reach the accounting-for goal. JPAC refined its proposed plan, with the approval and support of PACOM, and submitted a request to PACOM and then the Joint Staff through the program budget review process asking for an additional $216 million over fiscal years 2012 through 2016, and an additional 251 personnel. According to DPMO officials, neither the Joint Staff nor USD Policy provided oversight or intervention in the disagreement at that time. These officials stated that such oversight and intervention could have helped JPAC and DPMO to resolve their impasse by improving communication, interaction, and cooperation.\nThe dispute concerning the two competing proposed plans was resolved through DOD’s Program Budget Review Process, after being assessed by a DOD-wide team led by DOD’s Office of Cost Assessment and Program Evaluation (CAPE). CAPE officials stated that a senior-level panel composed of three-star level military officers and civilian counterparts ultimately supported JPAC’s proposed plan. These officials said that the recommendation was presented to a four-star level panel of military officers and civilian counterparts chaired by the Deputy Secretary of Defense. In a DOD resource management decision issued in January 2011,resources for JPAC over fiscal years 2012 through 2016, including an additional 253 personnel (a more than 60 percent increase over JPAC’s 2011 level).\nAlthough DOD programmed increases in funding and personnel for JPAC, key parts of JPAC’s plan are not being realized. The plan requires an initial surge in investigative missions, to be followed by increased efforts for recovery missions and then identifications in subsequent years. While JPAC initially began hiring additional personnel and conducting additional operations as called for by its plan, JPAC officials told us that the planned rates for increasing investigation and recovery missions were not feasible, in part because JPAC was unable to include the planned number of investigation and recovery missions for fiscal year 2013 and beyond when developing its operational plans. In addition, JPAC’s plan called for 114 sites to be added to the master excavation list in fiscal year 2012, but only 56 sites were added in that year. Further, the JPAC plan presumed there would be five recovery missions each year for the Korean War, but a planned recovery mission in North Korea was cancelled in 2012 due to political developments and it is unknown when the political environment will again enable access to that country.\nAccording to JPAC and DPMO officials, some of the shortfalls associated with the JPAC plan’s increases could be made up by including identifications from disinterments. JPAC’s plan did not include any identifications resulting from disinterments of unknown personnel who are buried at memorial cemeteries around the world,unknown personnel who had already been buried with honor previously as identifications of were given a lower priority by DOD policy. However, JPAC and DPMO officials told us that in the future, disinterments are expected to comprise a substantial source for identifications. JPAC stated that it has the potential to achieve more than 100 identifications from disinterments annually, but only to the extent that disinterments are not a detriment to JPAC’s field operations. DPMO officials said it was their intent that no more than 50 percent of identifications would come from disinterred persons. JPAC has established a dedicated disinterment cell to investigate and identify cases that would be likely candidates for disinterment, according to comments from JPAC on a draft of this report. Moreover, DPMO and JPAC officials expressed uncertainty over whether there would be widespread support within the department for a large number of disinterments. For example, JPAC reported that a request to disinter remains from the U.S.S. Oklahoma was denied by the Navy.\nJPAC officials explained that they have identified some new methods having the potential to improve their efforts, such as placing more investigative capabilities in JPAC’s forward detachments and using contractors in some locations to help locate potential recovery sites. However, changes to JPAC’s operating environment—such as the decreased number of investigation and recovery missions, the inability to access North Korea, disinterments, and JPAC’s new methods—have not yet coalesced into a revised plan. As of May 2013, the JPAC plan had not been updated to reflect any of these changed circumstances, and JPAC officials told us they did not expect the JPAC plan to be updated until after a community-wide plan had been finalized. As a result, it is unclear whether JPAC’s current execution of its planned operations and personnel increases will enable it to develop the necessary capability and capacity to meet the accounting-for goal.\nWhile the community has taken some recent steps to draft a community- wide plan as directed by the 2009 memo from the Deputy Secretary of Defense, as of May 2013, the JPAC plan, which does not incorporate the larger accounting community, is DOD’s only plan to increase capability and capacity to account for missing persons. We have previously reported that interagency collaboration can be hindered when agencies have different planning processes and funding sources to plan for and conduct their national security activities, which can result in a patchwork of activities that waste scarce funds and limit the overall effectiveness of federal efforts. An increased number of identifications will require the support of as well as participation from other members of the accounting community. For example, the Armed Forces DNA Identification Laboratory will have to increase the number of DNA analyses it performs in order for JPAC to support an increased number of identifications, and the service casualty offices will have to communicate with increased numbers of families and arrange and budget for more funerals every year. According to JPAC officials, when their competing plans were being developed, there was never a community gathering to discuss how to increase DOD’s capability and capacity to account for missing persons.\nIn 2012 the new DASD/DPMO Director, who was a former JPAC Commander, made an effort to mend relations between DPMO and JPAC and develop a community-wide plan to address the accounting-for goal. DPMO officials told us in June 2012 that they were trying to develop such a plan, incorporating the already funded JPAC plan, and that they intended to complete the plan within 6 months. Since that time, DPMO has instituted several positive steps. For example, it established a task team, known as the purple team, with representation from all community members to work on developing the community-wide plan and resolving areas of disagreement in the community. DPMO also initiated a “lean six sigma” review,community. The report resulting from this review made several recommendations related to areas such as organizational alignment, strategic planning, accounting strategy, and process and technology. DPMO officials said that the report was not received by DPMO until May 2013, and that DPMO plans to take actions to address some of these recommendations. However, DPMO officials told us in January 2013 that disagreements between JPAC and DPMO had hindered progress in developing the community-wide plan. According to both DPMO and JPAC officials, the areas of disagreement included topics such as (1) the which evolved to encompass the entire accounting division of research and analysis responsibilities between DPMO and JPAC, (2) determination of the appropriate levels of effort for each of the various conflicts, and (3) agreement on a policy to address lower priority cases that have been on JPAC’s list of potential recovery sites for a long time. As of June 2013, DPMO and JPAC officials said that the areas of disagreement had been informally resolved and needed to be documented. DPMO has developed a draft of the community-wide plan, but DPMO officials explained that the draft would not be sufficiently comprehensive to share for review among the community members until it included the resolved areas of disagreement. The officials stated that the revised timeframe for finalizing the community-wide plan is by the end of calendar year 2013.\nWithout a community-wide plan, the accounting community organizations have had varied success in identifying and obtaining funds and resources to meet the accounting-for goal. Moreover, there is no community-wide process to provide resources for the missing persons accounting mission. While DOD guidance designates the DASD as being responsible for advocating for program funding requirements and resources for implementation of the missing persons accounting mission, each member organization of the accounting community has its own processes for requesting resources, because they belong to diverse parent organizations, and these processes are not integrated or coordinated. Based on funding data provided by each organization, DOD’s obligations for the accounting mission have risen each year since fiscal year 2008, as shown in table 1 below, with obligations from JPAC and the Army casualty office showing most of the increases over this period. JPAC received the most funding each year, followed by DPMO, and then the Armed Forces DNA Identification Laboratory.\nJoint Prisoner of War/Missing in Action Accounting Command Armed Forces DNA Identification Laboratory Marine Corps service casualty office Air Force service casualty office Totals may not add due to rounding.\nIn response to the accounting-for goal, the accounting community members obtained varying levels of additional resources. JPAC along with the Marine Corps and Army casualty offices successfully obtained additional resources to support the increased goal. The JPAC plan that was integrated into DOD’s budget request proposed to provide JPAC with 253 additional personnel and $312 million in additional funding over fiscal years 2012 through 2016. According to JPAC officials, although JPAC was on track to implement the programmed personnel and budget growth to increase its capability and capacity, the DOD civilian workforce cap and the budget reductions and expected furloughs associated with sequestration placed those increases at risk. For example, JPAC had planned to hire 91 civilians in fiscal year 2013; however, JPAC officials explained that JPAC was granted an exception to the workforce cap to hire 6 personnel in fiscal year 2013. Without the ability to hire additional personnel, the officials said JPAC will be very challenged to meet the growth in planned operations, which could jeopardize its ability to meet the accounting-for goal. For example, in fiscal year 2013 JPAC had planned to conduct 36 joint field activities (which include multiple recovery missions and investigation missions in a specific country), and that number has been reduced to 30 joint field activities. The Marine Corps added one additional civilian position in its casualty office starting in fiscal year 2013. With the drawdown in the conflicts in Iraq and Afghanistan, Marine Corps officials said that they expected the demand for current loss cases to decrease as the workload from past cases potentially increases, thus enabling workload to be assigned to other staff personnel as needed. To address the accounting-for goal, the Army requested and received authorization to hire 10 additional civilian personnel to support the increased requirements associated with the addition of World War II to the accounting mission.\nDPMO, the Navy, and the Armed Forces DNA Identification Laboratory each intend to request additional resources through the DOD budget process to support the increased accounting-for goal. Officials from all of these organizations told us that if they did not receive additional funding, their ability to meet the accounting-for goal would be negatively affected. After DPMO’s proposed plan to address the accounting-for goal was disapproved in 2010, DPMO officials said they had made no progress in identifying or developing any additional capability and capacity requirements that would be needed at DPMO. However, in conjunction with the community-wide planning efforts, in late 2012 DPMO began assessing its funding and resource needs to meet the accounting-for goal, and DPMO officials told us they would request funding for any identified needs as part of the budget process for fiscal years 2015 through 2019. The Navy POW/MIA Branch has requested additional funding and personnel each year since the accounting-for goal was established, as part of the Navy’s internal budget development process, but it has not received any additional resources. The Navy POW/MIA Branch has submitted a budget estimate for fiscal year 2015 to its leadership, requesting three additional personnel to begin a World War II branch, but as of May 2013 Navy officials said that no decision had been made on this proposal. The officials told us that, because 2015 is the year when the increased accounting-for goal takes effect, they expect this issue to become a higher priority in the future for the Navy to include in its budget submission to the Office of the Secretary of Defense.\nArmed Forces DNA Identification Laboratory officials told us that unless additional resources are approved, the laboratory will be unable to meet increased demand, creating a bottleneck in JPAC’s ability to meet the increased number of identifications. Officials projected that their laboratory would need to increase the number of DNA analyses it performs from about 1,300 to approximately 2,600 specimens each year. With their current personnel and funding levels, officials explained that the laboratory cannot provide the necessary support for the increased requirements. The laboratory requested additional funding and personnel as part of the Army’s budget formulation process for 2 consecutive years, but the Army did not approve its requests for additional resources. Armed Forces DNA Identification Laboratory officials said that in November 2012 they again requested additional funding and personnel for fiscal years 2013 and 2014 through the Army’s internal budget process, and this request was under consideration as of May 2013. In addition, the officials said that the laboratory submitted a request as part of the Army’s budget formulation process for additional personnel and funding for fiscal years 2015 through 2019, and as of May 2013 this request was still under consideration by the Army.\nThe Armed Forces DNA Identification Laboratory also identified some other funding and personnel challenges. First, some of the equipment it uses to perform DNA analyses has been discontinued and will not be serviced by the manufacturer and must be replaced prior to fiscal year 2016, but equipment replacement costs have not been programmed into its budget. The laboratory included the funds needed to replace this equipment in its request for additional resources. Second, laboratory officials explained that funding concerns prevent management from easily rebalancing staff workload as needed to adjust to changes in demand for different types of DNA analysis. For example, according to officials, the laboratory lacks the flexibility to easily redirect contractors who typically perform nuclear DNA analysis for current conflicts to perform that same type of DNA analysis on specimens from past conflicts, because of the different way in which these efforts are funded. Third, these officials expressed concern with the laboratory’s heavy reliance on contractor personnel, who provide all of its scientific and technical support. They stated that if the current personnel provider loses the contract, the laboratory’s entire scientific staff might have to be replaced and all DNA analyses would cease until new individuals are hired and trained according to accredited forensic standards.\nThe Air Force’s efforts in meeting the missing persons mission are performed by both its mortuary affairs and its casualty offices, and the casualty office has expressed a need for additional resources. The Air Force mortuary affairs office does not intend to request additional resources as officials there said they believe they have sufficient resources for the mission. Because the Air Force was not established until 1947, subsequent to World War II, all missing persons from World War II era air losses are handled by the Army casualty office. However, Air Force casualty office officials stated that they need three additional positions to support the mission, because three positions were eliminated in 2012 as the result of an Office of the Secretary of Defense budget decision and in anticipation of a merger of the Air Force casualty and mortuary affairs offices. However, the casualty office officials said the merger of the two offices is now on indefinite hold, and they still have a requirement for these three positions. They further stated that they may request funding for additional personnel some time in the future, and that the Air Force casualty office’s ability to support the mission may be degraded without additional resources.\nThe Life Sciences Equipment Laboratory does not intend to request additional resources to increase its capability and capacity at the present time. Life Sciences Equipment Laboratory officials said that neither they nor the Air Force could justify seeking additional resources to increase their capability and capacity without receiving a more definite demand for an increase in their services from DPMO or JPAC, which they have not received. These officials stated that they expected additional funding would be needed for the equipment laboratory to keep pace with increased demand for their analyses; however, JPAC told the equipment laboratory that they did not forecast any increased requirements for the Life Sciences Equipment Laboratory. Until DOD finalizes a community- wide plan, that addresses the resource needs of community members, as well as changes in planned operations and the extent to which disinterments will be performed, the accounting community will be challenged to justify the resources it needs to increase DOD’s capability and capacity to account for at least 200 missing persons a year by 2015.",
"While DOD is working to revise its existing guidance and develop new guidance, the roles and responsibilities of the various members of the missing persons accounting community are not all clearly articulated in existing DOD directives or instructions. We have previously reported on the need for collaborating agencies to work together to define and agree on their roles and responsibilities. Such guidance can help agencies overcome differences in missions, cultures, and ways of doing business by providing strategic direction for activities and articulating a common outcome toward which they can collaboratively work. DOD has established several directives and instructions related to the missing persons accounting program. However, none of this guidance clearly delineates the specific roles and responsibilities of all the organizations comprising the missing persons accounting community in the key areas that we examined. Disagreements over roles and responsibilities where the guidance is broad or vague enough to support different interpretations have led to discord, lack of collaboration, and friction among the community’s members, and particularly between DPMO and JPAC. For example, DPMO views itself as having primary responsibility for research and analysis, and its officials expressed concerns to us over the increased research and analysis role performed by JPAC. Similarly, JPAC views itself as having the lead on operational activities, such as conducting investigation and recovery missions, and JPAC officials expressed concerns with DPMO’s plans to conduct some operational activities. Conflicting views such as these have contributed to the ongoing disputes between the two organizations. Moreover, the lack of clarity in the guidance has given rise to overlapping and fragmented efforts among accounting community members. We have previously reported that overlap in efforts may be appropriate in some instances, especially if agencies can leverage each others’ efforts. In other instances, overlap may be unintended, may be unnecessary, or may represent an inefficient use of U.S. government resources. As described in table 2, in implementing the accounting mission, overlapping and duplicativeefforts have led to inconsistent practices and inefficiencies in four key areas: (1) equipment and artifact identification and analysis, (2) research and analysis, (3) investigations, and (4) family outreach and external communications.\nJPAC and the Life Sciences Equipment Laboratory disagree about the laboratory’s roles and responsibilities for equipment and artifact identification and analysis, and DOD guidance is vague regarding those responsibilities. DOD Directive 2310.07E directs JPAC to work in “consonance” with, among others, the Life Sciences Equipment Laboratory to search for, recover, and identify remains, as appropriate.\nThe PACOM transition planshall establish or continue its working relationship with the Life Sciences Equipment Laboratory. However, neither document specifies or differentiates the roles and responsibilities of the Life Sciences Equipment Laboratory and the JPAC Central Identification Laboratory for equipment and artifact identification and analysis. A memorandum of agreement governing work between JPAC and the Life Sciences Equipment Laboratory was negotiated in 2004, but this agreement does not establish clear roles and responsibilities in several areas. As a result, the interactions between JPAC’s Central Identification Laboratory and the Life Sciences Equipment Laboratory have been inefficient and ineffective and have led to underutilizing government resources, as the following examples demonstrate. that established JPAC states that JPAC First, JPAC and Life Sciences Equipment Laboratory officials disagree about the value provided by the equipment laboratory’s analyses. JPAC’s life support equipment analysis capability overlaps with the analysis that the Life Sciences Equipment Laboratory provides. A JPAC official stated that the equipment laboratory’s current operational support serves as unnecessary overlap. JPAC stated that its life support investigators are able to produce reports that are adequate to support an identification and are produced under faster timeframes than the reports prepared by the Life Sciences Equipment Laboratory. In contrast, Life Sciences Equipment Laboratory officials stated that their capabilities are complementary to JPAC’s. These officials recognized JPAC’s need for artifact expertise in the field, but noted that JPAC’s field analysis reports do not have the same fidelity as the laboratory analysis they provide. In addition, JPAC officials said that they had discussed concerns about the length and utility of the Life Sciences Equipment Laboratory’s reports, but that the equipment lab had made no changes to address JPAC’s concerns. DPMO officials stated that DPMO has been working with the Life Sciences Equipment Laboratory to make their reports better conform with what JPAC would like to receive, and better enable the equipment laboratory to contribute to the accounting mission.\nSecond, JPAC officials criticized the Life Sciences Equipment Laboratory for not providing timely analyses when JPAC’s Central Identification Laboratory sent materials to the equipment laboratory, noting that cases can go from being unresolved to resolved while the equipment lab is preparing its report. However, we found that about half of the cases that JPAC’s Central Identification Laboratory sent to the Life Sciences Equipment Laboratory for analysis in 2011 and 2012 had already been resolved, and Life Sciences Equipment Laboratory officials told us they did not intend to conduct any analysis of those cases’ items. Records of the Life Sciences Equipment Laboratory show that of the 27 cases JPAC sent during this 2-year period, 13 had been accounted for prior to JPAC’s sending the artifacts and a fourteenth was accounted for 2 weeks after JPAC sent the artifacts. The memorandum of agreement governing work between JPAC and the Life Sciences Equipment Laboratory does not indicate whether it is appropriate for JPAC to request the Life Sciences Equipment Laboratory to analyze resolved cases, but it would appear that no utility is provided by a Life Sciences Equipment Laboratory report that is requested and prepared after the missing person has already been accounted for, as it would be duplicative of any report that had been prepared by JPAC to support the identification. Life Sciences Equipment Laboratory officials stated that their analysis was unnecessary for those cases, and that expending scarce resources and staffing to work on a resolved case was not a sound business practice and would constitute a waste of government resources. JPAC officials explained that in the past, they retained all materials until a recovery site had been closed—which can take years—and that older case work associated with resolved cases or cases with little prospect of identification were not routinely submitted to the equipment lab. However, in response to criticism from the Life Sciences Equipment Laboratory, JPAC officials said that they changed procedures and now send all Vietnam-era life support materials to the Life Sciences Equipment Laboratory at least quarterly, regardless of whether a case has been resolved.\nThird, JPAC and Life Sciences Equipment Laboratory officials disagree about roles and responsibilities in terms of which conflicts and types of equipment the Life Sciences Equipment Laboratory can analyze. JPAC officials told us it is unlikely that they would forward case work to the Life Sciences Equipment Laboratory for conflicts other than Vietnam, and that they do not send ground equipment remnants to the equipment laboratory, regardless of conflict. These officials stated that the Life Sciences Equipment Laboratory’s core expertise was the Vietnam War era and life sciences aircraft equipment, and that the lab’s competency with regard to World War II sites was no greater than JPAC’s capabilities. Conversely, Life Sciences Equipment Laboratory officials stated that their capabilities can support analysis of cases for conflict periods ranging from World War I through current military operations for all military services, and that their mission includes analyzing artifacts recovered at aircraft crash or ground action loss sites. The 2004 memorandum of agreement between JPAC and the Life Sciences Equipment Laboratory states that the Life Sciences Equipment Laboratory has the capability to provide analysis for equipment from World War II, Korea, Vietnam, the Cold War, and current day conflicts. The agreement focuses on aircraft equipment but is otherwise very general as to the types of artifacts to be provided to the equipment laboratory. According to Life Sciences Equipment Laboratory officials, its facilities house military aircraft, other equipment, and artifacts from conflicts dating back to World War I, with a significant amount from World War II, and they have the capability to analyze aircraft and other equipment artifacts from multiple conflicts. Life Sciences Equipment Laboratory officials expressed concern that JPAC and its Central Identification Laboratory are trying to exclude the Life Sciences Equipment Laboratory from the accounting process by downplaying its potential contributions. Until DOD guidance or the memorandum of agreement between JPAC and the Life Sciences Equipment Laboratory is revised to more clearly define their roles and responsibilities, including the appropriate scope of the equipment laboratory’s case work, the inefficient and ineffective interactions between the two organizations are likely to continue.\nDOD guidance is unclear regarding the research and analysis responsibilities of DPMO and JPAC. DOD Directive 2310.07E states that the responsibilities of the Director of DPMO include overseeing archival research; standardizing procedures for methodology and prioritization; conducting national and international archival research; and coordinating with JPAC, which also conducts archival research, to improve efficiency and prevent duplication of effort. However, the directive does not provide details regarding DPMO’s specific research and analysis responsibilities, and does not provide a detailed description of JPAC’s responsibilities. The October 2003 PACOM transition plan that established JPAC does not provide clarification and states that JPAC will conduct archival research and other analysis. While JPAC’s standard operating procedures document delineates its research and analysis responsibilities, it states that the authority to perform these responsibilities come from the DOD directive and PACOM. However, neither the directive nor the transition plan clearly delineates JPAC’s responsibilities with regard to research. DPMO and JPAC officials both told us that the absence of defined responsibilities in the areas of research and analysis has been a source of disagreements between the two organizations. DPMO officials told us that their organization has the lead responsibility to perform research and analysis, while JPAC officials contended that they have a role particularly as it relates to supporting investigations and recovery missions. Until DOD clarifies and differentiates DPMO’s and JPAC’s respective research and analysis responsibilities, the two organizations will continue to have overlapping functions, and disagreements are likely to continue.\nDOD guidance is also unclear with respect to defining investigation responsibilities for DPMO and JPAC, and this lack of clarity has enabled each organization to develop its own operational roles, which overlap one another. For example, both DPMO and JPAC conduct investigations for missing persons from World War II in Europe. DOD Directive 2310.07E states that the DASD shall exercise policy, control, and oversight within DOD for the entire process of accounting for missing persons, but it does not mention what role, if any, DPMO should play in performing investigations. Further, the directive does not describe JPAC’s investigation responsibilities. JPAC’s 2013 operational plan states that JPAC conducts worldwide investigation, recovery, and laboratory operations to identify missing personnel from past conflicts in order to support DOD’s personnel accounting mission, and that JPAC’s functions include field investigations. JPAC officials contend that they are DOD’s primary operational organization for accounting for missing persons, and that JPAC’s operational responsibilities include having the primary role in conducting investigations. In contrast, DPMO officials told us that their organization also has an operational role, particularly as it relates to performing investigations of World War II missing persons in many European countries. DPMO officials told us that JPAC does not have the capability and capacity to perform the investigative work for all World War II cases by itself, and that DPMO has the personnel and expertise to perform some investigations. Although the purple team has recommended that JPAC perform all operational functions, in May 2013 DPMO officials told us that the disagreement between DPMO and JPAC regarding investigation responsibilities had been resolved and that DPMO will be conducting investigations for World War II cases outside of PACOM’s area of responsibility. However, this resolution has not yet been documented. Until DOD clarifies and differentiates DPMO’s and JPAC’s investigation responsibilities, the two organizations will continue to have overlapping functions, and disagreements are likely to continue.\nWhile there is limited DOD guidance regarding family outreach and external communications roles and responsibilities for DPMO and the service casualty offices, there is no guidance on JPAC’s roles and responsibilities in this area. DOD Directive 5110.10 states that DPMO shall establish and lead a communications and outreach program in coordination with, among others, the service casualty offices to share information with a variety of external stakeholders, including families of unaccounted-for personnel, and shall serve as an advocate for families throughout the accounting process. Further, this directive states that DPMO will conduct communications and outreach with families of unaccounted-for personnel through the appropriate service casualty offices. DOD Instruction 1300.18 states that the military departments shall maintain a service casualty office as a focal point on all casualty matters and the concerned component will notify, advise, and assist the primary next of kin in cases where the individual is deceased or missing. Neither the directive nor the instruction mentions JPAC’s role in this area, and the JPAC transition plan does not mention JPAC’s role either. In addition, the guidance does not specify how DPMO, JPAC, and the service casualty offices are to coordinate family outreach responsibilities with one another. To carry out its family outreach and external communication responsibilities, DPMO organizes periodic updates and annual government briefings to keep family members informed and discuss their specific cases. Although guidance does not assign a specific family outreach goal to JPAC, JPAC’s 2010 annual report notes that JPAC conducts some family outreach activities by hosting numerous private tours for family members and providing operational briefings and individual family meetings at nine family update events. Service casualty office officials told us they serve as the primary liaison for families. They coordinate the briefings for the families concerning case status and developments through the regularly scheduled updates and annual government briefings organized by DPMO, as well as notify family members of an identification and assist them with funeral arrangements. None of the family organizations with which we spoke raised concerns about DOD’s having several organizations involved with family outreach and external communications. However, without clear guidance regarding the roles and responsibilities for each organization, there is potential for inconsistent communication of information to family members and external parties.\nSince 2010, DPMO has attempted to address the above-described issues surrounding the accounting community organizations’ roles and responsibilities by developing new guidance or revising existing guidance, but these efforts have not been completed. DPMO has drafted a revision to DOD Directive 2310.07E and has also drafted a new DOD instruction to provide more clarity with regard to roles and responsibilities. As of May 2013, however, neither the draft instruction nor the revised directive had been finalized, because the drafts had been stymied by disagreements among community members regarding their respective roles and responsibilities as stated in the drafts. DPMO and JPAC––the two primary community organizations––disagreed with regard to several areas of their respective roles and responsibilities. For example, JPAC’s initial comments on the draft instruction expressed disagreements about issues such as the role of the Armed Forces Medical Examiner, the responsibilities of JPAC and PACOM versus the other combatant commands, and JPAC’s specific roles and responsibilities in areas such as research and analysis and investigations. Subsequent disagreements on a later draft included similar issues, and DPMO officials held a meeting with JPAC officials to resolve some of these issues. Both DPMO and JPAC officials said they have made progress in addressing these areas of disagreement, and DPMO officials stated that they hoped to have the draft directive finalized by September 2013 and the draft instruction published by March 2014. Because the drafts of these documents are still under revision, it is unclear whether the final guidance will clarify the roles and responsibilities sufficiently to address the four areas of overlap and disagreements discussed above. Until DOD issues its revised directive and new instruction that more clearly define the roles and responsibilities of all the accounting community organizations, these areas of inefficient overlap may continue, and the disputing factions within the accounting community may continue to hinder future progress.",
"While JPAC has negotiated an agreement with European Command governing JPAC’s operations in Europe, JPAC has not established agreements or other appropriate mechanisms with the other combatant commands to conduct operations outside of PACOM’s area of responsibility. DOD Directive 2310.07 applies to personnel unaccounted for as a result of hostile acts in Operations Desert Shield and Desert Storm, the Indochina War era, the Korean Conflict, the Cold War, and World War II, as well as those who may be unaccounted for after the cessation of future conflicts. This directive states that the commanders of the combatant commands are responsible for supporting personnel accounting operations within their areas of responsibility. It also states that PACOM has designated JPAC as the command office of primary responsibility for personnel accounting matters pertaining to losses due to hostile acts, and that PACOM shall exercise combatant command authority over JPAC.\nInvestigations and recoveries associated with World War II may require operations in combatant command areas other than PACOM, and combatant commands have expressed differing opinions as to whether PACOM should conduct worldwide operations to support the missing persons accounting mission. DOD estimates that more than 73,000 persons are missing from World War II and are located in the areas of responsibility of all geographic combatant commands (see figure 2 above). For example, an estimated 1,444 are missing in Northern Command’s area of responsibility, and 997 are missing in Africa Command’s area of responsibility. JPAC and its predecessor organization were originally placed within PACOM because DOD’s accounting efforts were focused on persons unaccounted-for from the Vietnam and Korean conflicts. While the establishment of JPAC to conduct operations in support of the missing persons accounting mission was approved by the Deputy Secretary of Defense and coordinated with the joint staff when JPAC was formed in 2003, the scope of the accounting mission has expanded since then, and the statutory addition of all World II losses in 2009 has increased the likelihood that JPAC will need to operate in all of the combatant commands’ areas of responsibility. According to DPMO officials, some combatant commanders did not agree that PACOM should conduct worldwide operations because these operations are beyond the span of a single geographic combatant command and contrary to the intent of the Unified Command Plan. JPAC, however, maintains that its placement within PACOM continues to be appropriate in part because about 70 percent of missing persons are believed to be located in countries and seas within that command’s area of responsibility.\nIn anticipation of the increased activity in European Command’s area of responsibility related to World War II cases, JPAC and European Command updated their 2007 memorandum of agreement governing JPAC’s operations. The updated agreement, signed in April 2013, specifies European Command’s and JPAC’s responsibilities and procedures for conducting investigations and recoveries in European Command’s area of responsibility. The stated purpose of the updated agreement is to enable JPAC to accomplish its assigned mission objectives while respecting European Command’s enduring relationships with nations within its area of responsibility. The agreement does not confer JPAC with tasking authority over European Command personnel and activities.\nJPAC officials told us that the statutory requirement to increase DOD’s capability and capacity, along with JPAC’s recognition of the need to expand operational activity in European Command’s area of responsibility, contributed to their decision to update the agreement with European Command to establish more robust processes. The officials explained that JPAC will have to conduct significantly more investigations and recoveries than previously, including in countries where JPAC has not routinely conducted operations. However, DPMO officials told us that another reason for the updated agreement with European Command was to address concerns from that command, as well as criticisms from embassies and the joint staff, regarding some accounting efforts that had been conducted in Europe. DPMO officials said that complexities sometimes arise when interacting with foreign countries, explaining that the archaeological laws and cultural considerations governing the excavation, handling, and transport of human remains can be very different in each European country, and can vary from JPAC’s customary mode of operations in the Asia-Pacific region. DPMO officials said that foreign governments have their own protocols, cultural norms, and ways of doing business, so to accomplish tasks and address misunderstandings or obstacles, individuals who perform recovery operations should coordinate closely with the combatant command that possesses the knowledge, experience, and insight about these foreign countries. While the updated agreement with European Command represents a positive step toward addressing these issues, JPAC has not negotiated similar agreements or other appropriate mechanisms with any of the other combatant commands. We have previously reported that articulating agreements in formal documents can strengthen agencies’ JPAC officials explained that commitment to working collaboratively.JPAC will seek agreements with other combatant commands as needed as the accounting community expands its routine operational activities to include the areas of responsibility of other combatant commands. Moreover, the commander of JPAC stated that regardless of the existence of memoranda of agreement, JPAC considers coordination with other combatant commands as an imperative in its operations. Nonetheless, until these imperatives are formalized in memoranda of agreement or other documents specifying roles and responsibilities and negotiated with all of the combatant commands in which DOD may need to operate in its efforts to account for missing persons, future missing persons operations may be adversely affected due to unexpected operational or diplomatic concerns.",
"While DPMO has established criteria to prioritize recovery efforts for missing persons from the Vietnam War, the DOD accounting community is hampered in its ability to estimate how many recoveries can reasonably be expected from other conflicts, because DPMO has not established criteria that can be used to prioritize missing persons cases by reflecting feasibility of recovery. DOD Directive 2310.07E calls for DPMO to define, maintain, and enumerate government lists to account for missing persons. It further requires DPMO to render final analytic judgments as to what constitutes the fullest possible accounting on each case by identifying possibilities for future action and determining when further investigation must be deferred, pending new information or determination that no further pursuit is possible that may recover remains. One of the goals of DPMO’s research and analysis efforts is to develop a comprehensive list of missing persons information for all past conflicts starting with World War II, and to prioritize the missing persons cases according to probability of recovery, according to DPMO officials.\nDPMO has made some progress toward establishing criteria to prioritize missing persons cases from more recent conflicts, but it has not grouped the cases from World War II into categories to help the accounting community prioritize further investigations or recoveries of those cases. DPMO officials told us they rely on conflict-specific information in ascertaining why each individual is unaccounted for. According to these officials, their most precise information pertains to missing persons from the Vietnam War, for which a total of 1,647 persons are currently unaccounted-for. The Vietnam War missing persons cases are categorized as either “further pursuit,” “no further pursuit,” or “deferred.” In contrast, DPMO officials said they have the least information about World War II missing persons, in part because of the sheer magnitude of the number (more than 73,000). Although DPMO has developed what officials consider to be a comprehensive list of World War II missing persons, they have not yet developed categories or other criteria comparable to the “pursuit” and “no further pursuit” categories used for Vietnam War missing persons to help them prioritize their efforts for World War II. In recent years, DPMO has undertaken an effort to develop more detailed and complete information on the specific loss circumstances for World War II cases, and has completed this work on 14,000 cases. As of May 2013, DPMO has not established a date by when it expects to complete this effort for all World War II cases. According to DPMO officials, the information they have for Korean War missing persons is not as refined or detailed as that for Vietnam War missing persons, but it is more detailed than the information for World War II missing persons.\nOf the more than 83,000 missing persons who have yet to be accounted for, DOD officials told us that recovery of only an estimated 25,000 to 35,000 persons can be reasonably expected, due to the circumstances of some of the losses. According to DPMO officials, between 48,000 and 58,000 of the missing were in airplanes or ships lost over inaccessibly mountainous regions throughout the world or in deep water, and these persons cannot feasibly be recovered using technology available today. DPMO estimates that almost 40,000 of World War II missing persons were lost over deep water and are not recoverable. These officials emphasized that this number is an estimate, and that until they do further analysis they will not be able to determine whether missing persons in an aircraft fell on land, shallow water, or deep water; and ultimately, which of the missing persons have the potential to be recovered.\nDPMO officials told us that while they have enough information to support the conclusion that large numbers of unaccounted-for persons are not recoverable by means of current technology, they are concerned about the reactions this conclusion might elicit from relatives of the missing persons and from veterans and family organizations. Expressing their empathy with such family members, these DPMO officials told us that some family members hold out hope that the remains of their loved ones can still be recovered, and that family members sometimes challenge information presented to them, even when the information positively identifies the remains. Officials from some family and veterans organizations, however, told us that they would find it preferable for DOD to use a smaller and more realistic number for estimating those missing persons who are potentially recoverable, rather than the 83,000 figure the department currently cites. JPAC officials told us that DPMO is responsible for developing criteria that prioritizes cases, and that such criteria would help JPAC to determine those cases having the best potential for recovery and improve their ability to evaluate their performance. Until DOD establishes criteria that can be used to prioritize and determine the number of recoveries the department can reasonably expect, the accounting community will remain unable to accomplish its efforts to account for missing persons in the most efficient and effective way possible.",
"While efforts have been made to improve communication among the accounting community members, some communication efforts are still ad hoc, and the accounting community has not fully developed personnel files, as required by statute, to share information within the community. We have previously reported that frequent communication among collaborating agencies is a means to facilitate working across agency boundaries and to prevent misunderstandings.\nMembers of the accounting community have credited the current DASD/DPMO Director with taking some recent steps to build trust and cooperation through increased and improved communication among accounting community members, but some of the new communication efforts have not been formalized. For example, community-wide monthly meetings and two week-long conferences have been broadly supported by the accounting community as positive steps toward building unity and have resulted in greater collaboration among community members. Similarly, JPAC has involved DPMO in the development of JPAC’s fiscal year 2014 operational plan, and various officials within the community said that JPAC has also begun sharing its completed operational plans with other community members. Several community members stated that having access to JPAC’s operational plan has helped them in planning and managing their work. Further, JPAC’s Central Identification Laboratory began giving service casualty offices earlier notification of pending identifications. Service casualty officials explained that this has allowed them to start researching and updating next-of-kin contact information in advance, thereby expediting notifications to the next of kin after JPAC’s Central Identification Laboratory completes the identification.\nThese improvements among the accounting community over the past year represent an important step toward better collaboration among a group of organizations that have been hampered by longstanding conflicts among key leaders and organizations. However, it is unknown whether these ad-hoc communication improvements within the accounting community would be sustained after a change in leadership, because DOD has not established a mechanism to sustain them, such as the community-wide plan or other accounting community documents. Until the accounting community institutionalizes mechanisms for communication among the different community members, the community is at risk of losing recent gains made in communication, and the community could revert to an atmosphere of dissension and lack of collaboration.\nFurthermore, the Army service casualty office worked with the Armed Forces DNA Identification Laboratory to link their computer systems to better communicate about the status of family reference samples. Generally, to obtain family reference DNA samples, the service casualty offices will first request a genealogy report to identify potential DNA donors; then contact family members to request that they submit a DNA sample, and follow up with family members to help ensure the sample is provided; and finally communicate with the laboratory to determine whether it has processed the sample. Some service casualty officials explained that they did not have visibility over the status of family reference sample requests unless they looked up each case in the laboratory’s system. According to Army officials, for services with a large number of missing persons this level of individual case management was difficult and hindered their ability to set priorities and manage their workload. However, Army officials stated that they have been working to link the Armed Forces DNA Identification Laboratory’s system with that used by all four of the service casualty offices, so that the Army and the other service casualty offices will receive an automated download of family reference sample information. An Army official said that the agreement to transfer the data was approved by all parties in February 2013, but that the laboratory is currently working on a means to correct some data discrepancies. They expect the data file transfers to become routine by June 2013 or soon thereafter. This ability to easily communicate about the status of family reference samples will help all of the service casualty offices ensure that the samples are obtained in a timely manner, explained DNA laboratory officials, so that a potential identification is not delayed due to the absence of a family reference sample.\nNotwithstanding these positive steps toward improving communication and collaboration, the accounting community has not yet established a personnel file for all persons unaccounted-for, as required by statute. DOD is required to ensure that the personnel files contain all relevant information pertaining to a missing person and are readily accessible by all elements of the department involved in the effort to account for the person. After passage of the law that established this requirement,DPMO initiated efforts to convert a case management system under development for personnel recovery efforts for additional use in missing persons accounting efforts. More than $4.8 million was spent in developing this system, but DPMO told us that the effort was ultimately terminated due to such problems as adapting to the changed focus and managing and funding the increased size and scope of the program. Further, according to DPMO officials, the effort was unsuccessful because it was developed without input from or collaboration with any members of the accounting community. DPMO officials told us that DPMO is currently looking for a system that can be used for this purpose, and that DPMO intends to request funds for this effort as part of its budget submission for fiscal years 2015 through 2019. According to DPMO officials, digital case files already exist for all missing persons from the Vietnam and Korean Wars. They said that DPMO, in partnership with the Army and JPAC, has contracted to digitize all of the World War II deceased personnel files, and this effort is expected to be completed in September 2015, although the contract may be extended if needed. Digitizing the World War II records is a large and time-sensitive undertaking due to the large volume of World War II records and the fact that some of these records are stored on media that are at risk of decaying within the next several years, according to DPMO officials. DPMO officials also observed that many other historical records were in danger of loss due to age and decay, and that preservation of such material was critical to building case files and future accounting efforts.\nThe officials said that these digitized files will serve as the starting point for the required personnel files for World War II missing persons. JPAC officials told us that JPAC is also undertaking efforts to digitize its records and other information. Until such personnel files for all unaccounted-for missing persons are developed and made readily accessible, as required by law, the community’s efforts to collaborate on cases will be hindered by lack of information visibility among community members, which could lead to overlapping or duplicative research and analysis efforts as well as incomplete information provided to families.",
"The accounting community’s fragmented organizational structure has exacerbated the weaknesses in its leadership, and a majority of accounting community and DOD stakeholder organizations believe that alternative structures would be more effective. With each accounting community organization reporting under a different line of authority, as shown in figure 4, no single entity has overarching responsibility for community-wide personnel and resources—important levers for providing the capacity to reach DOD’s accounting-for goal. As a result, no single entity can implement or enforce decisions without obtaining widespread consensus. We have previously reported that having a single designated leader is often beneficial because it centralizes accountability for achieving outcomes and can accelerate decision-making.\nConcerns have risen over the years, both within and outside of DOD, with regard to whether DOD’s missing persons accounting community’s current organizational structure enables it to most effectively meet its mission. For example, we previously reported that DPMO’s 2005 strategic plan specified a goal of implementing an organizational structure that would unify missing persons accounting efforts, and that DPMO had also drafted an update to its charter directive consistent with this strategic plan goal that would give DPMO control over the entire process of recovering missing persons. We reported that reactions to early versions of the draft were mixed, with some organizations expressing concern that DPMO would assume more of an operational role than it had previously played. When our 2005 report was issued, the draft charter directive had not yet been finalized but had been revised to scale back DPMO’s role—a revision that was sustained when the directive was ultimately issued.\nIn addition, a 2006 Institute for Defense Analysis study conducted at the request of DPMO analyzed organizational changes that could improve the effectiveness and efficiency of the accounting community. This study concluded that significant improvements could be made by increasing the lines of coordination in the accounting community and by recommending that the community acknowledge DPMO as the leader in the accounting effort. The study also described some of the problems associated with the current organization; for example, that DPMO does not have tasking authority over the other organizations, and that while there are multiple lines of authority, no one organization has effective authority over execution of the entire mission. Furthermore, the December 2009 memo from the Deputy Secretary of Defense, directing the DASD to begin planning a response to the accounting-for goal, noted that reorganizing the personnel accounting community to improve efficiency could be included as part of the planning process. In May 2011 CAPE conducted a study on the proposal to transfer the mission, function, and resources of DPMO from USD Policy to USD Personnel and Readiness. As part of its study, CAPE solicited the opinions of several organizations, and concluded that the mission was being met under the current organizational structure and that no significant efficiencies would be gained from the transfer. During the course of our review, DPMO officials told us that concerns are still being raised about the organization of the accounting community, both within DOD and externally, and that the entire accounting community continues to struggle with efforts to achieve consensus and to establish a structure that will enable the department to most efficiently and effectively achieve the mission.\nWe found that a majority of accounting community and DOD stakeholder organizations believe that an alternative organizational structure for the accounting community would be more effective. We administered a questionnaire asking representatives from each accounting community organization whether various options could improve the ability of the community to meet its mission. One question asked respondents to rank five organizational options that would best enable the accounting community to meet its mission. We found that 12 of the 13 survey respondents who answered the question ranked an option with a more centralized chain of command as the most effective in enabling the accounting community to achieve its mission. Ten of these 12 respondents ranked the current organizational structure as the least effective or second least effective option for achieving the mission of the accounting community. For example, the Life Sciences Equipment Laboratory stated that the current system is fragmented and inefficient due to different reporting chains and is not conducive to community involvement or to establishing standard community policies and procedures, and that having a single leader would better enable the entire accounting community to achieve its mission. Moreover, the Army service casualty office stated that the current structure does not allow for senior leadership involvement, and that having unity of command would allow leaders to focus on the right issues instead of spending time resolving disputes.\nResponses to our questionnaire also demonstrated a lack of confidence about the current organizational structure among many community and DOD stakeholder organizations. We asked respondents to rate the various organizational options with regard to several characteristics that we have previously reported would benefit collaborating organizations, such as defining an overarching mission with clear priorities; limiting areas of overlap or duplication; communicating and operating across agency boundaries; collectively determining necessary resources; defining and agreeing on roles and responsibilities; monitoring progress, evaluating efforts, and identifying areas of improvement; and enabling appropriate involvement of senior leadership. In their responses to each of our seven questions on these issues, at least 10 respondents expressed a lack of confidence in the current organizational structure. For example, at least 12 of the survey respondents indicated that the current organizational structure did not enable or only somewhat enabled the community to develop the mandated capability and capacity, or to collectively determine necessary resources. In addition, nine respondents indicated that the current organizational structure did not at all enable the accounting community to define and agree on their respective roles and responsibilities. The organizations provided detailed comments to elaborate on their responses to the survey questions. For example, the Armed Forces Medical Examiner System stated that the status quo, in any form, is inefficient and promotes a disjointed and disunified effort and that the only way to potentially meet the accounting-for goal would be through unity of effort and clear command and control channels. The Navy POW/MIA Branch stated that a more integrated model would allow for a single agency with increased authority within DOD to create the plan for developing the capability and capacity to account for 200 missing persons per year. The Air Force casualty and mortuary affairs offices stated that an integrated structure would provide a single lead for policy oversight and would eliminate the duplication of operations among accounting community organizations, and that transferring operational missions from a combatant command would eliminate the need for memoranda of agreement between each of the commands for operations and would eliminate the need for JPAC’s budget request to compete for resources with those of other PACOM missions.\nIn contrast, not a single organization ranked the current organizational structure as the most effective organizational option, and only three organizations—USD Policy, PACOM, and JPAC—ranked the current organizational structure as the second most effective organizational option. Illustrating a disconnect between leadership’s perspective and the rest of the community, only two organizations—USD Policy and PACOM, the two existing top-level leadership organizations in the accounting community—responded that the current structure greatly enables appropriate senior leadership involvement. PACOM and USD Policy stated that all of the organizational options, including the current organizational structure, offer access to DOD senior leadership. In addition, senior officials from these offices questioned whether the benefit of reorganization would result in real change and would be worth undergoing turmoil in the organization. While we recognize that a reorganization may pose challenges, such as creating the potential for short-term impacts on operations due to disruption, our findings show that the majority of accounting community members and other stakeholders lack confidence in the status quo, and we believe that the potential benefits of reorganizing and/or clarifying roles and responsibilities could outweigh those challenges.\nThe accounting community’s current organizational structure has contributed to the community’s lack of collaboration, which in turn has contributed to the deficiencies related to planning, roles and responsibilities, requirements, and communication discussed above. Until the Secretary of Defense ensures that activities associated with the accounting mission are efficiently and effectively carried out with unity of command and effort, the inefficient and potentially avoidable overlap and disagreements among the community members may continue, and recovery operations could be hindered by unexpected operational concerns and a lack of standard procedures. Further, if the recent positive gains are lost, the community could revert to an atmosphere of dissension and lack of collaboration.",
"More than 3 years have passed since Congress directed DOD to increase its capability and capacity to account for missing persons and established the accounting-for goal, but the department has yet to establish a community-wide plan to meet these goals in a unified manner by 2015. The lack of involvement by top-level departmental leadership—above DPMO and JPAC—to direct actions to foster unity and agreement in reaching a plan has enabled the organizational disputes that have plagued the department for well over two decades to obstruct progress in developing a community-wide plan. This discord has also contributed to the department’s inability to clarify the roles and responsibilities of the members of the accounting community regarding fundamental functions such as artifact analysis, research and analysis, investigations, and family outreach. While there have been some indications of progress being made by the accounting community, the department’s efforts continue to be thwarted by organizational fragmentation and discord. DOD’s inability to establish criteria that can be used to prioritize and determine the number of recoveries the department can reasonably expect further hinders the department’s overall progress to achieve its mission.\nIn addition, without agreements among the combatant commanders for conducting operations to find missing persons outside of the PACOM’s area of responsibility, future missing persons operations may be adversely affected due to unexpected operational or diplomatic concerns. While efforts have been made to improve communication among the accounting community members, some communication efforts have not been incorporated in DOD guidance and the accounting community has not developed personnel files to share information, as required by statute. Until DOD incorporates mechanisms for communication in its guidance governing the accounting community, the department remains at risk of losing the recent gains attributable to these efforts and of reverting to an atmosphere of dissension and lack of collaboration. Overall, the accounting community’s current organizational structure has contributed to these deficiencies, and the majority of accounting community members and other stakeholders lack confidence in the organizational status quo of the accounting community. Until the Secretary of Defense ensures that activities associated with the accounting mission are efficiently and effectively carried out, the inefficient and potentially avoidable overlap and disagreements among the community members may continue. Collectively, these weaknesses jeopardize DOD’s capability and capacity to accomplish the statutory goals of accounting for missing persons, and to provide some measure of closure to those families whose loved ones are still missing as a result of their service to their country.",
"To enhance DOD’s capability and capacity to accomplish the missing persons accounting mission, we are making the following nine recommendations to the Secretary of Defense.\nTo help unify the accounting community’s fragmented organizational structure, we recommend that the Secretary of Defense examine options for reorganizing the accounting community, and as part of that examination, consider organizational options that provide a more centralized chain of command over the accounting community’s mission.\nTo clarify the specific roles and responsibilities of the accounting community members to help minimize unnecessary overlap and disagreement among community members: direct the Office of the Under Secretary of Defense (Policy) to revise DOD Directive 2310.07E and finalize and issue the new related DOD instruction to supplement this directive. Clarification of roles and responsibilities should be made particularly with respect to the following four functions: equipment and artifact identification and analysis; research and analysis; investigations; and family outreach and external communications. direct the Secretary of the Air Force and direct the Commander, U.S. Pacific Command, or the appropriate departmental entity in light of any reorganization, to negotiate a new memorandum of agreement between the Life Sciences Equipment Laboratory and JPAC. The memorandum should specify which conflicts’ artifacts JPAC should send to the Life Sciences Equipment Laboratory for analysis, the type of artifacts sent, and the priorities according to which the Life Sciences Equipment Laboratory should analyze resolved cases.\nTo more efficiently and effectively develop the capability and capacity to account for missing persons, direct the Office of the Under Secretary of Defense (Policy), or the appropriate departmental entity in light of any reorganization, to take the following actions: finalize the community-wide plan to develop the increased capability and capacity required by statute, with the support and participation of all community members. The initiatives and resources of all members of the accounting community should be integrated within the community-wide plan, including changes in planned operations and in the extent to which disinterments will be performed. establish criteria that can be used to prioritize missing persons cases to reflect feasibility of recovery, in order to better allocate resources and prioritize the department’s efforts to account for missing persons. establish a mechanism for community-wide communication to help sustain the positive gains that have recently been made with respect to communication. formalize the communication procedures for the JPAC Central Identification Laboratory to provide the service casualty offices with advance notification of pending identifications, to better expedite families’ notification of identifications. ensure that DPMO, in coordination with all members of the accounting community, develop personnel files for all unaccounted for persons as required by statute, in order to help avoid potential overlap or unnecessary duplication of effort and to ensure better communication among community members with respect to missing persons cases.\nTo help avert unexpected operational or diplomatic issues that might hinder missing persons operations, direct the Commander, U.S. Pacific Command, and Commander, Joint Prisoner of War/Missing in Action Accounting Command, or the appropriate department entities in light of any reorganization, to develop memoranda of agreement or other appropriate mechanisms with the other combatant commands in whose area of responsibility JPAC is likely to operate.",
"We provided a draft of this report to DOD for review and comment. In written comments, DOD concurred with eight of our nine recommendations and partially concurred with the remaining recommendation. DOD also provided a number of technical comments that we considered and incorporated, as appropriate. DOD’s comments are reprinted in their entirety in appendix V.\nIn agreeing with our first eight recommendations, DOD stated that it: needs to examine options to unify the personnel accounting community’s fragmented organizational structure; will clarify the roles and responsibilities of members of the accounting will negotiate a new memorandum of agreement between JPAC and the Life Sciences Equipment Laboratory; will finalize its community-wide plan to develop increased capability and capacity to account for missing persons; will establish criteria that can be used to prioritize efforts to recover will establish a mechanism for community-wide communications; needs to formalize communication procedures for the organizations identified by the GAO; and will develop personnel files for all unaccounted-for persons.\nWe believe that DOD’s stated intent to focus any reorganization efforts on DPMO and JPAC and possibly the Life Sciences Equipment Laboratory, and to examine options that would place the consolidated organization under a non-geographic combatant command, would meet the intent of our recommendation. Considering that families have been waiting for decades to discover the fate of their loved ones, and in light of the upcoming 2015 date for attaining the accounting-for goal, we believe that DOD’s examination should be completed as quickly as possible. In addition, we are encouraged that the draft directive is now in formal coordination and the draft instruction has been amended to clarify the areas we identified. In the event that the department decides to reorganize in response to our first recommendation, we note that the department would then have to revise its guidance on roles and responsibilities to reflect any reorganization.\nWith regard to our ninth recommendation, that the department develop memoranda of agreement with the other combatant commands in whose area of responsibility JPAC is likely to operate, DOD partially concurred. The department stated that it concurs that there is a need for a formal mechanism to ensure that DPMO and JPAC have the appropriate authorities to operate across combatant commands. However, DOD said that the best mechanism or overarching document may not be a memorandum of agreement, noting that the current and future DOD Directive 2310.07E directs the Chairman of the Joint Chiefs of Staff to operationally implement this directive. DOD stated that the best mechanism is through procedures available to the Chairman of the Joint Chiefs of Staff and the Joint Staff, rather than using memorandums of agreement. DOD said that DPMO will support action by the Joint Staff to carry out that direction. We recommended the development of memoranda of agreement with all geographic combatant commands because that was the vehicle that JPAC used with U.S. European Command, as we discuss in our report, and the agreement with U.S. European Command contained detailed processes governing JPAC’s operations within that command’s area of responsibility that we considered would be beneficial to develop similar agreements with all of the geographic combatant commands. However, if the department believes that a more uniform approach for all of the combatant commands could be developed through guidance or some other mechanism, we agree that it is possible that the intent of our recommendation could be met by a mechanism other than memoranda of agreement with each of the combatant commands. As a result, we are modifying our recommendation to provide the department with the flexibility to consider other appropriate mechanisms that could achieve this outcome.\nWe are sending copies of this report to appropriate congressional committees, the Secretary of Defense, the Chairman of the Joint Chiefs of Staff, the Secretaries of the Army, the Navy, and the Air Force, and the Commandant of the Marine Corps. The report also is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3604 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI.",
"We administered a questionnaire to the accounting community member organizations and several DOD stakeholder organizations regarding their views on alternative options for organizing the accounting community. We received a total of 14 responses out of the 17 questionnaires we distributed. All of the accounting community organizations submitted survey responses. Some organizations did not respond to all questions. For example, of the 14 organizations that provided responses, 13 responded specifically to the question on the option that enables the accounting community organizations to define and articulate an overarching mission with clear priorities. The following summarizes the responses we received from each of the survey respondents. The numbers in the boxes represent the number of organizations that selected the particular response.",
"To assess DOD’s capability and capacity to accomplish the missing persons accounting mission, we analyzed relevant statutes related to DOD’s missing persons accounting program, including the National Defense Authorization Act for Fiscal Year 2010 and Chapter 76 of Title 10 of the United States Code, as well as DOD directives, instructions, memoranda of agreement, standard operating procedures, and other guidance. We also interviewed officials from a wide range of DOD organizations. We reviewed proposed and funded plans to address the accounting-for goal developed by members of the accounting community to address this goal, and discussed with officials the circumstances surrounding the development of these plans. We also discussed with the different community members their different processes for requesting resources and we reviewed budgetary and other documents regarding what additional resources the community members had requested or planned to request to meet the goal, and the outcome of those resource requests. To identify the department’s total spending on the missing persons accounting program, we obtained information on obligations for fiscal years 2008 through 2012 for all members of the accounting community.\nWe analyzed relevant statutes and DOD directives, instructions, memoranda of agreement, standard operating procedures, and other guidance and documentation to identify potential areas of duplication, unnecessary overlap, or fragmentation among the activities of the accounting community members. We interviewed the relevant officials in the accounting community to discuss the areas where these roles and responsibilities were vague or overlapping, and discussed potential benefits and drawbacks of the lack of clarity in roles and responsibilities and associated areas of overlapping responsibilities for DOD’s missing persons accounting mission. We did not evaluate whether overlap would have positive or negative effects. We also discussed guidance available to accounting community members for potential operations outside of PACOM’s area of responsibility, and examined the extent the community had established criteria for prioritizing potentially recoverable missing persons . We discussed and reviewed communication efforts, and determined the status of a statutory requirement to establish personnel files for all unaccounted for persons.\nDuring the course of our review, we interviewed officials at a wide range of agencies and offices, including all members of the missing persons accounting community as well officials from top-level leadership offices and other stakeholder organizations, to obtain their perspectives on DOD’s missing persons accounting efforts and the organization of the accounting community. Specifically, we interviewed officials from all of the statutory members of the missing persons accounting community, including Deputy Assistant Secretary of Defense (DASD) for Prisoner of War/Missing Personnel Affairs; Defense Prisoner of War/Missing Personnel Office (DPMO); Joint Prisoner of War/Missing in Action Accounting Command; Armed Forces DNA Identification Laboratory; Life Sciences Equipment Laboratory; the Army Casualty and Mortuary Affairs Operations Center; the Navy POW/MIA Branch; the Air Force Past Conflicts Branch; the Air Force Missing Persons Branch; and the Marine Corps Casualty Office. In addition, we interviewed officials from top-level leadership offices and other stakeholder organizations, such as the Joint Staff, the Office of the Secretary of Defense (Policy), the Office of the Secretary of Defense (Personnel and Readiness), U.S. Pacific Command, the Defense Intelligence Agency, and DOD’s Office of Cost Assessment and Program Evaluation, to discuss the department’s missing persons accounting efforts and the organization of DOD’s missing persons accounting community. Further, we interviewed officials from several veterans and family organizations to obtain their perspectives on DOD’s missing persons accounting efforts and the role these organizations play in these efforts. Specifically, we spoke with officials from the American Legion, Veterans of Foreign Wars, National League of POW/MIA Families, and Korea-Cold War Families of the Missing. We also interviewed officials at the Department of State during the review before making the decision to limit the scope to DOD because State did not have a central focal point for these efforts, and State officials did not express concerns about DOD’s coordination with State on its missing persons accounting efforts.\nAlthough we found some discrepancies in DPMO’s data, we found the data to be sufficiently reliable to enumerate the numbers of unaccounted- for persons for background and illustrative purposes and to describe the estimated magnitude of missing persons who have been accounted for over the years broken out by military service, conflict, and geographic location. The numbers also relate to our discussion on DOD’s efforts to establish criteria to prioritize potentially recoverable missing persons.\nFurthermore, we assessed the existing organizational structure of the accounting community, by reviewing organizational charts and DOD directives, instructions, and other guidance. In addition, we reviewed prior assessments of the organization and members of the missing persons accounting community. To understand the extent to which alternative organizational options could help improve the accounting community, we administered a questionnaire to the accounting community member organizations and several DOD stakeholder organizations regarding their views on alternative options for organizing the accounting community. These options included maintaining the status quo, adding a board of advisors to the status quo, and integrating DPMO and JPAC under a single leadership structure with some variations on which organization should lead that structure. We conducted a pretest of the questionnaire and made appropriate changes based on the pretest. This questionnaire is reprinted in appendix I, along with a summary of the responses.\nWe administered the questionnaire to the universe of 17 organizations identified within the scope of this engagement, and requested one response from each respondent to serve as an organizational response. The respondents included all of the accounting community organizations: DPMO, JPAC, the Armed Forces DNA Identification Laboratory, the Life Sciences Equipment Laboratory, and the casualty and mortuary affairs offices of the military departments. In addition, we distributed the questionnaire to several DOD stakeholder organizations, including the Defense Intelligence Agency (Stony Beach), JPAC’s Central Identification Laboratory, USD Policy, USD Personnel and Readiness, the Joint Chiefs of Staff, Armed Forces Medical Examiner, U.S. Pacific Command, U.S. European Command, and DOD’s Office of Cost Assessment and Program Evaluation. We selected these organizations based on their involvement in the missing persons accounting mission. We administered the questionnaires via e-mail. We received a total of 14 responses out of the 17 questionnaires distributed, and followed up with all of the non- respondents. All of the accounting community organizations submitted survey responses. We qualitatively analyzed the open-ended responses and quantitatively analyzed the closed-ended responses from the questionnaires to identify trends in responses and gain insight into the accounting community organizations’ and DOD stakeholders’ views on the issues identified in the questionnaire.\nThe survey used was not a sample survey in that it included the universe of respondents. Therefore, the survey has no sampling errors. However, the practical difficulties of conducting any survey may introduce other types of errors, commonly referred to as nonsampling errors. For example, differences in how a particular question is interpreted, the sources of information available to respondents, or the types of people who do not respond can introduce unwanted variability into the survey results. We included steps in the development of the survey, the data collection, and the data analysis to minimize these nonsampling errors and help ensure the accuracy of the answers that were obtained. For example, a social science survey specialist designed the questionnaire, in collaboration with GAO staff with subject matter expertise. The survey asked a combination of questions that allowed for both open-ended and close-ended responses. We pretested the content and format of the questionnaire. During the pretests, we asked questions to determine whether (1) the survey questions were clear, (2) the terms we used were precise, (3) the questionnaire did not place an undue burden on the respondents, and (4) the questions were unbiased. We received input on the survey and made changes to the content and format of the final questionnaire based on our pretest results.\nThe questionnaire was also reviewed by an independent GAO survey specialist. Data analysis was conducted by a GAO data analyst working directly with GAO staff with subject matter expertise. A second independent analyst checked all of the computer programs for accuracy. The survey was conducted using self-administered electronic questionnaires. All data were double-keyed during the data-entry process, and GAO staff verified a sample of the resulting data to ensure accuracy.\nWe compared the results of our analyses to several practices we have identified in prior work that can benefit collaborating agencies, including (1) having overarching plans to align activities and resources; (2) clearly defining roles and responsibilities; (3) articulating agreements in formal documents; (4) communicating frequently; and (5) having a single- designated leader.\nWe conducted this performance audit from June 2012 through June 2013 in accordance with generally accepted government auditing standards.\nThose standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"Missing persons: Defense POW/Missing Personnel Office (DPMO) is responsible for maintaining the lists of missing persons. Service casualty offices serve as the primary point of contact for families and brief them on case status and developments through regularly scheduled updates, annual government briefings, and as requested.\nResearch and analysis: DPMO and the Joint POW/MIA Accounting Command (JPAC) conduct archival and other research about loss incidents to develop background information and other details for missing persons cases from past conflicts.\nInvestigation: If a case is determined to be sufficient after the research and analysis phase, DPMO and JPAC conduct investigations to locate and correlate information to a specific geographic location using case- specific experts such as historians and case analysts.\nRemains recovery: If it is determined that a sufficient correlation exists between the investigated case and the geographic location, the recovery mission to locate and excavate a crash or burial site and gather all remains and artifacts for analysis begins. JPAC’s Central Identification Laboratory conducts remains recovery operations. The recovery team typically includes anthropologists, archaeologists, life support investigators, and photographers. Remains recovery can also occur through unilateral turnover by foreign countries and through disinterment of unknown remains in U.S. national cemeteries.\nIdentification: JPAC’s Central Identification Laboratory analyzes skeletal and dental remains and analyzes materiel evidence, and life support equipment. DNA samples are sent to the Armed Forces DNA Identification Laboratory for analysis. The Life Sciences Equipment Laboratory is sometimes consulted to assist with analysis of aircraft wreckage and life support equipment.\nFamily acceptance: Service casualty or mortuary affairs office personnel notify the primary next of kin of an identification and present the case information to the primary next of kin to gain the family’s acceptance of the identification. They also assist families with funeral arrangements Accounting: Upon receipt of the casualty report from the service casualty office, DPMO removes name of identified person from list of missing persons and issues press release.",
"Under Secretary of Defense (Policy) is responsible for developing, coordinating, and overseeing the implementation of DOD policy to account for personnel unaccounted for as a result of hostile acts.\nDeputy Assistant Secretary of Defense (DASD) for Prisoner of War/Missing Personnel Affairs is responsible for, among other things, exercising policy, control, and oversight for the entire process of accounting for missing persons; monitoring and advocating for program funding requirements and resources for the mission; and leading and coordinating related communications efforts, such as the public outreach program.\nDefense POW/Missing Personnel Office (DPMO) was established within DOD in 1993 to provide centralized management of POW/MIA affairs in order to enhance the efficiency, effectiveness, and responsiveness of DOD’s efforts in addressing these issues. DPMO’s mission is to lead the national effort to account for personnel, including members of the armed forces on active duty, DOD civilian employees, or employees of a DOD contractor, missing as a result of hostile action, and establishes the conditions necessary to recover those who become isolated during operations. DPMO is responsible for, among other things, overseeing archival research and standardizing procedures for methodology and prioritization; rendering final analytic judgments as to what constitutes fullest possible accounting for each case by identifying possibilities for future action , or determining when no further pursuit is possible; and defining, maintaining and enumerating accounting lists. The DPMO Director is responsible for overseeing the execution of DPMO’s mission and duties. In addition, the DASD for Prisoner of War/Missing Personnel Affairs serves as the DPMO director and reports to the Under Secretary of Defense-Policy in that capacity as well.\nDepartment of the Army The Secretary of the Army serves as the Executive Agent for mortuary affairs for the Department of Defense.\nU.S. Army Human Resources Command Casualty and Mortuary Affairs Operations Center serves as the primary liaison for families concerning personnel recovery and accounting. Officials from this office also assist families and help explain the methods used to account for their missing loved ones. Additional activities include gathering family DNA reference samples and coordinating responses to family inquiries and concerns and maintaining family contact information.\nArmed Forces DNA Identification Laboratory conducts DNA analyses of remains of missing persons from past military conflicts for the Joint POW/MIA Accounting Command and its laboratory component, the Central Identification Laboratory, and maintains the past conflict accounting family reference sample database, to include processing of all DNA references.\nThe Life Sciences Equipment Laboratory provides technical and analytical support to the accounting community, and is primarily tasked by the Joint POW/MIA Accounting Command’s Central Identification Laboratory to analyze and identify life science equipment-related artifacts that have been recovered and may potentially be related to missing persons cases.\nAir Force Missing Persons Branch serves as liaison for families concerning personnel recovery and accounting, particularly relating to primary next of kin issues.\nPast Conflicts Branch serves as liaison for families concerning personnel recovery and accounting, particularly for issues relating to the “person authorized to direct disposition,” and to mortuary affairs. Additional responsibilities include gathering family DNA reference samples.\nNavy POW/MIA Branch serves as the primary liaison for families concerning personnel recovery and accounting. Officials from this office also assist families and help explain the methods used to account for their missing loved ones. Additional responsibilities include gathering family DNA reference samples and coordinating responses to family inquiries and concerns and maintaining family contact information.\nMarine and Family Programs Division Marine Corps Service Casualty Office serves as the primary liaison for families concerning personnel recovery and accounting. Officials from this office also assist families and help explain the methods used to account for their missing loved ones. Additional responsibilities include gathering family DNA reference samples and coordinating responses to family inquiries and concerns and maintaining family contact information.\nJoint Chiefs of Staff is responsible for monitoring program funding requirements and resourcesfor the execution of the personnel accounting mission, and for supporting joint manning requirements for joint accounting organizations in coordination with the PACOM.\nU.S. Pacific Command (PACOM)\nJoint POW/MIA Accounting Command (JPAC) is responsible for conducting operations in support of achieving the missing persons accounting mission. In 2003 JPAC was established as a Joint Command by the merger of the Joint Task Force-Full Accounting and Central Identification Laboratory – Hawaii in order to achieve unity of command, permanence of operational elements, and efficiency and effectiveness in the use of DOD’s resources, as well as to strengthen the command and control of military forces in achieving the fullest possible accounting. JPAC’s functions include analysis, archival research, investigations, recoveries, repatriations, identifications, and reporting.\nCentral Identification Laboratory (CIL) is the laboratory component of the Joint POW/MIA Accounting Command.\nUnder Secretary of Defense for Intelligence coordinates with other non-DOD intelligence organizations and agencies and appropriate DOD agencies as necessary to promote intelligence information-sharing and to support missing persons accounting operations.\nUnder Secretary of Defense for Personnel and Readiness Military Community and Family Policy Casualty, Mortuary Affairs and Military Funeral Honors coordinates casualty matters among the military services, other federal agencies, non-profit organizations, and family support groups. In addition, this organization also provides policy guidance to the military services and other agencies on casualty reporting, recording, notification, and legislation affecting casualty matters and develops issuances on mortuary affairs. Additionally, this organization develops policy requiring personnel recovery in DOD component education and training programs.",
"",
"",
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"In addition to the contact named above, Margaret Best (Assistant Director), Renee Brown, Terry Richardson, Leigh Ann Sennette, Amie Steele, Cheryl Weissman, Allen Westheimer, and Michael Willems made major contributions to this report."
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"question": [
"Who holds responsibility for the accounting mission?",
"How has this fragmented leadership affected the accounting mission?",
"To what extent will this hinder the mission?",
"How do community members feel about the organizational structure?",
"What organizations are responsible for accounting for missing persons from wars?",
"What quantity of people are missing from these wars?",
"What progress is DOD making in accounting for these missing persons?",
"What did Congress mandate regarding missing persons in 2009?",
"How did the law affect WWII missing persons counts?",
"What did GAO assess?",
"What data did GAO collect for this assessment?",
"What mandated GAO to review DOD’s efforts in the first place?"
],
"summary": [
"Statute and DOD guidance assign responsibility for the accounting mission to many organizations and each reports through a different line of authority. Thus, no single entity is responsible for communitywide personnel and resources.",
"This fragmented organizational structure has exacerbated weaknesses in leadership, and most community organizations GAO spoke to believe alternative structures would be more effective.",
"Until top-level leaders at USD Policy and PACOM can ensure that all mission activities are carried out with unity of effort, inefficient and potentially avoidable overlap, unexpected operational concerns, and disagreements among members could continue to hinder the mission.",
"A majority of community members GAO surveyed conveyed a lack of confidence about the organizational structure. For example, 12 out of 13 survey respondents ranked an option with a more centralized chain of command as the most effective in enabling the accounting community to achieve its mission.",
"Several DOD organizations, known as the accounting community, have a role in accounting for the missing.",
"DOD reports that more than 83,000 persons are missing from past conflicts in Vietnam, Korea, the Cold War, the Persian Gulf, and World War II.",
"Between 2002 and 2012, DOD accounted for an average of 72 persons each year.",
"In 2009, Congress mandated DOD to increase its capability and capacity such that the community could account for at least 200 missing persons annually by 2015.",
"The law also added all World War II losses to the list of conflicts for which DOD was responsible, thus increasing from about 10,000 to 83,000 the number of missing persons for whom DOD must account.",
"GAO assessed DOD's capability and capacity to accomplish the missing persons accounting mission.",
"In doing so, GAO analyzed guidance and requirements, discussed accounting efforts and the structure of the community with community members, and surveyed accounting community members and related entities.",
"A committee report accompanying the National Defense Authorization Act for Fiscal Year 2013 mandated GAO to review DOD's efforts to address the accounting-for goal."
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CRS_R41429
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{
"title": [
"",
"Background",
"Generalized System of Preferences (GSP)",
"Regional Programs",
"Central America and the Caribbean",
"Andean Trade Preference Act (ATPA)",
"African Growth and Opportunity Act (AGOA)",
"Preference Programs and the WTO",
"Stakeholder Perspectives",
"Economic Issues",
"Program Effectiveness—Use of U.S. Trade Preferences",
"Developing Country Economic Effects",
"Comparative Advantage and Development",
"Export Diversification",
"Preference Erosion",
"Country Usage Concentration",
"Eligibility Issues",
"Effects on the U.S. Market",
"Legislative Options for Congress",
"Renewal Period",
"Harmonization",
"Country Coverage",
"Eligibility Criteria",
"Product Coverage",
"Outlook"
],
"paragraphs": [
"Since 1974, Congress has created multiple trade preference programs designed to foster economic growth and development in less developed countries. These programs provide temporary, non-reciprocal, duty-free U.S. market access to select exports of eligible countries. Congress conducts regular oversight of these programs, often revising and extending them. The112th Congress passed extensions to three trade preference programs: (1) the Generalized System of Preferences (GSP), which expired on December 31, 2010, and was renewed retroactively from that date to July 31, 2013 ( P.L. 112-40 ); (2) the Andean Trade Preference Act (ATPA) for Colombia and Ecuador until July 31, 2013 ( P.L. 112-42 ); and (3) a third-country fabric provision in the African Growth and Opportunity Act (AGOA) until September 30, 2015 ( P.L. 112-163 ). Since the GSP and ATPA programs were only extended until the end of July 2013, Congress may consider further renewal of these programs in the first session of the 113th Congress, along with possible trade preference reform options. Three bills in the 112th Congress, S. 105 , S. 1244 , and H.R. 2387 , propose a new trade preference program that would provide duty-free and reduced tariff treatment for certain apparel from the Philippines. Other bills in the 112 th Congress proposing preference programs include S. 1443 , which would create a new trade preference program for selected Asian and South Pacific countries.",
"The multilateral trading system that has evolved since the end of World War II is centered on the guiding tenet of non-discrimination. It is embodied in the most favored nation (MFN) principle of the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO). The economic rationale for this foundational idea rests on avoiding the type of protectionist policies prominent during the inter-war period that exacerbated the Great Depression. As fundamental as MFN treatment is to the conduct of modern trade, the GATT/WTO also allows for certain exceptions, one being special and differential treatment (SDT) for developing countries.\nSpecial trade treatment permits, among other policies, preferential programs that reduce tariffs on certain goods from eligible developing countries. Lower tariffs support an export development strategy that is based on increasing trade and diversifying it away from traditional commodity exports into more value-added goods in industry and manufacturing. Because commodity prices have declined over the long run and experienced periods of extreme volatility over shorter periods of time, countries dependent on them often find their trade position weakened over time. Exports are also key to development of industry in countries with small domestic markets. By diversifying trade to other sectors and industries it is hoped that developing economies will attract more investment, create more jobs, become more stable, and grow faster.\nMany developed countries have unilateral trade preference programs; Congress has legislatively established five in the United States. The first was the Generalized System of Preferences (GSP), established in the Trade Act of 1974. It applies to developing countries as a whole. In addition, there are four regional programs that followed, created in the Andean Trade Preference Act (APTA), the Caribbean Basin Economic Recovery Act (CBERA); the Caribbean Basin Trade Partnership Act (CBTPA), the African Growth and Opportunity Act (AGOA), and the Haitian Opportunity through Partnership Encouragement (HOPE) Act (discussed in detail below). The regional programs were built on the GSP concept, but are more targeted and tend to offer more generous and flexible access to the U.S. market.\nTrade preferences provide duty-free U.S. market access to select exports of eligible developing countries. All U.S. preference programs are unilateral, meaning that they do not require reciprocal trade concessions. Congress conducts oversight of these programs, revising and extending them periodically. In order to qualify to receive benefits, beneficiary developing countries must meet eligibility criteria, which vary by program. Some examples include ensuring that prospective countries make strides toward enhancing the rule of law, adopting internationally recognized worker rights, supporting counternarcotics policies, and providing open markets for U.S. exports. Preference programs, as such, are regarded by many as integral elements of U.S. trade, development, and foreign policy.\nSupporters of trade preferences include beneficiary developing country governments who have established industries and jobs partially as a result of preference programs, U.S. importers, including retailers and U.S. consuming industries, and U.S. producers working in joint production with assembly plants in developing countries. These groups tend to favor longer-term renewal of preferences to ensure more predictability, which is one important factor in investment and sourcing decisions. Stakeholders opposed to preference programs include U.S. manufacturers of competing import-sensitive products and some labor groups representing workers negatively affected by them, although the strict labor requirements of preference programs can attract support from labor groups. Generally, preference programs receive broad support in Congress, but some lawmakers have reservations about their design and operation.",
"Authorized by Congress in 1974, the GSP is the oldest and largest U.S. trade preference program, currently providing trade benefits to 128 countries. It was last extended in the 112 th Congress through July 31, 2011 ( P.L. 112-40 ). The GSP statute (Title V of the Trade Act of 1974, P.L. 93-618 , as amended) authorizes the President to grant duty-free status to selected imports from two categories of countries: beneficiary developing countries (BDCs) and least-developed country beneficiaries (LDBDCs), the latter designating additional special treatment for the poorest developing countries. The President may designate eligible countries, subject to various mandatory and discretionary conditions as set out in the statute. In general, these include: providing equitable and reasonable market access; taking actions to adopt internationally recognized worker rights; supporting private ownership and repatriation of capital; not engaging in practices that would harm U.S. economic interests; and supporting certain U.S. anti-terrorism policies. The GSP program is implemented by the Trade Policy Staff Committee (TPSC), an interagency group chaired by the Office of the U.S. Trade Representative (USTR).\nIn order to qualify for GSP eligibility, products must be imported directly from a BDC, where at least 35% of the value of materials and/or processing must be completed. The President is authorized to designate products as eligible for GSP status, but many agricultural, textile, apparel, and other \"import sensitive\" products are excluded. In addition, a country (LDC beneficiaries excluded) may lose eligibility for a particular product due to statutory competitive need limitations (CNLs). An automatic CNL is triggered if imports of a product from a BDC: (1) exceed a specified threshold value ($140 million in 2010); or (2) account for 50% or more of total U.S. imports of the product. After the threshold is reached, CNLs go into effect on July 1 of the next calendar year and may be waived under certain conditions.\nCountries are also mandatorily \"graduated\" from the GSP program if the President determines that they have become a \"high income\" country. Benefits may also be limited or withdrawn if the President determines that a beneficiary is sufficiently competitive based an assessment of its level of economic development, per capita income, or living standards.",
"",
"In 1983, Congress created the first regionally-targeted preference program with strong bipartisan passage of the Caribbean Basin Economic Recovery Act (CBERA). The Act provided limited duty-free entry of select Caribbean exports as a core element of the U.S. foreign economic policy response to deteriorating economic and political conditions in the region in the 1980s. Although considered an important new program at the time, its effects were limited by the exclusion of key exports, especially apparel. Apparel were (and are) major products of the region, but were designated \"import sensitive\" in the United States. CBERA was made permanent with a few modest additions of eligible products in the Caribbean Basin Economic Expansion Act of 1990 (CBI II).\nAdditional preferences were extended to the Caribbean region in the Caribbean Basin Trade Partnership Act (CBTPA) in May 2000. In the CBTPA, Congress effectively extended benefits to eligible Caribbean countries through fiscal year 2008 equivalent to those given to Mexico under the North American Free Trade Agreement (NAFTA). The CBPTA also enhanced product coverage to include certain apparel goods—provided that the fabrics were sourced in the United States or the Caribbean and made from U.S. yarn. Congress recently extended CBTPA through September 30, 2020 in the Haiti Economic Lift Program (HELP) Act of 2010.\nImplementation of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) on March 1, 2006 shifted treatment of imports from the largest Caribbean apparel producing countries from a unilateral preference program to the more liberal benefits afforded under the new, reciprocal free trade agreement (FTA). Haiti was the only major apparel-producing country in the region that was not included in CAFTA-DR. Because Haiti's economic fortunes continued to deteriorate, Congress provided uniquely generous and flexible unilateral preferences to Haiti's apparel sector by amending CBERA to include the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 (HOPE I). These preferences were further enhanced and extended by the HOPE II Act of 2008, and again by the HELP Act.\nThe HOPE Act, as amended, differs from other U.S. preference programs because it allows duty-free treatment for Haitian apparel exports made from limited amounts of lower-cost third-country fabrics and other inputs from countries outside the region or not part of a trade agreement with the United State (e.g., many Asian producers). The eligibility criteria are based on GSP provisions, with an additional requirement mandating detailed United Nations monitoring of Haitian firms to ensure that they conform to internationally recognized worker rights.",
"The United States originally extended special duty treatment to imports from Colombia, Ecuador, Peru, and Bolivia in the Andean Trade Preference Act (ATPA), initially enacted on December 4, 1991. It lapsed on December 4, 2001, but was subsequently renewed and amended on August 6, 2002 in the Andean Trade Promotion and Drug Eradication Act (ATPDEA). ATPDEA renewed ATPA trade preferences and also expanded the preferences to include additional products previously excluded under ATPA, including certain petroleum and petroleum products, textiles and apparel, footwear, and tuna in flexible containers, among others. Since that time, Congress has provided several short-term extensions of ATPA. The most recent extension took place on October 12, 2011, when the 112 th Congress enacted implementing legislation for the U.S.-Colombia Trade Promotion Agreement ( P.L. 112-42 ). As part of the free trade agreement's implementing legislation, ATPA was renewed for Colombia and Ecuador until July 31, 2013.\nEcuador is the only remaining designated beneficiary country under ATPA. Colombia was removed as a designated beneficiary country when the U.S.-Colombia free trade agreement entered into force on May 15, 2012. The implementing legislation for the agreement included language for the President to terminate Colombia's designation as a beneficiary country once the agreement entered into force. Peru also has a free trade agreement with the United States that has entered into force and no longer receives trade preferences under ATPA. Bolivia's status as a beneficiary country was terminated because of its failure to meet the eligibility criteria. In December 2008, then-President George W. Bush determined that Bolivia failed to meet ATPA beneficiary criteria and suspended Bolivia's status as a beneficiary country for failure to cooperate in counternarcotics efforts. On June 30, 2009, President Barack Obama extended this determination. Reinstatement of Bolivia as an ATPA beneficiary country requires congressional approval.\nThe purpose of ATPA is to provide preferential duty treatment to U.S. imports from beneficiary countries to promote economic growth, provide \"legitimate\" business opportunities, and expand job creation as alternatives to illegal crop production and drug trafficking. The ATPA has been one part of a broader U.S. initiative to address the drug trade problem in the Andean region. Other efforts include drug crop eradication and additional counter-narcotics activities.",
"The African Growth and Opportunity Act (AGOA) originated in 2000 as part of an increasing U.S. effort to promote the development of, and deeper economic integration with, sub-Saharan Africa. The AGOA program was last amended and extended through September 30, 2015. GSP benefits were also extended to AGOA-eligible countries until that time, irrespective of any other congressional determinations on GSP extension, meaning that all AGOA-eligible countries also receive the benefits of GSP until the expiration of AGOA on September 30, 2015.\nA provision in AGOA that allows duty-free treatment of apparel assembled in one or more lesser-developed SSA countries, regardless of the country of origin of the fabric (\"third-country fabric provision\"), subject to a cap, was extended until September 30, 2015 in the 112 th Congress ( P.L. 112-163 ).\nAGOA provides eligible sub-Saharan African countries more generous duty-free access than afforded under GSP, including special access for certain textile and apparel products that are designated \"import sensitive\" in the GSP statute. AGOA also provides U.S. technical assistance and trade capacity building to eligible governments and businesses through four regional trade hubs in Gaborone, Botswana; Nairobi, Kenya; Accra, Ghana; and Dakar, Senegal.\nAs of December 2011, 40 countries are eligible to receive AGOA benefits. AGOA-eligible countries must demonstrate, among other things, that they: (1) are making continual progress toward establishing a market-based economy; (2) do not engage in activities that undermine U.S. national security and foreign policy interests; and (3) do not engage in gross violations of internationally recognized human rights or provide support for international terrorism.",
"The GATT and WTO agreements are based on the fundamental principle that unconditional most-favored-nation (non-discriminatory) status must be offered to the products of other Members with respect to tariffs and other trade-related measures. Programs offering preferential treatment, such as the GSP, are inconsistent with this principle. Because these programs were designed to help less developed countries through trade expansion, parties to the GATT provided a legal basis for one-way tariff preferences in the 1979 \"Enabling Clause,\" which stated that \"contracting parties may accord differential and more favorable treatment to developing countries, without according such treatment to other contracting parties\" under certain conditions. The Enabling Clause was formally incorporated into the GATT 1994 when the Uruguay Round Agreements—the same agreements that established the WTO—entered into force on January 1, 1995.\nOther developed countries offer special trade preferences for developing countries including Canada, the European Union, Japan, and Australia. Some developing nations, such as India and Brazil, also provide tariff concessions to least developed countries (LDCs). Generally, each preference-granting country extends to eligible developing countries (as determined by each benefactor) an exemption from duties (in the form of duty-free access or reduced tariffs) on designated \"non-sensitive\" manufactured products and agricultural goods. Product coverage and the type of preferential treatment offered vary widely. Although most preference schemes (including all U.S. programs) admit eligible products duty-free, some countries provide tariff reductions, rather than complete exemption, from duties. The Australian system, for example, is based on a five percentage point margin of preference, meaning that when the Australian General Tariff (GT) is 5% or higher on a given product, the amount of the tariff is reduced by 5 percentage points for products of beneficiary countries. When the GT rate is 5% or less, the preferential rate is zero.\nOther developed countries also offer regional preferences, or preferences that \"reward\" developing countries that comply with additional eligibility criteria such as anti-corruption measures, environmental sustainability goals, or core worker rights provisions. For example, the European Union offers additional duty-free access to its market to LDC beneficiaries under the \"Everything But Arms\" preference, as well as an incentive-based program (known as GSP+) that provides enhanced benefits for \"vulnerable countries\" (in terms of size or limited diversification in its exports). GSP+ beneficiaries must have ratified and effectively implemented 27 specified international conventions in the fields of human rights, core labor standards, sustainable development, and good governance.\nAlso in the WTO, as a part of the Doha Round of multilateral trade negotiations, developed country members and \"developing country members declaring themselves in a position to do so\" agreed to provide \"duty-free and quota-free\" (DFQF) market access for all products originating from all least-developed countries \"in a manner that ensures stability, security, and predictability.\" Members \"facing difficulties\" would be permitted to exempt 3% of all tariff lines, provided that steps are taken to build the list of covered products until total DFQF is reached. Since the DDA is a \"single undertaking\" (which means that nothing is finally agreed until everything is agreed), the DFQF agreement reached in 2005, will not be implemented until the negotiating round is concluded.",
"Like all public policies, the costs and benefits do not fall uniformly to all affected parties. This is reflected in various stakeholder responses to trade preferences. Supporters include beneficiary developing country governments, producers, workers, and exporters. Many of these countries receive foreign investment based on U.S. trade preferences, resulting in increased employment in certain industries. For these countries, jobs and related income created by U.S. trade preference programs have become an important element for economic growth and development. Many beneficiary stakeholders express concern that if preferences are not renewed, other low-cost countries such as China would benefit at their expense.\nU.S. manufacturers who import intermediate products through the various trade preference programs in downstream products also support trade preferences. Some U.S. producers, especially in the U.S. textile and apparel industries, have made use of preferences to remain competitive through cooperative relationships with certain beneficiaries, especially the Caribbean and Latin American countries. Businesses that benefit from preference programs favor longer-term renewal of trade preferences because they provide predictability when signing import contracts and making investment decisions.\nTrade preferences reflect both economic development and foreign policy goals. In addition to the economic benefits, eligibility criteria create incentives for beneficiary countries to support U.S. objectives such as adopting and enforcing internationally recognized worker rights, reducing barriers to investment, and enforcing intellectual property rights. In addition, U.S. regional preferences created with particular goals in mind—such as eradication of drug production in the case of the Andean trade preference program—create incentives to fulfill additional U.S. policy goals. Organized labor, for example, tends to support trade preferences because worker rights provisions have led to improvements in labor rights in some regions. Labor officials have cited the GSP process, specifically annual country practice reviews, as helpful in addressing enforcement and rule-of-law issues relating to compliance. Labor support, however, is also tempered by the fact that certain workers will be negatively affected by increased imports of products with which they compete.\nStakeholders opposed to preferences programs mostly include U.S. manufacturers of competing import-sensitive products. In particular, some in the U.S. textile and apparel industry are opposed to unfettered extension of textile and apparel preferences, especially when U.S. workers are potentially adversely affected.",
"All trade preference programs have in common the goal to promote export-driven growth and development in less developed countries. The programs themselves, however, raise multiple economic and political issues. Preference program features are a key factor in determining their effectiveness. Among key issues is the extent to which preferences: (1) target the developing country's productive capacity; (2) have sufficiently flexible and manageable rules of origin; (3) are not overly restricted by domestic interests; and (4) are extended for a sufficiently long period of time to attract foreign investment. Because of eligibility requirements that countries must accept from the preference giver, and the fact that they can also be unilaterally cut off, there are also opportunity costs to preferences.",
"The value trade preferences provide from a programmatic perspective rests on their ability to increase exports from developing countries, particularly away from traditional commodities. The value to the exporting countries is equal to what is called the preference margin, which may be simply defined as the difference between the MFN and preferential tariffs on exported goods. If the preference margin is significant, it should contribute to export growth by reducing the import cost of goods in the United States relative to competing exports from countries without preferences.\nOne simple approach to examining the benefits of preference programs is to evaluate their use by observed growth in exports, although this provides for only a partial understanding. For example, the total value of imports entering under U.S. preference programs in 2011 was $78.4 billion, in 2010 was $78.4 billion, and $60.5 billion in 2009 (see Figure 1 and Table 1 ). In 2010, the value of imports rose to $78.5 billion and stayed relatively the same, at $78.4 billion in 2011 . U.S. imports from all countries fell dramatically in 2009, including those entering under preference programs. The Great Recession was the major cause of U.S. import compression in 2009, with the decline in U.S. consumption of petroleum products being a key trend. For AGOA in particular, the dramatic decline in 2009 reflects that 93% of AGOA-eligible imports are petroleum products, the demand for which fell precipitously with the economic downturn (see Appendix Table A-2 for data). Such a dramatic fall in exports entering under preference programs points to two fundamental concerns: the continued dependence on price-volatile commodity exports, and the possible limited impact of preference programs in encouraging greater export diversification.\nFigure 2 illustrates that only 4% of about $2.2 trillion in U.S. imports entered duty-free under preference programs in 2011. About 16% of U.S. imports entered duty-free (or at reduced duties) under reciprocally-negotiated free trade agreements (FTAs). In 2011, the largest percentage (80%) of U.S. imports entered under most-favored-nation (MFN), also known as normal trade relations (NTR) rates. The simple average U.S. tariff rate is about 3.5%, but tariffs on certain items, including some eligible under preference programs, can be much higher.\nPreference margins, by and large, tend to be small, providing relatively limited benefit to developing countries. More nuanced findings suggest, however, that certain products with high tariffs, such as apparel, provide a much greater benefit to those countries able to produce for the U.S. market. At the other end of the spectrum, the preference margin on petroleum is much smaller because tariffs tend to be small or zero in the case of many countries, and so there is much less benefit from a particular preference program. Nor does continuing to rely on petroleum exports promote economic diversification conducive for development.\nThere are also costs associated with tariff preferences. Extensive administrative procedures and complex rules of origin often diminish their use. Also, benefits may accrue to U.S. importers rather than exporters, if they are price setters in the domestic economy. Preferences may also diminish production of competing goods in the importing country and cause some trade diversion.\nFigure 3 illustrates foreign direct investment (FDI) flows to beneficiary countries by preference program from 2000 to 2009, although attributing these trends to preference programs is analytically difficult. Nonetheless, between 2000 and 2008, the most dramatic increases in FDI flows occurred in GSP beneficiary countries. These countries received more than $350 billion in foreign investment in 2008. AGOA countries also experienced slow, but steady FDI growth, from $24.8 billion in 2000 to $46.5 billion in 2008. ATPA countries, likewise, experienced slow, steady increases in FDI flows. FDI flows to Latin American and Caribbean beneficiaries of CBERA and CBTPA remained relatively stable during the period. As with the record on imports, the decline in investment from 2008 to 2009 can be attributed largely to the global economic downturn.",
"For GSP-eligible countries, total U.S. imports from all beneficiaries have increased 133.4% over an eleven-year time period, from $172.4 billion in 2000 to $402.4 billion in 2011. Over the same time period, total U.S. imports entering under the GSP program increased by 12.8%, from $16.4 billion in 2000 to $18.5 billion in 2008. Thus, in the aggregate, the GSP affects a relatively small portion of developing country exports. This may be due, in part, to program restrictions on key \"import sensitive\" exports, such as textiles and apparel and agricultural goods, and is also perhaps due in part to the automatic competitive need limits on GSP-eligible products. Mandatory graduation of GSP countries when they reach a higher level of development may also be a factor.\nThe Caribbean programs have had varying economic effects depending on how they have been structured. The original CBERA program provided limited incentives to the major exports of the region (i.e., apparel), and so the impact was predictably limited. This remained unchanged until the CBTPA, passed in 2000, provided duty-free treatment for apparel (under certain circumstances), among other goods. Since Central America is a major source of apparel goods, it was not surprising that U.S. imports under CBTPA grew to some 30% of total imports from the region by 2003. Nonetheless, U.S. imports of apparel under CBTPA continued to shrink as a percentage of apparel imports from the world, in part pointing to the limits of preferential tariff treatment in the face of a highly competitive global market.\nIn addition, with the implementation of the CAFTA-DR, apparel concessions were more favorable under the free trade agreement and so were no longer exported under the CBTPA. With the migration of the Central American countries and the Dominican Republic to CAFTA-DR, the total amount of U.S. merchandise imports under CBERA and CBTPA amount to only 0.5% of total U.S. imports. Because half of these imports enter duty-free under NTR and another 20% are dutiable, the total amount of imports entering duty-free under CBERA and CBTPA is only 0.15% of total U.S. imports. Some three-quarters of this amount is energy-related products from Trinidad and Tobago.\nThe Haiti HOPE I Act was used minimally in the first two years because of its highly complicated rules of origin and a short-term extension by Congress that did not entice investor response. With the passage of HOPE II, the preferences were made more flexible and generous, targeted to both knit and woven textiles and apparel. Simpler rules of origin, particularly those that did not require use of U.S. or domestic materials, were widely used. These changes again point to the importance of preference program design as a critical factor affecting their use. Congress amended and enhanced the preferences for Haitian products in the HELP Act of 2010, targeting those preferences demonstrated to be the most easily and widely used. Imports from Haiti now account for some 13% of total imports receiving preferential treatment under CBERA, as amended by the HOPE and HELP acts.\nThe effect of the ATPA on the economies of Bolivia, Colombia, Ecuador, and Peru has also been small but positive. A study by the United States International Trade Commission estimated that ATPA helped to expand job opportunities in the flower and asparagus industries, particularly to individuals who otherwise might have engaged in illicit drug crop production and related activities. After ATPA was amended to include textile and apparel articles, all four countries experienced related output and employment growth, particularly in Peru and Colombia. The textile and apparel sectors have been a source of legitimate economic activity and employment in some Andean regions. Industry representatives there are concerned about losing ATPA preferences because of the importance of the United States as an export market. The removal of Bolivia as a designated ATPA beneficiary amidst political uncertainty has likely affected the potential for long-term investment in Bolivia, which may, in turn, have contributed to volatility in Bolivia's FDI flows as well as potential ATPA-related investment.\nAGOA preferences, combined with macroeconomic reforms, played a positive role in economic growth in sub-Saharan Africa in some industry sectors. For example, footwear exports from the region grew 33% overall between 2002 and 2006 as a result of duty-free access to the U.S. market under AGOA. At the same time, African exports continue to be the least diversified of all developing regions, and many African economies still remain vulnerable to external shocks caused by reliance on primary commodity exports such as oil.",
"While preferences may lead to important gains in manufacturing growth in some sectors and countries, a critical question is whether they help a country exploit a comparative advantage in trade, or artificially induce investment in industries that otherwise would be uncompetitive in the global market place. Some evidence points to support for comparative advantage in many cases where preferences build on an existing or nascent industry, allowing firms to gain a foothold in the international marketplace. Preferences appear to have provided an opportunity for some of the current emerging markets such as India and Brazil to expand their international reach in certain markets. For example, India's utilization rate of the GSP program is very high (about 83%) —spurred on, in part, by jewelry exports. The incentives created through the ATPA program may also have played a role in the expansion of the flower industry in Colombia and Ecuador. According to the Society of American Florists, about 67% of fresh flowers (as sold by dollar volume) in the United States are imports, with Colombia and Ecuador as the top two exporters. Apparel is an important sector for expanding export diversification in developing countries, particularly those with liberal rules of origin. Countries such as Haiti have benefitted significantly from flexible rules of origin for apparel goods.\nOn the other hand, some countries may be encouraged by preferential programs to develop industry sectors in which they would otherwise not be able to compete, diverting public and private investment for other uses. Supply constraints and difficult business environments can overcome any benefit that tariff preferences may offer.",
"Trade preference programs are unlikely to help poor countries achieve their development goals unless there is some transformation in their export structure away from primary goods. USTR officials assert, for example, that AGOA is helping to expand and diversify trade between the United States and sub-Saharan Africa by building partnerships between U.S. and African businesses. According to a 2009 report by the International Trade Administration, U.S. imports under AGOA are becoming increasingly diverse. Some of the more significant growth is taking place in jewelry and jewelry parts, fruit and nut products, fruit juices, leather products, plastic products, and cocoa paste. Apparel production has also benefitted.\nThe fact that sub-Saharan Africa's preferential trade with the world still largely consists of oil and petroleum products, however, points to the crux of the diversification problem. With petroleum accounting for 93% of AGOA trade, the program may not be having the desired effect on Africa's economic development. Such a case argues for aid in helping countries in Africa to take fuller advantage of the benefits that trade preferences offer and perhaps for reconsideration of program incentives.",
"Preference erosion refers to the diminishing of the preference margin because tariff levels are being reduced in either multilateral or reciprocal bilateral or regional trade agreements. As tariffs fall worldwide, the benefit of zero tariffs in preference programs becomes smaller. It is an important point in the Doha Round negotiations from LDC perspectives. Particularly affected are countries participating in preference programs that cover most of their trade. There is a disincentive for LDCs to support multilateral trade liberalization should it result in reducing the benefits of their preference programs. Products that otherwise face relatively high tariffs, such as apparel, are also subject to relatively greater preference erosion. One study cites apparel producing countries Cape Verde, Haiti, Malawi, Mauritania, and Sao Tome and Principe as the most vulnerable to preference erosion.\nGiven there has not been a multilateral agreement under the WTO since the 1994 Uruguay Round, most preference erosion has occurred because of the expanding bilateral and regional trade agreements, and the 2005 WTO Agreement on Textiles and Clothing (ATC), which eliminated quantitative export restrictions and import quotas. Under these circumstances, developing countries see the Doha Round as a continuation of trends that reduce their preference benefits. There is broad agreement, however, that in the aggregate, preference erosion is quantitatively small relative to the global benefits of MFN trade liberalization, although for certain countries it may be costly.",
"While U.S. preference programs are open to many countries (for example, there are over 120 GSP beneficiaries), actual preference usage seems to be highly concentrated in only a few countries. In 2011, the top 25 preference beneficiaries accounted for 95% of U.S. preference imports. As part of the debate over preference programs, some discussion has gravitated toward reconsidering their design in ways that would broaden their use, particularly by LDCs that may not be endowed with energy exports or have limited capability to develop apparel manufacturing.",
"Trade preferences, by their nature, divide countries into two camps: those who receive them and those that do not. This dichotomy raises some political issues that affect attitudes toward preference programs. Countries that have preferential access to developed economies want to maintain that advantage. They do this by advocating for precluding the extension of preferences to other countries. Large developing countries also lobby to ensure that their continued benefit is not jeopardized by a change in graduation or other rules that might reduce their eligibility.\nFor example, some AGOA beneficiaries have expressed concern that proposals to extend duty-free, quota-free (DFQF) access to all LDCs (including apparel exporters Bangladesh and Cambodia) will place Africa's developing apparel industries in direct competition with these countries for U.S. market share, thereby eroding the preferences they currently exclusively enjoy. Some Members have sought an overhaul of preference programs to make it easier to graduate \"advanced\" developing countries such as India and Brazil from the GSP because of their opposition of U.S. interests in DDA negotiations. Others in the academic world have also pointed to the benefits of focusing preference programs exclusively on the poorest of the developing countries.\nA second issue involves the opportunity costs of eligibility criteria. All U.S. programs, for example, require participating countries to meet numerous non-trade related criteria. These range from adopting labor commitments to ensuring assistance is forthcoming on drug interdiction, among other policies. While the United States readily acknowledges that these foreign policy concerns are part of their preference programs, they represent opportunity costs to the recipient country that some argue amounts to \"politicizing trade.\"",
"The United States potentially faces costs in permitting unilateral trade preferences to developing countries. Domestic industries may face greater competition as lower-cost imports enter the U.S. market, which could affect production, employment, and wages. However, preference programs are designed to limit the economic impact on domestic producers by various means.\nIn the GSP, U.S. import-competing manufacturers are largely protected from severe economic impact by three features. First, some products, such as most textile and apparel goods, are designated \"import sensitive\" and are therefore ineligible for duty-free treatment. Second, \"competitive need limits\" in the GSP are triggered if imports of a product reach a certain threshold. Third, U.S. producers may petition the United States Trade Representative (USTR) that GSP treatment granted to eligible articles be withdrawn. These petitions are considered during the annual review of the GSP program.\nAlthough the smaller regional programs include preferences for additional \"import-sensitive\" products, such as textiles and apparel, these differences do not greatly increase the potential for significant negative effects on U.S. producers. First, tariff lines given duty-free access can be very narrowly tailored to mitigate the impact of the preferences. Second, rules of origin are often carefully written to minimize effects on domestic producers. For example, for apparel to receive the AGOA preference, no more than 10% (by weight) of the fiber and yarns making up the product can originate in a country other than the AGOA beneficiary or the United States. Some U.S. apparel producers actually benefit from preferences through an integrated value-added chain of production between the U.S. producers and those in Central America and the Caribbean, which lowers their overall costs relative to other major global producers, such as those in China. These cost factors have also assisted U.S. producers in retaining U.S. market share that could have been lost to Asian producers following the expiration of the WTO Agreement on Textiles and Clothing on January 1, 2005.\nAlso in terms of U.S. benefits, some U.S. manufacturers who use imported inputs benefit from the lower cost of the intermediate manufactured goods and raw materials imported under preference programs. U.S. demand for certain individual products, such as jewelry, leather, and aluminum, is also quite significant. Ultimately, consumers also benefit from the lower prices of products imported duty-free under preference programs.\nEven though preferences are structured to minimize the impact on U.S. producers, some amount of injury does occur. For example, the U.S. International Trade Commission found that U.S. growers of asparagus, fresh cut roses, chrysanthemums, carnations, and anthuriums may have experienced displacement of more than 5% of the value of production in 2005 because of imports that receive the ATPA preference.\nWith regard to losses in tariff revenues, over time, most of these costs have been shown to be relatively small. For example, CBO estimated that the GSP provision in P.L. 112-40 ( H.R. 2832 ), which renewed the GSP until July 31, 2013, would amount to a loss of revenue of $980 million in FY2010 and $503 million in FY2011. Imports entering duty-free are also relatively small compared to the total dollar value of imports to the United States.\nOverall effects on the U.S. economy are quite small. For example, the value of goods imported under the GSP program in 2011 represented only about $19 billion, compared to total U.S. imports of $2.2 trillion. Imports from all preference programs amounted to only about 4% of all U.S. trade in 2011 (see Figure 2 ).",
"The debate in Congress over trade preferences encompasses multiple viewpoints. Leaving the programs largely as they are is one. Others see the need for revision to address specific problems. These include: (1) the role that preferences may play as a disincentive for beneficiary countries, particularly large developing countries, to embrace fully the Doha Round of multilateral trade negotiations; (2) problems of compliance with eligibility criteria; (3) the need to press for reciprocal trade treatments as poor countries reach a certain level of development; and (4) the need to focus them more on the least developed countries. Policy discussions tend to revolve around five basic program parameters: (1) renewal period, (2) harmonization, (3) country coverage, (4) product coverage, and (5) eligibility criteria.",
"With the exception of CBERA, all preference programs are time-limited and Congress must reauthorize them if they are to continue. Although Congress has generally viewed these programs as temporary, it has historically chosen to renew them, often with broad approval. Program beneficiaries, including governments, importers, and consuming industries, advocate diligently for continued program support.\nThe primary argument for longer-term renewals is to establish a predictable trade environment that will attract long-term investment. Preferences translate into relatively lower costs of goods imported into the United States, which provide businesses with the incentive to operate in otherwise less competitive or desirable locations. Investors are more likely to consider long-term commitments when preferences are not subject to repeated short-term extensions, which adds an element of uncertainty to business planning, and also has implications for employment and economic stability in beneficiary countries. Extended preference horizons also support development of stable sourcing relationships and improved working environments given the emphasis eligibility criteria places on such factors as rule of law, good business practices, and worker rights. Some Members, though, view extended renewal as conditioned on other program changes such as those discussed below.\nThe 111 th Congress acted to extend some preference programs. In the second session, the HELP Act ( P.L. 111-117 ) extended the CBTPA and the Haiti HOPE Act through September 30, 2020. In the second session, legislation to renew GSP did not pass in the Senate, and the ATPA received only a short-term renewal until February 12, 2011. The112th Congress passed extensions to three trade preference programs: (1) the GSP, which expired on December 31, 2010 and was renewed retroactively from that date to July 31, 2013 ( P.L. 112-40 ); (2) the Andean Trade Preference Act (ATPA) for Colombia and Ecuador until July 31, 2013 ( P.L. 112-42 ); and (3) a third-country fabric provision in the African Growth and Opportunity Act (AGOA) until September 30, 2015 ( P.L. 112-163 ).",
"Preference programs have similar, but not identical, program features. A key theme for renewal has been to review these policy parameters to determine if there are opportunities to simplify, harmonize, and make more consistent program features such as eligibility criteria, rules of origin, and product coverage. Some areas may be easier to harmonize than others. For example, it may be possible to standardize eligibility criteria across all programs.\nHarmonizing the complex \"maze\" of rules of origin could be a much greater challenge. Still, many view this as an important step toward making the programs operate more efficiently, not only from the perspective of businesses attempting to meet these rules, but also at the U.S. border where customs officials must determine the eligibility of each product entering the country. Because these rules were carefully crafted to maximize benefits to the intended countries, while minimizing any adverse effects on U.S. producers and preventing transshipment, harmonization may prove challenging to achieve in practice.\nTrade capacity building (TCB), or training to improve the capability of firms in beneficiary countries to use these preferences, may provide a partial solution. The Government Accountability Office (GAO) has reported that research on the textile and apparel inputs industry in sub-Saharan Africa has confirmed that TCB is key to improvement of the competitiveness of the sector and utilization of preferences.",
"Although preference program legislation gives the President the authority to determine country eligibility based on designated criteria, Congress specifically designates overall which countries may receive the preferences. For example, Congress designated 48 sub-Saharan African countries as potentially eligible to receive the AGOA preference, but the President initially designated 34 countries as eligible based on the criteria Congress set forth in the statute. Congress could legislatively expand or contract country coverage at any time. For example, several bills in Congress seek specifically to prevent Vietnam from obtaining GSP status due to its poor record on worker rights.\nBy definition, trade preferences are targeted toward developing countries, but there are different opinions regarding how broadly they should apply. Some argue that they should be targeted only toward LDCs that need them most. Higher or \"middle\" income developing countries resist this approach.\nCongress could also expand regional programs or create new preference programs in order to incorporate those LDCs not currently covered in AGOA or the other regional programs. Three bills in the 112th Congress, S. 105 , S. 1244 , and H.R. 2387 , propose a new trade preference program that would provide duty-free and reduced tariff treatment for certain apparel from the Philippines. Other bills proposing trade preferences include S. 1443 , which would create a new trade preference program for selected Asian and South Pacific countries.\nAnother approach would be to reduce coverage for advanced developing countries, or require more reciprocity from these nations. Decreasing the number of country participants could also be achieved by applying mandatory country \"graduation\" to all preference programs, such as currently implemented in the GSP. According to the GSP statute, mandatory graduation occurs when a beneficiary country is determined to be a \"high income country\" as defined by official International Bank for Reconstruction and Development (World Bank) statistics. Alternatively, Congress could choose another measure of income for graduation from preference programs, or require that country graduation be determined by a comprehensive review of its industries and economy.",
"Some importers and non-governmental organizations (NGOs) advocate amending preference program eligibility criteria so that they are \"clear, commercially meaningful, and achievable.\" Proponents of this view tend to differ in their selection of criteria, however. For example, some NGO advocates object to conditions requiring protection of intellectual property on the grounds that the application of these criteria can be \"arbitrary and unpredictable.\" Business proponents, however, might be more favorable to inclusion of intellectual property eligibility criteria on the grounds that such protections help them to preserve the value of their products.\nAn alternative might be to reconstitute preference programs to include incentives to beneficiaries other than tariff reductions, or to create an additional preference program for countries that are willing to comply with additional U.S. objectives. The European Union, for example, has crafted a \"GSP-plus\" program that offers additional product coverage to particularly vulnerable developing countries, provided that they have ratified and implemented a number of core international conventions on human rights, labor rights, good governance and environmental protection.",
"Congress could re-evaluate current product coverage, and decide to expand or eliminate certain products from preference programs. For example preference advocates argue that immediate DFQF could be extended to all LDCs with minimal effects on the U.S. economy.\nNo U.S. preference program as currently authorized provides complete DFQF access. For example, some U.S. products, such as certain apparel, leather, electronics, steel, and glass products, are deemed \"import-sensitive\" in GSP due to possible negative effects on U.S. domestic producers. In terms of DFQF access for textiles and ready-made apparel products, the AGOA program is the broadest, although significant restrictions are still in place (i.e., caps are placed on use of yarns and fabrics that are of third-country or sub-Saharan African origin).\nAs part of the World Trade Organization (WTO) Doha Round negotiations, the United States and other developed country WTO members and \"developing country members declaring themselves in a position to do so\" agreed to provide DFQF access, but these commitments will not take effect until (or unless) the Doha Round is completed.\nSome in Congress favor expanding product coverage in preference programs. If Congress chose to expand or harmonize product coverage, it could also shield import-competing U.S. industries by applying an across-the-board cap on preferential access. For example, the CNL thresholds that apply in GSP (discussed above) could be implemented in all programs, or be enacted in a harmonized program. Congress could also provide tariff reductions (as opposed to duty-free access) for certain \"import-sensitive\" products in all U.S. preference programs as currently implemented. This approach is similar to the Australian GSP program, which provides a 5% preference margin on products with tariffs over 5%, rather than strictly duty-free access.\nPreferences also differ with regard to cumulation, which allows for combining inputs from numerous beneficiary countries under one or more preference programs as long as a substantial transformation still occurs in the beneficiary country. For example, one of the requirements for apparel articles to qualify for the ATPA states that they may be sewn or assembled in one or more ATPA beneficiary countries or the United States. In the GSP, certain pre-designated regional groups may meet the value-added requirement by combining (cumulating) inputs in order to qualify for preferential access. The Haiti HOPE Act provisions also allow for regional cumulation and limited use of third-party materials. Allowing LDC beneficiaries to \"cumulate\" inputs from all developing countries could provide flexibility and could have the added effect of simplifying rules of origin. Congress could restrict or expand the availability of preferences by modifying these provisions to include a greater or lesser percentage of inputs from other beneficiary countries, or by permitting a larger percentage of third-party inputs.",
"The 111 th Congress held hearings on trade preference programs in both the House and Senate, where some Members expressed interest in amending and harmonizing some of the preferences provisions. As specialized programs intended to serve as a form of assistance to developing countries, program design is critical in determining whether those countries most in need are being well served. Because these are complex programs with multiple design features, evaluating them is a challenging and complicated exercise. Since the GSP and ATPA programs were given short term extensions until the end of July 2013, the 113 th Congress may consider further renewal of these programs, along with possible trade preference reform options.\nAppendix A. Eligible Countries and Products Imported by Preference Program"
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{
"question": [
"How has Congress attempted to foster economic growth in less developed countries?",
"How do these programs affect the countries involved?",
"How has Congress revised these programs?",
"What further extensions may Congress consider?",
"What new trade preference programs is Congress considering?",
"To what countries does the GSP apply?",
"What regional trade preferences has Congress established?",
"What new legislation was enacted affecting the CBPTA and HOPE Act?",
"How do trade preferences differ from free trade agreements?",
"What eligibility criteria exist with trade preferences?",
"To what extent does the WTO tolerate trade preferences?",
"How did the WTO DDA round affect trade preferences?",
"What have been the results of trade preference evaluations?",
"How have developing countries used tariff preferences?",
"How are preferences used in other countries?",
"How important is meeting the needs of the least developing countries?",
"How are consumers and U.S. industries and workers affected differently by the additional trade?",
"What does this report discuss?"
],
"summary": [
"Since 1974, Congress has created multiple trade preference programs designed to foster economic growth, reform, and development in less developed countries.",
"These programs give temporary, non-reciprocal, duty-free U.S. market access to select exports of eligible countries.",
"The112th Congress passed extensions to three trade preference programs: (1) the Generalized System of Preferences (GSP) which expired on December 31, 2010 and was renewed retroactively from that date to July 31, 2013 (P.L. 112-40); (2) the Andean Trade Preference Act (ATPA) for Colombia and Ecuador until July 31, 2013 (P.L. 112-42); and (3) a \"third-country fabric\" provision in the African Growth and Opportunity Act (AGOA) until September 30, 2015 (P.L. 112-163).",
"Since the GSP and ATPA programs were only extended until the end of July 2013, Congress may consider further renewal of these programs in the first session of the 113th Congress, along with possible trade preference reform options.",
"Three bills in the 112th Congress, S. 105, S. 1244, and H.R. 2387, propose a new trade preference program that would provide duty-free and reduced tariff treatment for certain apparel from the Philippines. Other bills in the 112th Congress proposing preference programs include S. 1443, which would provide trade preferences for selected Asian and South Pacific countries.",
"The GSP applies to all developing countries worldwide.",
"In addition, there are four regional programs including the ATPA; the Caribbean Basin Economic Recovery Act (CBERA); the Caribbean Trade Partnership Act (CBTPA); the African Growth and Opportunity Act (AGOA); and the Haitian Opportunity through Partnership Encouragement (HOPE) Act.",
"In the second session of the 111th Congress, legislation was enacted to extend provisions in the CBPTA and HOPE Act through September 30, 2020, in the Haiti Economic Lift Program Act of 2010 (P.L. 111-171).",
"Unlike free trade agreements, trade preferences are non-reciprocal, meaning that developing countries do not have to provide equivalent trade benefits to the United States.",
"Countries must meet certain eligibility criteria, however, such as providing adequate protection of intellectual property, operating an open market economy under established multilateral trade rules, and adopting internationally recognized worker rights.",
"Trade preferences are permitted by the World Trade Organization (WTO) under the General Agreement on Tariffs and Trade (GATT) \"enabling clause,\" which allows members to provide more favorable treatment to developing countries.",
"In the WTO Doha Development Agenda (DDA) round of multilateral trade negotiations, both developed and developing WTO members agreed to provide duty-free, quota-free (DFQF) preferential access to least-developed countries, subject to adoption of the agreement.",
"Evaluations of the benefits of trade preferences have been mixed.",
"Many developing countries have used tariff preferences to enhance their competitiveness in certain industries, particularly apparel.",
"In other countries, preferences are used to export major commodities such as petroleum products, which may be less supportive of long-term economic diversification and development.",
"Meeting the needs of the least developing countries is a core policy issue that continues to drive the debate over the design of preference programs.",
"Consumers and some U.S. industries and workers benefit from the additional trade, others compete directly with it, therefore, perspectives on trade preferences vary despite their overall costs apparently being small.",
"This report discusses the major U.S. trade preference programs, their possible economic effects, stakeholder interests, and legislative options."
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GAO_GAO-14-545
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{
"title": [
"Background",
"NE’s Approach to Advanced Reactor R&D Supports Several Advanced Reactor Technologies",
"NE’s Advanced Reactor R&D Efforts Are Focused on Three Primary Reactor Technologies",
"High-Temperature Gas-Cooled Reactors",
"Liquid-Metal-Cooled Fast Reactors",
"Fluoride-Salt-Cooled High- Temperature Reactor",
"Other Advanced Nuclear Reactor Technologies",
"Advanced Small Modular Reactors",
"NE’s Approach Addresses Broad Programmatic Goals and Policy Objectives, and Provides Flexibility in Responding to Changes in U.S. Energy Policy",
"NE Uses Internal and External Reviews to Set Program and Funding Priorities but Does Not Have a Strategy for Deploying an Advanced Reactor Prototype",
"NE Plans, Prioritizes, and Evaluates Its R&D Activities through Internal and External Reviews",
"NE Does Not Have a Strategy to Overcome Several Barriers to Deploying an Advanced Nuclear Reactor Prototype",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Overview of Nuclear Reactor Technologies",
"Overview of Reactor Operations",
"Types of Nuclear Reactors",
"Overview of the Reactor Core",
"Appendix II: Comments from the Department of Energy",
"Appendix III: GAO Contacts and Staff Acknowledgments",
"GAO Contacts",
"Staff Acknowledgments"
],
"paragraphs": [
"According to its 2010 Nuclear Energy Research and Development Roadmap: A Report to Congress, NE’s primary mission is to advance nuclear power as a resource capable of meeting the nation’s energy supply, environmental, and energy security needs by resolving technical, cost, safety, proliferation resistance, and security barriers through research, development, and demonstration, as appropriate. NE conducts research aimed at (1) improving the reliability, sustaining the safety, and extending the operational lifetime of existing light water nuclear reactors; (2) supporting the development of the next generation of nuclear reactors, including light-water-reactor-based small modular reactors and advanced reactors, with a focus on affordability; (3) developing sustainable nuclear fuel cycles; and (4) reducing the risk of nuclear proliferation and terrorism. Light-water-reactor-based small modular reactors are smaller in size and energy output than conventional light water reactors—but use the same basic technology for the nuclear reactor core—and offer several potential advantages over existing light water reactors, including lower capital and construction costs through factory fabrication; enhanced safety and security; improved operation times and longer life cycles; and flexibility to be sited at locations that cannot support large nuclear plants, such as isolated areas or sites with limited water supplies.\nAdvanced reactors, including advanced small modular reactors, use innovative nuclear fuels, coolants, and energy systems, and offer the potential for significant advantages over existing light water reactors, including greater energy conversion efficiency, reduced plant size, lower construction and operation costs, and improved safety. NE has mainly conducted advanced reactor R&D on high-temperature reactors and fast reactors. High-temperature reactors produce electricity, as well as process heat that can be used for industrial purposes, such as refining petroleum or producing hydrogen, and replace current sources of process heat from burning natural gas or other fossil fuels, which emit greenhouse gases. Fast reactors can use spent nuclear fuel as their fuel source, which reduces the need for long-term storage of spent nuclear fuel, and would more efficiently use uranium, helping reduce nuclear waste.\nNE conducts nuclear reactor R&D through its Reactor Concepts Research, Development, and Demonstration program, which aims to (1) help advance nuclear power as a resource capable of meeting the nation’s energy, environmental, and national security needs and (2) develop new and advanced reactor designs and technologies that advance the state of reactor technology and improve the economic competitiveness of nuclear power. The program encompasses the following subprograms:\nThe Light Water Reactor Sustainability subprogram is developing the scientific basis to extend existing nuclear power plant operating life beyond the current licensing period and ensure their long-term reliability, productivity, safety, and security. This subprogram conducts research into materials aging and degradation, updating instrumentation and controls, and assessing reactor safety margins, among other things.\nThe Advanced Reactor Concepts subprogramdevelopment of innovative reactor technologies that may offer improved safety, functionality and affordability; more efficient energy conversion; increased proliferation resistance and security; and that build upon existing nuclear technology and operating experience. It supports research to reduce technical barriers for advanced nuclear energy systems, and its efforts support various reactor technologies at different maturity levels.\nThe Advanced Small Modular Reactor subprogram development of innovative small modular reactor designs that potentially offer improved safety, functionality, and affordability; more efficient energy conversion; increased proliferation resistance and security; and simplified operation and maintenance. For example, the program supports research into novel sensors and control systems for multiple reactor units, as well as advanced materials development.\nBeginning in fiscal year 2015, the Advanced Small Modular Reactor subprogram will be consolidated into the Advanced Reactor Technologies subprogram. coordinates R&D on common issues and challenges that confront other NE R&D efforts to avoid duplication of effort.\nNE conducts most of this research at 10 DOE national laboratories across the country and, over the past 3 years, has spent an average of about $840 million per year on its mission to advance nuclear power (see table 1). Of this amount, NE provides about $50 million annually to engage U.S. universities through its Nuclear Energy University Program to fund R&D and to build infrastructure and capabilities to enhance universities’ ability to perform research and educate students.\nNE’s recent advanced reactor R&D efforts began in 2000, when NE convened a group of senior governmental officials from nine countries to discuss the development of such reactors in the United States and internationally. This group, called the Generation-IV International Forum, and the Nuclear Energy Advisory Committee produced a Technology Roadmap for Generation-IV Nuclear Energy Systems in 2002. The intent of the forum was to develop competitively priced and reliable nuclear reactors, while satisfactorily addressing nuclear safety, waste, and proliferation concerns. In response to these efforts, the United States determined that it would fund the development of a high- temperature gas-cooled reactor as its top priority. In addition, NE funded research into sodium-cooled fast reactors—fast reactors that use sodium to cool the reactor core—as well as a variety of other advanced reactors.\nThe Energy Policy Act of 2005 (EPAct 2005) established in law the Next Generation Nuclear Plant (NGNP) Project.to develop a prototype reactor using advanced technology to generate electricity, hydrogen, or both. The law states that the NGNP Project shall consist of research, development, design, construction, and operation of a nuclear reactor prototype, and specifies completion dates for the project’s two phases, as well as certain other requirements, including licensing. Specifically, EPAct 2005 states that Phase 1 of the project, which requires DOE to, among other things, conduct R&D activities enabling it to select and validate an appropriate technology, culminating in the selection of a technology and initial design parameters, by a target date of September 30, 2011. The law also authorized DOE to submit a report to Congress identifying an alternative date upon which the agency would select the technology and initial design parameters. Phase 2 of the project, in which DOE would develop a final design for a nuclear reactor prototype, apply for licenses to construct and operate the reactor technology, construct the prototype, and begin operations, is to be completed by a target date of September 30, 2021, although DOE is again authorized to submit a report establishing an alternate date for completion. EPAct 2005 also mandated the organization of a consortium of appropriate industrial partners that will carry out cost-shared R&D, as well as design, construction, and operation on behalf of the NGNP Project, and that the NGNP prototype reactor be located at the Idaho National Laboratory in Idaho Falls, Idaho.\nThe purpose of the NGNP is In February 2006, the Nuclear Energy Advisory Committee recommended accelerating the NGNP Project schedule to, among other things, make the project more attractive to industry. However, also in February 2006, the administration announced the newly formed Global Nuclear Energy Partnership program, which sought to encourage the expansion of nuclear energy while addressing the burden of spent fuel disposal and the risk of nuclear weapons proliferation and, according to a 2008 National Academy of Sciences report, led to reduced funding for the NGNP Project. Under the Global Nuclear Energy Partnership program, DOE focused advanced reactor R&D activities on developing sodium-cooled fast reactors, and it changed its approach from designing and building a small engineering-scale demonstration of the reactor and reprocessing facility, led by DOE’s national laboratories, to accelerating its work with industry to demonstrate commercially viable sodium-cooled fast reactor technology in full-scale facilities.\nIn 2008, we reviewed NE’s Global Nuclear Energy Partnership program and found that DOE’s original approach to the domestic component of the program—building engineering-scale facilities—would meet the program’s objectives if the advanced spent nuclear fuel recycling technologies on which it focused could be successfully developed and commercialized. However, we also reported that the approach lacked industry participation—potentially reducing the prospects for eventual commercialization of the technologies. NE favored an accelerated approach of building full-scale facilities that would likely require using unproven evolutions of existing technologies that would reduce the long- term benefits of the sodium-cooled fast reactor. We recommended that NE reassess its preference for an accelerated approach. In response, DOE decided, in 2009, to no longer pursue the Global Nuclear Energy Partnership program. However, NE continued research related to sodium- cooled fast reactors, with a new focus on long-term R&D coordinated with NE’s fuel cycle research.\nAlso in 2008, the National Academy of Sciences’ National Research Council issued a report reviewing NE’s R&D efforts and concluded that the success of any particular advanced reactor technology in the United States would depend on policy decisions and other factors beyond NE’s control. In addition, the report concluded that NE’s resources were barely adequate for basic studies related to the NGNP Project and entirely inadequate for (1) exploring the sodium-cooled fast reactor at a research level and (2) investigating other reactor technologies. The report also stated that selecting a specific technology to develop from among the options known at that time would have been premature.\nIn April 2010, NE issued its Nuclear Energy Research and Development Roadmap: A Report to Congress, which provides a basis to guide NE’s internal programmatic and strategic planning for research going forward. Also in April 2010, NE issued Next Generation Nuclear Plant: A Report to Congress, which presents the historical background of the project; details the project’s spending; and discusses the principal investments in design, licensing, and research. As discussed in this report, NE selected the high- temperature gas-cooled reactor as the advanced reactor technology to develop under the NGNP Project.\nIn its 2011 Phase 1 review of the project, the Nuclear Energy Advisory Committee reported that the NGNP Project was not ready to proceed to the complete set of Phase 2 activities, citing absence of industrial partners willing to commit to share in the cost of the need for more detailed design and R&D; the need to resolve key licensing issues; constraints imposed by EPAct 2005, such as the Idaho site requirement; the absence of a public-private partnership, as required; constructing the prototype reactor; and an unrealistic project plan given the limited amount of conceptual design work completed.\nThe committee recommended that NE continue conducting its Phase 1 R&D, focused on one technology and completing design work, initiate the partnership with the nuclear industry, and continue to engage the Nuclear Regulatory Commission (NRC)—the federal agency that licenses and regulates the nation’s civilian use of nuclear reactors—to ensure that the regulatory framework for this new reactor technology would be ready to support commercialization. The committee also recommended eliminating the requirement that the NGNP prototype be sited at Idaho National Laboratory.\nIn October 2011, DOE submitted a letter to Congress in response to EPAct 2005 requirements to transmit the committee’s report and to report on certain requirements to complete Phase 1 of the NGNP Project. As noted above, EPAct 2005 required, by September 30, 2011, that DOE select technology and initial design parameters; alternately, DOE was to submit a report to Congress identifying a new date upon which the agency would do so. In the 2011 letter, DOE stated that it was notifying Congress that the department had not selected the initial design parameters for the NGNP by September 30, 2011, and that it would not proceed with Phase 2 design activities at that time. The letter also stated that DOE would focus on remaining applied R&D, work with NRC on licensing framework, and establish the public-private partnership—in essence, to follow most of the advisory committee’s recommendations— until conditions favorable to completing the NGNP Project warranted a change in direction. Further, DOE asserted that the partnership—rather than DOE—would select initial design parameters and would provide an update to the project’s schedule and milestones.\nIn its fiscal year 2014 budget request to Congress, DOE indicated that NE would continue to fund some NGNP research activities under the Advanced Reactor Concepts subprogram.",
"NE’s approach to its advanced reactor R&D is to support research on technologies associated with three main types of advanced reactors: high-temperature gas-cooled reactors; liquid-metal-cooled fast reactors, including the sodium-cooled fast reactor; and fluoride-salt-cooled high- temperature reactors. NE also conducts research supporting other less- developed advanced reactor technologies and supports the development of advanced small modular reactors. NE’s approach to advanced reactor R&D addresses broad programmatic goals—including improvements in the economics, safety, and proliferation resistance of nuclear power plants—and aims to develop technologies to reduce nuclear waste and greenhouse gas emissions. This approach provides several advantages, including flexibility in responding to changes in future U.S. energy policy or other circumstances.",
"NE’s approach to its advanced reactor R&D efforts primarily is to support research on three main advanced reactor technologies: high-temperature gas-cooled reactors; liquid-metal cooled fast reactors, including the sodium-cooled fast reactor; and fluoride-salt-cooled high-temperature reactors. On a smaller scale, NE also conducts or funds research supporting other less-developed advanced reactor technologies. In addition, NE conducts research supporting a variety of technologies related to the development of advanced small modular reactors. In discussions with representatives from the nuclear industry, members of the National Academy of Sciences’ National Research Council, and others, we found that views frequently varied on which specific technologies NE should be supporting through its R&D efforts.",
"High-temperature gas-cooled reactors produce energy in the form of high- temperature heat—which can produce electricity or be used as process heat—and differ from existing light water reactors in three key features: using (1) helium gas instead of water as a coolant; (2) graphite instead of water to slow neutrons and sustain the nuclear reaction; and (3) advanced nuclear fuel, which offers safety benefits at high temperatures. These three features make high-temperature gas-cooled reactors capable of operating at higher temperatures than existing light water reactors, thus offering a broader range of applications to industrial processes, as well as higher heat-to-electricity energy conversion efficiencies than are achievable with the lower operating temperatures of light water reactors. The high-temperature gas-cooled reactor is an advanced reactor technology that is expected to be helpful in limiting greenhouse gas emissions, according to NE officials, DOE laboratory staff, and NE documents. In addition, the technology offers inherent and passive safety features—including advanced fuel, helium coolant, and passive heat removal—that are especially important in a post-Fukushima world, according to NE officials.\nNE’s current involvement with high-temperature gas-cooled reactor R&D began in 2002, when, under the Generation-IV International Forum, high- temperature gas-cooled reactor systems were selected as one of six advanced reactor technologies to be developed by the international consortium. The United States was one of six countries, plus the European Union, that took the lead in developing this reactor technology, according to NE officials. NE chose to pursue high-temperature gas- cooled reactors because, according to NE officials, laboratory staff, and NE documents, they met the criteria of its advanced reactor programs, including potential improvements over existing light water reactors in safety, economic viability, and their promise for reducing greenhouse gas emissions. NE officials told us that the high-temperature gas-cooled reactor was also chosen because it had operating history in the United States and throughout the world, which meant that many important technical details had already been resolved. At the time, NE concluded that its research would build on existing operational experience, thus increasing the likelihood that high-temperature gas-cooled reactors could be developed and commercialized. NE envisioned its research would further demonstrate the technical and economic viability of the high- temperature gas-cooled reactor technology.\nPursuant to EPAct 2005, NE is to undertake research, development, design, construction, and operation of an advanced nuclear reactor prototype with a targeted completion date of September 30, 2021. From 2005 to 2011, under Phase 1 of the NGNP Project, NE spent more than $500 million on R&D in support of high-temperature gas-cooled reactor technologies. This research was conducted primarily at DOE’s national laboratories, and it focused on preliminary reactor design work, developing new reactor fuel, and testing high-temperature materials. The NGNP Project also collaborates with universities and industry on some R&D activities, and NE has coordinated with NRC to conduct R&D necessary to design and license high-temperature gas-cooled reactors in the United States. The last high-temperature gas-cooled reactor was licensed in the United States in 1973, and many questions remain about the process by which NRC will consider license approval for these reactors. According to NE and NRC officials, NE began consulting with NRC in the mid-2000s as NRC worked to (1) update its policy on the regulation of advanced reactors and (2) produce a report to Congress on its advanced reactor licensing strategy for NGNP, which was jointly published in 2008. During this time, NE shared detailed technical information and supporting materials with NRC, information meant to mitigate risks associated with the licensing process, according to NE and NRC officials. Although DOE determined that it would not proceed to Phase 2 design activities for the NGNP Project in 2011, NE continues to fund research on some aspects of a high-temperature gas-cooled reactor, including the testing of advanced reactor fuel and high-temperature materials including graphite.\nWe found varying views on the potential economic feasibility of the high- temperature gas-cooled reactors. Some industry representatives and a member of the National Academy of Sciences’ National Research Council that we interviewed questioned the appropriateness of NE continuing to fund high-temperature gas-cooled reactor research, citing concerns over the reactor’s economic viability in relation to the current cost of natural gas. One industry representative cited studies showing that the technology is not economically viable, as well as the fact that NE has, to date, been unable to get industrial partners interested in sharing project development costs. However, an economic analysis by the NGNP Industry Alliance—an international consortium of potential end users, owner-operators, and technology companies brought together to partner with NE and commercialize the high-temperature gas-cooled reactor— concluded that the high-temperature gas-cooled reactor would be economically viable under certain market conditions. In addition, NE has conducted a series of feasibility studies, including detailed economic analyses and studies of potential industrial applications for the process heat, to demonstrate conditions under which the high-temperature gas- cooled reactor technology becomes economically competitive. Representatives from the NGNP Industry Alliance said they believe that, with favorable trends in natural gas prices, the high-temperature gas- cooled reactor will be economically viable by the time the prototype reactor is built in the early-2030s, as is projected under the NGNP Industry Alliance’s current project time frames.",
"The liquid-metal-cooled fast reactors, including sodium-cooled fast reactors, use liquid-metal to cool the reactor core. In addition to producing electricity, a primary benefit of these reactors is in nuclear waste management. Fast reactors can use reprocessed spent nuclear fuel as their energy source, which would help the United States reduce the amount of spent fuel from light water reactors that would need to be stored or eventually placed in a geologic repository. Fast reactors also minimize nuclear waste generation by significantly improving fuel use efficiency as compared to traditional light water reactors.\nNE identified the sodium-cooled fast reactor as a reactor technology of interest in 2002 under the Generation-IV International Forum because, according to NE officials, it met criteria of its advanced reactor programs, including significant advances in proliferation resistance, its potential for improving the sustainability of the nuclear fuel cycle, and its management of highly radioactive waste elements. NE continues to conduct research in support of sodium-cooled fast reactors because of their advantages for addressing nuclear waste and because reactors with the same basic technology have been built and operated in the United States and around the world since the 1960s. In fact, several other countries, including Japan and France, had or currently have operating sodium-cooled fast reactors.\nWe also found varying views on sodium-cooled fast reactors among industry representatives, members of the National Academy of Sciences’ National Research Council, and others that we interviewed. Some members of the National Academy of Sciences’ National Research Council and an industry representative cited concerns over the safety of sodium-cooled fast reactors—including the highly reactive nature of the sodium in the presence of water and the threat of sodium fires—and believe that these safety issues may never be fully overcome. Moreover, some industry representatives and members of the National Academy of Sciences’ National Research Council told us that a fast reactor technology market does not exist in the United States, citing other more cost-effective options for storing spent nuclear fuel, including storage in aboveground casks or water pools as is the current practice at U.S. nuclear power reactors. These individuals believe that NE’s sodium- cooled fast reactor research is ill-advised.\nIn contrast, NE officials and some industry representatives that we interviewed believe that remaining technical challenges with the sodium- cooled fast reactor can be overcome. In addition, NE officials said it is conceivable that changes in government policy for handling spent nuclear fuel in the United States will create a market for fast reactors, as it has in the United Kingdom. Moreover, NE believes that the sodium-cooled fast reactor, or other similar fast reactor technology, may be instrumental in efforts to develop a sustainable nuclear fuel cycle. In 2011, NE undertook a comprehensive study of various options for improving the sustainability of the nuclear fuel cycle, which would potentially entail using fast reactor technology and waste reprocessing to create nuclear power systems that better manage and reduce the generation of nuclear waste when compared to a once-through light water reactor fuel cycle. Although this study did not consider specific advanced reactor technologies, a closed fuel cycle may require using an advanced fast reactor technology, such as the sodium-cooled fast reactor.",
"The fluoride-salt-cooled high-temperature reactor design takes advantage of the physical characteristics of liquid-salt coolant to enable the development of a high-temperature system that is scalable to larger power and able to operate at lower pressure and higher power density than the helium-cooled high-temperature gas-cooled reactor. With these characteristics, according to NE officials and DOE documents, these reactors could provide potential safety benefits and increased efficiency over existing light water reactors while maintaining the benefit of providing both electricity and process heat for industrial applications. NE officials told us that this mix of characteristics is the reason why NE provides limited funding research into fluoride-salt-cooled high-temperature reactor. However, the fluoride-salt-cooled high-temperature reactor technology is not very mature or well tested, and because of this is considered more of a long-range advanced reactor technology, according to NE officials. NE funds R&D into fluoride-salt-cooled high-temperature reactors mainly through NE’s Nuclear Energy University Program, with the research mainly conducted at universities across the country. Two industry representatives we interviewed took issue with NE for funding a reactor technology that is unproven and that in their view has little chance of ever being built. In response, NE officials told us that the potential benefits of fluoride-salt-cooled high-temperature reactor over other advanced reactor technologies warrant providing limited funds and utilizing university research capabilities.",
"NE conducts or funds R&D on other advanced reactor technologies on a small scale, mainly to assess their potential and better characterize their performance capabilities. NE officials told us that most of these technologies have some unproven aspects, operate in novel ways, or have other characteristics that increase the risk associated with their development. NE supports research into some of these potentially transformative, long-term technology options through its Nuclear Energy University Program. For example, in 2013, the program funded research to assess the feasibility of an advanced reactor fueled with depleted uranium, a design offering a 30-fold increase in uranium ore utilization verses contemporary light water reactor designs.\nNE also funds research into promising advanced reactor technologies through the Advanced Reactor Concepts Technical Review Panel process. Through this process, NE identifies R&D needs for potentially viable advanced reactor technologies to inform NE advanced reactor R&D funding decisions. A goal of the process is to facilitate greater engagement between DOE and the nuclear industry. NE first solicited information on advanced reactor proposals from industry in February 2012, after which a review panel made up of experts from national laboratories, universities, and industry reviewed the proposals against established evaluation criteria, including safety, market attractiveness, economics, proliferation risk, waste generation, security, and potential regulatory challenges. The panel’s assessment of market attractiveness focused on the proposed technologies’ ability to be competitive in the marketplace, and it included variables like efficiency, initial capital costs, and economic factors such as construction, manufacturing, and operating costs and uncertainties, as well as the resulting cost of electricity, according to the Technical Review Panel report. The objective of the Technical Review Panel process was to evaluate the viability of the technologies, understand the R&D needs of each, and prioritize research to support development and commercialization of each. After R&D needs and priorities were identified, NE issued a funding opportunity announcement, competitively selected four projects, and provided a total of $3.5 million in funding for those projects, according to NE officials. Many nuclear industry representatives we interviewed applauded NE’s effort and told us that this process was an effective way for NE to collaborate with industry and that it begins to address a long-standing industry concern that NE’s R&D efforts did not coordinate with industry or meet industry needs. However, these industry representatives also stated that the $3.5 million in R&D funding was insufficient to meaningfully address the need for collaboration between NE and industry as it was enough to fund a very small number of R&D activities. Notably, Congress provided NE with an additional $12 million to support a continuation of this effort. According to NE officials, NE has issued another industry solicitation and will use the information gathered to make additional industry cost-shared R&D awards early in fiscal year 2015.",
"NE also conducts research on advanced small modular reactors with the goal of supporting the development of innovative small modular reactor designs that offer improved safety, functionality, and affordability. These R&D efforts support advanced small modular reactors that offer simplified operation and maintenance, more efficient energy conversion, and increased proliferation resistance and security. More specifically, NE funds research on advanced sensors, instrumentation and controls, control systems for multiple units, advanced materials, and other major system components. In addition, NE funds efforts to create standards and codes for small modular reactor materials to support the eventual licensing of these advanced reactor technologies.\nIn 2012 and 2013, through its Small Modular Reactor Licensing Technical Support program, NE issued funding opportunity announcements for cost- sharing with industry for the development of small modular reactor designs—including small modular reactors based on light water reactor technology, as well as advanced small modular reactors—to support the program’s vision to provide additional nuclear power options that offer more flexibility in financing, siting, and end-use applications than large light water reactor designs. Under the cost-sharing arrangement for each funding opportunity, DOE is supporting design development, first-of-a- kind engineering, experiments, and analysis in support of gaining design certification approval from NRC for the small modular reactors so that commercial deployment of the first small modular reactor can begin. Industry proposals under these announcements were judged by independent selection panels based on a series of criteria, including the extent to which the design incorporates safety, operability, efficiency, economics, and security characteristics that exceed the capabilities of current reactor designs; the likelihood of expeditiously achieving design the overall quality of the project plan and certification and deployment;business approach; and other factors. Based on our review of the two funding opportunity announcements, however, we found that the funding opportunity announcements differed in the economic information that NE required for proposals. In the 2012 announcement, NE more directly addressed economics and marketability by requiring applicants to propose business plans “to meet expanding domestic electricity requirements at a competitive price” and to “provide their plan to achieve successful commercial deployment” of the technology. By contrast, the 2013 announcement indicated that the economic criteria used to evaluate proposals would be based on the designs’ construction, fabrication, deployment, and operational costs. NE officials told us that these criteria indirectly assess economics and marketability of these technologies, and that the type of economic information received from applicants in 2012 was very preliminary and did not provide a good discriminator with which to evaluate proposals. In addition, these officials stated that it was incumbent on the applicants to ultimately assure marketability as they were providing most of the funding and have a profit motive. For both funding opportunity announcements, the panel’s evaluation resulted in choosing a small modular reactor design based on conventional light water reactor technology. Some industry representatives, members of the National Academy of Sciences’ National Research Council and the Nuclear Energy Advisory Committee, and NE officials told us that this selection was an appropriate choice because it has a significantly better chance of being licensed and constructed in the required time frame, as compared to advanced small modular reactor designs that are not based on conventional light water reactor technology.",
"While the broad goals of NE’s advanced reactor R&D efforts are to improve the economics, safety, and proliferation resistance of nuclear power plants, the R&D efforts also aim to develop advanced reactor technologies that can prepare the United States to address policy objectives such as reducing nuclear waste and greenhouse gas emissions. NE’s approach to advanced reactor R&D is to conduct research in support of multiple advanced reactor technologies. According to NE officials and documents, because NE’s approach to advanced reactor R&D has multiple goals and seeks to address several different policy objectives, NE works on multiple technologies simultaneously. A key objective of NE’s advanced reactor R&D efforts is to conduct research to remove technology barriers or reduce technology risks, while collaborating with industry and academia, with the ultimate goal for industry to take the results of NE’s research to the next step of development and commercialization. NE focuses on R&D that industry does not have the means to carry out, according to NE officials, with the expectation that the research will reduce financial risks to industry and thereby increase the affordability of industry investment in new nuclear technologies. In addition, NE engages and collaborates with NRC on issues related to the eventual licensing of advanced reactors, including understanding the likely scope and extent of R&D necessary to support the licensing process.\nWhile advanced reactors are attractive for many reasons, NE carries out research on a variety of reactors because, in part, different reactor types can address particular objectives, according to NE officials. For instance, fast reactors can be better at addressing the nuclear waste issue than some other advanced reactors, while high-temperature gas-cooled reactors provide process heat and may be a better solution for addressing greenhouse gas emissions. According to NE officials, the development of fast reactors, such as the sodium-cooled fast reactor, is likely to play a critical role in managing spent nuclear fuel if and when the United States decides to reprocess and use its spent nuclear fuel rather than store it at reactor sites, as is the current practice at U.S. nuclear power reactors, or isolate it in a geologic repository underground, as has been proposed.\nTo remain aware of industry’s R&D needs and international nuclear energy developments, NE regularly collaborates with industry and international organizations, according to NE officials and NE documents. NE officials told us that NE regularly collaborates with industry on specific R&D projects by sharing technical data and information. For example, NE is currently collaborating with industry on advanced fuels and materials, among other things. NE officials told us they work with industry and have conversations regarding specific R&D activities. According to NE officials and some industry representatives that we interviewed, this type of collaboration has been increasing in recent years, and one industry representative stated that such collaboration is critically important to ensuring that NE’s activities are relevant for industry.\nOne way that NE has recently collaborated with industry, according to NE officials, was through the Advanced Reactor Concepts Technical Review Panel process. Some industry representatives we talked to stated that this review panel process was beneficial to both industry and NE because it helped inform NE of industry R&D needs and because it has provided some funds to industry to carry out research on promising new technologies. Industry officials also told us that the process has opened up some new channels of communication between NE and industry. However, industry representatives also stated that, although this collaboration with industry is beneficial, NE could be doing more to ensure that its R&D is more fully aligned with industry needs. For example, according to one industry official, NE conducts some research that, while interesting and potentially beneficial, has little utility for industry’s current needs.\nNE carries out international collaboration through ongoing meetings of the Generation-IV International Forum and through the International Atomic Energy Agency, through the Organisation for Economic Co-operation and Development (OECD), and through bi-lateral agreements with many countries around the world, including Canada, the Russian Federation, the People’s Republic of China, Japan, the Republic of Korea, and countries in the European Union. NE officials cited several examples of such collaboration, such as with the People’s Republic of China on high-temperature gas-cooled reactors; with France on their sodium-cooled fast reactor development project; with Japan on advanced materials for sodium-cooled fast reactors; and with the Republic of Korea on sodium-cooled fast reactors.\nNE’s approach to advanced reactor R&D provides several advantages, primarily flexibility in responding to changes in future U.S. energy policy or other circumstances, according to NE officials. The officials said they believe that conducting research in support of multiple advanced reactor technologies gives the agency the flexibility to respond to external factors affecting the direction of their advanced reactor R&D efforts, including changes in U.S. energy policy, energy markets, or other areas. Specifically, NE officials told us that the current approach positions NE to respond to changes in U.S. energy policies, such as policies for managing the nation’s nuclear waste or controlling greenhouse gas emissions. Changes in either of these policies would affect the direction of NE’s advanced reactor efforts, according to NE officials. For instance, a policy calling for the United States to manage nuclear waste by reprocessing spent nuclear fuel and reusing it as reactor fuel would result in NE focusing efforts and concentrating resources on developing and deploying fast reactor technologies. NE officials told us that the current practice of storing nuclear waste in aboveground facilities at nuclear power plants across the country will eventually be changed, and waste will either be moved to long-term underground repositories, or reprocessed and burned in fast nuclear reactors. NE officials told us that ongoing research into fast reactor technologies is important so that NE is positioned to react to changes in U.S. policy toward the handling of nuclear waste, including waste that has already been generated and waste that continues to be generated.\nSimilarly, NE officials said that policies that affect the prices of various energy sources would have an effect on the commercial attractiveness of high-temperature reactors, including high-temperature gas-cooled reactors. For instance, officials cited the possibility of the imposition of a carbon tax to control greenhouse gas emissions, or the possibility of natural gas prices rising, either of which would make nuclear energy more economically competitive and increase the attractiveness of the high- temperature gas-cooled reactors that produce both electricity and process heat for industrial applications. These industrial applications currently rely heavily on natural gas or coal plants as their source for high-temperature process heat. NE officials stated that natural gas prices in other countries are already at levels where the high-temperature gas-cooled reactors are projected to be economically competitive and that this has resulted in some interest from outside the United States in the development of this technology.\nAccording to NE officials, another advantage of NE’s approach to advanced reactor R&D is that NE is able to maintain an employee base with knowledge and expertise on a wide variety of reactor technologies. NE officials told us that maintaining staff expertise is important so NE can continue to conduct research on the various technologies, train the next generation of scientists and engineers, and be ready to support the production of prototype reactors when the time comes. In addition, maintaining a level of expertise in a variety of advanced reactor technologies means that NE can engage with, monitor, and support other countries as they develop advanced reactor technologies. These officials said this is important because other countries are actively developing advanced reactor technologies, and the United States needs scientists that can understand how those reactors operate, in part, to judge their safety and nuclear proliferation risks.\nNE officials also said that conducing R&D on several types of advanced reactors simultaneously, rather than focusing on a single reactor type, also gives NE the ability to fund R&D supporting promising but unproven reactor technologies. For instance, NE is funding limited research on lead-cooled fast reactors, which offer the potential for improved safety and proliferation resistance over other advanced reactor technologies, but they have some unproven technologies and components, according to NE officials. Similarly, NE is funding research in support of an advanced small modular reactor based on fast reactor technology that would potentially address the nuclear waste issue and also provide process heat for industrial applications. NE officials said that it is important to have funds available to support these and other potentially game-changing technological breakthroughs. However, in its June 2013 report, the Nuclear Energy Advisory Committee was critical of NE’s approach, saying that NE needs to better prioritize its R&D efforts on a smaller number of advanced reactor technologies to focus research funding on the ultimate goal of deploying an advanced reactor prototype.\nAlthough NE selected the technology to develop under the NGNP Project, many members of the National Academy of Sciences’ National Research Council, members of the Nuclear Energy Advisory Committee, and industry representatives we interviewed agree with NE’s approach to advanced reactor R&D because the time is not right for NE to move to the deployment phase. For instance, representatives from industry and the Nuclear Energy Advisory Committee told us that uncertainties around current policies for handing nuclear waste and controlling greenhouse gases do not make a compelling case for choosing an advanced reactor technology to deploy as a prototype. The 2008 National Academy of Sciences’ National Research Council review of NE’s advanced reactor R&D efforts agreed with NE’s approach to advanced reactor R&D, saying that there are several policy matters and other questions—undetermined nuclear waste management options, unformulated environmental policy, ongoing work of other countries on advanced technologies, and unclear nonproliferation regimes—that will affect NE’s decisions and priorities. This review team stated that, given these unknowns, it would be premature to select a winning technology from among current options.\nIn addition, in January 2012, the President’s Blue Ribbon Commission on America’s Nuclear Future recommended having the United States continue multiple near-term (i.e., light water reactor) and long-term (e.g., small modular reactor, sodium-cooled fast reactor, high-temperature gas- cooled reactor) R&D efforts until NE could defensibly select technologies that would meet certain regulatory and policy requirements (e.g., safety, environmental protection, security, and nonproliferation). Moreover, members of the Nuclear Energy Advisory Committee and the National Academy of Sciences’ National Research Council, and representatives from industry told us that current NE funding levels would prohibit NE from deploying a prototype reactor even if NE chose an advanced technology to deploy. Some of them said that NE is correctly positioning itself to be prepared to deploy a prototype reactor in the long-term as policies or energy markets change. One Nuclear Energy Advisory Committee representative said that United States could focus its advanced reactor R&D efforts quickly in response to a policy change or other congressional direction, provided that NE also saw increased funding.",
"NE’s uses internal and external reviews to set program and funding priorities for advanced reactor R&D and to evaluate progress toward program goals. However, NE does not have a strategy for overcoming barriers to deploying an advanced nuclear reactor prototype, increasing the likelihood that such a reactor will not be built by the 2021 target date specified in EPAct 2005. Not deploying a prototype carries certain risks, including waning U.S. influence in the safe operation of nuclear plants internationally and potential loss of certain knowledge and expertise.",
"NE takes a number of steps to plan and prioritize its advanced reactor R&D efforts and evaluate progress toward program goals. Before its annual program planning meetings, NE and national laboratory staff develop a list of R&D efforts considered to be priorities. NE management reviews this information in light of program goals, including long-term goals described in NE’s 2010 R&D Roadmap, program funding, and schedules, according to NE officials. Once the research priorities are established and approved by management, the individual laboratories develop detailed work plans, which describe the objectives and scope of the work to be performed. These work plans are reviewed to ensure that the proposed work is aligned with NE’s mission and that the work can be accomplished within the allotted budget and time frames, according to NE officials. All of the approved work plans are then entered into NE’s performance management system—the Program Information Collection System—which allows NE to track progress toward budget and schedule milestones on an ongoing basis. According to a laboratory staff member, this system tracks progress toward short-term goals—on a monthly basis—and long-term goals—on yearly, 3-year, and 5-year time frames.\nNE monitors and evaluates its advanced reactor R&D activities on an ongoing basis through the Program Information Collection System and conducts program reviews—monthly, quarterly, and annually—to assess progress toward program goals, according to NE officials. For example, officials from the Advanced Reactor Concepts and Advanced Small Modular Reactor subprograms hold monthly progress review meetings to discuss, among other things, program updates, technical highlights, and budget and milestone status updates. The officials use monthly status tracking reports generated by the performance management system as part of these reviews, in which officials review cost and schedule performance data. In addition to the monthly meetings, officials from the Advanced Reactor Concepts and Advanced Small Modular Reactor subprograms typically conduct four in-depth reviews of each year, according to NE officials. These reviews focus on one or more specific areas of research, and officials discuss progress toward goals, important issues or problems, and plans going forward. For example, the meeting minutes from the quarterly review of the Advanced Reactor Concepts and Advanced Small Modular Reactor subprograms in July 2013 show that officials discussed accomplishments and also priorities for the upcoming fiscal year, and conducted in-depth discussions of certain program areas and overviews of others. In addition, NE conducts annual reviews of activities across multiple subprograms and topics to ensure that NE’s efforts are complementary and nonduplicative, and also to gain insight into areas of potential collaboration. For example, during its annual review of the nuclear reactor R&D efforts in March 2014, NE officials discussed progress on fuels for the high-temperature gas-cooled reactor, advanced reactor licensing, and advanced reactor materials for small modular reactors, among other things. On a less-formal basis, management officials at the national laboratories are in frequent communication with NE management through weekly teleconferences to provide regular progress updates and provide information on unforeseen circumstances or challenges, according to NE officials.\nNE also takes steps to coordinate efforts across its R&D programs and subprograms to leverage experience and funding, as well as to reduce redundant R&D activities. Officials from the Advanced Reactor Concepts and Fuel Cycle subprograms stated that they frequently coordinate with each other because their R&D efforts are interdependent. For example, the Fuel Cycle subprogram is conducting R&D on accident tolerant fuels that will be used for advanced reactors, so coordination between the Fuel Cycle subprogram and the Advanced Reactor Concepts subprogram is crucial, according to NE officials.\nTo further help ensure that R&D efforts are coordinated and to minimize redundancies, NE established the Nuclear Energy Enabling Technologies program in fiscal year 2011. The program is designed to conduct R&D on crosscutting technologies that complement NE’s activities to support and enable the development of new advanced reactor designs and fuel cycle technologies. NE created the program to better coordinate and integrate R&D activities after officials identified some similar efforts being performed on crosscutting areas, such as materials, across more than one program, according to NE officials. Through this program, NE has awarded over $9 million to support R&D projects focused on reactor materials, advanced sensors and instrumentation, and advanced methods for manufacturing, among other things. NE determines which R&D efforts are conducted by the Nuclear Energy Enabling Technologies program by reviewing R&D proposals submitted by different groups, including the national labs, universities, research institutions, and industry, according to NE documents. Specific R&D projects are selected based on common needs of programs and subprograms, with each selected project required to support at least three programs or subprograms.\nOthers also periodically conduct external reviews of NE’s advanced reactor R&D to inform the planning and prioritization efforts for and assess the progress of its R&D activities. Most prominently, according to NE officials, the Nuclear Energy Advisory Committee provides NE with independent advice and recommendations on complex science and technical issues that arise in planning, managing, and implementing NE’s R&D activities. The Nuclear Energy Advisory Committee typically meets twice annually with NE management to discuss its reports and recommendations. The Nuclear Energy Advisory Committee’s subcommittee on Nuclear Reactor Technology is intended to provide expert guidance to NE on both the short-term and long-term direction of its R&D efforts on reactor technologies. NE officials and Nuclear Energy Advisory Committee representatives told us that the committee has been beneficial in providing expertise to NE and that NE has been responsive to the committee’s recommendations. In 2011, a Nuclear Energy Advisory Committee review of NE’s R&D efforts on the NGNP Project determined that NE should not move forward with the complete set of Phase 2 activities of the project, citing constraints imposed by EPAct 2005 and difficulties finding industry partners. Subsequently, in 2011, NE informed Congress that it would not proceed with Phase 2 design activities of the NGNP Project until circumstances warranted a change in direction.\nNE’s efforts have also been reviewed by other outside entities, including the Secretary of Energy’s Advisory Board, which provides advice and recommendations to the Secretary of Energy on various topics. For example, in 2012, the Secretary of Energy requested the board identify areas in which standards for safety, security, and nonproliferation should be developed for small modular reactors; identify challenges, uncertainties, and risks to commercialization; and provide advice on approaches to manage these risks and accelerate deployment of these reactors. The board determined that the commercialization of small modular reactors was likely to produce multiple benefits for the country, including helping provide for a more reliable power grid with more widely distributed power generation once current light water reactors are retired; supporting clean generation and reduced carbon emissions; and helping preserve influence of the United States on nuclear nonproliferation issues. The board stated that to deploy small modular reactors widely, the nation must develop a robust small modular reactor industry that can manufacture cost-competitive small modular reactors that meet U.S. regulatory standards, and that the primary risk for commercialization of these reactors, beyond design certification and licensing, is the ability to drive the plant costs down sufficiently to become competitive with other energy sources, such as natural gas, without compromising safety and security. To develop this industry, according to the board, the U.S. government will likely have to play a significant financial role beyond the Small Modular Reactor Licensing Technical Support program.",
"Although NE’s primary mission is to advance nuclear power through research, development, and demonstration, its deployment of an advanced reactor prototype under the NGNP Project is unlikely in the foreseeable future. Among the different advanced reactor technologies currently supported by NE R&D, the high-temperature gas-cooled reactor technology is the most likely to be deployed and commercialized in the near term, according to an NE planning document. NE officials said that the likelihood is based on the wide range of potential market applications to industry of electricity and process heat and is supported by substantial government investments in the technology’s development, including testing of materials, fuels, and other components. NE has consulted with the NGNP Industry Alliance on the project, including discussing the alliance’s plan for proceeding with development of a prototype reactor. In addition, NE has done market research on potential industrial applications for the process heat. Further, NE established a contract in 2013 with NGNP Industry Alliance to develop economic analyses detailing how industry may best engage in developing and commercializing high- temperature gas-cooled reactor technologies. According to laboratory staff, development and testing of the advanced fuel for high-temperature gas-cooled reactor has progressed positively, and other research on high- temperature materials and other components has produced positive results.\nIn 2011, DOE informed Congress that it would not proceed with Phase 2 design activities for the NGNP Project until circumstances warranted a change in direction. According to NE officials, laboratory staff, and representatives of the NGNP Industry Alliance, the NGNP Project remains hindered by several barriers. Specifically, barriers are as follows:\nCost-share requirements. DOE’s attempts to implement the cost- share provisions in EPAct 2005 for the NGNP Projects have met with resistance from industry, according to DOE officials and industry representatives, because of differences in how EPAct 2005 is interpreted by NE and by the NGNP Industry Alliance. EPAct 2005 provides that activities by industry must be cost-shared in accordance with the research, development, demonstration, and commercial application cost-sharing provisions established under section 988 of the act. Specifically, the Secretary must require cost-sharing in accordance with this cost-sharing provision when carrying out a research, development, demonstration, or commercial application program or activity that is initiated after August 8, 2005. For applied research and development activities, industry generally is to provide not less than 20 percent of the cost, but the cost-share may be reduced or eliminated if the Secretary determines doing so is necessary and appropriate. For demonstration and commercial application activities, industry generally is to provide not less than 50 percent of the cost, but the cost-share may be reduced if the Secretary determines that doing so is necessary and appropriate considering any technological risk relating to the activity. However, according to NE officials and representatives from the NGNP Industry Alliance, they have been unable to come to an agreement on implementing the cost-share requirement for funding the remainder of the NGNP Project because of disagreement on the applicable cost- share levels and how and when the cost-share would be applied to specific activities or project phases. The NGNP Industry Alliance favors meeting the total cost-share requirement by measuring costs over the course of the remainder of the NGNP Project rather than on an annual basis. According to the NGNP Industry Alliance cost-share proposal from November 2009, the alliance suggested assessing a lower industry cost-share in the first years of the project and increasing the industry share over time, with industry paying the vast share of the annual project costs by the final years of the project. Under this proposed scenario, the alliance states that the cumulative industry contribution would meet the overall cost-share requirement, and NE’s portion of the development costs would largely be paid up front. DOE did not fully consider the alliance’s proposal for a multiyear approach to the cost-share requirement, according to NE officials, because the project was not proceeding at the time due to funding constraints, competing program priorities, and other factors Representatives from the NGNP Industry Alliance told us that cost- sharing the development activities on a annual basis is not feasible because it would mean a substantial layout of funds with a very long payoff time and would expose the industry partners to significant financial risks. NGNP Industry Alliance representatives said these risks include unknowns associated with obtaining regulatory approval from NRC for the prototype reactor, and the risk that NE will not be provided sufficient funds through congressional appropriations to meet its obligations. NE officials told us that they understand the NGNP Industry Alliance’s perspective and had been attempting to work out an agreement when DOE decided not to proceed to Phase 2 of the project. Representatives from the NGNP Industry Alliance told us that the impasse over cost-sharing needs to be resolved in order to proceed with the NGNP advanced reactor prototype.\nSite requirement. According to NE officials, laboratory staff, and NGNP Industry Alliance representatives, the EPAct 2005 requirement that the NGNP reactor prototype be located at the Idaho National Laboratory is another barrier to proceeding with the project. Representatives of the NGNP Industry Alliance said that part of the economic benefit of the reactor prototype would be the use of the high-temperature process heat that results from operating the high- temperature gas-cooled reactor. Alliance representatives said that building the reactor at Idaho National Laboratory foregoes the economic benefit because industries that could potentially use process heat are not located near the laboratory, making the overall prototype reactor less economically attractive. Instead, they told us that the NGNP prototype reactor should be located where the petrochemical or other industries that use process heat could benefit from it. This is consistent with a finding in the Nuclear Energy Advisory Committee’s 2011 Phase 1 review of the NGNP Project. In its review, the committee stated that the business case to optimize NGNP use for process heat applications and electricity indicates that a site in proximity to a wide range of industrial uses is more appropriate and that a siting at the Idaho National Laboratory will not support a partnership agreement with industry. If industry cannot realize an economic benefit from the prototype reactor, it is unlikely that industry would support the reactor being built at the Idaho National Laboratory.\nFiscal constraints and competing priorities. NE officials, laboratory staff, industry representatives, and Nuclear Energy Advisory Committee members that we interviewed told us that NE’s recent funding levels are inadequate to move forward with the NGNP prototype reactor. NE officials and the NGNP Industry Alliance both estimate that NE’s share of NGNP Project could amount to as much as $2 billion over the remainder of the project, in which costs would be shared with industry. Under the NGNP Industry Alliance’s proposal, DOE would provide between approximately $170 million and $330 million annually over the first 6 years of the proposed plan. This compares to the total funding for Advanced Reactor Concepts subprogram of about $60 million in 2014. NE officials, Nuclear Energy Advisory Committee members, and laboratory staff told us that NE’s funding levels are inadequate to move forward toward a prototype reactor, even if it were to focus its resources on one effort. Furthermore, an NE officials and a member of the Nuclear Energy Advisory Committee told us that current priorities to fund R&D aimed at sustaining the existing light water reactors and focusing on the design and licensing of small modular reactors would have to shift in order to make more funds available for advanced reactor R&D.\nCompetition from natural gas. NE officials, some industry representatives, and Nuclear Energy Advisory Committee members that we interviewed told us that low natural gas prices have made nuclear energy less attractive economically over the past few years, reducing overall interest in nuclear power options. NE officials and industry representatives said that the current atmosphere is not conducive to partnering with industry on advanced reactor projects, including the NGNP Project.\nThe Secretary’s October 2011 letter to Congress did not specify which conditions might warrant a change in program direction—that is, proceed with Phase 2 of the NGNP Project—and NE has not developed a strategy for overcoming the identified barriers hindering the resumption of the project or a set of criteria for determining when a change in program direction would occur. An NE management official that we interviewed stated that conditions that would warrant a change in direction might include Congress legislating a carbon tax, a rise in price of natural gas, or an increase in funding for the NGNP. In addition, developing such a strategy may involve consultation with the Nuclear Energy Advisory Committee and others, including independent nuclear experts. Without a strategy for overcoming the barriers hindering the restart of the NGNP Project and identifying conditions NE can use for determining when a change in program direction would occur, it will be difficult for NE to demonstrate that it is poised to move forward, and it risks the project being on hold indefinitely.\nAccording to EPAct 2005, NE was required to select the initial reactor design parameters to be used for the NGNP Project by September 30, 2011, or submit a report to Congress establishing an alternative date for making the selection. However, the Secretary’s 2011 letter to Congress did not specify initial design parameters for the NGNP or specify an alternative date for making a selection. Instead, the letter stated that the initial design parameters had not yet been selected and that such a selection would be made by the public-private partnership once it is formed. Without selecting initial reactor design parameters or establishing a date to make a selection as required by EPAct 2005, it is not clear if or when NE is going to take this next step in deploying the NGNP prototype reactor.\nIn addition, after the Secretary’s decision not to proceed with Phase 2 design activities, NE’s engagement with NRC on licensing issues has decreased. NE maintains a team seeking to engage NRC on NGNP licensing issues, according to NE officials, but NRC has reassigned staff from its NGNP work and engages with NE on a minimal basis, according to NRC officials. NRC officials said that they cannot proceed substantively further in developing a licensing framework until NE has developed a specific design for an advanced reactor technology.\nFurthermore, not deploying an advanced reactor prototype carries some risks, according to some industry representatives, Nuclear Energy Advisory Committee members, and NE officials we interviewed. Specifically, these risks include (1) falling behind other countries in advanced reactor development and losing market share in the global market for nuclear energy; (2) losing influence on which reactor technologies are developed, which raises safety and nuclear proliferation concerns; and (3) losing its ability to manufacture the components necessary to construct nuclear plants.\nBy not deploying an advanced reactor prototype, the United States risks falling behind other countries—such as Japan, Russia, China, South Korea, and France—that are actively working to deploy and commercialize advanced reactors, according to a Nuclear Energy Advisory Committee report. For example, Russia currently has two sodium-cooled fast reactors—one experimental and one commercial—in operation and is developing or constructing additional sodium-cooled fast reactor technologies, and it has plans to export reactor technology to other nations. In addition, China has an operating sodium-cooled fast reactor and high-temperature gas-cooled reactor on a test reactor scale and is in the process of building a prototype high temperature gas-cooled reactor, according to NE officials. In potentially losing its global leadership position in developing nuclear technologies, the United States risks losing market share in the global market for nuclear energy, which would cost the U.S. economy high-paying jobs in the nuclear industry, according to these individuals.\nBy falling behind other countries in advanced reactor development, the United States also risks losing influence on determinations of which reactor technologies are developed, with implications for the safety of reactor operations worldwide, as well as implications for how resistant the technologies are to nuclear proliferation—including the safe, effective disposal of nuclear waste—according to NE officials, laboratory staff, and Nuclear Energy Advisory Committee members that we spoke to. Specifically, according to members of the Nuclear Energy Advisory Committee, if the nation is not leading the development of advanced reactors, other countries may operate reactors that do not meet the highest safety standards and may not take adequate steps to ensure nuclear waste is handled appropriately and properly secured.\nSimilarly, the United States risks losing its ability to manufacture the components necessary to construct nuclear plants, according laboratory staff and Nuclear Energy Advisory Committee members that we interviewed. In addition, by not deploying an advanced reactor, NE risks losing staff, including engineers with the knowledge and experience necessary to design and build advanced reactors, according to an NE official and laboratory staff. For example, without a specific goal of developing an advanced reactor prototype, NE staff are more likely to leave NE for jobs with a better sense of mission, according to these officials.",
"Energy demand in the United States is expected to rise considerably over the coming decades, and concerns remain over energy security and greenhouse gas emissions from the burning of fossil fuels. While nuclear energy accounts for about 20 percent of electricity generation in the United States and produces no air pollution or greenhouse gases, the accident at Japan’s Fukushima Daiichi commercial nuclear power plant in March 2011 highlighted ongoing concerns about the safety of nuclear plants, and concerns also exist about potential threats of nuclear proliferation and terrorism. With this in mind, it is important that nuclear power plants continue to evolve and provide energy economically, while also addressing safety and proliferation concerns. By conducting nuclear reactor R&D, NE has a critical role to play as it supports existing light water reactors, as well as a new generation of advanced nuclear reactors.\nHowever, in 2011, DOE informed Congress that it would not proceed with Phase 2 of the NGNP Project until circumstances warranted a change in direction, and the project remains hindered by several barriers, including the cost-share and site requirements of EPAct 2005. NE officials have attempted to work out a cost-share agreement with the alliance, but different interpretations of the cost-share requirements by DOE and the NGNP Industry Alliance have created an impasse, and no agreement had been reached before DOE determined that it would not proceed to Phase 2 of the project.\nAnother barrier to proceeding with the project is the EPAct 2005 requirement that the NGNP reactor prototype be located at the Idaho National Laboratory. Building the reactor there foregoes the economic benefit of the reactor’s process heat because industries that could potentially use the prototype reactor’s high-temperature process heat are not located near the laboratory. If industry cannot realize an economic benefit from the prototype reactor, it is unlikely that industry would support the reactor being built at the Idaho National Laboratory.\nMoreover, DOE’s October 2011 letter notified Congress that the department had selected the NGNP technology, as required by EPAct 2005, acknowledged that the department had not selected the initial design parameters for the NGNP or identified the date upon which it would do so by September 30, 2011, as required by EPAct 2005, and essentially put Phase 2 of the NGNP Project on hold until conditions favorable to completing the NGNP warranted a change in direction. However, the letter did not specify which conditions might warrant a change in program direction—that is, proceed with Phase 2 of the NGNP Project—and NE has not developed a strategy for overcoming the identified barriers hindering restarting the project or which contains such conditions. Without a strategy for overcoming the barriers hindering the restart of the NGNP Project and identifying conditions NE can use for determining when a change in program direction would occur, the project may be on hold indefinitely. Furthermore, without selecting initial reactor design parameters and reporting the parameters to Congress, as required by EPAct 2005 for completing Phase 1 of the project, or establishing a date to make a selection, it is not clear if or when NE is going to take this next step and proceed with Phase 2 of the NGNP Project.",
"To better prepare the Department of Energy to meet the requirement of the Energy Policy Act of 2005 to deploy the NGNP prototype reactor, we recommend that DOE take the following two actions:\nDevelop, in consultation with the Nuclear Energy Advisory Committee and independent nuclear experts, as appropriate, a strategy to proceed with Phase 2 of the NGNP Project, outlining conditions that will warrant a change in program direction, remaining research and development activities, projected project budget and schedule, and steps necessary to overcome barriers to successful completion of the NGNP Project.\nProvide a report to Congress complying with the statutory requirement for Phase 1 of the NGNP Project by providing initial design parameters or a date for providing them. The report should also provide an updated status of the issues DOE identified in its 2011 letter to Congress and outline any additional barriers to proceeding with Phase 2 of the project, including the status of the establishment of a public-private partnership; the project strategy, including conditions that would warrant restarting the project; and a legislative proposal, if necessary, to address any barriers to proceeding with the project, including the site and cost-share requirements.",
"We provided a draft of this report to DOE for review and comment. In written comments, DOE’s Assistant Secretary for Nuclear Energy, responding on behalf of DOE, wrote that DOE agreed in principle with our first recommendation and respectfully disagreed with our second recommendation. DOE’s written comments on our draft report are reproduced in appendix II. In addition, DOE provided technical comments, which we incorporated in the report as appropriate.\nIn its comment letter, DOE stated that it agreed in principle with our recommendation that it develop a strategy to proceed with Phase 2 of the NGNP Project. Moreover, DOE stated that its current strategy is to continue updating analyses of requirements for successful commercialization of reactor technology to reflect changing market conditions, research and development accomplishments, and the maturity of the licensing framework. However, this strategy does not outline steps DOE could take to proactively overcome the barriers hindering the resumption of the NGNP Project, nor does it outline criteria for determining when a change in program direction would occur. We continue to believe that developing a strategy to proceed with Phase 2 of the NGNP Project is important because without a strategy it will be difficult for NE to demonstrate that, upon completion of Phase 1, it will be poised to develop a final design and construct and operate the prototype reactor. Moreover, not having a strategy for proceeding with Phase 2 could result in the project being on hold indefinitely.\nDOE respectfully disagreed with our recommendation that it provide a report to Congress that, among other things, provides initial design parameters or a date for providing them and outlines barriers to proceeding with Phase 2 of the project. DOE stated that such a report was not advisable or useful, or necessary as a means for the Department to comply with the statutory requirements for Phase 1 of the NGNP Project, and further stated that the Department is in compliance with the relevant statutory requirements. As DOE explained, it reported to Congress in 2011 that while it had selected the hydrogen production technology, as required by EPAct 2005, it had not selected the initial design parameters for the project and that based on the recommendations of the Nuclear Energy Advisory Committee, fiscal constraints, competing priorities, projected cost of the prototype, and the inability to reach agreement with industry on cost sharing, it would not proceed with Phase 2 design activities at that time. Instead, it would continue to focus on high-temperature reactor R&D activities and establishment of a public-private partnership, among other things, until conditions warranted a change in direction. DOE did not, however, establish an alternative date for selecting the initial design parameters, as EPAct 2005 required. Rather, it stated that selection of initial design parameters would be made by the public-private partnership once it is formed. Given that almost 3 years have passed since the letter to Congress, we believe that the recommended report is warranted and would serve to inform Congress of the status of the NGNP Project and provide transparency and accountability regarding DOE’s intentions for completing Phase 1 and proceeding with Phase 2 of the project. For example, by providing a firm date for selecting the initial design parameters of the NGNP prototype reactor, DOE could be held accountable to meeting that date or could engage in a discussion about whether and why that date should be further extended. Similarly, an updated report to Congress could include a candid description of the ongoing barriers to moving forward, which could spur discussions resulting in legislation or other remedies to mitigate these barriers.\nWe are sending copies of this report to the Secretary of Energy, the appropriate congressional committees, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact Frank Rusco at (202) 512-3841 or [email protected] or Dr. Timothy M. Persons at (202) 512-6522 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.",
"",
"Nuclear reactors generate heat by sustaining a fission chain reaction in nuclear fuel. Nuclear fission reactions can occur when a neutron strikes the nucleus of a large atom, causing that nucleus to split, or fission. The result of a fission reaction is typically two fission fragments, or smaller nuclei; 2 or 3 new fast-moving neutrons; and significant heat. In a nuclear reactor, the large atoms used for fission are typically the fissile isotopes uranium-235 or plutonium-239, and the new neutrons produced by a fission reaction are used to initiate new fission reactions, resulting in a sustained fission chain reaction.\nThis heat generated by this fission reaction is typically used to create steam and drive a steam turbine to generate electricity. Some reactors may also operate at particularly high temperatures and can use the heat to either generate electricity or to supply process heat that can be used for various industrial processes, replacing other heat sources such as natural gas.",
"Nuclear reactors typically fall into one of two types based on the neutron spectrum, or neutron energies, at which the fission reactions occur as follows:\nThermal reactors optimize the fission reaction rate in their fuel. This is done by slowing down, or moderating, the high-energy fast neutrons that are the products of fission reactions. This thermalization of the fast neutrons increases the likelihood that a neutron will initiate a fission reaction. Currently deployed light water reactors, including pressurized water reactors and boiling water reactors, are thermal reactors.\nFast reactors, by contrast, do not moderate the fission neutrons, leaving them as fast neutrons. A fast neutron has a lower likelihood of initiating a fission event than a slow neutron, so the chain reaction can be more difficult to sustain, but it has the benefit of producing more neutrons when fission does occur. These surplus neutrons, as compared to the number of neutrons produced in thermal reactors, allow fast reactors to be more effective than thermal reactors at creating, or breeding, new fuel through neutron bombardment of uranium-238 (creating plutonium-239). Fast reactors optimized for fuel production in this manner are called fast breeder reactors and can produce more fuel through breeding than they consume. Fast reactors may also use spent fuel from other nuclear reactors as fuel and thereby reduce long-term fuel disposal needs.",
"While there are a large number of reactor technologies that can differ significantly, the fission reaction in a reactor occurs in the central region of a reactor called the reactor core. The reactor core typically contains several components as follows:\nNuclear fuel. Nuclear reactors need fissile isotopes, such as uranium-235 and plutonium-239, to sustain chain reactions. Commercial reactors often use uranium ore that has been enriched in the isotope uranium-235 as their fissile fuel; the rest of the fuel consists of the non-fissile uranium-238. However, reactor operation will result in the conversion of some uranium-238 to the fissile isotope plutonium-239, which may then fission and contribute to power generation, and some reactor fuel may start with some of the uranium-235 mixed with plutonium-239 (sometimes referred to as a mixed oxide fuel). Fast reactors can also use spent fuel from other reactors as fuel and can be very effective at converting uranium-238 into plutonium-239. Some reactors can also utilize uranium-233 or thorium-232 as components of their fuel.\nModerator. Thermal reactors use a moderator material to slow down, or thermalize, the fission neutrons in order to sustain the fission reaction. This is needed because neutrons produced by fission reactions are too fast (or energetic) to have a high likelihood of initiating a new fission reaction in fuel. Fast reactors are designed to utilize fast neutrons for the fission reactions and fuel breeding and, as such, do not use a moderator.\nCoolant. To remove heat from the core, a coolant—typically water, a gas, or liquid metal—is circulated through the core. The coolant both prevents the core from overheating (which could damage or melt the fuel) and it carries energy, in the form of heat, outside the core for electricity production, typically by generating steam that then drives a steam turbine. In some reactor types, the coolant can also function as the reactor’s moderator.\nReaction control. Reactors can use different techniques to maintain the fission chain reaction at appropriate rates. For example, control rods may be inserted into reactor cores to absorb neutrons and slow down (or stop) the chain reaction, or neutron-absorbing materials, such as boric acid in pressurized water reactors, may be introduced to the coolant system to achieve a similar effect.\nReactor technologies are classified as either thermal or fast reactors (although some technologies are “epithermal” and fall in between the two types) and by the materials used for the moderator or coolant. For example, a pressurized water reactor is a thermal reactor using water as both a coolant and moderator, and a gas-cooled fast reactor is a fast reactor using gas (carbon dioxide or helium) as a coolant.\nTable 2 lists and provides information about the reactor types that are either currently operating in the United States or are advanced reactor designs under consideration for development.",
"",
"",
"",
"In addition to the contacts named above, Ned Woodward (Assistant Director), John Barrett, Elizabeth Beardsley, John Delicath, R. Scott Fletcher, Cindy Gilbert, Michael Krafve, Tom Lombardi, Mehrzad Nadji, and Kiki Theodoropoulos made key contributions to this report."
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"question": [
"What is the focus of DOE NE's approach to advanced reactor R&D?",
"How does NE's approach compare to the industry's ultimate goal?",
"What are some advantages to NE’s approach?",
"To what extent do industry representatives agree with NE's approach?",
"Why are opponents critical of NE's approach?",
"What is the Nuclear Energy Advisory Committee's stance regarding NE's approach?",
"Why does NE regularly collaborate with industry and international organzations?",
"How does NE set program and funding priorities?",
"How are NE's efforts reviewed?",
"What NE technology is most likely to be deployed in the near term?",
"What is this likelihood based on?",
"Through what project has NE been pursuing this technology?",
"What does EPAct 2005 require of DOE by the end of fiscal year 2021?",
"Why did DOE not proceed with this project?",
"What sort of barriers were there to this project’s completion?",
"What other project-related selection has DOE not made?",
"What was GAO asked to review?",
"What does this report address?",
"How did GAO collect data for the report?",
"What did GAO recommend regarding DOE's compliance with the EPAct 2005?",
"How did DOE react to these recommendations?",
"How did DOE's comments affect GAO's recommendations?"
],
"summary": [
"The Department of Energy's (DOE) Office of Nuclear Energy's (NE) approach to advanced reactor research and development (R&D) focuses on three reactor technologies—high-temperature gas-cooled reactors, sodium-cooled fast reactors, and fluoride-salt-cooled high-temperature reactors—but NE is also funding research into other advanced reactor technologies.",
"NE's approach is to conduct research in support of multiple advanced reactor technologies, while collaborating with industry and academia, with the ultimate goal for industry to take the results of NE's research to the next step of development and commercialization.",
"This approach provides several advantages, including flexibility in responding to changes in future U.S. energy policy.",
"Many representatives that GAO talked to from the nuclear power industry and the National Academy of Sciences agree with NE's approach, saying that current policies on controlling greenhouse gas emissions and disposing of nuclear waste do not make a compelling case for choosing a reactor technology to develop.",
"However, others GAO talked to are critical of some of the reactor technologies NE chooses to research, citing economic and technological challenges.",
"The Nuclear Energy Advisory Committee has criticized NE's approach, recommending that NE focus its efforts on a smaller number of technologies to help ensure that a reactor prototype is deployed.",
"To remain aware of industry's R&D needs and international nuclear energy developments, NE regularly collaborates with industry and international organizations.",
"NE uses internal and external reviews to set program and funding priorities for advanced reactor R&D activities and to evaluate progress toward program goals.",
"For example, NE conducts internal monthly and quarterly reviews to discuss project status, budgets, and technical highlights. Furthermore, NE's R&D efforts are periodically reviewed by external entities, including the Nuclear Energy Advisory Committee.",
"Among the advanced reactor technologies that NE's R&D currently supports, the high-temperature gas-cooled reactor is the technology that is most likely to be deployed and commercialized in the near term, according to an NE planning document.",
"NE officials said this likelihood is based on the wide range of potential industry market applications and because of substantial government investments in the technology's development.",
"NE has been pursuing this technology under the Next Generation Nuclear Plant (NGNP) Project, as established by the Energy Policy Act of 2005 (EPAct 2005).",
"Under EPAct 2005, DOE is to deploy a prototype reactor for NGNP by the end of fiscal year 2021.",
"However, in 2011, DOE decided not to proceed with the deployment phase of this project, citing several barriers.",
"For example, NE and industry have been unable to reach an agreement on a cost-share arrangement to fund the deployment phase because of a disagreement on the applicable cost-share levels and how and when the cost-share would be applied to specific activities or project phases. Although NE continues to conduct R&D for the NGNP Project, it has not developed a strategy to overcome the cost-share issue and other barriers to resuming the deployment phase of the project.",
"Furthermore, DOE has not selected initial reactor design parameters or reported to Congress on an alternative date for making this selection. Without doing so, it is not clear when NE is going to take this next step in deploying the NGNP prototype reactor and it risks the project not being completed by the targeted date in 2021.",
"GAO was asked to review NE's advanced reactor R&D efforts.",
"This report (1) describes NE's approach to advanced nuclear reactor R&D and (2) examines how NE plans and prioritizes its advanced reactor R&D activities, including deploying an advanced reactor.",
"GAO reviewed laws and reports concerning NE's efforts to develop advanced reactor technologies and interviewed NE officials and a nonprobability sample of companies developing such technology, selected because of their involvement with DOE's R&D efforts.",
"To better prepare DOE to meet the requirement of EPAct 2005 to deploy the NGNP prototype reactor, GAO recommends that DOE develop a strategy for resuming the NGNP Project and provide a report to Congress updating the status of the project.",
"DOE agreed in principle with GAO's first recommendation and respectfully disagreed with the second.",
"GAO believes these recommendations remain valid as discussed in the report."
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CRS_RL32212
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{
"title": [
"",
"I. Introduction",
"II. The Constitutional Framework for the Appointment of Officers of the United States",
"III. Appointment Methods for Officers of the United States",
"Officers Currently Appointed Through the Advice and Consent Process19",
"Other Appointment Methods",
"IV. The Appointment Process for PAS Positions",
"Selection and Nomination",
"Senate Consideration",
"Appointment53",
"V. Length of the Appointment Process",
"VI. Growth in the Number of PAS Positions",
"VII. Assessment of Expected Benefits of a Reduction in the Number of Advice and Consent Positions",
"Improving the Senate Confirmation Process",
"Shortening the Appointment Process",
"Shortening Selection",
"Shortening Senate Consideration",
"VIII. Potential Approaches to Determining the Appropriate Number and Distribution of PAS Positions",
"Institutional Considerations",
"Political Considerations",
"Congress",
"The President",
"Agency Heads",
"Interest Groups",
"Options for Congressional Consideration",
"Option 1: Maintain the Status Quo",
"Option 2: Create an Advisory Commission",
"Option 3: Establish a Military Base Closure-Type Procedure",
"Option 4: Select Categories of Positions for Reduction",
"Option 5: Reduce the Number of Positions by Function",
"Option 6: Distribute PAS Positions in Proportion to Agency Size",
"Option 7: Delegate Selection of Positions for Reduction to Committees of Jurisdiction",
"Option 8: Establish Restrictions on Appointments to Certain Positions",
"Option 9: Require Notification by President of Some Non-PAS Appointments",
"A Comparison of Options",
"A Combination of Approaches"
],
"paragraphs": [
"",
"Over the past 20 years, a number of commissions and task forces have examined the process by which the President makes appointments to certain positions with the advice and consent of the Senate (PAS positions). These groups have issued reports criticizing, among other things, the length of the process, the level of ethical and political scrutiny to which potential appointees are subjected, the complexity and quantity of the paperwork that appointees are required to complete and submit, and the procedural and political complications associated with some nominations during the Senate confirmation process. Rigorous studies have associated these perceived shortcomings of the process with longer vacancies, confusion and embarrassment of nominees, and difficulty in attracting a broad range of well-qualified candidates to top policymaking positions.\nThese reports and studies have recommended a variety of reforms that might be instituted by Congress, the President, and the Senate. In addition to procedural remedies to perceived problems, some of these reports have called for a reduction in the overall number of PAS positions. For example, in 1996, the Twentieth Century Fund Task Force on Presidential Appointments recommended that the number of all positions to which the President makes appointments, including those requiring Senate confirmation, be reduced by a third. The task force further suggested that \"[a]ppointments to most advisory commissions and routine promotions of military officers, foreign service officers, [and] public health services officers, except those at the very highest ranks ... cease to be presidential appointments and cease to require Senate confirmation.\" In 2001, as part of a proposal aimed at improving the process for making appointments to PAS positions, the Presidential Appointee Initiative (PAI) at the Brookings Institution also called for a reduction in the number of such positions. Rather than identifying which positions might be shed, the PAI focused on which appointments should continue to come before the Senate. It recommended that \"Senate confirmation only be required of appointments of judges, ambassadors, executive-level positions in the departments and agencies, and promotion of officers of the highest rank.\" It further suggested a reduction of political appointees by a third, such that PAS positions would be limited to \"the assistant secretary level and above in each department and to the top three levels only in independent agencies.\" The 9/11 Commission Report included a recommendation that the \"Senate should not require confirmation of [national security team] executive appointees below Executive Level 3,\" which could eliminate advice and consent requirements for, among other positions, most assistant secretaries with national security responsibilities.\nOne of the co-chairs of the PAI advisory board, former Senator Nancy Kassebaum Baker, elaborated on the expected benefit of a reduction in the number of PAS positions for the conduct of Senate confirmation business:\nI am a strong supporter of advice and consent—I think we all are—but the application of the confirmation requirement now extends to many thousands of positions, only a relatively small number of which benefit from the full attention or careful scrutiny of the Senate.\nI think this [proposal] would lessen the time that would be taken. By the time one arranges hearings, the paperwork comes through, there are a number of appointments that then take up an enormous amount of time of the hearing committees.\nSo we think that a simpler, more focused set of confirmation obligations can only yield a more efficient and more consistent performance of the Senate's confirmation responsibilities.\nOther observers have suggested that by reducing the number of PAS positions, the perceived backlog of appointments might be eased. In essence, critics of the presidential appointment process contend that appointments to PAS positions are taking too long, and that a reduction in the number of these positions would lead to a more efficient confirmation process in the Senate and faster appointments to the remaining positions that are subject to advice and consent.\nInterest in reforming the PAS appointment process and possibly reducing the number of PAS positions led to the enactment of a provision that directs each agency head to submit an advice and consent position reduction plan, with specified contents, to the President, the Senate Committee on Homeland Security and Governmental Affairs, and the House Committee on Government Reform. During the 107 th Congress, Senator Fred Thompson introduced the Presidential Appointments Improvement Act of 2001 ( S. 1811 ), which, among other provisions, would have required such plans. The bill was referred to the Committee on Governmental Affairs and subsequently reported to the full Senate, but it was not acted upon by the full Senate during the 107 th Congress. Early in the 108 th Congress, Senator George Voinovich introduced legislation similar to Senator Thompson's bill from the previous Congress, and Representative Jo Ann Davis introduced a companion bill in the House. The reduction plan provision was incorporated into the Intelligence Reform and Terrorism Prevention Act of 2004, which was enacted on December 17, 2004. Congress might elect to make these agency plans the basis for future decisions concerning the reduction of PAS positions.\nThis report provides background information and analysis of issues concerning possible congressional action to reduce PAS positions. The report begins with a discussion of the constitutional framework that guides congressional determinations about appointment authority. The next four parts of the report describe the various executive leadership appointment methods used in the federal government, the PAS appointment process, and trends in the length of the appointment process and the number of PAS positions. This descriptive information is followed by an evaluation of the assertions, discussed above, that a reduction in the number of PAS positions would likely lead to a more efficient confirmation process in the Senate and a faster appointment overall process. The last third of the report identifies potential congressional approaches to reducing the number of PAS positions, and analyzes the institutional and political considerations associated with each of these options.",
"As part of its system of checks and balances, the Constitution provides a general framework for the appointment of officers of the United States:\n[The President] shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.\nIn a 1976 opinion, the Comptroller General reasoned that this provision indicates that all officers of the United States are to be PAS positions unless Congress affirmatively delegates that authority. In other words, the default appointment process under the Constitution for such officers is presidential appointment with the advice and consent of the Senate. With regard to which positions would be considered \"offices\" under this clause, the Supreme Court has held that \"any appointee exercising significant authority pursuant to the laws of the United States is an 'Officer of the United States,' and must, therefore, be appointed in the manner prescribed\" above.\nAlthough the Appointments Clause sets the advice and consent process as the default method for filling offices of the United States, only certain such officers must be appointed by that method. At the discretion of Congress, \"inferior\" officers may be appointed either under the default process or by the President alone, the courts, or agency heads. A clear line between principal and inferior officers has not been established, but guidance of the Justice Department's Office of Legal Counsel (OLC) in this area suggests that \"[i]n determining whether an officer may properly be characterized as inferior, … the most important issues are the extent of the officer's discretion to make autonomous policy choices and the location of the powers to supervise and to remove the officer.\"\nAlthough the distinctions between officers and non-officers and between principal and inferior officers, as currently understood, are imprecise, they provide guidance that might assist Congress in identifying (1) which positions are not offices, and therefore need not be filled in accordance with the Appointments Clause; and (2) which offices are inferior, and therefore may be filled through appointment by the President alone, the courts, or agency heads, at the discretion of Congress. Arguably, many positions that are, at present, filled through the advice and consent process would fall into one of these categories. For each case in either of these categories, Congress might elect to maintain the present arrangement for reasons not related to constitutional requirements, or to provide for a different method of appointment.",
"As the previous section indicates, under the Constitution, presidential appointment with the advice and consent of the Senate is just one of the ways in which officers of the United States may be appointed. In the executive branch, officers are appointed by the President, with or without Senate confirmation, or by the department or agency head. Some appointments, referred to as political appointments, are made at the discretion of the appointing authority, that is, the President, agency head, or court. Other appointments, referred to as career or competitive appointments, are made through a competitive process.\nThe executive leadership of the federal bureaucracy consists of between 9,000 and 10,000 individuals. Of that number, approximately 3,500 are political appointees, often supporters of the President or party loyalists, and the balance are career members of the Senior Executive Service (SES). The political positions fall into four categories: PAS, presidential appointments not requiring confirmation (PA positions), noncareer SES, and Schedule C positions. Each of these categories is discussed below. If Congress removes a position from PAS status, it may continue the position, or its functions, as another kind of position. Congress may assign appointment authority to the President alone or direct that the position be filled by a member of the SES. If Congress is silent on the matter, agencies may create SES or Schedule C positions to carry out the particular functions.",
"Each year the President submits more than 20,000 nominations to the Senate. Although these nominations include those to the highest unelected policymaking positions in the federal government, the great majority are routine armed forces officer appointments. The nominations also include large groups of presidential appointments to positions in the Coast Guard, the Foreign Service, the Public Health Service, and the National Oceanic and Atmospheric Administration (NOAA) officer corps. Nominations to positions in these groups are often submitted and considered en bloc .\nA smaller portion of the submissions to the Senate each year comprises nominations to high-level positions in the executive, legislative, and judicial branches. These include:\nmore than 350 full-time positions in the executive departments; more than 150 full-time positions on regulatory and other collegial boards and commissions; more than 100 full-time positions in independent and other agencies; 674 district court judgeships; 179 circuit court judgeships; 93 U.S. attorney positions; 94 U.S. marshal positions; more than 150 ambassadors; and over 400 part-time positions in the executive branch.\nThe persons filling these PAS positions are generally considered to be the top policy decision makers in the federal government, having the responsibility to implement statutes. Federal law specifies which positions must be filled this way. The nomination and confirmation process for PAS appointments is discussed below under \" IV. The Appointment Process for PAS Positions .\"",
"Three other types of appointments are used to staff most of the other policymaking positions in the federal bureaucracy: PA and Schedule C positions, which are political; and SES positions, some of which are political and some of which are career.\nApproximately 125 full-time positions government-wide are PA positions. PA positions are rare in programmatic agencies; they are generally found in the White House Office and filled by persons who directly staff and advise the President. The Department of Homeland Security is an exception in this regard. Under the provisions of the Homeland Security Act, at least six officers in the department are appointed by the President alone.\nThe ranks of program managers are most commonly filled by members of the SES. The Senior Executive Service includes both career and noncareer positions. Congress sometimes specifies, in statute, that a particular official shall be a career member of the SES, but most SES positions are established by the agencies. Career SES appointees are appointed competitively. They have civil service status and have had their executive qualifications reviewed and approved by the Office of Personnel Management (OPM). Noncareer SES appointees are not appointed competitively. Agency heads make noncareer appointments with the authorization of OPM and the approval of the White House Office of Presidential Personnel, and noncareer appointees serve at the pleasure of the appointing official. They occupy top-level supervisory and management positions throughout the executive branch that typically involve developing, promoting, and directing Administration policies. Congress has provided, through statute, a formula for the allocation of SES positions to political appointees, and so indirectly determines their number. As of September 2004, 6,203 SES positions were filled by career appointees and 691 were filled by noncareer appointees.\nSchedule C positions are created under the authority of Part 6 of Title 5 of the Code of Federal Regulations . Schedule C appointees are excepted from the competitive service, and occupy mostly positions of confidential assistant to higher-level officials, as well as some policy-determining positions, throughout the executive branch. Recent Schedule C appointments include, for example, the Confidential Assistant to the Deputy Assistant Secretary for Export Promotion Services in the Department of Commerce and the Director of Cargo and Trade Policy for Border and Transportation Security in the Department of Homeland Security. As of September 2004, 1,526 officials had Schedule C appointments. Most Schedule C appointees are paid at rates at the upper grades of the General Schedule but are lower in the hierarchy than presidential appointees and SES appointees. More than 40% of Schedule C appointees were paid at or above the highest grade level as of September 2004. An agency must get the approval of OPM in order to establish a Schedule C position. Positions authorized by OPM are revoked automatically when an incumbent leaves office.\nThe options discussed above include both political and career appointments. Decreasing the number of PAS positions while increasing the number of other political positions might be seen by some as an imperfect solution. Since the mid-1980s, a number of federal government observers, scholars, and elected officials have expressed concerns about the increasing number of political appointments in the federal bureaucracy. In January 2003, for example, the second National Commission on the Public Service, chaired by Paul Volcker, recommended a one-third reduction in such positions. In recent years, several legislative initiatives have proposed maintaining or reducing the number of political appointments. In the Department of Transportation annual appropriations measures for nine of the last 13 fiscal years, statutory limits have been placed on the number of such positions.\nThe balance between political and career leadership positions reflects the value, in the American government, of both political accountability and neutral managerial competence. Whereas political appointments are typically made by the President and agency heads as a means of pursuing a particular policy agenda, careerists are usually hired under the civil service system on the basis of merit to execute the laws in an unbiased manner. Public administration scholars and practitioners have long recognized that this process of implementing laws is both political and administrative. Managerial expertise is necessary during implementation, but accountability for the way in which the will of elected officials is carried out is also an important component of sound public administration.\nIf Congress changes the appointment method for some PAS positions, the functions of the positions are likely to be placed, either by Congress, the President, or the agency, in the hands of either a career or political appointee. Since the appointee will no longer need to be confirmed by the Senate, it could be argued that a political official might be less accountable to Congress than a PAS appointee would be. What about careerists? Some have argued that career officials tend to be allied with Congress, while others have suggested that they respond to the political environment as a whole. Consequently, Congress might opt to specify that certain functions be carried out by career officials. On the other hand, Congress might elect to provide the Administration with greater management flexibility by allowing more positions to be filled by the President alone or agency heads.",
"The appointment process consists of three stages—selection and nomination, confirmation, and appointment. The President has the authority to make a nomination to a position requiring confirmation, but, when making his selection, he must consider how it will fare in the confirmation process. The Senate confirms most nominations, but, considering the history of nominations, no President can safely assume that his nominees will be approved routinely. Although the formal appointment process is the province of the President and the Senate, other concerned parties, such as interest groups and other elected officials, may attempt to influence the outcome at various stages by providing information to the decision makers and the media. This is particularly the case for higher profile positions.",
"A number of steps are involved in the President's selection for most Senate-confirmed appointments. First, with the assistance of the White House Office of Presidential Personnel, the President selects a candidate for the position. Generally, the candidate then prepares and submits several forms: the \"Public Financial Disclosure Report\" (Standard Form (SF) 278), the \"Questionnaire for National Security Positions\" (SF 86), and the White House \"Personal Data Statement Questionnaire.\" The Office of the Counsel to the President oversees the clearance process, which often includes background investigations conducted by the Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS), Office of Government Ethics (OGE), and an ethics official for the agency to which the candidate is to be appointed. If conflicts are found during the background check, OGE and the agency ethics officer may work with the candidate to mitigate the conflicts. Once the Office of the Counsel has cleared the candidate, the nomination is ready to be submitted to the Senate.\nFor positions located within a state (U.S. attorney, U.S. marshal, and U.S. district judge), the White House, by custom, normally consults with the Senators from that state (if they are from the same political party as the President) prior to a nomination. If neither Senator is from the President's party, he usually consults with party leaders from the state. Occasionally, the President solicits recommendations from Senators of the opposition party because of their positions in the Senate. The White House may also consult with Senators, particularly leaders of the committees of jurisdiction, regarding other nominations. These consultations provide an opportunity for individual Senators to play a role in the recruitment of qualified office holders, and they also provide Senators with valuable political capital. For these reasons, the Senate may be reluctant to give up its role in appointments to these positions.\nThe selection and vetting stage is often the longest part of the appointment process (see discussion below under \" V. Length of the Appointment Process \"). There can be lengthy delays, particularly if many candidates are being processed, as they are at the beginning of an Administration, or if conflicts need to be resolved. Candidates for higher-level positions are often accorded priority in this process.\nA nominee has no legal authority to assume the duties and responsibilities of the position; the authority comes with Senate confirmation and presidential appointment (the nominee's receipt of his or her commission and swearing in). A nominee who is hired as a consultant while awaiting confirmation may serve only in an advisory capacity.\nIf circumstances permit and conditions are met, the President may give the nominee a temporary appointment under the Vacancies Act or a recess appointment to the position. Both types of appointment confer upon the appointee the legal authority to carry out the duties of the office. Temporary appointments under the Vacancies Act may last for 210 days after the date of the vacancy. This time restriction may be suspended or extended under certain conditions, however, and temporary appointments may last for more than two years. Recess appointments may last for less than a year or nearly two years, depending on when the appointment is made. Presidents have occasionally used these two types of appointments to circumvent the confirmation process. Such efforts have sometimes had political consequences, however. Senators have, at times, placed holds on other nominations or passed more restrictive legislation in response to perceived executive abuses of the appointment process.",
"In the consideration stage, the Senate determines whether or not to confirm a nomination. The way the Senate acts on a nomination depends largely on the importance of the position involved, existing political circumstances, and policy implications. Generally, the Senate shows particular interest in the nominee's views and how they are likely to affect public policy. Nominations are referred to the appropriate committee, where they sometimes receive a hearing. They are then usually reported back to the Senate, where they are taken up and voted upon. Most nominations proceed through the process in a routine, timely fashion. During the 107 th Congress, for example, the median number of days taken to confirm a nomination to a full-time departmental position was 36. A large portion of the nominations received are military or other officer appointments, and these are typically handled through a routinized process. The Senate routinely confirms, en bloc , hundreds of these kinds of nominations at a time. Nominations to policymaking positions can stall, however, or, in effect, die at any point. This is more likely to happen to controversial nominations. Sometimes, however, Senators may block noncontroversial nominations through the use of holds to gain leverage as part of a strategy to move unrelated legislation or nominations. (See further discussion below under \" Shortening the Appointment Process .\")\nThe Senate confirmation process is centered at the committee level. Some committees, such as Armed Services, Judiciary, and Foreign Relations, handle many nominations, while other committees handle relatively few. The rules and procedures of the committees frequently include timetables specifying minimum periods between steps in the process. Committee nomination activity generally includes investigation, hearing, and reporting stages. Action at the committee level tends to be at the discretion of the chair. There is no internal requirement that a committee act on any nomination.\nAs part of investigatory work, committees may draw on information provided by the White House as well as information collected by the committees. For example, they have access to documents related to the Public Financial Disclosure Report completed during the nomination stage. Select Senators also may have, with the authorization of the President, access to FBI reports or report summaries. In addition, committees usually collect other personal and financial information from nominees. This process may include completion of standard committee forms as well as follow-up questionnaires tailored to specific nominations. As part of these forms and questionnaires, or during hearings, the Senate usually gains a commitment from the nominee to respond to requests to come before committees of the Senate.\nHearings provide a public forum to discuss a nomination and any issues related to the program or agency for which the nominee would be responsible. Even if confirmation is thought to be a virtual certainty, hearings may provide Senators and the nominee with an opportunity to go on the record with particular views or commitments. Senators may use hearings to explore a nominee's qualifications, articulate a policy perspective, or raise related oversight issues. Some committees hold hearings on nearly all nominations; others hold hearings for only some. A committee may consider the importance of a nomination and the workload and schedule of the committee when determining whether or not to hold a hearing.\nThe committee may discontinue acting on a nomination at any point—upon referral, after investigation, or after a hearing. If the committee votes to report the nomination back to the full Senate, it has three options. It may report the nomination favorably, unfavorably, or without recommendation. If it elects not to report a nomination, the Senate may, under certain circumstances, discharge the committee from further consideration of the nomination in order to bring it to the floor.\nAlthough the Senate confirms most nominations, some nominations are not confirmed. Rarely, however, does a rejection occur on the Senate floor. Nearly all rejections occur in committee, either by committee vote or by committee inaction. Rejections in committee occur for a variety of reasons, including opposition to the nomination, inadequate amount of time for consideration of the nomination, or factors that may have nothing to do with the merits of the nomination. If a nomination is not acted upon by the Senate by the end of a Congress, it is returned to the President. Pending nominations also may be returned automatically to the President at the beginning of a recess of 30 days or longer, but the Senate rule providing for this return is often waived. The most recent study of Senate confirmation action, which looked at the period between 1981 and 1992, found that the Senate failed to confirm 9% of all nominations to full-time positions in the executive departments, 11% of nominations to independent agencies, and 22% of nominations to boards and commissions.",
"In the final stage, the confirmed nominee is given a commission signed by the President, with the seal of the United States affixed thereto, and is sworn into office. The President may sign the commission at any time after confirmation. Under unusual circumstances, he may not sign it at all, thus preventing the appointment. Once the appointee is given the commission and sworn in, he or she has full authority to carry out the responsibilities of the office.",
"As discussed in the introduction to this report, some proponents of reducing the number of PAS positions have asserted that, over the last several decades, the appointment process has taken longer, and the number of PAS positions has grown, and that the longer process is due, in part, to the greater number of positions. This section and the next section assess the first two assertions. An assessment of the perceived benefits of reducing the number of PAS positions follows these sections.\nData limitations have precluded CRS from providing a comparison, government-wide, of the length of the entire appointment process across different time periods, but comparisons based on more limited data can be made. Accurate and comprehensive data concerning the dates on which PAS positions become vacant, which would approximate the starting dates for refilling these positions, are not generally available. One instance in which it is possible to collect this information for many positions, however, is at the beginning of a new Administration, when many positions are vacated and filled simultaneously. G. Calvin Mackenzie calculated that the average time from inauguration to confirmation for initial PAS appointments grew from 2.38 months at the beginning of John F. Kennedy's presidency to 8.53 months at the beginning of William J. Clinton's presidency. Because of the inexperience of new presidential staff and the large number of appointments going through the system at the same time, these average times for new Administrations are probably longer than averages of all appointment times would be.\nAnother instance in which it is possible to collect information about the length of the appointment process for a subset of PAS positions is in the case of initial appointments to newly created departments. In this case, the starting point for filling positions can be set at the time of the enactment of the enabling law. From 1965 to 2004, six new departments were created: Housing and Urban Development (1965); Transportation (1966); Energy (1977); Education (1979); Veterans Affairs (1988); and Homeland Security (2003). Table 1 provides a summary of the average length of time taken to nominate and confirm initial appointees to PAS positions in each of these departments. The last column in Table 1 shows the median numbers of days elapsed from enactment of the organic legislation to Senate confirmation. The latter figures range from a low of 77 days (about 2½ months) to 352 days (nearly a year).\nWith the exception of the Department of Energy, the median times grew longer from 1965 (140 days) to 2004 (206 days). This is consistent with reports suggesting that, in general, the appointment process has grown longer and more complex over the last 40 years. Often in response to individual incidents, Congress and Presidents have increased scrutiny of potential appointees as insurance against scandals. In addition to this trend, the length of the process has been affected by particular circumstances. In the case of the Department of Veterans Affairs, for example, the organic legislation was signed into law in the last months of the Reagan presidency and implemented at the beginning of the presidency of George H. W. Bush. The incoming President had no authority to submit a nomination until his inauguration, which was 87 days after the bill-signing. In addition, many tasks, including a multitude of other appointments, confronted the new Administration, and this may have contributed to the relatively lengthy appointment process for the new department.\nTable 1 also shows that the time between enactment and nomination generally accounts for a far greater part of the appointment process than the time between nomination and Senate confirmation; the President generally takes much longer to submit a nomination than does the Senate to deliberate on the nomination. This generalization is further supported by a study of departmental appointments in 1981 and 1993. The report looked at the time required to fill PAS positions in the first year of the Reagan and Clinton Administrations. It showed that, on average, the time the Presidents took to submit a nomination accounted for more than 75% of the total time from inauguration to confirmation. This finding may not apply to nominations in general, since at least two factors characteristic of the beginning of a new Administration should not affect other nominations. A new President has lead time before his inauguration to begin the selection and vetting process. On the other hand, there might be a bottleneck in the vetting process, as the various offices involved attempt to complete the investigation and clearance process for the large numbers of potential nominees typical of the beginning of a new Administration.",
"Has the number of PAS positions grown over the past several decades? Most observers agree that it has. Such positions have been counted in a variety of ways. Table 2 provides one measure of the number of full-time executive branch PAS positions with policymaking responsibilities at eight points over the last three decades. The table shows growth in the number of positions in the 1970s and 1980s, a slight decline in the 1990s, and additional growth between 2000 and 2004. Overall, the number of positions grew approximately 26% between 1972 and 2004.\nAlthough a number of new government organizations with PAS positions, including three of the departments discussed above (which had a total of 53 positions at their inception), were created during this time, most of the growth in the number of PAS positions can be attributed to an incremental increase across many agencies. For example, the Environmental Protection Agency (EPA) had seven PAS positions in 1972 and 14 such positions in 2004. In 1972, none of the positions at the Office of Management and Budget (OMB) was subject to the advice and consent process, while by 2004, six required Senate confirmation. As in the case of OMB, in most cases the creation of new PAS positions probably reflects the importance of the policymaking functions of particular offices and the perceived need for congressional influence in their leadership.",
"Proponents of a reduction in the number of PAS positions have suggested that such a reduction would be expected to \"yield a more efficient and more consistent performance of the Senate's confirmation responsibilities\" and to reduce the overall the length of the appointment process.",
"Would an improvement in the Senate confirmation process result from a reduction in the number of PAS positions? Nearly all the potential gains in efficiency and performance probably would be found at the committee level, since, unless a nomination is controversial, confirmation on the Senate floor is usually accomplished by unanimous consent with minimal debate. To varying degrees, depending on the committee and the nominee, committee activity related to nominations may include review of Federal Bureau of Investigation reports and Executive Personnel Financial Disclosure Reports (SF-278), collection and review of additional financial and personal background information, meetings with nominees, and hearings. Committees usually follow more routinized procedures for lower-level nominations, while spending more time reviewing and investigating high-level nominees more closely. Consequently, if the Senate were to consider only nominations to top policymaking positions, the measured Senate efficiency and performance might not noticeably improve. If Congress changed the appointment method for higher-level PAS positions, however, reduced workload might allow the Senate to execute its confirmation responsibilities more efficiently.\nThe Senate also might incur costs, however, were the appointment method for higher-level PAS positions to be changed. For example, Senators would lose the opportunity to review and pass on presidential appointees' qualifications and potential conflicts of interest. Senators also would lose the opportunity to use the confirmation process to influence policy. With appointments to PAS positions, they may do this by not confirming a nominee or by extracting a commitment on some action from a nominee during the confirmation process. In addition, Senate committees might have greater difficulty obtaining testimony from appointees who have not been confirmed by the Senate, and the Senate's efficiency and performance in its oversight role might, therefore, decrease. As noted above, the Senate usually gains a commitment from the nominee, during the confirmation process, to respond to requests to come before its committees. If advice and consent requirements were discontinued for some state-level appointments, such as U.S. attorneys and marshals, some Senators, particularly those of the same party as the President, might lose the opportunity to consult with the President on suitable candidates for these positions.",
"Would a reduction in the number of PAS positions shorten the overall process for appointments to PAS positions? Although the evidence, discussed above, suggests that both the number of PAS positions and the length of the appointment process have grown in the past three decades, it is not clear that the greater number has caused or contributed to a longer appointment process. If Congress were to reduce the number of PAS positions, doing so would, of course, shorten the process for those appointments that no longer needed to go through the confirmation process. It is unclear, however, whether or not the average length of the appointment process would be reduced for the remaining PAS positions. As previously discussed, the process includes three stages: selection and nomination, which, on average, takes the longest period of time; Senate consideration; and appointment, which may take place at the pleasure of the President. The appointment process could be shortened if either the presidential vetting process or Senate consideration, or both, were shortened.",
"Selecting and investigating the background and finances of potential nominees often takes a considerable amount of time. This process sometimes can be completed quickly for top nominees, such as department secretaries, when greater resources are committed to the task. Completion of the vetting process for most other nominees, however, usually takes longer. If fewer people had to go through the process, it might proceed more quickly for the remaining applicants. If the appointees who were no longer subject to the advice and consent of the Senate still needed to be vetted by the White House, just as many applications would need to go through the pipeline. Consequently, it is unclear that converting some PAS positions to other types of positions would reduce delays at the selection stage of the appointment process.\nThe Intelligence Reform and Terrorism Prevention Act of 2004 included several provisions that might reduce some appointment process delays in the selection stage. For example, the law directs the Office of Personnel Management (OPM) to provide each major party presidential candidate, soon after his or her nomination, with certain information concerning presidentially appointed positions. Access to such information allows the potential president to begin the selection process as much as half a year before taking office.\nThe statute also amended the Presidential Transition Act of 1963 to recommend that the President-elect submit \"names of candidates for high level national security positions through the level of undersecretary\" for national security clearance as soon as possible after the presidential election and to require expeditious background investigations of these candidates, among other things. Title III of the act made government-wide changes to the national security clearance process that are designed to consolidate and streamline this function. Because most presidential appointees are subject to this clearance process, these changes may have an impact on the duration and difficulty of the selection stage of the appointment process.\nIn addition, the Intelligence Reform and Terrorism Prevention Act contained a provision that requires a report from the Office of Government Ethics (OGE) regarding potential improvements to the financial disclosure process for executive branch employees. A similar report sent to Congress by the Office of Government Ethics in 2001 recommended changes to the Ethics in Government Act to \"(1) reduce the number of valuation categories; (2) shorten certain reporting time-periods; (3) limit the scope of reporting by raising certain dollar-thresholds; (4) reduce details that are unnecessary for conflicts analysis; and (5) eliminate redundant reporting.\" The findings of the newly mandated report might serve as a basis for legislation that would streamline the financial disclosure process and thereby, on average, shorten the duration of the appointment process.",
"Would a reduction in the number of PAS positions decrease the length of the Senate confirmation process? The most time-consuming activities in this process are the investigatory activities and preparation for hearings. As discussed above, committee investigations include the review of documents and reports collected during the selection and nomination stage, as well as the collection and review of committee-specific personal and financial forms. In some cases, committees prepare, and nominees complete, individually tailored followup questionnaires as well. Preparation for, and scheduling of, hearings may also lengthen the average confirmation time. If the positions removed from PAS status were among those that involve significant investigations or hearings, their removal might result in shorter appointment times, on average. Congress also might opt to address any delays possibly resulting from investigations and the hearing process by increasing committee staffing or reducing the number of nominations that receive hearings.\nAlthough the average length of time that a nomination is pending in the Senate may be related to Senate workload, other factors may play a more significant role. Policy differences, either related or unrelated to particular nominations, may lead Senators to delay or block nominations through the use of holds or other procedures. For example, Senator Hillary Rodham Clinton placed a hold on a nomination in connection with concerns about air quality around Ground Zero after the collapse of the World Trade Center. On the floor of the Senate, she stated:\nWhen Governor Leavitt was nominated for the position of Administrator of the EPA [Environmental Protection Agency], I made it clear to Governor Leavitt, to my colleagues on the Environment and Public Works Committee, and to the public I would put a hold on Governor Leavitt's nomination. At that moment it was the only means available to a single Senator to get the attention of the White House and to demonstrate the seriousness I believed these issues demanded.\nOther reasons nominations may be blocked or delayed include retribution for actions by other Senators or the President (\"tit-for-tat\"), efforts to \"trade\" confirmation of one nomination for confirmation for another (packaging together several nominations), efforts to gain a policy commitment from a nominee, or a need for more time to gain or review information on a nomination.\nIn 2004, Congress acted to hasten Senate consideration of a subset of nominations at the beginning of a new Administration. The Intelligence Reform and Terrorism Prevention Act expressed \"the sense of the Senate\" about a timetable for submission and consideration of high-level national security nominations during transitions. Under this timetable, nominations to such positions should be submitted by the President-elect to the Senate by Inauguration Day, and Senate consideration of all such nominations should be completed within 30 days of submission.",
"The analysis in the preceding section suggests that a decrease in the number of PAS positions might ease the workload of Senate committees, facilitate a faster average confirmation time, and reduce the overall length of the appointment process. It further suggests that these benefits could be contingent on which positions are converted to another appointment method. The greatest effect could come from the conversion of higher-level positions, just the kind of positions that Congress might be most reluctant to convert.\nIf Congress elected to reduce the number of PAS positions for these or other reasons, this activity could be considered as part of a larger congressional task: determining the appropriate number and distribution of PAS positions. To a considerable extent, the Constitution gives Congress discretion over the determination of which officers will be subject to the advice and consent of the Senate, and which may be appointed by the President alone, the courts, or agency heads. This determination is likely to have consequences for Congress, the President, agency heads, and other interested parties. Given the potential impact of congressional decisions about the number and distribution of PAS positions, how might Congress go about making these determinations? What institutional and political considerations are relevant in the decision making process? What are some alternative ways for approaching this task?",
"Although the President's role has evolved into that of chief manager of the federal bureaucracy, Congress has a clear and longstanding role as co-manager of the national administration. The role of the Senate in the appointment process is just one of the ways Congress is involved in shaping the organization and activities of federal governmental entities and programs. Congress establishes departments and agencies, and, to whatever degree it chooses, the internal organization of agencies. Congress, through law, also determines the missions of agencies, defines the parameters of personnel systems, provides funding through the appropriations process, and ultimately determines, through the authorization process, whether agencies and programs shall continue in existence. Congress also co-manages the federal bureaucracy through its oversight role. Senators sometimes use confirmation hearings as one venue for conducting oversight.\nWhen Congress delegates the authority for the appointment of an inferior officer to the President alone or to an agency head, it cedes some power over the federal bureaucracy to the executive. In such a case, Congress, particularly the Senate, may have reduced influence over the selection of the individual, and it gives up the opportunity to consider the individual's merits. In addition, congressional committees may have greater difficulty obtaining testimony from an appointee who has not been confirmed by the Senate. As previously mentioned, the Senate usually gains, during the confirmation process, a commitment from the nominee to respond to requests to come before committees of the Senate. This commitment may not be necessary, under most circumstances, to obtain testimony. An argument could be made that Congress has the authority to call most officers with operational duties, regardless of appointment status, before its committees. As a practical matter, however, the commitment obtained at the time of confirmation may make this process easier for Congress. Congress could strengthen its oversight ability by stipulating, in law, that all officers with operational responsibilities are obligated to respond to congressional committees of jurisdiction.",
"Several participants in the political process, including Congress, the President, agency heads, and interest groups, have a political stake in the arrangements by which the number and distribution of PAS positions are determined.",
"Although certain high-level policymaking positions, such as secretary and administrator, are routinely subject to the advice and consent of the Senate, many subordinate PAS positions require confirmation because Congress asserted its constitutional prerogative. That is, some Members of Congress saw a need, at some point, to establish each PAS position as an advice and consent position. Thus, it might be difficult to change the appointment method for such positions if the interest in asserting that prerogative is ongoing.\nIt could be argued that the confirmation process, in general, provides the Senate with leverage during negotiations with the President over related and unrelated matters. The perception that a reduction in the number of PAS positions might reduce this leverage might add difficulty to the process of changing the appointment method for positions presently filled through the PAS process. It might also be perceived, however, that the reduction in the number of PAS positions would be limited and that the remaining PAS positions might provide Congress with nearly the same level of leverage as now exists.\nIf the appointment method for some positions were changed, Members of Congress, particularly Senators, might have less influence in the selection of appointees to these positions than they now enjoy. The perception that congressional influence might be diminished in this way might lead to difficulties in selecting PAS positions for reduction. This might be particularly true for state-level positions, such as U.S. attorney, U.S. marshal, and district judge, because of the significant role that home-state Senators often play in their selection.",
"The President stands to gain if PAS positions are converted into political appointments by him alone or by agency heads. Political appointees of this type, who do not need Senate confirmation, could be more responsive and accountable to the President than they would otherwise be. With their primary allegiance to the President or agency head, they might be more likely to implement energetically the President's management and policy priorities. Such appointees would not have made commitments to the Senate during the confirmation process, nor would they necessarily have developed relationships with Senators and congressional staffers during the appointment process. The Administration would have more latitude in determining if, and under what circumstances, appointees would be permitted to testify before congressional committees. This discretion would not be absolute, however, since Congress would continue to have other points of political leverage, such as the appropriations process.",
"Although agency heads are aligned politically with the President, they are likely to prefer, where possible, to have significant leeway in the selection of appointees to positions within their organizations. This would permit them to exercise the greatest control over the implementation of policy and management goals in their agencies. The White House often consults with agency leaders when making appointments to presidentially appointed positions. If PAS positions are to be filled through another appointment method, however, agency heads might benefit most when such positions are converted to noncareer SES positions, to which individuals are appointed by the agency head.",
"Various politically active groups seek to influence the selection of federal policymaking officials. The political considerations for these groups are likely to vary depending on several factors. To the degree that a group is more strongly aligned with, and has greater influence with, one party or another, it is likely to prefer that the appointment process be centered where its preferred party is in power. Because of the rights accorded the minority in the Senate and the power of individual Senators, some interest groups might prefer the advice and consent process even if the party with which they are affiliated does not control the chamber. Senate allies could serve to check the appointment power of the President, as the Constitution contemplates. The preference of an interest group for a particular appointment method might be influenced also by the political advantage associated with a certain level of visibility. In some cases, an interest group might prefer the greater visibility of Senate hearings for a nominee, because they might serve to highlight certain policy issues. Furthermore, even if the preferred candidate of the group is not confirmed, rejection in the Senate can sometimes serve to galvanize the supporters of the policies of the rejected nominee. In other cases, however, an interest group might prefer to work \"behind the scenes,\" at the agency level, to support a particular appointment.",
"",
"Congress could maintain the current number and distribution of PAS positions. Under this option, the number of PAS positions would not be systematically reduced, and the primary means by which Congress would determine which positions would be subject to advice and consent would be through the legislative process. The present arrangements are firmly grounded in the Constitution and provide institutional and political benefits to Congress, especially the Senate.\nArguably, appointees who are confirmed by the Senate could be more responsive to Congress than those who are not. As noted above, during confirmation, most nominees agree to testify, as requested, before committees of Congress, making such cooperation somewhat easier to obtain than it would be otherwise. In addition, relationships may be built between the nominee and committee staffers or Senators during the confirmation process, relationships that may be helpful in resolving substantive issues arising at a later date. Senators also may obtain, during confirmation, a nominee's commitment to a particular action.\nSenators also may use the confirmation process as a vehicle for oversight. Nomination hearings offer an opportunity to review programs in depth. Under the present arrangements, Senators also gain political leverage, through the use of holds, for example, that they can use during negotiations with the President or other Senators. Senators enjoy, as well, significant influence in the appointment of home state officials (e.g., U.S. attorneys, marshals, and district court judges) when the President is of the same party. Finally, continuation of the status quo would avoid the process of selecting positions to be filled through other appointment methods, which might prove politically difficult.\nAlthough continuation of the status quo appears to offer many institutional and political benefits to Senators, there are potential drawbacks for the Senate. As noted at the beginning of this report, commissions and task forces, as well as some Members of Congress, have been calling for changes in the appointment process. The salience of this issue might grow as agencies submit statutorily required PAS position reduction plans. To the degree that the Senate becomes identified with the problems in this process, it could lose some prestige as an institution. In addition, the committee consideration process, particularly for higher-level nominations, consumes significant time and resources that might be used for other important matters. Each of these drawbacks might be magnified if, as has happened in the past, the number of PAS positions increases.\nThe status quo has disadvantages for the President as well. The President is held accountable, by the public and Congress, for the day-to-day management of the federal bureaucracy. Sharing appointment power with Congress may hinder the President's ability to carry out management reforms, as well as his political agenda, if his appointees are accountable both to Congress and to him.",
"Congress could create an advisory commission to study the number and distribution of PAS positions and make recommendations on an agency-by-agency basis for the reduction (or increase) of positions. Such an advisory commission might study, from a congressional perspective, the PAS position reduction plans provided by agency heads, or it might make an independent assessment without consideration of those plans. Congress then could consider the commission's recommendations and implement them as appropriate. One benefit of this approach is that the subject could be studied outside of the immediate political process, providing for a more objective assessment of how Congress might proceed. In addition, in the short term, Congress might be seen as responding to perceived problems with the appointment process. Furthermore, when the commission reported its findings, Congress would retain control over which, if any, of the recommendations to pursue. Finally, if Congress did not act on the recommendations at the time of their release, the report could remain available and provide a basis for future action to change the appointment process. The existence of a report with recommendations, however, might provide political momentum that would favor congressional action.\nThere are several drawbacks to this option. One common complaint about the creation of congressional commissions is that their findings are sometimes ignored or marginalized. Congress probably could create a commission more easily than implement its recommendations, because the institutional and political concerns associated with a reduction in positions probably would still exist at the point of implementation. Congress might increase the likelihood of eventual implementation if the commission comprised high-profile members and if it were charged with considering institutional and political issues during its deliberations. One further drawback to this option is that, although the commission would be removed from the immediate political process, it might be vulnerable to outside influence from political leaders and interest groups. This potential drawback might be mitigated by balanced representation of a variety of interested parties, including the President, on the commission.",
"Congress could establish an expedited, or \"fast-track,\" procedure to facilitate the selection of PAS positions for reduction. Such a procedure could be modeled on the one established by law, during the 1980s and 1990s, for military base closure and realignment. This process was used several times in the 1990s, and a new round of base closures in 2005 was authorized by the FY2002 defense authorization act.\nThe current process involves the Secretary of Defense, the President, Congress, and a commission whose members are appointed by the President with the advice and consent of the Senate. Some of the nominees are recommended by the Speaker of the House, the House minority leader, and the Senate majority and minority leaders. The process, in brief, begins with the submission to congressional defense committees, by the Secretary, of proposed and then final criteria to be used by the secretary in forming recommendations regarding closure or realignment. These criteria become final unless Congress disapproves. The Secretary then submits recommendations, based on these criteria, to the commission. Following this, the commission modifies the recommendations and submits them to the President, who can either approve the recommendations, as drafted, and transmit them to Congress, or not approve them and explain his reasons to the commission and Congress. Under the latter circumstance, the commission then sends the President revised recommendations for his approval, and transmission to Congress, or his rejection. The only way Congress can block implementation of the recommendations at this point is to pass a joint resolution of disapproval within 45 days of receiving them. During that 45-day period, constraints on congressional activity included time limits on committee consideration, time limits on debate, and a prohibition on amendments.\nIf Congress were to develop a similar procedure for reducing the number of PAS positions, it might include provisions specifying, among other things, the following:\nthe role of the Administration in the process; the structure, role, and authority of a commission; the role of congressional committees; the role of agencies, including the role, if any, of statutorily mandated PAS position reduction plans; limits on debate and amendments; and time limits on various portions of the process.\nIf Congress were to pursue this option, the procedure that was established would need to provide for legislative adoption of any recommended changes, since advice and consent requirements, unlike military bases, are set in statute.\nExpedited procedures have sometimes proven effective in accomplishing goals that are politically difficult but important to Congress. The specifics of expedited procedures vary, but while they generally include a role for the President and for Congress, the provisions usually limit the ability of Members to block the process once it is underway. Nonetheless, Congress as a whole retains the power, in the end, to defeat objectionable legislative proposals.\nSome observers of Congress argue that the slow, deliberative, and selective nature of the legislative process acts as a check against hasty and unwise laws. Most expedited procedures limit Members' rights to debate and amend legislation and thereby sidestep two of the hallmarks of congressional process. In addition to frustrating Members' ability to address their individual concerns, it could be argued that these limitations close off an important avenue of legislative refinement. In particular, this option would give the Senate less control over the process than it now has or than it probably would have under some other options.",
"Congress could opt to use categories, such as military, foreign service, and public health officer positions, judgeships, ambassadorships, and executive-level positions, when selecting which offices to continue as PAS positions. This is essentially the approach suggested by the Presidential Appointee Initiative in one of its recommendations:\nThe Congress should enact legislation providing that Senate confirmation only be required of appointments of judges, ambassadors, executive-level positions in the departments and agencies, and promotions of officers to the highest rank (0-10) in each of the service branches.\nIn testimony before the Senate Committee on Governmental Affairs, former Director of the White House Office of Presidential Personnel Robert J. Nash also recommended categories for reduction:\nI also think we should consider reducing the number of part-time board and commission members who are confirmed by the Senate. ... Examples could include the National Endowment for the Humanities and agencies that don't have security, national defense, those kinds of responsibilities.\nThis method has been used before. For example, collectors of internal revenue, collectors of customs, and postmasters were all converted from PAS positions to competitive service positions during reorganizations of the agencies within which they resided. Two of these three reorganizations were accomplished through presidential reorganization authority, which is currently dormant.\nThe Constitution uses categories—\"Ambassadors, other public Ministers and Consuls, Judges of the supreme Court\" —to specify which positions must be filled through appointment by the President with the advice and consent of the Senate. Congress might elect, for example, to remove categorically from PAS status all military, Coast Guard, foreign service, public health, or NOAA officer appointments and promotions below the top ranks. Removing any one of these categories would greatly reduce the number of PAS positions but probably lead to little loss of political and institutional benefit. Such an action might have symbolic, as well as real, impact, and might build political momentum for further changes. In addition, it might lead to greater efficiency in carrying out promotions at agencies and in the armed forces. Retaining top officer positions in PAS status arguably could provide Congress with more focused, and, therefore, meaningful, control and accountability than it has at present.\nBecause of routinized approaches to these categories of nominations, which are usually considered en bloc , this option may be least likely to have any impact on the issues of concern to commissions and task forces—namely, that the appointment process is too long and inefficient. In addition, some officer corps and other appointees may value Senate confirmation as a matter of tradition or prestige, and the use of alternative methods for such appointments might have a negative impact on morale.",
"Congress could elect to reduce the number of PAS positions according to the functions of the positions. For example, assistant secretaries for policy might continue to be PAS positions, while assistant secretaries for public affairs could be appointed by departmental secretaries. Under the assumption that, in general, officers in programmatic positions exercise more policymaking discretion than those in non-programmatic positions, Congress might opt to require advice and consent for the former and not the latter.\nSome would argue, however, that there are few purely non-policymaking, apolitical functions at the leadership levels of agencies. For example, an argument could be made that general counsels are staff positions that involve providing neutral legal advice. From this point of view, agency heads should be entitled to appoint neutral, competent senior executives to such positions. But in some cases, general counsels may have considerable influence in the policy arena. For example, offices of general counsel are often involved preparing legislation, commenting on legislation to OMB, conducting regulatory and legislative clearance, defending the agency against legal challenges, helping to draft agency testimony, and briefing those who deliver it, all of which involve policymaking discretion. Approaches of general counsels range from providing information about whether or not action is legal to \"devis[ing] plans that will achieve the objective, identifying risks and developing options for pursuing and obtaining policy goals.\"",
"Congress also could approach the effort to reduce the number of PAS positions by attempting to distribute PAS positions in relation to the size of each agency. Under this approach, those departments with a greater number of career employees and non-PAS political appointees would have a greater number of PAS positions. The logic behind this option is that Congress, as co-manager of the federal bureaucracy, should have a proportional number of accountable appointees throughout the agencies, analogous to the span of control in traditional management hierarchies. At present, the distribution of PAS positions across agencies varies widely. For example, as of January 2003, the Department of Education employed 269 people for every full-time PAS position, while the Department of Defense ratio was 13,151 to one.\nTo the degree that PAS appointees are more accountable to Congress, this option might help to make accountability across the agencies more uniform. It appears to be a rational approach to administering the federal government, if Congress sees itself as a co-manager of the bureaucracy. This method has potential drawbacks as well, however. First, Members may have particular policy areas of greater concern than others, and may prefer to have more PAS appointees in these areas. In addition, the interest in strong oversight and accountability might be stronger in some areas than others. Some arenas may be seen as more the province of the President, and, therefore, Congress may expect less direct accountability. It should also be noted that this approach might be more likely to result in an increase in the number of PAS positions. Members might see the need for greater numbers of PAS positions to mitigate high ratios and be reluctant to give up such positions where lower ratios already exist. Finally, the workload for Senate committees with jurisdiction over large departments, such as the Armed Services Committee, could be greatly increased.",
"Congress might ask congressional committees, which are likely to have the closest experience with particular positions, to suggest which PAS positions would be appropriate to appoint through another method. This approach could provide more focused congressional control over the reduction process. It would place the first step in the decision making process where it is likely to serve Congress's institutional interests. Committees are familiar with oversight and accountability needs and might be most able to assess where less direct control through the confirmation process might be workable. In addition, proponents of a reduction in the number of PAS positions might be more likely to get cooperation on the Senate floor if committees have had significant input into their areas of greatest concern.\nThis option has several potential drawbacks, however. First, committees do not have an incentive to suggest significant reductions in the number of PAS positions. It could be argued that they would be giving up some authority, while the only benefit might be a possible reduction in workload. Second, this approach has no explicit avenue of input for the President. An approach that is rational from the point of view of congressional committees might not yield an outcome that is rational from the point of view of the President's priorities or management goals. Finally, it could prove difficult to determine a target number of positions to convert for each committee, and it might, therefore, be difficult to provide committees with specific targets. Some committees have jurisdiction over many appointments; others, few.",
"Congress could change the appointment method for a number of PAS positions and then restrict the President's appointment authority for some of those positions. For example, Congress could specify, in statute, qualifications required for the holders of certain positions. Current law includes a number of examples of such requirements, including the provisions for appointment of the controller at the head of the Office of Federal Financial Management:\nThe Controller shall be appointed from among individuals who possess - (1) demonstrated ability and practical experience in accounting, financial management, and financial systems; and (2) extensive practical experience in financial management in large governmental or business entities.\nAlternatively, Congress could specify a process for determining the appropriate qualifications for the position. Either approach could allow Congress to retain some control over the qualities of the appointed individual while reducing the number of PAS positions.\nAnother way for Congress to restrict the President's appointment power might be to specify that he must appoint from among nominees submitted to him by particular organizations or offices. For example, the 11 members of the Nuclear Waste Technical Review Board \"shall be appointed by the President ... from among [the not less than 22] persons nominated by the National Academy of Sciences.\" The nominees, in turn, must meet a number of qualifications, including being \"eminent in a field of science or engineering.\"\nTo the degree that Congress's concern is to influence the qualifications of PAS appointees and prevent unqualified people from being appointed, this option offers a possible way of doing so without going through the advice and consent process. The option does not address other institutional and political concerns, however, including the potential loss of political leverage, oversight, and accountability.",
"Congress could reduce the number of PAS positions and require that the President notify appropriate Members of Congress (e.g., leaders in each chamber, relevant committee chairs) upon appointment of an individual to some or all of these positions. The notification could be required to include the qualifications of the appointee and the reasons for his or her selection. A notification period also could be specified. This requirement would be similar to present statutory requirements for removal of incumbents from certain positions. For example, the U.S. Code provides that if the President dismisses the Director of the Mint, \"the President shall send a message to the Senate giving the reasons for removal.\" This option might mitigate the loss of congressional authority with regard to certain positions. It would provide Congress with an intermediate level of involvement in the appointment process for certain positions. Although Senators might lose the opportunity to evaluate qualifications before the appointment and the political leverage associated with the confirmation process for the particular position, this approach could maintain a greater level of accountability from the President for his appointment choices than would be the case if no notification were required.",
"The options delineated above reflect different approaches to congressional determination of the number and distribution of PAS positions in the federal bureaucracy. Each balances the range of institutional and political considerations differently. The first option, maintaining the status quo, is the default option. Since it continues the present appointment arrangements, it probably offers the least institutional and political risk for Members, particularly Senators. This choice may have political consequences, however, if observers blame Congress, particularly the Senate, for a lengthening appointment process for increasing numbers of important positions. Already, commissions, such as those mentioned above, have drawn attention to perceived shortcomings in the appointment process for positions subject to Senate confirmation. As noted above, the submission of PAS position reduction plans by agency heads, as required by the Intelligence Reform and Terrorism Prevention Act, might increase the salience of this issue. If political momentum for changes to the appointment process grows in the future, Congress might, at some point, have less political control over the reform agenda than it now has. For this reason, Congress might benefit politically from a reduction in the number of PAS positions, even if the benefits to the appointment process of such a reduction are not clear. It is unclear to what degree such benefits might offset the potential political drawbacks.\nIf Congress opts to reduce the number of PAS positions, a functional or proportional distribution approach might best protect its institutional interests. A functional approach would allow Congress to maintain a greater role in, and give closer attention to, higher-priority functions. A proportional distribution approach might lead to more uniform accountability to Congress across departments and agencies. Alternatively, it could be argued that committees with oversight responsibilities are in the best position to determine where Congress needs the most accountability, and that their recommendations should be given the greatest weight in a reduction process. Any perceived loss of senatorial authority resulting from reductions under these methods might be mitigated by the establishment of restrictions or notification procedures for certain positions no longer subject to advice and consent requirements. The adoption of an expedited procedure might afford Congress the least control over the process and serve its institutional interests least well.\nThe institutional interests of the President, as manager-in-chief, may be best served when positions involve political appointments without the advice and consent of the Senate, and have no associated qualifications or other restrictions. Political appointees who are not confirmed by the Senate might be more responsive to the President than they would be if they were approved by the Senate as well. Increased allegiance from such appointees might strengthen the President's ability to \"take Care that the Laws be faithfully executed.\" From this perspective, any of the options that convert PAS positions to positions involving political appointments not subject to advice and consent would be preferable to the status quo. The establishment of an expedited procedure might be the most preferred option, if the President were accorded a significant role in selecting which positions should no longer require Senate confirmation of nominees.\nTwo of the options identified above address potential political challenges associated with PAS position reductions. First, the reduction process might be centered in the committees, so that committees would suggest lists of positions for consideration. Committees might be best able to suggest which PAS positions could be converted to non-PAS status at the lowest political cost. Nonetheless, it might prove too politically difficult, in this way, to select a significant number of positions for conversion, since Senate committees have a vested interest in continuing to participate in the confirmation of appointees to positions within their jurisdiction. Alternatively, the political difficulties associated with selecting PAS positions for reduction could be circumvented by centering the selection process outside Congress in a commission, with or without an expedited procedure. Although this method might be the most politically feasible option, it arguably might have significant institutional costs, as discussed above.\nIf Members of Congress envision the reduction of the number of PAS positions as a first step toward comprehensive reform of the appointment process, the magnitude of the reduction might not be as important as it would be if such a reduction were viewed as an end in itself. Even if the reduction achieved did not significantly improve the functioning of the Senate or reduce the length of the appointment process, it might establish a coalition of proponents of reform who could work together for further changes. Such an achievement also could serve to provide a precedent and momentum for further PAS position reductions or reform of various parts of the vetting process.",
"When institutional and political factors are considered, Congress might choose to develop a process that combines several of the options above. For example, the initial process might involve a group of representatives from various congressional committees, so that political considerations could be incorporated. The process might begin with a categorization of the pool of PAS positions into principal officers and inferior officers. The former group would be exempt from the remainder of the process, for constitutional reasons. The remaining pool might be further categorized in other ways. It could be divided into routine and non-routine or full-time and part-time appointments, for example. These groups of positions could be further assessed along functional lines to see if there is common agreement that certain functions do not require the closest attention of Congress. Positions also could be assessed by department and agency to determine whether Congress would be weakened as an institution by a decrease in the number of PAS positions in a particular organization. In some cases, the statutorily required PAS position reduction plans or further specified study by a commission or task force might assist Congress in its determinations. If such a process proved to be politically untenable, Congress might opt to create an expedited procedure for the reduction of positions. For some of the positions with changed appointment methods, Congress might establish statutory qualifications or other restrictions on the President's appointment authority. In addition, or instead, Congress might establish appointment notification requirements for newly converted positions. This is just one example of the way the options discussed above might be combined.\nWhatever additional legislative action it might elect to pursue with regard to determining the number and distribution of PAS positions in the federal bureaucracy, Congress might include a sunset provision so that appointment provisions would revert to their pre-existing status after some period of time unless Congress acted to make the changes permanent. If some Members were uncertain about the impact of certain changes, this provision could provide a trial period to allow Congress to assess whether the benefits of the changes outweighed any drawbacks."
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"question": [
"What powers does the Constitution allow Congress regarding PAS positions?",
"What officials are appointed by the President, the courts, or agency heads?",
"What does the appointment process consist of?",
"How have PAS positions changed in the last three decades?",
"To what extent does this growth affect the lengthier process?",
"What factors affect the lengthier process?",
"What do proponents of a reduction in PAS positions argue?",
"How will PAS reduction be enacted?",
"How might Congress use these plans?",
"What alternative options exist for Congress?",
"What actions may Congress take in lieu of maintaining PAS status?",
"What considerations exist for Congressional PAS action?",
"What influence do Senators have over PAS position selections?",
"What leverage does the confirmation process provide Senate?",
"How will the report be updated?"
],
"summary": [
"The Constitution provides Congress with considerable discretion over which officers of the United States will be in PAS positions, and which may be appointed by the President alone, the courts, or agency heads.",
"At present, more than 2,000 high-level officials across the three branches are appointed by the President with the advice and consent of the Senate.",
"The appointment process includes presidential selection and nomination, Senate consideration, and formal presidential appointment.",
"In general, the number of PAS positions has grown and the appointment process has gotten longer over the last three decades.",
"It is not clear, however, that the larger number is responsible for the lengthier process.",
"Other factors, such as stricter vetting requirements, also play a role.",
"Proponents of a reduction in the number of PAS positions have suggested that it might lead to an improvement in the efficiency and performance of the Senate confirmation process and to a decrease in the length of the appointment process, but this will probably be the case only if the positions removed from PAS status are those for which appointments consume the most time.",
"A recently enacted provision directs each federal agency head to submit a PAS position reduction plan to the President and Congress.",
"Congress might elect to make these plans the basis for future decisions concerning the reduction of PAS positions.",
"Alternative options for Congress include maintaining the status quo; creating a commission to make recommendations for reductions of PAS positions; establishing a \"fast track\" procedure for these reductions; reducing the number of positions by category or function; distributing PAS positions in proportion to agency size; and delegating reduction choices to committees of jurisdiction.",
"In lieu of maintaining PAS status for certain positions, Congress might continue to influence the appointment process by legislatively establishing qualifications or notification requirements for appointments to those positions.",
"Congressional action on PAS positions would involve a number of institutional and political considerations.",
"For example, participation in the appointment process through advice and consent gives Senators influence over the selection of nominees and facilitates obtaining testimony from appointees during oversight hearings.",
"In addition, the confirmation process arguably provides the Senate with leverage during negotiations with the President over unrelated matters.",
"This report will be updated as warranted by events."
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CRS_R42093
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{
"title": [
"",
"Current Conservation Portfolio",
"Programs by Type",
"Working Lands",
"Land Retirement and Easement Programs",
"Conservation Compliance",
"Other Programs and Provisions",
"Program Funding",
"Issues for the Next Farm Bill",
"Budget and Baseline Issues",
"Overall Farm Bill Baseline",
"Conservation Programs With No Baseline",
"Extension of the 2008 Farm Bill",
"Spending Limits on Mandatory Program Spending",
"Mandatory Reduction and Program Extension in Appropriations Acts",
"Programmatic Issues",
"Simplifying the Conservation Portfolio",
"Working Lands or Land Retirement",
"Payment and Income Limitations",
"Payment Limits",
"Income Limits",
"Compliance Requirements",
"Environmental Regulation and Certainty Projects",
"Evaluation and Reports",
"Conclusion"
],
"paragraphs": [
"Agricultural conservation began in the 1930s with a focus on soil and water issues associated with production and environmental concerns on the farm. By the 1980s, agricultural conservation policies broadened to include environmental issues beyond soil and water, especially environmental issues related to production (off the farm). Many of the current agricultural conservation programs were enacted as part of the 1985 farm bill ( P.L. 99-198 , Food Security Act of 1985), which also included for the first time a conservation title. These programs have been reauthorized, modified, and expanded, and several new programs have been created, particularly in subsequent omnibus farm bills. While the number of programs has increased and new techniques to address resource problems continue to emerge, the basic approach has remained unchanged—voluntary farmer participation encouraged by providing land rental payments, cost-sharing conservation practice implementation, technical assistance, education, and basic and applied research.\nThe Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 ), the 2008 farm bill, reauthorized almost all existing conservation programs, modified several programs, and created various new ones. Funding authority for most of these programs expired at the end of FY2012, and was extended until the end of FY2013 by the American Taxpayer Relief Act ( P.L. 112-240 ). The 112 th Congress debated reauthorizing legislation in the House-reported ( H.R. 6083 ) and Senate-passed ( S. 3240 ) farm bills. This legislation did not pass before the end of the 112 th Congress, leaving the 113 th Congress to write a new farm bill.",
"Since its first inclusion in the 1985 farm bill, the conservation title has been a significant and visible title in the farm bill. As the title has grown in both size and interest, so too have questions and concerns about program funding, policy objectives, individual program effectiveness, comparative geographic emphasis, and the structure of federal assistance. Congress has continued to debate and address these concerns with each omnibus farm bill. The 2008 farm bill was no exception. While almost all existing conservation programs were reauthorized, several programs were modified to address concerns. The 2008 farm bill also created new programs, expanding the range of USDA conservation activities.\nCurrently, more than 20 agricultural conservation programs are administered by USDA, mostly by the Natural Resources Conservation Service (NRCS). Starting in 1985, each succeeding farm bill has expanded the range of natural resource problems to be addressed as well as the number of conservation programs and level of funding. In some cases, the programs are subsets of overarching programs that apply to a specific place or a specific resource, but with unique provisions and eligibility requirements. Though some similarities among these programs exist, each is administered with slight differences. For a list of most agricultural conservation programs, see CRS Report R40763, Agricultural Conservation: A Guide to Programs .",
"Generally, farm bill conservation programs can be grouped into the following four categories based on similarities: working land programs, land retirement and easement programs, conservation compliance programs, and other programs and overarching provisions. Most of these programs are authorized to receive mandatory funding (i.e., they do not require an annual appropriation) and include authorities that expire with other farm bill programs at the end of FY2013. Other types of conservation programs such as watershed programs, emergency programs, and technical assistance are authorized in other non-farm bill legislation. Most of these programs have permanent authorities and receive appropriations annually through the appropriations process. These programs are not generally discussed in the context of a farm bill and are not covered in detail in this report.",
"Working lands conservation programs are typically classified as programs that allow private land to remain in production, while implementing various conservation practices to address natural resource concerns specific to the area. The largest of these programs is the Environmental Quality Incentives Program (EQIP), currently authorized at a total of $7.3 billion between FY2008 and FY2012. Others, such as the Wildlife Habitat Incentives Program (WHIP), Agricultural Management Assistance (AMA), and Agricultural Water Enhancement Program (AWEP), operate similarly to EQIP; however, they target specific resource concerns or geographic areas. The Conservation Stewardship Program (CSP) replaced the Conservation Security Program in the 2008 farm bill and is designed to encourage producers to address specific resource concerns in a comprehensive manner. CSP operates differently from the other working lands programs in that it employs a \"pay-for-performance\" approach. This approach pays producers based on their quantifiable level of environmental outcomes. Payments may vary to further incentivize higher levels of performance.",
"Land retirement programs provide federal payments to private agricultural landowners for temporary changes in land use or management to achieve environmental benefits. Conversely, conservation easements impose a permanent land-use restriction that is voluntarily placed on the land in exchange for a government payment. The largest land retirement program is the Conservation Reserve Program (CRP), which reimburses the landowner for removing land from production for up to 10 years at a time and is authorized to enroll up to 32 million acres. Other programs such as the Wetlands Reserve Program (WRP) and the Grasslands Reserve Program (GRP) use a combination of long-term and permanent easements as well as restoration contracts to protect wetlands and grasslands from production. The Farmland Protection Program (FPP) also uses easements; unlike the aforementioned programs, however, it does not remove land from production, but rather restricts productive farmland from being developed for non-farm purposes.",
"USDA also administers highly erodible lands conservation and wetland conservation compliance programs, referred to as Sodbuster, Swampbuster, and Sodsaver. These programs prohibit producers from receiving many farm program benefits when certain compliance requirements are not met. Under Sodbuster, farmers who cultivate highly erodible lands must have fully implemented an approved conservation plan or risk losing eligibility for various farm support programs on all the land the producer cultivates. Similarly, under Swampbuster, producers who convert a wetland, making production of an agricultural commodity possible, after November 28, 1990, are ineligible for program benefits. The 2008 farm bill created a new compliance provision known as Sodsaver. Under Sodsaver, producers that plant an insurable crop (over 5 acres) on native sod are ineligible for crop insurance and the noninsured crop disaster assistance (NAP) program for the first five years of planting. This provision requires states to sign up for participation. To date, no state governors have opted to participate in this program.",
"USDA administers several other farm bill conservation programs, many of which were created in the 2008 farm bill. Some programs are geographically specific, such as the Chesapeake Bay program and the Great Lakes Basin program, which focus on select watershed regions. Other programs, such as the Cooperative Conservation Partnership Initiative (CCPI), use existing conservation program funds as leverage for partnership agreements with non-federal funding. Grant programs are also available, such as the Voluntary Public Access and Habitat Incentives program and the Conservation Innovation Grants (CIG). Other farm bill provisions redirect funding to various priority areas, such as the regional equity provision and additional incentives for beginning, socially disadvantaged, and limited resource producers.\nFor additional information and program descriptions for most conservation programs within the farm bill discussion, see the CRS Report R40763, Agricultural Conservation: A Guide to Programs .",
"The majority of farm bill conservation programs are funded through USDA's Commodity Credit Corporation (CCC) as mandatory spending. Mandatory spending can be thought of as multiyear appropriation in authorizing legislation (e.g., a farm bill). These authorizations do not require an annual appropriation. Mandatory conservation programs either receive a statutorily authorized level of funding (e.g., $1.75 billion available for a conservation program during a fiscal year) or an acreage allotment (e.g., enroll up to 32 million acres nationally). Mandatory funds from the authorizing law are assumed to be available unless they are expressly reduced to smaller amounts by a subsequent act of Congress, usually initiated in the appropriations process or by the authorizing committees.\nHistorically, most conservation programs did not receive mandatory funding. The majority of conservation programs prior to the 1985 farm bill ( P.L. 99-198 ) had discretionary funding authority and were funded through the annual appropriations process. Since the 1985 farm bill, the number of programs receiving mandatory funding as well as the level of authorized funding has grown ( Figure 1 ). Most conservation program advocates view mandatory funding as a more desirable approach than the annual appropriations process. They believe that it is generally easier to protect authorized mandatory funding levels from reductions during the appropriations process than to secure appropriations each year. Congress has supported this by continuing to enact provisions that allow many conservation programs to receive mandatory funding. One of several concerns regarding conservation funding in the next farm bill centers on the possible reduction of mandatory program spending, without an increase in discretionary spending, thereby reducing the total level of conservation funding.\nDuring the 2008 farm bill debate conservation groups and producers found themselves competing with other agricultural interests for the necessary resources to expand or even continue many conservation programs. Upon passage of the 2008 farm bill, the conservation title was one of the few titles to have received an increase in mandatory funding levels, which was seen as a victory by many in the conservation and environmental communities. Conservation program funding was authorized to expand from approximately $4 billion total in FY2008 to $6.1 billion in FY2012.\nIn an environment of pronounced domestic budget constraints, many mandatory conservation programs have faced reductions from the farm bill authorized levels, usually through the appropriations process. While other farm bill mandatory programs have experienced reductions in appropriations, the majority affect conservation programs. Conservation and environmental groups criticize these reductions, arguing that when appropriators reduce conservation funding they undercut many of the programs that generated political support for the farm bill's initial passage. Others point out that funding for mandatory conservation programs continues to increase despite these reductions (see Figure 1 ). For additional information on reductions to mandatory agricultural spending, see CRS Report R41245, Reductions in Mandatory Agriculture Program Spending and CRS Report R41964, Agriculture and Related Agencies: FY2012 Appropriations .",
"Current budgetary constraints continue to drive the debate related to the next farm bill. Most programs authorized in the 2008 farm bill ( P.L. 110-246 ) will expire on September 30, 2013, because of the 2012 farm bill extension. Many of the conservation issues discussed in the 112 th Congress continue to be discussed, including program consolidation, environmental regulation, and conservation compliance. While the conservation title was arguably one of the less controversial titles debated during the 112 th Congress's farm bill reauthorization consideration, tension remains on some key policy points, namely funding levels and compliance requirements.",
"One overarching issue affecting conservation in the next farm bill is budgetary constraints and baseline funding. Similar to the conditions during debate on the 2008 farm bill, the current farm bill debate has been driven in part by relatively large budget deficits and demand for fiscal restraint. Most conservation programs authorized in the 2008 farm bill receive mandatory funding. Farm bill reauthorization proposals in the 112 th Congress would have reduced mandatory conservation funding. Also, reductions in mandatory funding through the annual appropriations process continue to impact conservation program funding. Many of these proposed reductions continue to receive strong opposition from conservation and farm supporters alike.",
"The Congressional Budget Office (CBO) generates a budget score and baseline projection for mandatory spending. A \"baseline\" is an estimate at a particular point in time of what federal spending on mandatory programs likely will be under current law. The baseline serves as a benchmark or starting point for the budget under which the authorizing committees write the farm bill. When new provisions are introduced that affect mandatory spending, their impact (or \"score\") is measured as a difference from the baseline. Increases in cost above the baseline may be subject to budget constraints such as pay-as-you-go (PAYGO) or cut-as-you-go (CUTGO).\nConservation currently accounts for less than 7% of the overall farm bill baseline funding for the next 10 years ( Figure 2 ). The largest percentage of baseline funding is in the nutrition title (primarily the Supplemental Nutrition Assistance Program, or food stamps), which has long been considered to be difficult politically to reduce. If it is assumed that no additional money from outside the agriculture committees' jurisdiction is expected, then funding for any new programs or program growth will likely come from existing farm bill baseline. The three largest sources of funding after nutrition are crop insurance, conservation, and commodity support (namely direct payments). Authorizing committees are not restricted by the current division of the farm bill baseline—only the total amount of baseline available during reauthorization. This means that the authorizing committees can shift funding from one title or program to another, depending on priorities.\nThe American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) extended all 2008 farm bill provisions that were in effect and expiring on September 30, 2012, for one additional year until September 30, 2013. There is no net cost to the extension because mandatory funding to continue most of the major farm bill programs was already in the budget baseline. A subset of the 2008 farm bill programs did not have a continuing mandatory baseline and did not receive any additional mandatory funding under the extension. This group includes certain conservation programs and is discussed further in the next section. Many of these programs would have been funded in the five-year farm bills that were developed in 2012 (both H.R. 6083 and S. 3240 ). However, most of these programs do not have funding for FY2013, and require additional legislative action or appropriations.",
"Thirty-seven provisions in the 2008 farm bill received mandatory budget authority but are not assumed to receive such funding in the budget baseline beyond the original expiration of the 2008 farm bill (FY2012). Of these 37 provisions, five are for programs within the conservation title ( Table 1 ). The estimated cost to extend these five programs for five years is approximately $2.7 billion. If policymakers want to continue these programs, under current budget rules, they will need to pay for the programs with offsets from other sources.",
"Some conservation programs such as CRP have baseline beyond FY2012; therefore the extension allows CRP to continue in FY2013 at the original authorized rate of enrollment—up to 32 million acres at any one time. Other mandatory conservation programs that expired and were extended have limited baseline beyond FY2012, as a result of previous reductions in annual appropriations. For example, the Wetlands Reserve Program (WRP) had authority under the 2008 farm bill to enroll no more than 3.04 million acres before FY2012, and did not include budgetary baseline beyond FY2012. Temporary reductions in FY2011 and FY2012 annual appropriations acts limited USDA's ability to enroll the authorized level of acres. This resulted in limited baseline being carried forward into FY2013, whereas it would have otherwise been expended by the end of FY2012. With the current farm bill extension, WRP can presumably use this additional baseline to enroll acres within its original authorized acreage cap.\nA different set of mandatory conservation programs has no baseline beyond FY2012 and therefore require offset funding to be continued (e.g., VPAHIP). The extension does not affect these programs, which have expired and will continue to remain inactive unless otherwise funded. The extension authorized VPAHIP to receive $10 million in appropriations for FY2013; however, no additional funding has been appropriated.",
"The 2008 farm bill authorized increases in mandatory funding for many conservation programs. Unlike the discretionary conservation programs, which must be funded through the annual appropriations process, mandatory programs have an authorized level of funding (or acreage enrollment) that is available unless reduced to smaller amounts in the appropriations process. If appropriators do not set a spending limit or reduce the authorized level, then the program receives the authorized level of funding.\nDespite the increase in mandatory funding authority, many conservation programs have been reduced or capped through annual appropriations acts since FY2003 ( Figure 3 ). Many of these spending reductions were at the request of both the Bush and Obama Administrations. The mix of programs and amount of reduction has varied from year to year. Some programs, such as the CRP, have not been reduced by appropriators in recent years, while others, such as EQIP, have been repeatedly reduced below authorized levels. Total mandatory funding for conservation was reduced by over $5.3 billion from FY2003 through FY2013. Even with these reductions, total mandatory funding for conservation programs has remained relatively constant at around $5 billion annually. For more information about reductions in mandatory program spending, see CRS Report R41245, Reductions in Mandatory Agriculture Program Spending .\nAlthough some titles in the 2008 farm bill (e.g., commodities and crop insurance) received a reduction in mandatory funding authority, the conservation title received increased mandatory funding authority. Many supporters of conservation programs viewed this as a victory during the farm bill debate. Yet the President's budget proposals continued the trend of proposed reductions. While the FY2010 Agriculture Appropriations Act ( P.L. 111-80 ) did not include many of these proposed reductions (with the exception of EQIP and Watershed Rehabilitation), the FY2011 ( P.L. 112-10 ) and FY2012 ( P.L. 112-55 ) appropriations acts reduced mandatory conservation program funding by $673 million and $929 million, respectively. The FY2013 continuing resolution ( P.L. 112-175 ) continues FY2012 funding levels, including reductions, to March 27, 2013. Advocates for these programs contend that these limitations are significant changes from the intent of the farm bill, which they say compromise the programs' ability to provide the anticipated magnitude of benefits to producers and the environment. Others, including those interested in reducing agricultural expenditures or in spending the funds for other agricultural purposes, counter that even with these reductions, overall funding for conservation has not been reduced.",
"While most conservation advocates decry reduced conservation funding for any fiscal year, additional emphasis was placed on reductions proposed in FY2012. Authority for many of the farm bill conservation programs expired at the end of FY2012. Because CBO uses the last year of authorization to determine future authorization levels, a reduction in the last year's authorized level could compound the effect on available baseline for the next farm bill.\nTo address this concern, the FY2012 Agriculture Appropriations Act ( P.L. 112-55 ) extended the expiration date of selected farm bill conservation programs to the end of FY2014. Authority for these programs—AMA, CSP, EQIP, WHIP, and FPP—would have expired in FY2012. Appropriators also placed limitations on FY2012 spending for all of these programs. Without the program extension, the reduced FY2012 spending levels would have served as the baseline for future years, based on CBO scoring rules.\nBecause these five conservation programs were extended to the end of FY2014, they were unaffected by the 2012 farm bill expiration and extension. They were, however, affected by the FY2013 continuing resolution, which continued FY2012 funding reductions to March 27, 2013. AMA, EQIP, WHIP, and FPP were reduced by a specific funding level, similar to FY2012 reductions.\nHowever, CSP, which is authorized to enroll acres, was affected differently by the appropriations limitation. CSP is authorized to enroll a specific level of acres annually (12.769 million acres) and does not have a limited funding level. Similar to CRP, CSP pays prior year contracts out of current year funding. For example, a 10-year CSP contract signed in FY2009 will be paid annually using FY2009-FY2018 funding. Reductions in appropriations to CSP have not limited the number of authorized acres, but rather the total amount of annual funding available. This affects the program in two ways. First, because existing CSP contracts must be paid first using current year funding, it limits the amount of funding left to enroll new acres, thus indirectly reducing the number acres enrolled for a given year. Second, because the program is authorized to enroll acres each year and grow exponentially, the reductions in appropriations one year may delay the expected growth in baseline for the program.\nJust as the savings from conservation reductions in appropriations bills are not always redirected toward other conservation activities, the reestablishment of the farm bill baseline through expiring conservation programs does not guarantee that future farm bills or appropriations will extend the same level of support for conservation.",
"",
"Before the 1985 farm bill, few conservation programs existed and only two would be considered large by today's standards. The current conservation portfolio includes more than 20 distinct programs with annual spending over $5 billion. The differences and number of programs can create some general confusion about the purpose, participation, and policies of the programs. Discussion about simplifying or consolidating conservation programs to reduce overlap, duplication, and generate savings frequently arises during farm bill reauthorization. Prior to the 2008 farm bill, USDA proposed a major consolidation of several conservation programs. While the 2008 farm bill did eliminate some conservation programs, it also created several more. Both the House-reported ( H.R. 6083 ) and Senate-passed ( S. 3240 ) farm bills in the 112 th Congress included several program consolidation measures. In light of continued funding constraints, program consolidation to generate potential savings may continue during reauthorization.\nWhile many conservation groups supported the consolidation efforts in the 112 th Congress, other expressed concern that program consolidation would remove the geographic or issue-specific emphasis that was originally created by Congress to address identified priorities. The majority of conservation programs are administered nationwide. Some programs have sub-programs that address specific issues or are geographically defined in statute or report language (e.g., the Conservation Innovation Grants is a subprogram of EQIP). Other programs that are geographically specific or issue-specific are stand-alone programs and receive funds in addition to other nationwide programs (e.g., the Chesapeake Bay Watershed Program). If program consolidation occurs, it could remove these previously identified priorities that allowed the number of programs to expand. Conversely, program consolidation could also lead to additional congressionally directed language or \"carve-outs\" within programs to ensure that identified priorities are still addressed. Efficiencies created by a reduction in the number of programs could be negated or reduced by additional carve-outs within remaining programs.",
"Land retirement programs, such as the CRP, began with a soil conservation and commodity-reduction purpose, during a time of economic downturn in the farm sector. As the conservation effects of these programs were identified, the potential for generating multiple environmental benefits beyond soil conservation emerged and included benefits to wildlife habitat, air and water quality, and carbon sequestration. For producers, land retirement programs are attractive because they receive rental payments at acceptable levels. However, with high commodity prices and incentives to plant crops, producer interest in land retirement may be declining. Some forecasts are that these high commodity price levels may continue for the foreseeable future, thus shrinking farmer interest in land retirement for some time. Also, increased commodity prices can lead to increased land rental rates, which in turn increases the cost of land retirement programs. These factors could signal a shift in farm bill conservation policy away from the traditional land retirement programs toward an increased focus on conservation working lands programs—programs that keep land in production while implementing conservation practices to address natural resource concerns. Some of this shift has already occurred in the last decade (see Figure 4 and Figure 5 ) as the percentage of mandatory program funding for land retirement programs (e.g., CRP) has declined relative to working lands programs (e.g., EQIP) and overall land use.\nMost conservation and wildlife organizations support both land retirement and working lands programs; however, the appropriate \"mix\" continues to be debated. Even debate between shorter-term land retirement programs such as CRP and longer-term easement programs such as WPR continues. Supporters of long-term or permanent easement programs cite a more cost-effective investment in sustainable ecosystems for long-term wildlife benefits. Short-term land retirement program supporters cite the increased flexibility, which can generate broader participation than permanent easement programs.\nThere is also a noticeable increase in what USDA terms land preservation programs (long-term and permanent easement programs, see Figure 6 and Figure 7 ). The high cost of land retirement programs (e.g., CRP, which is based on land rental rates) and the lack of baseline for most land preservation programs (e.g., WRP and GRP) make the future of these programs uncertain in the current budget situation. With any proposal, it is likely that environmental interests will not support a reduction in one conservation program without an increase in another conservation program.",
"Two types of payment limits exist for conservation programs. One sets the maximum amount of conservation program payments that a person or legal entity can receive during a specified period of time. The other (known as the adjusted gross income or AGI limit) sets the maximum amount of income that an individual can earn and still remain eligible for conservation program benefits. Limitations on payments received through conservation programs were expanded in the 2008 farm bill. Prior to the 2008 farm bill, most conservation programs were affected by an income limitation, not a limitation on payments. Now, most programs are affected by both, which in turn can affect program participation (see Table 2 ).",
"Payment limits are the maximum amount of conservation program funding that a person or legal entity can receive during a specified period of time. As with commodity programs, payment limits for conservation programs are controversial because of issues relating to the size of operations receiving support and who should receive payments. The effect of payment limits varies by program and the conservation practices implemented. Most conservation programs with higher payments tend to be distributed to farms and ranches with larger acreage because payments for many conservation practices are scaled by the number of acres on which that practice is applied or acres are enrolled.\nSupporters of payment limits are often advocates for smaller farms and opponents of large animal feeding operations. Most working lands conservation programs provide a percentage of the cost to install conservation practices (known as cost-share) or implement site-specific management practices. As noted above, most of these payments are made on a per-acre applied basis, thereby skewing larger payments to contracts with more acres enrolled. Small farm advocates claim that this disproportionately benefits large agricultural producers by making less money available for small producers. Also, in the case of EQIP, cost-share assistance is provided for more expensive practices such as animal waste storage facilities in concentrated animal feeding operations (CAFOs). Opponents of these animal operations criticize the higher payment limit because of the recipients' production methods.\nThose who oppose payment limits (or support higher limits) for conservation programs counter that conservation programs should focus on land with the greatest environmental need and not be limited to a price per participant. They argue that higher payment limits allow for greater environmental stewardship on farms and ranches, particularly larger operations with a greater land base, which may have greater natural resource concerns. Others claim that payment limits on restoration agreements could create a disincentive to enroll larger conservation easements, which can be most desirable. Because most conservation easement programs, namely WRP and GRP, enroll land that will also require restoration, a limit on restoration payments could reduce the enrollment of large acre tracts.",
"The AGI limit sets a maximum amount of income that an individual can earn and still remain eligible for program benefits. The 2008 farm bill made the AGI limitation for conservation programs higher than the AGI limitation for the commodity farm support programs. Despite this higher limit, income limitations on conservation programs remain somewhat controversial. Previously, the AGI limit for both conservation and commodities programs was set at $2.5 million and had an exception if three-fourths of AGI was earned from farming sources. Now, if the three-year average of non-farm income AGI exceeds $1,000,000, no conservation program benefits are allowed. The exception to this limit is if two-thirds of the three-year AGI was earned from farming sources. In addition, this limitation may be waived by USDA on a case-by-case basis for the protection of environmentally sensitive land of special significance. In general, the AGI limit for conservation programs is higher than that for commodity programs to encourage environmental stewardship on farms and ranches, particularly larger operations that may have greater natural resource problems.\nSupporters of AGI limits believe that tighter limits benefit small producers and gain additional public support for all agricultural programs through fiscal responsibility. Opponents of AGI limits on conservation programs believe that if there are greater conservation benefits provided to the general public, then, irrespective of wealth, a producer's enrollment is good for the general public.",
"The 1985 farm bill created the highly erodible lands (HEL) conservation and wetland conservation compliance programs, which tied various farm program benefits to conservation standards. These programs require farmers producing agricultural commodities on HEL to fully implement an approved conservation plan or to not convert wetlands to production in order to remain eligible for certain farm program benefits. Between 1982 and 2007, farmers reduced total cropland soil erosion by 43%. The bulk of this reduction occurred following the 1985 farm bill and the implementation of CRP and conservation compliance requirements.\nUnder the original provisions enacted in 1985, a producer could lose the following farm program benefits if found to be out of compliance: price and income supports and related programs, farm storage facility loans, crop insurance, disaster payments, storage payments, and any farm loans that contribute to erosion on highly erodible lands. The provision has since been amended numerous times to remove certain benefits and add others.\nMost notably, the 1996 farm bill ( P.L. 104-127 ) removed crop insurance as a program benefit that could be denied and added production flexibility contracts—the precursor to what is now referred to as direct payments. The debate surrounding this decision centered on the desire to encourage producers to purchase crop insurance and to respond to farmer concerns that compliance requirements were intrusive.\nCurrently, the major farm program benefits that could be affected by compliance are counter-cyclical payments, direct payments, and conservation programs. Presently, high commodity prices have resulted in few or no counter-cyclical payments. This leaves conservation program participation and direct payments as the remaining major benefits that could be affected by compliance. The current financial climate has caused direct payments under the farm commodity support programs to come under considerable scrutiny. Debate continues regarding their fate, and many believe that the program could be reduced or eliminated in farm bill reauthorization as a budget saving measure. Conservation advocates worry that without direct payments there will be little incentive for producers to meet conservation compliance and wetland conservation requirements. Environmental and conservation organizations are asking Congress to consider requiring conservation compliance for crop insurance benefits or any new revenue assurance programs. Additional information on this issue may be found in CRS Report R42459, Conservation Compliance and U.S. Farm Policy .",
"Farm bill conservation programs are the voluntary federal policy for addressing environmental impacts related to agriculture. Another federal policy for addressing environmental impacts is through regulation. Increasingly, conservation programs are called upon to prevent or reduce the need for environmental regulation. While the farm bill debate will likely not focus specifically on environmental regulations because most environmental law originates outside of the House and Senate Agriculture Committees, debate could focus on strengthening the voluntary response to environmental issues through conservation programs. This, in turn, could influence the funding debate and how much of the overall farm bill budget is appropriate for conservation programs.\nAnother assistance mechanism recently discussed in relation to environmental regulation is referred to as \"certainty\" or \"assurance standards.\" Several states have in place or are developing certainty programs to encourage farmers to implement water quality improvement measures without the fear that those actions could lead to further regulation and enforcement under national environmental laws such as the Clean Water Act (CWA). While this is a somewhat new concept for addressing water quality concerns, similar certainty programs have been established in the past between state and federal agencies for the protection of wildlife habitat in private lands.\nOn January 17, 2012, a memorandum of understanding (MOU) was signed between EPA and USDA to establish a water quality certainty program in Minnesota. This is the first formal state-federal certainty program to be developed in the area of water quality. USDA officials continue to express interest in developing a \"safe harbor\"-type mechanism between USDA and EPA for water quality; however, no formal proposal has been released nationwide. Legislation was proposed in the 111 th Congress ( H.R. 5509 ), but not in the 112 th . It is possible that additional proposals for creating a national certainty program or pilot program in select watersheds (e.g., the Chesapeake Bay) could be included in the farm bill reauthorization debate.",
"Following the significant increase in funding for conservation programs in the 2002 farm bill, USDA initiated a project to measure the environmental benefits of many of these programs. The project is a multi-agency effort known as the Conservation Effects Assessment Project (CEAP). CEAP's stated purpose is to aid policymakers in developing new conservation programs and help existing conservation program managers implement programs more effectively and efficiently to meet the goals of Congress and the Administration.\nCEAP does not quantify the environmental benefits of any single conservation program or approach; instead, it attempts to understand how conservation efforts are working and what future improvements are needed. CEAP assessments are being developed for cropland, grazing lands, wetlands, and wildlife. To date, five watershed cropland reports have been released: Upper Mississippi River Basin, Missouri River Basin, Ohio-Tennessee River Basin, Chesapeake Bay, and Great Lakes Basin. The reports have shown that conservation practices adopted on cropland have an effect in reducing sediment, nutrients, and pesticides from farm fields. Despite these gains, the reports also find that additional measures are needed within the watersheds studied.\nOne of the recommended approaches is through targeting conservation programs resources to areas that have high need for additional treatment—acres most prone to runoff or leaching. While a targeted approach could increase the effectiveness of conservation programs, it could also reduce the availability of funds in certain areas considered to be at a lower risk. As additional reports continue to be released, their potential outcomes could prove useful in shaping future policy debates surrounding environmental issues in the farm bill.",
"As Congress debates conservation provisions in the next farm bill the focus continues to be on overall federal spending and agriculture's share. Conservation funding has grown to represent a sizable portion of the overall farm bill baseline and could see reductions during reauthorization. Many in the conservation community see this as inevitable; however, they do not want to see a reduction in conservation that is disproportionate to other areas of agricultural spending. While most producers are in favor of conservation programs, it is unclear how much of a reduction in other farm program spending they would be willing to support to further conservation efforts. Recent reports and studies have shown that conservation measures are effective in addressing environmental concerns; however, spending reductions, program efficiencies, and federal policies surrounding environmental regulation and compliance will likely drive conservation farm bill discussion in the 113 th Congress."
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{
"question": [
"How did the 2008 farm bill fare in the 112th Congress?",
"What attention is the conservation title attracting?",
"What issues were raised in the 2012 farm bill debate?",
"What other issues are included in the debate?",
"What factors are driving the farm bill debate?",
"How has conservation funding changed in the past 25 years?",
"What is the funding breakdown for the farm bill programs?",
"How did the American Taxpayer Relief Act of 2012 affect 2008 farm bill programs?",
"What has been the federal response to agricultural environmental concerns?",
"How are these conservation programs being called upon?",
"How have other conservation efforts been met?",
"How might the effectiveness of compliance programs be affected?"
],
"summary": [
"Reauthorization of the Food, Conservation, and Energy Act of 2008 (2008 farm bill) failed to pass in the 112th Congress, leaving it to the 113th Congress to continue the farm bill debate.",
"The conservation title continues to receive attention and interest from farmers and ranchers as well as environmental and conservation organizations.",
"Contentious issues raised in the 2012 farm bill debate might continue in the 113th Congress, specifically calls to reduce overall funding levels, including conservation, and the addition of crop insurance as a benefit lost under conservation compliance.",
"Other issues from the 2012 farm bill reauthorization debate include consolidating duplicative programs, using public-private partnerships to extend federal funding, and amending existing programs by adding new options to protect and restore resources on agricultural lands.",
"Budgetary concerns continue to drive the farm bill reauthorization discussion, with additional emphasis placed on reducing mandatory spending.",
"In the past 25 years, conservation has received an increasing level of mandatory funding authorized through farm bills.",
"Nutrition, direct payments, crop insurance, and conservation make up 99% of the 10-year estimated baseline funding for farm bill programs.",
"Several conservation programs, provisions, and funding authorized in the 2008 farm bill expired at the end of FY2012 and were extended to the end of FY2013 by the American Taxpayer Relief Act of 2012 (P.L. 112-240).",
"The federal response to environmental concerns related to agriculture is generally viewed as both supportive and restrictive.",
"These conservation programs are increasingly called upon to support best management practices to meet federal environmental requirements; however, these programs are being considered for funding reductions.",
"Other conservation efforts, such as conservation compliance on highly erodible lands and wetlands compliance, might be viewed as restrictive.",
"Potential changes in commodity programs could reduce the effectiveness of compliance programs."
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|
CRS_98-958
|
{
"title": [
"",
"Introduction",
"Bars to Extradition",
"No Treaty",
"No Treaty Crime",
"Military and Political Offenses",
"Capital Offenses",
"Want of Dual Criminality",
"Extraterritoriality",
"Nationality",
"Double Jeopardy",
"Lapse of Time",
"Other Common Features",
"Expenses and Representation",
"Transfer of Evidence",
"Transit",
"Constitutionality",
"Procedure for Extradition from the United States",
"Arrest and Bail",
"Hearing",
"Review",
"Surrender",
"Extradition for Trial or Punishment in the United States",
"Specialty",
"Alternatives to Extradition",
"Waiver",
"Immigration Procedures",
"Irregular Rendition/Abduction",
"Foreign Prosecution"
],
"paragraphs": [
"",
"\"'Extradition' is the formal surrender of a person by a State to another State for prosecution or punishment.\" Extradition to or from the United States is a creature of treaty. The United States has extradition treaties with over a hundred of the nations of the world, although there are many with which the United States has no extradition treaty. International terrorism and drug trafficking have made extradition an increasingly important law enforcement tool.\nAlthough extradition as we know it is of relatively recent origins, its roots can be traced to antiquity. Scholars have identified procedures akin to extradition scattered throughout history dating as far back as the time of Moses. By 1776, a notion had evolved to the effect that \"every state was obliged to grant extradition freely and without qualification or restriction, or to punish a wrongdoer itself,\" and the absence of intricate extradition procedures has been attributed to the predominance of this simple principle of international law.\nWhether by practice's failure to follow principle or by the natural evolution of the principle, modern extradition treaties and practices began to emerge in this country and elsewhere by the middle 18 th and early 19 th centuries.\nThe first U.S. extradition treaty consisted of a single terse article in Jay's Treaty of 1794 with Great Britain. Its brevity notwithstanding, the article contained several of the basic features of contemporary extradition pacts:\nIt is further agreed, that his Majesty and the United States, on mutual requisitions, by them respectively, or by their respective ministers or officers authorized to make the same, will deliver up to justice all persons, who, being charged with murder or forgery, committed within the jurisdiction of the other, provided that this shall only be done on such evidence of criminality, as, according to the laws of the place, where the fugitive or person so charged shall be found, would justify his apprehension and commitment for trial, if the offence had there been committed. The expense of such apprehension and delivery shall be borne and defrayed, by those who make the requisition and receive the fugitive.\nSince then, the United States has relied almost exclusively upon bilateral agreements as a basis for extradition. However, the United States has entered into several multilateral agreements that may also provide legal authority for extradition. Such agreements take two forms. One form is a multilateral agreement that exclusively concerns extradition. The United States is currently a party to two such agreements: the 1933 Montevideo Convention on Extradition, which apparently has never served as a basis for extradition, and the Extradition Agreement Between the United States and the European Union, which entered into force in February 2010. The provisions of the U.S.-EU extradition treaty are implemented via bilateral instruments concluded between the United States and each EU Member State. These instruments amend or replace any provisions contained in earlier treaties between the United States and individual EU Member States that conflict with the requirements of the multilateral agreement.\nThe United States is also a party to several multilateral agreements that generally aim to deter and punish transnational criminal activity or serious human rights abuses, including by imposing an obligation upon signatories to prosecute or extradite persons who engage in specified conduct. Although these agreements are not themselves extradition treaties, they often contain provisions stating that specified acts shall be treated as extraditable offenses in any extradition treaty between parties.",
"Extradition treaties are in the nature of a contract, and by operation of international law,\n[a] state party to an extradition treaty is obligated to comply with the request of another state party to that treaty to arrest and deliver a person duly shown to be sought by that state (a) for trial on a charge of having committed a crime covered by the treaty within the jurisdiction of the requesting state, or (b) for punishment after conviction of such a crime and flight from that state, provided that none of the grounds for refusal to extradite set forth in [the treaty] is applicable.\nSubject to a contrary treaty provision, federal law defines the mechanism by which the United States honors its extradition treaty obligations. Although some countries will extradite in the absence of an applicable treaty as a matter of comity, it was long believed that the United States could only grant an extradition request if it could claim coverage under an existing extradition treaty. Dicta in several court cases indicated that this requirement, however, was one of congressional choice rather than constitutional requirement.",
"Congress appears to have acted upon the assumption that a treaty was not required for extradition in 1996, when it authorized the extradition of fugitive aliens at the behest of a nation with which the United States has no extradition treaty. That same year, Congress passed legislation to implement international agreements made between the United States and the International Tribunals for Yugoslavia and Rwanda, which were entered into as executive agreements rather than treaties. Pursuant to these agreements, the United States pledged to surrender to the requesting tribunal any person found within its territory who had been charged with or found guilty by the tribunal of an offense.\nThe constitutional vitality of these efforts was put to the test shortly thereafter when the United States attempted to surrender a resident alien to the International Tribunal for Rwanda. Initially, a federal magistrate judge for the Southern District of Texas ruled that constitutional separation of powers requirements precluded extradition in the absence of a treaty. The government subsequently filed another request for surrender with the district court, and the presiding judge certified the request, holding that an extradition could be effectuated pursuant to either a treaty or an authorizing statute. In a 2-1 panel decision, the Fifth Circuit Court of Appeals upheld this ruling, concluding that \"although some authorization by law is necessary for the Executive to extradite, neither the Constitution's text nor … [relevant jurisprudence] require that the authorization come in the form of a treaty.\" The Supreme Court subsequently declined a petition for writ of certiorari to review the appellate court's ruling.\nA question has occasionally arisen over whether an extradition treaty with a colonial power continues to apply to a former colony that has become independent, or whether an extradition treaty with a prior State remains in effect with its successor. Although the United States periodically renegotiates replacements or supplements for existing treaties to make contemporary adjustments, the United States has a number of treaties that pre-date the dissolution of a colonial bond or some other adjustment in governmental status. Fugitives in these situations have sometimes contested extradition on the grounds that the United States has no valid extradition treaty with the successor government that asks that they be handed over for prosecution. These efforts are generally unsuccessful since successor governments have ordinarily assumed the extradition treaty obligations negotiated by their predecessors.",
"Extradition is generally limited to crimes identified in the treaty. Early treaties often recite a list of the specific extraditable crimes. Jay's Treaty mentions only murder and forgery; the inventory in the 1852 treaty with Prussia included eight others; and the 1974 treaty between the United States and Denmark identified several dozen extradition offenses:\n1. Murder; voluntary manslaughter; assault with intent to commit murder. 2. Aggravated injury or assault; injuring with intent to cause grievous bodily harm. 3. Unlawful throwing or application of any corrosive or injurious substances upon the person of another. 4. Rape; indecent assault; sodomy accompanied by use of force or threat; sexual intercourse and other unlawful sexual relations with or upon children under the age specified by the laws of both the requesting and the requested States. 5. Unlawful abortion. 6. Procuration; inciting or assisting a person under 21 years of age or at the time ignorant of the purpose in order that such person shall carry on sexual immorality as a profession abroad or shall be used for such immoral purpose; promoting of sexual immorality by acting as an intermediary repeatedly or for the purpose of gain; profiting from the activities of any person carrying on sexual immorality as a profession. 7. Kidnapping; child stealing; abduction; false imprisonment. 8. Robbery; assault with intent to rob. 9. Burglary. 10. Larceny. 11. Embezzlement. 12. Obtaining property, money or valuable securities: by false pretenses or by threat or force, by defrauding any governmental body, the public or any person by deceit, falsehood, use of the mails or other means of communication in connection with schemes intended to deceive or defraud, or by any other fraudulent means. 13. Bribery, including soliciting, offering and accepting. 14. Extortion. 15. Receiving or transporting any money, valuable securities or other property knowing the same to have been unlawfully obtained. 16. Fraud by a bailee, banker, agent, factor, trustee, executor, administrator or by a director or officer of any company. 17. An offense against the laws relating to counterfeiting or forgery. 18. False statements made before a court or to a government agency or official, including under United States law perjury and subornation of perjury. 19. Arson. 20. An offense against any law relating to the protection of the life or health of persons from: a shortage of drinking water; poisoned, contaminated, unsafe or unwholesome drinking water, substance or products. 21. Any act done with intent to endanger the safety of any person traveling upon a railway, or in any aircraft or vessel or bus or other means of transportation, or any act which impairs the safe operation of such means of transportation. 22. Piracy; mutiny or revolt on board an aircraft against the authority of the commander of such aircraft; any seizure or exercise of control, by force or violence or threat of force or violence, of an aircraft. 23. An offense against the laws relating to damage to property. 24. a. Offenses against the laws relating to importation, exportation or transit of goods, articles, or merchandise. b. Offenses relating to willful evasion of taxes and duties. c. Offenses against the laws relating to international transfers of funds. 25. An offense relating to the: a. spreading of false intelligence likely to affect the price of commodities, valuable securities or any other similar interests; or b. making of incorrect or misleading statements concerning the economic conditions of such commercial undertakings as joint-stock companies, corporations, co-operative societies or similar undertakings through channels of public communications, in reports, in statements of accounts or in declarations to the general meeting or any proper official of a company, in notifications to, or registration with, any commission, agency or officer having supervisory or regulatory authority over corporations, joint-stock companies, other forms of commercial undertakings or in any invitation to the establishment of those commercial undertakings or to the subscription of shares. 28. Unlawful abuse of official authority which results in grievous bodily injury or deprivation of the life, liberty or property of any person, [or] attempts to commit, conspiracy to commit, or participation in, any of the offenses mentioned in this Article, Art. 3, 25 U.S.T. 1293 (1974).\nWhile many existing U.S. extradition treaties continue to list specific extraditable offenses, the more recent ones feature a dual criminality approach, and simply make all felonies extraditable (subject to other limitations found elsewhere in their various provisions).",
"In addition to an explicit list of crimes for which extradition may be granted, most modern extradition treaties also identify various classes of offenses for which extradition may or must be denied. Common among these are provisions excluding purely military and political offenses. The military crimes exception usually refers to those offenses like desertion which have no equivalents in civilian criminal law. The exception is of relatively recent vintage. In the case of treaties that list specific extraditable offenses, the exception is unnecessary since purely military offenses are not listed. The exception became advisable, however, with the advent of treaties that make extraditable any misconduct punishable under the laws of both treaty partners. With the possible exception of selective service cases arising during the Vietnam War period, recourse to the military offense exception appears to have been infrequent and untroubled.\nThe political offense exception, however, has proven more troublesome. The exception is and has been a common feature of extradition treaties for almost a century and a half. In its traditional form, the exception is expressed in deceptively simple terms. Yet it has been construed in a variety of ways, more easily described in hindsight than to predict beforehand. As a general rule, American courts require that a fugitive seeking to avoid extradition \"demonstrat[e] that the alleged crimes were committed in the course of and incidental to a violent political disturbance such as a war, revolution or rebellion.\"\nContemporary extradition treaties often seek to avoid misunderstandings over the political offense exception in a number of ways. Some expressly exclude terrorist offenses or other violent crimes from the definition of political crimes for purposes of the treaty; some explicitly extend the political exception to those whose prosecution is politically or discriminatorily motivated; and some limit the reach of their political exception clauses to conform to their obligations under multinational agreements. Separately, several multinational agreements contain provisions that effectively incorporate enumerated offenses into any preexisting extradition treaty between parties. A few of these multilateral agreements also specify that enumerated activities shall not be considered political offenses for purposes of extradition.",
"A number of nations have abolished or abandoned capital punishment as a sentencing alternative. Several of these have preserved the right to deny extradition in capital cases either absolutely or in absence of assurances that the fugitive will not be executed if surrendered. More than a few countries are reluctant to extradite in a capital case even though their extradition treaty with the United States has no such provision, based on opposition to capital punishment or to the methods and procedures associated with execution bolstered by sundry multinational agreements to which the United States is either not a signatory or has signed with pertinent reservations. Additionally, \"though almost all extradition treaties are silent on this ground, some states may demand assurances that the fugitive will not be sentenced to life in prison, or even that the sentence imposed will not exceed a specified term of years.\"",
"Dual criminality addresses the reluctance to extradite a fugitive for conduct that the host nation considers innocent. Dual criminality exists when the parties to an extradition treaty each recognize a particular form of misconduct as a punishable offense. Historically, extradition treaties have handled dual criminality in one of three ways: (1) they list extraditable offenses and do not otherwise speak to the issue; (2) they list extraditable offenses and contain a separate provision requiring dual criminality; or (3) they identify as extraditable offenses those offenses condemned by the laws of both nations. Today, \"[u]nder most international agreements ... [a] person sought for prosecution or for enforcement of a sentence will not be extradited ... (c) if the offense with which he is charged or of which he has been convicted is not punishable as a serious crime in both the requesting and requested state.... \"\nAlthough there is a split of authority over whether dual criminality resides in all extradition treaties that do not deny its application, the point is largely academic since it is a common feature of all American extradition treaties. Subject to varying interpretations, the United States favors the view that treaties should be construed to honor an extradition request if possible. Thus, dual criminality does not \"require that the name by which the crime is described in the two countries shall be same; nor that the scope of the liability shall be coextensive, or, in other respects, the same in the two countries. It is enough if the particular act charged is criminal in both jurisdictions.\" When a foreign country seeks to extradite a fugitive from the United States, dual criminality may be satisfied by reference to either federal or state law.\nU.S. treaty partners do not always construe dual criminality requirements as broadly. In the past, some have been unable to find equivalents for attempt, conspiracy, and crimes with prominent federal jurisdictional elements (e.g., offenses under the Racketeer Influenced and Corrupt Organizations [RICO] and Continuing Criminal Enterprise [CCE] statutes). Many modern extradition treaties contain provisions addressing the problem of jurisdictional elements and/or making extraditable an attempt or conspiracy to commit an extraditable offense. Some include special provisions for tax and customs offenses as well.",
"As a general rule, crimes are defined by the laws of the place where they are committed. There have always been exceptions to this general rule under which a nation was understood to have authority to outlaw and punish conduct occurring outside the confines of its own territory. In the past, U.S. extradition treaties applied to crimes \"committed within the [territorial] jurisdiction\" of the country seeking extradition. Largely as a consequence of terrorism and drug trafficking, however, the United States now claims more sweeping extraterritorial application for its criminal laws than recognized either in its more historic treaties or by many of today's governments. Success in eliminating extradition impediments by negotiating new treaty provisions has been mixed. More than a few call for extradition regardless of where the offense was committed. Yet perhaps an equal number of contemporary treaties permit or require denial of an extradition request that falls within an area where the countries hold conflicting views on extraterritorial jurisdiction.",
"The right of a country to refuse to extradite one's own nationals is probably the greatest single obstacle to extradition. The United States has long objected to the impediment, and recent treaties indicate that its hold may not be as formidable as was once the case. U.S. extradition agreements generally contain three types of nationality provisions:\nThe first does not refer to nationals specifically, but agrees to the extradition of all persons. Judicial construction, as well as executive interpretation, of such clauses have consistently held that the word \"persons\" includes nationals, and therefore refusal to surrender a fugitive because he is a national cannot be justified.... The second and most common type of treaty provision provides that \"neither of the contracting parties shall be bound to deliver up its own citizens or subjects.... \" [Congress has enacted legislation to overcome judicial construction that precluded the United States from surrendering an American under such provisions. ]…. The third type of treaty provision states that \"neither of the contracting parties shall be bound to deliver up its own citizens under the stipulations of this convention, but the executive authority of each shall have the power to deliver them up if, in its discretion, it be deemed proper do so.\"\nThese three types of treaty provisions have been joined by a number of variants. A growing number go so far as to declare that \"extradition shall not be refused based on the nationality of the person sought.\" Another form limits the nationality exemption to nonviolent crimes. A third bars nationality from serving as the basis to deny extradition when the fugitive is sought in connection with a listed offense. Another variant allows a conflicting obligation under a multinational agreement to wash away the exemption. Even where the exemption is preserved, contemporary treaties more regularly refer to the obligation to consider prosecution at home of those nationals whose extradition has been refused.",
"Depending on the treaty, extradition may also be denied on the basis of a number of procedural considerations. Although the U.S. Constitution's prohibition against successive prosecutions for the same offense does not extend to prosecutions by different sovereigns, it is common for extradition treaties to contain clauses proscribing extradition when the transferee would face double punishment and/or double jeopardy (also known as non bis in idem ). The more historic clauses are likely to bar extradition for a second prosecution of the \"same acts\" or the \"same event\" rather than the more narrowly drawn \"same offenses.\" The new model limits the exemption to fugitives who have been convicted or acquitted of the same offense and specifically denies the exemption where an initial prosecution has simply been abandoned.",
"Lapse of time or statute of limitation clauses are also prevalent in extradition treaties:\nMany [states] ... preclude extradition if prosecution for the offense charged, or enforcement of the penalty, has become barred by lapse of time under the applicable law. Under some treaties the applicable law is that of the requested state, in others that of the requesting state; under some treaties extradition is precluded if either state's statute of limitations has run. ... When a treaty provides for a time-bar only under the law of the requesting state, or only under the law of the requested state, United States courts have generally held that time-bar of the state not mentioned does not bar extradition. If the treaty contains no reference to the effect of a lapse of time neither state's statute of limitations will be applied.\nLeft unsaid is the fact that some treaties declare in no uncertain terms that the passage of time is no bar to extradition, and others rest the decision with the discretion of the requested state.\nIn cases governed by U.S. law and in instances of U.S. prosecution following extradition, applicable statutes of limitation and due process determine whether pre-indictment delays bar prosecution, and speedy trial provisions govern whether postindictment delays preclude prosecution.",
"U.S. extradition treaties commonly contain a number of other features, including provisions concerning the allocation of extradition-related expenses between the parties; the appointment of legal representation for the requesting country in extradition hearings; the transfer of evidence along with the extradited person; and the transit of a fugitive through the territory of either of the parties to a third country.",
"U.S. extradition treaties, particularly the more recent ones, often have other less obvious, infrequently mentioned features. Perhaps the most common of these deal with the expenses associated with the procedure and representation of the country requesting extradition before the courts of the country of refuge. The distribution of costs is ordinarily governed by a treaty stipulation, reflected in federal statutory provisions, under which the country seeking extradition accepts responsibility for any translation expenses and the costs of transportation after surrender, and the country of refuge assumes responsibility for all other costs. Although sometimes included in a separate article, contemporary treaties generally make the country of refuge responsible for legal representation of the country seeking extradition.",
"Contemporary treaties regularly permit a country to surrender documents and other evidence along with an extradited fugitive. An interesting attribute of these clauses is that they permit transfer of the evidence even if the fugitive becomes unavailable for extradition. This may make some sense in the case of disappearance or flight, but seems a bit curious in the case of death.",
"A somewhat less common clause permits transportation of a fugitive through the territory of either of the parties to a third country without the necessity of following the treaty's formal extradition procedure.",
"The Constitution provides that the judicial power of the United States extends to certain cases and controversies. Historically, this has led to discomfort whenever an effort is made to insert the federal courts in the midst of an executive or legislative process, such as the issuance of purely advisory opinions. The fact that extradition turns on the discretion of the Secretary of State following judicial certification has led to the suggestion that the procedure established by the extradition statute is constitutionally offensive to this separation of powers. First broached by a district court in the District of Columbia, subsequent courts have rejected the suggestion in large measure under the view that much like the issuance of a search or arrest warrant, the task is compatible with tasks constitutionally assigned to the judiciary.",
"A foreign country usually begins the extradition process with a request submitted to the State Department sometimes including the documentation required by the treaty. When a requesting nation is concerned that the fugitive will take flight before it has time to make a formal request, it may informally ask for extradition and provisional arrest with the assurance that the full complement of necessary documentation will follow. In either case, the Secretary of State, at his discretion, may forward the matter to the Department of Justice to begin the procedure for the arrest of the fugitive \"to the end that the evidence of criminality may be heard and considered.\"\nThe United States Attorneys' Manual encapsulates the Justice Department's participation thereafter in these words:\n1. OIA [Office of International Affairs] reviews ... requests for sufficiency and forwards appropriate ones to the district [where the fugitive is found].\n2. The Assistant United States Attorney assigned to the case obtains a warrant and the fugitive is arrested and brought before the magistrate judge or the district judge.\n3. The government opposes bond in extradition cases.\n4. A hearing under 18 U.S.C. §3184 is scheduled to determine whether the fugitive is extraditable. If the court finds the fugitive to be extraditable, it enters an order of extraditability and certifies the record to the Secretary of State, who decides whether to surrender the fugitive to the requesting government. In some cases a fugitive may waive the hearing process.\n5. OIA notifies the foreign government and arranges for the transfer of the fugitive to the agents appointed by the requesting country to receive him or her. Although the order following the extradition hearing is not appealable (by either the fugitive or the government), the fugitive may petition for a writ of habeas corpus as soon as the order is issued. The district court's decision on the writ is subject to appeal, and extradition may be stayed if the court so orders.",
"Although the United States takes the view that an explicit treaty provision is unnecessary, extradition treaties sometimes expressly authorize requests for provisional arrest of a fugitive prior to delivery of a formal request for extradition. Regardless of whether detention occurs pursuant to provisional arrest, as a consequence of the initiation of an extradition hearing or upon certification of extradition, the fugitive is not entitled to release on bail except under rare \"special circumstances.\" This limited opportunity for preextradition release may be further restricted under the applicable treaty.",
"The precise menu for an extradition hearing is dictated by the applicable extradition treaty, but a common checklist for a hearing conducted in this country would include determinations that\n1. there exists a valid extradition treaty between the United States and the requesting state; 2. the relator is the person sought; 3. the offense charged is extraditable; 4. the offense charged satisfies the requirement of double criminality; 5. there is \"probable cause\" to believe the relator committed the offense charged; 6. the documents required are presented in accordance with United States law, subject to any specific treaty requirements, translated and duly authenticated ...; and 7. other treaty requirements and statutory procedures are followed.\nAn extradition hearing is not, however,\nin the nature of a final trial by which the prisoner could be convicted or acquitted of the crime charged against him.... Instead, it is essentially a preliminary examination to determine whether a case is made out which will justify the holding of the accused and his surrender to the demanding nation.... The judicial officer who conducts an extradition hearing thus performs an assignment in line with his or her accustomed task of determining if there is probable cause to hold a defendant to answer for the commission of an offense.\nThe purpose of the hearing is in part to determine whether probable cause exists to believe that the individual committed an offense covered by the extradition treaty. The rules of criminal procedure and evidence that would apply at trial have no application at the hearing. Warrants, depositions, and other authenticated documents are admissible as evidence. The individual may offer evidence to contradict or undermine the existence of probable cause, but affirmative defenses that might be available at trial are irrelevant. Hearsay is not only admissible but may be relied upon exclusively; the Miranda rule has no application; initiation of extradition may be delayed without regard for the Sixth Amendment right to a speedy trial or the Fifth Amendment right of due process; nor do the Sixth Amendment rights to the assistance of counsel or cross examine witnesses apply. Due process, however, will bar extradition of informants whom the government promised confidentiality and then provided the evidence necessary to establish probable cause for extradition.\nMoreover, extradition will ordinarily be certified without \"examining the requesting country's criminal justice system or taking into account the possibility that the extraditee will be mistreated if returned.\" This \"noninquiry rule\" is a judicially created rule premised on the view that \"[w]hen an American citizen commits a crime in a foreign country, he cannot complain if required to submit to such modes of trial and to such punishment as the laws of that country may prescribe for its own people, unless a different mode be provided for by treaty stipulations between that country and the United States.\"",
"If at the conclusion of the extradition hearing, the court concludes there is some obstacle to extradition and refuses to certify the case, \"[t]he requesting government's recourse to an unfavorable disposition is to bring a new complaint before a different judge or magistrate, a process it may reiterate apparently endlessly.\"\nIf the court concludes there is no such obstacle to extradition and certifies to the Secretary of State that the case satisfies the legal requirements for extradition, the fugitive has no right of appeal, but may be entitled to limited review under habeas corpus. \"[H]abeas corpus is available only to inquire whether the magistrate had jurisdiction, whether the offense charged is within the treaty and, by a somewhat liberal extension, whether there was any evidence warranting the finding that there was reasonable ground to believe the accused guilty.\" In this last assessment, appellate courts will only \"examine the magistrate judge's determination of probable cause to see if there is 'any evidence' to support it.\"\nLimitations on review or application of the rule of noninquiry may be modified by treaty or statute. Whether a particular treaty or statute precludes review or application of the rule, however, can be a complicated issue. For example, the U.N. Convention Against Torture (CAT) provides that no State Party \"shall expel, return ... or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture.\" Following U.S. ratification of CAT, Congress enacted Section 2242 of the Foreign Affairs Reform and Restructuring Act of 1998 (FARRA), which requires all relevant federal agencies to adopt appropriate regulations to implement this policy. Some fugitives have argued that CAT or FARRA operate as exceptions to the noninquiry rule. The argument has produced hollow victories at the appellate court level. The Fourth Circuit concluded that the rule of noninquiry posed no obstacle, but went on to hold that FARRA itself barred habeas review of a fugitive's torture claim. The Ninth Circuit, on the other hand, concluded that FARRA required the Secretary of State to pass upon on a fugitive's torture claim, but that \"[t]he doctrine of separation of powers and the rule on non-inquiry block[ed] any [judicial] inquiry into the substance of the Secretary's declaration.\"",
"If the judge or magistrate certifies the fugitive for extradition, the matter then falls to the discretion of the Secretary of State to determine whether as a matter of policy the fugitive should be released or surrendered to the agents of the country that has requested his or her extradition. The procedure for surrender, described in treaty and statute, calls for the release of the prisoner if he or she is not claimed within a specified period of time, often indicates how extradition requests from more than one country for the same fugitive are to be handled, and frequently allows the fugitive to be held for completion of a trial or the service of a criminal sentence before being surrendered. Extradition treaties may also provide that, in cases where a fugitive faces charges or is serving a criminal sentence in a country of refuge, he may be temporarily surrendered to a requesting State for purposes of prosecution, under the promise that the State seeking extradition will return the fugitive upon the conclusion of criminal proceedings.",
"The laws of the country of refuge and the applicable extradition treaty govern extradition back to the United States of a fugitive located overseas. The request for extradition comes from the Department of State whether extradition is sought for trial in federal or state court or for execution of a criminal sentence under federal or state law.\nThe Justice Department's Office of International Affairs must approve requests for extradition of fugitives from federal charges or convictions and may be asked to review requests from state prosecutors before they are considered by the State Department. Provisions in the United States Attorneys' Manual and the corresponding Justice Department's Criminal Resource Manual sections supplement treaty instructions on the procedures to be followed in order to forward a request to the State Department and thereafter.\nThe first step is to determine whether the fugitive is extraditable. The Justice Department's checklist for determining extraditability begins with an identification of the country in which the fugitive has taken refuge. If the United States has no extradition treaty with the country of refuge, extradition is not a likely option. When there is a treaty, extradition is an option only if the treaty permits extradition. Common impediments include citizenship, dual criminality, statutes of limitation, and capital punishment issues.\nMany treaties permit a country to refuse to extradite its citizens even in the case of dual citizenship. As for dual criminality, whether the crime of conviction or the crime charged is an extraditable offense will depend upon the nature of the crime and where it was committed. If the applicable treaty lists extraditable offenses, the crime must be on the list. If the applicable treaty insists only upon dual criminality, the underlying misconduct must be a crime under the laws of both the United States and the country of refuge.\nWhere the crime was committed matters; some treaties will permit extradition only if the offense was committed within the geographical confines of the United States. Timing also matters. The speedy trial features of U.S. law require a good faith effort to bring to trial a fugitive who is within the government's reach. Furthermore, the lapse of time or speedy trial component of the applicable extradition treaty may preclude extradition if prosecution would be barred by a statute of limitations in the country of refuge. Some treaties prohibit extradition for capital offenses; more often they permit it but only with the assurance that a sentence of death will not be executed.\nProsecutors may request provisional arrest of a fugitive without waiting for the final preparation of the documentation required for a formal extradition request, if there is a risk of flight and if the treaty permits it. The Justice Department encourages judicious use of provisional arrest because of the pressures that may attend it. The Criminal Resource Manual contains the form for collection of the information that must accompany either a federal or state prosecutor's application for a Justice Department request for provisional arrest.\nAlthough treaty requirements vary, the Justice Department suggests that prosecutors supply formal documentation in the form of an original and four copies of\na prosecutor's affidavit describing the facts of the case, including dates, names, docket numbers and citations, and preferably executed before a judge or magistrate (particularly if extradition is sought from a civil law country) copies of the statutes the fugitive is said to have violated, the statutes governing the penalties that may be imposed upon conviction, and the applicable statute of limitations if the fugitive has been convicted and sentenced: identification evidence; certified documentation of conviction, sentence, and the amount of time served and remaining to be served; copies of the statutes of conviction; and a statement that the service of the remaining sentence is not barred by a statute of limitations if the fugitive is being sought for prosecution or sentencing: certified copies of the arrest warrant (preferably signed by the court or a magistrate) and of the indictment or complaint if the fugitive is being sought for prosecution or sentencing: evidence of the identity of the individual sought (fingerprints/photographs) and of the evidence upon which the charges are based and of the fugitive's guilt in the form of witness affidavits (preferably avoiding the use grand jury transcripts and, particularly in the case of extradition from a common law country, the use of hearsay).\nIf the Justice Department approves the application for extradition, the request and documentation are forwarded to the State Department, translated if necessary, and with State Department approval forwarded through diplomatic channels to the country from which extradition is being sought.\nThe treaty issue most likely to arise after extradition and the fugitive's return to this country is whether the fugitive was surrendered subject to any limitations such as those posed by the doctrine of specialty.",
"Under the doctrine of specialty, sometimes called speciality,\na person who has been brought within the jurisdiction of the court by virtue of proceedings under an extradition treaty, can only be tried for one of the offences described in that treaty, and for the offence with which he is charged in the proceedings for his extradition, until a reasonable time and opportunity have been given him after his release or trial upon such charge, to return to the country from whose asylum he had been forcibly taken under those proceedings.\nThe limitation, expressly included in many treaties, is designed to preclude prosecution for different substantive offenses but does not bar prosecution for different or additional counts of the same offense. And some courts have held that an offense whose prosecution would be barred by the doctrine may nevertheless be considered for purposes of the federal sentencing guidelines, or for purposes of criminal forfeiture. At least where an applicable treaty addresses the question, the rule is no bar to prosecution for crimes committed after the individual is extradited.\nThe doctrine may be of limited advantage to a given defendant because the circuits are divided over whether a defendant has standing to claim its benefits. Additionally, one circuit has held that a fugitive lacks standing to allege a rule of specialty violation when extradited pursuant to an agreement other than treaty. Regardless of their view of fugitive standing, reviewing courts have agreed that the surrendering State may subsequently consent to trial for crimes other than those for which extradition was had.",
"The existence of an extradition treaty does not preclude the United States acquiring personal jurisdiction over a fugitive by other means, unless the treaty expressly provides otherwise.",
"Waiver or \"simplified\" treaty provisions allow a fugitive to consent to extradition without the benefit of an extradition hearing. Although not universal, the provisions constitute the least controversial of the alternatives to extradition.",
"The removal of aliens under immigration law has traditionally been considered a practice distinct from extradition. Unlike extradition, the legal justification for removing an alien via deportation or denial of entry is not so he can answer charges against him in the receiving State; rather, it is because the removing country has sovereign authority to determine which nonnationals may enter or remain within its borders, and the alien has failed to fulfill the legal criteria allowing noncitizens to enter, remain in, or pass in transit through the sovereign's territory.\nWhether by a process similar to deportation or by simple expulsion, the United States has had some success encouraging other countries to surrender fugitives other than their own nationals without requiring recourse to extradition. Ordinarily, U.S. immigration procedures, on the other hand, have been less accommodating and have been called into play only when extradition has been found wanting. They tend to be time consuming and usually can be used only in lieu of extradition when the fugitive is an alien. Moreover, they frequently require the United States to deposit the alien in a country other than one that seeks his or her extradition. Yet in a few instances where an alien has been naturalized by deception or where the procedures available against alien terrorists come into play, denaturalization or deportation may be considered an attractive alternative or supplement to extradition proceedings.",
"Although less frequently employed by the United States, \"irregular rendition\" is a familiar alternative to extradition. An alternative of last resort, it involves kidnaping or deceit and generally has been reserved for terrorists, drug traffickers, and the like. Kidnaping a defendant overseas and returning him to the United States for trial does not deprive American courts of jurisdiction unless an applicable extradition treaty explicitly calls for that result. Nor does it ordinarily expose the United States to liability under the Federal Tort Claims Act or individuals involved in the abduction to liability under the Alien Tort Statute. The individuals involved in the abduction, however, may face foreign prosecution, or at least be the subject of a foreign extradition request. Moreover, the effort may strain diplomatic relations with the country from which the fugitive is lured or abducted.\nBesides receiving persons through irregular rendition, the United States has also rendered persons to other countries over the years, via the Central Intelligence Agency and various law enforcement agencies. During the George W. Bush Administration, there was controversy over the use of renditions by the United States, particularly with regard to the alleged transfer of suspected terrorists to countries known to employ harsh interrogation techniques that may rise to the level of torture. Little publicly available information from government sources exists regarding the nature and frequency of U.S. renditions to countries believed to practice torture, or the nature of any assurances obtained from them before rendering persons to their custody. It appears that most, if not all, cases in which the United States has irregularly rendered persons have involved the transfer of noncitizens seized outside the United States, perhaps because persons within the United States (and U.S. citizens outside the country ) are provided procedural protections against being summarily transferred to another country under federal statute and the Constitution. The legal limitations against the rendition of noncitizens seized outside the United States are much more limited, though it would be a violation of both CAT and U.S. criminal law for a U.S. official to conspire to commit torture via rendition.",
"A final alternative when extradition for trial in the United States is not available, is trial within the country of refuge. The alternative exists primarily when a U.S. request for extradition has been refused because of the fugitive's nationality and/or when the crime occurred under circumstances that permit prosecution by either country for the same misconduct. The alternative can be cumbersome and expensive and may be contrary to U.S. policy objectives.\nAppendix A. Countries with Which the United States Has a Bilateral Extradition Treaty\nAppendix B. Countries with Which the United States Has No Bilateral Extradition Treaty"
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"question": [
"What is extradition?",
"What extradition treaties is the United States involved in?",
"Why are extradition treaties important?",
"What does this report examine?",
"What controversy do extradition treaties generate?",
"What cases of non-extradition are covered by extradition treaties?",
"What are examples of these excluded provisions?",
"How is extradition triggered?",
"How is extradition processed in the United States?",
"What action is taken following the hearing?",
"To what extent does the magistrate inquire into the nature of foreign proceedings?",
"What factors govern extradition?",
"How are requests processed?",
"How does the forcible return of a fugitive affect the trial and/or punishment?",
"What alternatives exist to extradition/"
],
"summary": [
"\"Extradition\" is the formal surrender of a person by a State to another State for prosecution or punishment.",
"The United States has extradition treaties with over a hundred nations, although there are many countries with which it has no extradition treaty.",
"International terrorism and drug trafficking have made extradition an increasingly important law enforcement tool.",
"This is a brief overview of the adjustments made in recent treaties to accommodate American law enforcement interests, and then a nutshell overview of the federal law governing foreign requests to extradite a fugitive found in this country and a United States request for extradition of a fugitive found in a foreign country.",
"Extradition treaties are in the nature of a contract and generate the most controversy with respect to those matters for which extradition may not be had.",
"In addition to an explicit list of crimes for which extradition may be granted, most modern extradition treaties also identify various classes of offenses for which extradition may or must be denied.",
"Common among these are provisions excluding purely military and political offenses; capital offenses; crimes that are punishable under only the laws of one of the parties to the treaty; crimes committed outside the country seeking extradition; crimes where the fugitive is a national of the country of refuge; and crimes barred by double jeopardy or a statute of limitations.",
"Extradition is triggered by a request submitted through diplomatic channels.",
"In this country, it proceeds through the Departments of Justice and State and may be presented to a federal magistrate to order a hearing to determine whether the request is in compliance with an applicable treaty, whether it provides sufficient evidence to satisfy probable cause to believe that the fugitive committed the identified treaty offense(s), and whether other treaty requirements have been met.",
"If so, the magistrate certifies the case for extradition at the discretion of the Secretary of State.",
"Except as provided by treaty, the magistrate does not inquire into the nature of foreign proceedings likely to follow extradition.",
"The laws of the country of refuge and the applicable extradition treaty govern extradition back to the United States of a fugitive located overseas.",
"Requests travel through diplomatic channels, and the treaty issue most likely to arise after extradition to this country is whether the extraditee has been tried for crimes other than those for which he or she was extradited.",
"The fact that extradition was ignored and a fugitive forcibly returned to the United States for trial constitutes no jurisdictional impediment to trial or punishment.",
"Federal and foreign immigration laws sometimes serve as an alternative to extradition to and from the United States."
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GAO_GAO-18-427
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{
"title": [
"Background",
"Key Questions to Assess Agency Reforms",
"Goals and Outcomes of Reforms",
"Determining the Appropriate Role of the Federal Government",
"Establishing Goals and Outcomes",
"Process for Developing Reforms",
"Involving Employees and Key Stakeholders",
"Using Data and Evidence",
"Addressing Fragmentation, Overlap, and Duplication",
"Addressing High Risk Areas and Longstanding Management Challenges",
"Implementing the Reforms",
"Leadership Focus and Attention",
"Managing and Monitoring",
"Strategically Managing the Federal Workforce",
"Employee Engagement",
"Strategic Workforce Planning",
"Workforce Reduction Strategies",
"Employee Performance Management",
"Agency Comments and Our Evaluation",
"Appendix 1: Related GAO Products",
"Appendix II: Subject Matter Specialists",
"Appendix III: GAO Contacts and Staff Acknowledgments",
"GAO Contacts",
"Staff Acknowledgments"
],
"paragraphs": [
"Prior to the President’s March 2017 executive order for comprehensive government reorganization, in January 2017, the President ordered a federal hiring freeze—providing exemptions for federal employees with national security or public safety responsibilities. The January 2017 presidential memo also directed OMB, in consultation with the Office of Personnel Management (OPM), to recommend a long-term plan to reduce the size of the federal workforce through attrition. OMB’s April 2017 guidance to agencies on their reform plans lifted the federal hiring freeze. Below is a timeline for proposed reform development and implementation as shown in figure 1.\nAccording to OMB’s April 2017 guidance, the agency reform plans were intended to accomplish several objectives, including creating a lean, accountable, more efficient government, focusing on efficiency and effectiveness and delivering programs of highest needs to citizens, and aligning the federal workforce to meet the needs of today and the future, among other things.\nEach agency’s proposed reform plan was to include proposals to improve efficiency, effectiveness, and accountability in four categories: (1) eliminate activities; (2) restructure and merge activities; (3) improve organizational efficiency and effectiveness; and (4) workforce management. To support these proposed reforms, OMB asked agencies to conduct an analysis, among other things, to consider if there was a unique federal role or whether some or all services, activities, or functions could be better performed by another entity, such as a state, local or tribal government or the private sector. Additionally, according to OMB’s April 2017 guidance, the draft agency proposed reform plan should be aligned with the agency strategic plan. Agency strategic plans were to be released with the President’s fiscal year 2019 budget.\nThe final reforms included in the fiscal year 2019 budget also were to be reflected in the agencies’ human capital operating plans and information technology strategic plans, based on OMB guidance we reviewed. In March 2018, OMB released the President’s Management Agenda (PMA), which provided updated information on the status of government reorganization efforts and is connected with these reform efforts. The PMA also identified a set of cross-agency priority (CAP) goals, required under the GPRA Modernization Act of 2010 (GPRAMA), to target those areas where multiple agencies must collaborate to effect change and report progress in a manner the public can easily track.\nIn addition to the agency reform proposals, OMB was also required by the March 2017 executive order to develop a comprehensive government- wide reform plan, including both legislative proposals and administrative actions based on agency reform plans, OMB-coordinated crosscutting proposals, and public input. According to a document provided by OMB staff, OMB solicited public comments beginning in April 2017 through June 2017 to inform the development of the government-wide reform plan. OMB staff told us they provided these comments to the appropriate agencies.\nThe March 2018 PMA stated that, in the months ahead, the administration plans to share additional reorganization proposals designed to refocus programs around current and future needs. According to OMB guidance, once the government-wide reform proposals are finalized, it will, in coordination with the President’s Management Council, establish a way to track the progress of the reforms. To track progress of the reforms, OMB’s guidance stated that it will leverage the federal performance planning and reporting framework originally put into place by the Government Performance Results Act of 1993 (GPRA) and significantly enhanced by GPRAMA, through the use of CAP goals, agency priority goals, and Performance.gov.",
"Given the potential benefits and challenges developing and implementing agency reform efforts, Congress and the executive branch need the tools and information to help evaluate agencies’ reform proposals and ensure they are effectively implemented. Congress’s role in reviewing agency proposed reforms will be critical to the success of making significant changes in how the government operates.\nTo assist Congress in its oversight role, we organized our prior work and leading practices into the following four broad categories that can help the Congress assess proposed reforms. Figure 2 describes the four broad categories, relevant sub-categories of questions, and selected key questions in more detail below.",
"Lessons learned from prior federal reform and reorganization efforts suggest that reforming government is an immensely complex activity that requires agreement on both the goals to be achieved and the means for achieving them. Because many current federal programs and policies were designed decades ago to respond to trends and challenges that existed at the time of their creation, it makes sense to periodically conduct fundamental reviews of major programs and policy areas to ensure they continue to meet current goals and emerging trends. It is also important to determine the appropriate level of government, or the roles of the non- profit or private sectors, in achieving these goals. Our prior work shows that establishing a mission-driven strategy and identifying specific desired outcomes to guide that strategy are critical to achieving intended results. In other words, what is the agency trying to achieve with its reforms?",
"It is important for agencies to reexamine the role of the federal government in carrying out specific missions and programs, policies, and activities by reviewing their continued relevance and determining whether the federal government is best suited to provide that service or if it can be provided by some other level of government or sector more efficiently or effectively. Another key aspect of shifting federal activities to other levels of government is how well the federal government fully considered the potential effects reforms might have on state and local governments, especially from a budgetary and fiscal standpoint. For example, how should the federal government act directly, or in partnership with another level of government or a non-profit organization, to achieve the identified outcomes? Defining the appropriate federal role also involves examining the federal government’s relationships with key state, local, non-profit, and private sector partners. For example, agencies should assess whether there are alternatives for managing their programs effectively across intergovernmental and organizational boundaries, as well as which level of government has the capacity to deliver on the nation’s needs and priorities today and in the future.\nHow well have the proposed reforms indicated the likely result of the elimination, merging, or restructuring of activities with other levels of government or sectors?\nTo what extent have the proposed reforms included consideration for other levels’ of government or sectors’ ability or likelihood to invest their own resources to address the underlying challenges?\nTo what extent have the proposed reforms included goals to transfer a particular responsibility to another level of government—such as state or local government—or sector, and has the agency made the case that such a transfer could improve the overall accomplishment of public purpose?\nTo what extent have the proposed reforms considered if a new mechanism is needed to integrate and coordinate programs between levels of government? If so, what statutory or regulatory changes would be needed to support such a transfer in responsibilities and to address concerns such as cost-sharing or funding?\nTo what extent has the agency identified any risks of using contractors to perform agency activities, and if so, has it developed appropriate risk mitigating strategies?",
"When considering government reforms, our prior work has identified useful principles, such as designing proposed reforms to achieve specific, identifiable goals that encourage decision makers to reach a shared understanding of the purpose of the reforms. Agreement on specific goals can help decision makers determine what problems genuinely need to be fixed, how to balance differing objectives, and what steps need to be taken to create, not just short-term advantages but long-term gains. Part of determining if agencies have successfully identified the goals of their proposed reforms is to determine whether the agency has built a business case analysis that presents facts and supporting details among competing alternatives.\nTo what extent has the agency established clear outcome-oriented goals and performance measures for the proposed reforms?\nTo what extent has the agency shown that the proposed reforms align with the agency’s mission and strategic plan?\nTo what extent has the agency considered and resolved any agency crosscutting or government-wide issues in developing their proposed reforms? For example, what are the implications of proposed reforms on other agencies?\nTo what extent has the agency considered the likely costs and benefits of the proposed reforms? If so, what are they?\nTo what extent has the agency considered how the upfront costs of the proposed reforms would be funded?\nTo what extent has the agency included both short-term and long- term efficiency initiatives in the proposed reforms?",
"Successful reforms require an integrated approach that involves employees and key stakeholders and is built on the use of data and evidence. Reforms should also address agency management challenges, such as those we have identified as fragmented, duplicative, or overlapping, or in our high-risk program, or by agency Inspectors General.",
"Our prior work has shown that it is important for agencies to directly and continuously involve their employees, the Congress, other key stakeholders—such as other federal partners, state and local governments, and members of the public—in the development of any major reforms. Involving employees, customers, and other stakeholders helps facilitate the development of reform goals and objectives, as well as incorporating insights from a frontline perspective and increases customer acceptance of any changes. We have also identified leading practices for open innovation strategies, defined as the use of activities and technologies to harness ideas, expertise, and resources of those outside an organization to address an issue or achieve specific goals.\nHow and to what extent has the agency consulted with the Congress, and other key stakeholders, to develop its proposed reforms?\nHow and to what extent has the agency engaged employees and employee unions in developing the reforms (e.g., through surveys, focus groups) to gain their ownership for the proposed changes?\nHow and to what extent has the agency involved other stakeholders, as well as its customers and other agencies serving similar customers or supporting similar goals, in the development of the proposed reforms to ensure the reflection of their views?\nHow and to what extent has the agency considered the views of state and local governments that would be affected by the proposed reforms?\nHow and to what extent have agencies gathered the views of the public and incorporate these views in the proposed reforms?\nIs there a two-way continuing communications strategy that listens and responds to concerns of employees regarding the effects of potential reforms?\nHow will the agency publicize its reform goals and timeline, and report on its related progress?",
"We have reported that agencies are better equipped to address management and performance challenges when managers effectively use data and evidence, such as from program evaluations and performance data that provide information on how well a program or agency is achieving its goals. When reforming a given program, the use of data and evidence is critical from setting program priorities and allocating resources to taking corrective action to solve performance problems and ultimately improve results. We have also stated that full and effective implementation of GPRAMA could facilitate efforts to reform the federal government and make it more efficient, effective, and accountable. GPRAMA also provides important tools that can help decision makers address challenges facing the federal government.\nWhat data and evidence has the agency used to develop and justify its proposed reforms?\nHow has the agency determined that the evidence contained sufficiently reliable data to support a business case or cost-benefit analysis of the reforms?\nHow, if at all, were the results of the agency’s strategic review process used to help guide the proposed reforms?\nHow, if at all, were the results of the agency’s enterprise risk management process used to help guide the proposed reforms?",
"In our prior work, we have identified areas where agencies may be able to achieve greater efficiency or effectiveness by reducing or better managing programmatic fragmentation, overlap, and duplication. For additional details on assessing areas of fragmentation, overlap, and duplication, see our evaluation and management guide.\nTo what extent has the agency addressed areas of fragmentation, overlap, and duplication—including the ones we identified—in developing its reform proposals?\nTo what extent have the agency reform proposals helped to reduce or better manage the identified areas of fragmentation, overlap, or duplication?\nTo what extent has the agency identified cost savings or efficiencies that could result from reducing or better managing areas of fragmentation, overlap, and duplication?",
"Reforms improving the effectiveness and responsiveness of the federal government often require addressing longstanding weaknesses in how some federal programs and agencies operate. For example, agency reforms provide an opportunity to address the high-risk areas and government-wide challenges we have called attention to that are vulnerable to fraud, waste, abuse, and mismanagement, or are in need of transformation.\nWhat management challenges and weaknesses are the reform efforts designed to address?\nHow specifically has the agency considered high-risk issues, agency Inspector General’s major management challenges, and other external and internal reviews in developing its reform efforts?\nHave the agency’s efforts to address those challenges been consistent with the proven approach GAO has found to resolve high risk issues? Agencies can show progress by addressing GAO’s five criteria for removal from the High-Risk List: leadership commitment, capacity, action plan, monitoring, and demonstrated progress. The five criteria form a road map for efforts to improve and ultimately address high-risk issues.\nHow has the agency identified and addressed critical management challenges in areas such as information technology, cybersecurity, acquisition management, and financial management that can assist in the reform process?\nHow does the agency plan to monitor the effects proposed reforms will have on high risk areas?\nHas the agency addressed ways to decrease the risk of fraud, waste, and abuse of programs as part of its proposed reforms?\nIn addition, agencies should also draw upon our past recommendations, including GAO priority open recommendations and those from their own Inspectors General, to address management challenges.\nHow have findings and open recommendations from GAO and the agency Inspectors General been addressed in the proposed reforms?\nHow has the agency addressed GAO’s priority open recommendations, which are those that warrant priority attention from heads of key departments and agencies?",
"Our prior work on organizational transformations show that incorporating change management practices improves the likelihood of successful reforms. Moreover, it is also important to recognize agency cultural factors that can either help or inhibit reform efforts and how change management strategies may address these potential issues. We have also reported that organizational transformations, such as reforms, should be led by a dedicated team of high-performing leaders within the agency. Finally, our prior work also shows that fully implementing major transformations can span several years and must be carefully and closely managed.",
"Has the agency designated a leader or leaders to be responsible for the implementation of the proposed reforms?\nHas agency leadership defined and articulated a succinct and compelling reason for the reforms (i.e., a case for change)?\nHow will the agency hold the leader or leaders accountable for successful implementation of the reforms?\nHas the agency established a dedicated implementation team that has the capacity, including staffing, resources, and change management, to manage the reform process?",
"How has the agency ensured their continued delivery of services during reform implementation?\nWhat implementation goals and a timeline have been set to build momentum and show progress for the reforms? In other words, has the agency developed an implementation plan with key milestones and deliverables to track implementation progress?\nHas the agency ensured transparency over the progress of its reform efforts through web-based reporting on key milestones?\nHas the agency put processes in place to collect the needed data and evidence that will effectively measure the reforms’ outcome-oriented goals?\nHow is the agency planning to measure customer satisfaction with the changes resulting from its reforms?",
"As part of its reform effort, OMB also required agencies to develop a long- term workforce reduction plan and a plan to maximize employee performance as part of the April 2017 reform guidance. Specifically, OMB required agencies to develop proposals intended to improve performance, increase accountability, and reduce the size and costs of the federal workforce. Our prior work has found that at the heart of any serious change management initiative are the people—because people define the organization’s culture, drive its performance, and embody its knowledge base. Experience shows that failure to adequately address—or often even consider—a wide variety of people and cultural issues can lead to unsuccessful change.",
"Research on both private- and public-sector organizations has found that increased levels of engagement—generally defined as the sense of purpose and commitment employees feel toward their employer and its mission—can lead to better organizational performance. Additionally, we found that agencies can sustain or increase their levels of employee engagement and morale, even as employees weather difficult external circumstances. In a previous review of trends in federal employee engagement, as seen in figure 2 below, we identified six key drivers of engagement based on our analysis of selected questions in the Federal Employee Viewpoint Survey (FEVS).\nWhat do FEVS results show for the agency’s current employee engagement status both overall and disaggregated to lower organizational levels?\nHow does the agency plan to sustain and strengthen employee engagement during and after the reforms?\nHow specifically is the agency planning to manage diversity and ensure an inclusive work environment in its reforms, or as it considers workforce reductions?",
"Strategic workforce planning should precede any staff realignments or downsizing, so that changed staff levels do not inadvertently produce skills gaps or other adverse effects that could result in increased use of overtime and contracting.\nTo what extent has the agency conducted strategic workforce planning to determine whether it will have the needed resources and capacity, including the skills and competencies, in place for the proposed reforms or reorganization?\nHow has the agency assessed the effects of the proposed agency reforms on the current and future workforce and what does that assessment show?\nTo what extent does the agency track the number and cost of contractors supporting its agency mission and the functions those contractors are performing?\nHow has the agency ensured that actions planned to maintain productivity and service levels do not cost more than the savings generated by reducing the workforce?\nWhat succession planning has the agency developed and implemented for leadership and other key positions in areas critical to reforms and mission accomplishment?\nTo what extent have the reforms included important practices for effective recruitment and hiring such as customized strategies to recruit highly specialized and hard-to-fill positions?\nWhat employment- and mission-related data has the agency identified to monitor progress of reform efforts and to ensure no adverse impact on agency mission, and how is it using that data?",
"Before implementing workforce reduction strategies, it is critical that agencies carefully consider how to strategically downsize the workforce and maintain the staff resources to carry out its mission. Agencies should consider long-term staffing plans and associated personnel costs, organizational design and position structures and the appropriateness of backfilling positions as they become vacant.\nTo what extent has the agency considered skills gaps, mission shortfalls, increased contracting and spending, and challenges in aligning workforce with agency needs prior to implementing workforce reduction strategies?\nIn situations when “early outs” and “buyouts” are proposed, to what extent has the agency linked proposed early outs and buyouts to specific organizational objectives, including the agency’s future operational, restructuring, downsizing, or other reform goals?",
"Performance management systems are used to plan work and set individual employee performance expectations, monitor performance, develop capacities to perform, and rate and incentivize individual performance. In addition, performance management systems can help the organization manage employees on a daily basis and help to ensure that individual employees understand the “line of sight” between their performance and organizational results. Effective performance management systems provide supervisors and employees with the tools they need to improve performance.\nTo what extent has the agency aligned its employee performance management system with its planned reform goals?\nHow has the agency included accountability for proposed change implementation in the performance expectations and assessments of leadership and staff at all levels?\nAs part of the proposed reform development process, to what extent has the agency assessed its performance management to ensure it creates incentives for and rewards top performers, while ensuring it deals with poor performers?\nTo what extent has the agency taken action to address employees with unacceptable performance and increase the use of alternative dispute resolution to address workplace disputes that involve disciplinary or adverse actions?",
"We provided a draft of this report to the Director of the Office of Management and Budget for review and comment. OMB staff provided technical comments, which we incorporated as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees, the Director of the Office of Management and Budget, and other interested parties. This report will also be available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact J. Christopher Mihm at (202) 512-6806 or [email protected] or Robert Goldenkoff at (202) 512-2757 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of our report. Key contributors to this report are listed in appendix III.",
"Organizational Transformation and Streamlining Government GAO, Managing for Results: Key Considerations for Implementing Interagency Collaborative Mechanisms, GAO-12-1022 (Washington, D.C.: Sep. 27, 2012).\nGAO, Streamlining Government: Questions to Consider When Evaluating Proposals to Consolidate Physical Infrastructure and Management Functions, GAO-12-542 (Washington, D.C.: May 23, 2012).\nGAO, Government Efficiency and Effectiveness: Opportunities for Improvement and Considerations for Restructuring, GAO-12-454T (Washington, D.C.: Mar. 21, 2012).\nGAO, Streamlining Government: Key Practices from Select Efficiency Initiatives Should Be Shared Governmentwide, GAO-11-908 (Washington, D.C.: Sep 30, 2011).\nGAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and Organizational Transformations, GAO-03-669 (Washington, D.C.: Jul. 2, 2003).\nGAO, A Call For Stewardship: Enhancing the Federal Government's Ability to Address Key Fiscal and Other 21st Century Challenges, GAO-08-93SP (Washington, D.C.: Dec. 17, 2007).\nGAO, 21st Century Challenges: Reexamining the Base of the Federal Government, GAO-05-325SP (Washington, D.C.: Feb. 1, 2005).\nGAO, Regulatory Programs: Balancing Federal and State Responsibilities for Standard Setting and Implementation, GAO-02-495 (Washington, D.C.: Mar. 20, 2002).\nFragmentation, Duplication, and Overlap GAO, 2018 Annual Report: Additional Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits, GAO-18-371SP (Washington, D.C.: Apr. 26, 2018).\nGAO, Fragmentation, Overlap, and Duplication: An Evaluation and Management Guide, GAO-15-49SP (Washington, D.C.: Apr. 14, 2015).\nHigh-Risk and Major Management Challenges GAO, High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others, GAO-17-317 (Washington, D.C.: Feb. 15, 2017).\nGAO, Managing for Results: Selected Agencies’ Experiences in Implementing Strategic Reviews, GAO-17-740R (Washington, D.C.: Sep. 7, 2017).\nGAO, Enterprise Risk Management: Selected Agencies' Experiences Illustrate Good Practices in Managing Risk, GAO-17-63 (Washington, D.C.: Dec. 1, 2016).\nGAO, Managing for Results: Practices for Effective Agency Strategic Reviews, GAO-15-602 (Washington, D.C.: Jul. 29, 2015).\nContracting and National Security Acquisitions GAO, Federal Procurement: Smarter Buying Initiatives Can Achieve Additional Savings, but Improved Oversight and Accountability Needed, GAO-17-164 (Washington, D.C.: Oct. 26, 2016).\nGAO, Framework for Assessing the Acquisition Function At Federal Agencies, GAO-05-218 (Washington, D.C.: Sep. 1, 2005).\nGAO, Improper Payments: Strategy and Additional Actions Needed to Help Ensure Agencies Use the Do Not Pay Working System as Intended, GAO-17-15 (Washington, D.C.: Oct. 14, 2016).\nGAO, Financial Management Systems: Experience with Prior Migration and Modernization Efforts Provides Lessons Learned for New Approach, GAO-10-808 (Washington, D.C.: Sep. 8, 2010)\nGAO, Financial Management Systems: Additional Efforts Needed to Address Key Causes of Modernization Failures, GAO-06-184 (Washington, D.C.: Mar.15, 2006).\nGAO, Executive Guide: Creating Value Through World-class Financial Management (Supersedes AIMD-99-45), AIMD-00-134 (Washington, D.C.: Apr.1, 2000).\nGAO, Information Technology: Further Implementation of FITARA Related Recommendations Is Needed to Better Manage Acquisitions and Operations, GAO-18-234T (Washington, D.C.: Nov. 15, 2017).\nGAO, Information Technology: Opportunities for Improving Acquisitions and Operations, Highlights of a Forum Convened by the Comptroller General of the United States, GAO-17-251SP (Washington, D.C.: Apr. 11, 2017).\nGAO, Cybersecurity: Federal Efforts Are Under Way That May Address Workforce Challenges, GAO-17-533T (Washington, D.C.: Apr. 4, 2017).\nGAO, IT Workforce: Key Practices Help Ensure Strong Integrated Program Teams; Selected Departments Need to Assess Skill Gaps, GAO-17-8 (Washington, D.C.: Nov. 30, 2016).\nGAO, Federal Chief Information Security Officers: Opportunities Exist to Improve Roles and Address Challenges to Authority, GAO-16-686 (Washington, D.C.: Aug. 26, 2016).\nGAO, Digital Service Programs: Assessing Results and Coordinating with Chief Information Officers Can Improve Delivery of Federal Projects, GAO-16-602 (Washington, D.C.: Aug. 15, 2016).\nGAO, Information Technology Reform: Billions of Dollars in Savings Have Been Realized, but Agencies Need to Complete Reinvestment Plans, GAO-15-617 (Washington, D.C.: Sept. 15, 2015).\nStrategically Managing the Federal Workforce GAO, Federal Workforce: Additional Analysis and Sharing of Promising Practices Could Improve Employee Engagement and Performance, GAO-15-585 (Washington, D.C.: Jul. 14, 2015).\nGAO, Federal Workforce: OPM and Agencies Need to Strengthen Efforts to Identify and Close Mission-Critical Skills Gaps, GAO-15-223 (Washington, D.C.: Jan. 30, 2015).\nGAO, Federal Workforce: Improved Supervision and Better Use of Probationary Periods Are Needed to Address Substandard Employee Performance, GAO-15-191 (Washington, D.C.: Feb. 6, 2015).\nGAO, Results-Oriented Management: OPM Needs to Do More to Ensure Meaningful Distinctions Are Made in SES Ratings and Performance Awards, GAO-15-189 (Washington, D.C.: Jan. 22, 2015)\nGAO, Human Capital: Strategies to Help Agencies Meet Their Missions in an Era of Highly Constrained Resources, GAO-14-168 (Washington, D.C.: May 7, 2014).\nGAO, Human Capital: Agencies Are Using Buyouts and Early Outs with Increasing Frequency to Help Reshape Their Workforces, GAO-06-324 (Washington, D.C.: Mar. 31, 2006).\nGAO, Issues Related to Poor Performers in the Federal Workplace, GAO-05-812R (Washington, D.C.: June 29, 2005).\nGAO, Human Capital: A Guide for Assessing Strategic Training and Development Efforts in the Federal Government (Supersedes GAO-03-893G), GAO-04-546G (Washington, D.C.: Mar. 1, 2004).\nGAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, GAO-04-39 (Washington, D.C.: Dec. 11, 2003).\nGAO, Results-Oriented Culture: Creating a Clear Linkage between Individual Performance and Organizational Success, GAO-03-488 (Washington, D.C.: Mar. 14, 2003).\nGAO, Federal Downsizing: Effective Buyout Practices and Their Use in FY 1997, GGD-97-124 (Washington, D.C.: Jun. 30, 1997).\nGAO, Performance Management: How Well Is the Government Dealing With Poor Performers?, GGD-91-7(Washington, D.C.: Oct. 2, 1990).\nGAO, Recent Government-Wide Hiring Freezes Prove Ineffective in Managing Federal Employment, FPCD-82-21 (Washington, D.C: Mar. 10, 1982).\nGAO, Key Issues: Ensuring the Security of Federal Information Systems and Cyber Critical Infrastructure and Protecting the Privacy of Personally Identifiable Information - High Risk Issue, accessed April 24, 2018, https://www.gao.gov/key_issues/ensuring_security_federal_information_s ystems/issue_summay GAO, Key Issues, Duplication and Cost Savings, Action Tracker, https://www.gao.gov/duplication/overview#t=1, accessed April 24, 2018,an online tool for monitoring the progress federal agencies and Congress have made in addressing the actions identified in GAO's annual Duplication and Cost Savings reports.",
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"In addition to the above contact, Sarah E. Veale, Assistant Director, Thomas Gilbert, Assistant Director, and Carole J. Cimitile, Analyst-in- Charge, supervised the development of this report. Layla Y. Moughari, Steven Putansu, and Robert Robinson made significant contributions to this report. Kayla Robinson provided legal counsel."
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"question": [
"How did the President mandate the reorganization of executive branch agencies?",
"How has OMB started carrying out the executive order?",
"To what extent have past reforms been successful?",
"What factors do successful reforms depend upon?",
"What does this report cover?",
"What prior work did GAO review for this report?",
"How did GAO solicit feedback about this report?"
],
"summary": [
"On March 13, 2017, the President issued an executive order requiring a comprehensive reorganization of executive branch agencies.",
"In April 2017, the Office of Management and Budget (OMB) provided guidance to federal agencies for developing their reform and workforce reduction proposals.",
"Past proposals to reform and reorganize government have not always come to fruition and can take years to implement fully.",
"GAO's prior work has shown that successful reforms or transformations depend upon following change management practices, such as agreement on reform goals, and the involvement of the Congress, federal employees, and other key stakeholders.",
"This report identifies the key questions that Congress, OMB, and agencies can use to assess the development and implementation of agency reforms.",
"To meet this objective, GAO reviewed its prior work and leading practices on organizational transformations; collaboration; government streamlining and efficiency; fragmentation, overlap, and duplication; high-risk; and on other agency longstanding management challenges.",
"GAO also identified subject matter specialists knowledgeable about issues related to government reform and strategic human capital management who reviewed and commented on GAO's draft questions."
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CRS_R44637
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{
"title": [
"",
"Introduction",
"Legislative History",
"Funding History",
"20-Year Funding Trends",
"Enduring vs. Supplemental/OCO Appropriations"
],
"paragraphs": [
"",
"Congress appropriates foreign affairs funding primarily through annual Department of State, Foreign Operations, and Related Programs (SFOPS) appropriations. Prior to FY2008, however, Congress provided funds for the Department of State and international broadcasting within the Commerce, Justice, and State, the Judiciary, and Related Agencies appropriations (CJS) and separately provided foreign aid funds within Foreign Operations, Export Financing, and Related Programs appropriations.\nThe transition between the different alignments occurred in the 109 th Congress, with a change in appropriations subcommittee jurisdiction. For that Congress, the House of Representatives appropriated State Department funds separately from foreign aid, as in earlier Congresses, but the Senate differed by appropriating State and foreign aid funds within one bill—the Department of State, Foreign Operations, and Related Programs Appropriations. Both the House and Senate began jointly funding Department of State and foreign aid appropriations within the Department of State, Foreign Operations and Related Programs Appropriations in the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ).\nSFOPS appropriations currently include State Department Operations (including accounts for Embassy Security, Construction, and Maintenance, and Education and Cultural Affairs, among others); Foreign Operations (including USAID administration expenses, bilateral economic assistance, international security assistance, multilateral assistance, and export assistance); various international commissions; and International Broadcasting (including VOA, RFE/RL, Cuba Broadcasting, Radio Free Asia, and Middle East Broadcasting Networks). While the distribution varies slightly from year to year, Foreign Operations funding is typically about twice as much as State Operations funding.\nIn addition to regular, enduring SFOPS appropriations, Congress has approved emergency supplemental funding requested by Administrations to address emergency or otherwise off-cycle budget needs. Since FY2012, Congress has also appropriated Overseas Contingency Operations (OCO) funding requested within the regular budget process for Department of State and USAID war-related expenses.\nThis report lists the legislative and funding history of SFOPS appropriations and includes funding trends.",
"Nearly all foreign affairs appropriations within the past 25 years were passed within omnibus, consolidated, or full-year continuing resolutions, rather than in stand-alone bills, and usually after the start of the new fiscal year. Many foreign policy experts contend that stand-alone appropriations legislation would allow for a more rigorous debate on specific foreign policy activities and improve the ability to introduce or fund new programs, or cancel and defund existing programs. Such experts assert that the frequent practice of passing continuing resolutions and delaying passage of appropriations well into the next fiscal year has hindered program planning (not just in foreign affairs) and has reduced the ability to fund programs that did not exist in the previous cycle.\nIn addition to annual appropriations, several laws require Congress to authorize State and foreign operations funding prior to expenditure. Before 2003, Congress typically provided authorization in a biannual Foreign Relations Authorization bill. This practice not only authorized funding for obligation and expenditure, but also provided a forum for more rigorous debate on specific foreign affairs and foreign aid policies and a legislative vehicle for congressional direction. In recent years, the House and Senate have separately introduced or considered foreign relations and foreign aid authorization bills, but none have been enacted.\nTable 1 below provides a 25-year history of enacted foreign affairs appropriations laws (excluding short-term continuing resolutions and supplemental appropriations), including the dates they were sent to the President and signed into law. Some observations follow:\nSince FY1995, Congress appropriated foreign affairs funding in on-time, freestanding bills once—in 1994 for the FY1995 appropriations year. The last time Congress passed foreign affairs funding on time, but not in freestanding legislation, was for FY1997. Congress included foreign affairs funding within an omnibus, consolidated, or full-year continuing resolution 21 of the past 25 years. FY2006 was the last time Congress enacted freestanding State Department and foreign operations appropriations bills. Six times over the past 25 years, Congress sent the State and foreign operations appropriations to the President in March, April, or May—six to eight months into the fiscal year.",
"Since realignment of the foreign affairs appropriations legislation in FY2008, SFOPS appropriations measures have included State Department Operations, Foreign Operations, various international commissions, and International Broadcasting. For a full list of the accounts included in the FY2019 SFOPS, see Table 2 .",
"Table 3 and Figure 1 provide the funding levels for enduring funds and Supplemental/OCO funds in the Department of State, Foreign Operations and Related Programs for FY2001-2020 request (in current dollars).\nAlthough current funding for State-Foreign Operations generally has grown since FY2001, there was a spike in funding in FY2004 that can, in large part, be attributed to supplemental funding for the Iraq Relief and Reconstruction Fund, which provided additional funds in that year. The creation of the Millennium Challenge Corporation (MCC) and the President's Emergency Plan for AIDS Relief (PEPFAR) added to growing funding levels from FY2004-FY2009. OCO became a regular part of foreign affairs funding as of FY2012. Supplemental funding for Ebola in FY2015, Zika in FY2016, and OCO in FY2017 contributed to the rise in funding levels during those years (see Figure 2 ).\nThe constant dollar trend line generally continues to increase, although at a slower pace than current dollars. FY2004 remains the peak year in constant dollars. The introduction of OCO funding in FY2012 briefly elevated SFOPS funding, but in the following years, funding levels off at nearly the same amount as the FY2012 level. After removing inflation, funding for FY2013 through the FY2020 request declines below that level, suggesting that the Budget Control Act of 2011 (BCA) has kept foreign affairs funding below the rate of inflation.",
"The Administration distinguishes between enduring (also called base, regular, or ongoing), emergency supplemental, and Overseas Contingency Operations (OCO) funds. Funds designated as emergency or OCO are not subject to procedural limits on discretionary spending in congressional budget resolutions, or the statutory discretionary spending limits provided through the Budget Control Act of 2011 for FY2011-FY2021 (BCA, P.L. 112-25 ).\nPrior to FY2012, the President typically submitted to Congress additional funding requests (after the initial annual budget request), referred to as emergency supplementals. Supplemental funding packages have historically been approved to address emergency, war-related, or otherwise off-cycle budget needs. The Obama Administration requested emergency supplemental appropriations for urgent unexpected expenses, such as the U.S. international responses to Ebola, the Zika virus, and famine relief to Syria, Yemen, Somalia, and Northeast Nigeria. The Trump Administration has not requested supplemental funding for unexpected international crises.\nIn contrast to emergency supplemental appropriations, the Obama Administration included within the regular budget request in FY2012 what it described as short-term, temporary, war-related funding for the frontline states of Iraq, Afghanistan, and Pakistan—designated as Overseas Contingency Operations funds, or OCO. Congress had used the OCO designation in earlier years for Department of Defense appropriations to distinguish between ongoing versus war-related expenditures. In response to the FY2012 SFOPS OCO request, Congress appropriated OCO funds for the Department of State and USAID activities beyond the requested level and for more than just activities in Iraq, Afghanistan, and Pakistan.\nIn FY2012, Congress included OCO funds for the three frontline states as well as for Yemen, Somalia, Kenya, and the Philippines. The Obama Administration first requested OCO funds for a country other than the three frontline states in FY2015, when it requested OCO funds for Syria. In FY2018, the Trump Administration requested OCO funds for the Department of State and USAID activities in Iraq, Afghanistan, and Pakistan, as well as \"High Threat/High Risk\" areas. These included Syria, Yemen, Nigeria, Somalia, and South Sudan, among others. The Administration's initial FY2019 request included OCO funds for the Department of State and USAID, but after passage of the Bipartisan Budget Act of 2018 (BBA 2018, P.L. 115-123 ), the Administration requested that all previously requested SFOPS OCO funds be moved to enduring funds. For FY2020, the Trump Administration again requested no OCO funds for foreign affairs agencies.\nSince FY2012, OCO has ranged from a low of 14% of the total budget request in FY2014 to a high of 36% in FY2017, when the Bipartisan Budget Act of 2015 (BBA 2015, P.L. 114-74 ) set nonbinding OCO minimums for FY2016 and FY2017. The Bipartisan Budget Act of 2018 (BBA 2018, P.L. 115-123 ) raised discretionary spending limits for FY2018 and FY2019 and extended direct spending reductions through FY2027. With the raised spending limits, the Trump Administration's FY2019 budget request did not include the OCO designation for any foreign assistance funds. However, Congress has continued to appropriate OCO funds, including $8.0 billion in FY2019. The Administration's FY2020 budget request also does not request OCO funds for State-Foreign Operations appropriations.\nThe BCA and BBAs have had an effect on foreign affairs funding levels and may have future implications. The Budget Control Act of 2011 sets limits on discretionary spending through FY2021 for defense and nondefense funding categories. Because OCO funds are not counted against the discretionary spending limits, the BCA has put downward pressure on SFOPS enduring/base funds, while OCO has increasingly funded other foreign affairs activities. In addition, the 2015 BBA significantly increased FY2016 and FY2017 OCO funding for foreign affairs over the requested funding levels in FY2015 and FY2016, further encouraging a migration of funds for ongoing activities into OCO-designated accounts. However, the 2018 BBA has had the opposite effect on foreign affairs OCO, allowing lawmakers to shift OCO funding back into enduring/base accounts."
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{
"question": [
"How does Congress currently appropriate most of its foreign affairs funding?",
"How did Congress historically fund foreign affairs programs?",
"What programs were not involved in this general funding?",
"How did the 110th Congress change the foreign aid appropriations?",
"What have SFOPS appropriations since FY2001 consisted of?",
"How have total SFOPS funding levels changed in this period?",
"Why haven't SFOPS funding levels surpassed the FY2004 peak?",
"How were most foreign affairs appropriations measures passed in the past 25 years?",
"At what point in the fiscal year were most of these appropriations passed?",
"What did SFOPS appropriations consist of in many fiscal years?"
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"summary": [
"Congress currently appropriates most foreign affairs funding through annual Department of State, Foreign Operations, and Related Programs (SFOPS) appropriations.",
"Prior to FY2008, however, Congress provided funding for the Department of State, international broadcasting, and related programs within the Commerce, Justice, State, the Judiciary, and Related Agencies appropriations.",
"In those years, Congress separately appropriated funding for the U.S. Agency for International Development (USAID) and foreign aid within the Foreign Operations, Export Financing, and Related Programs appropriations.",
"The 110th Congress aligned the two foreign affairs appropriations into the SFOPS legislation.",
"SFOPS appropriations since FY2001 have included enduring appropriations (ongoing or base funding), emergency supplemental appropriations, and Overseas Contingency Operations (OCO) appropriations.",
"Total SFOPS funding levels in both current and constant dollars show a general upward trend, with FY2004 as the peak largely as a result of emergency supplemental appropriations for Iraq Relief and Reconstruction Funds. When adjusted for inflation, annual foreign affairs appropriations have yet to surpass the FY2004 peak.",
"The Budget Control Act (BCA) of 2011 and the Bipartisan Budget Acts (BBA) of 2015 and 2018 appear to have had an impact on both enduring and OCO funding levels.",
"The legislative history of SFOPS appropriations shows that nearly all foreign affairs appropriations measures within the past 25 years were passed within omnibus, consolidated, or full-year continuing resolutions, rather than in stand-alone bills.",
"Moreover, many appropriations were passed after the start of the new fiscal year, at times more than half way into the new fiscal year.",
"In many fiscal years, SFOPS appropriations included emergency supplemental funding or, since FY2012, OCO funding."
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CRS_RS21579
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{
"title": [
"",
"Overview",
"Government and Politics",
"Terrorism and Counterterrorism",
"Human Rights",
"The Economy",
"Western Sahara48",
"Foreign Policy",
"U.S. Relations",
"U.S. Assistance",
"Recent Congressional Actions",
"Outlook"
],
"paragraphs": [
"",
"Obama Administration officials have expressed strong support for the Moroccan monarchy, while also encouraging political reforms and occasionally voicing human rights concerns. U.S. bilateral aid assists Morocco with economic growth, basic education, democratization, military and police professionalization, and counterterrorism. In addition, a five-year, $697.5 million U.S. Millennium Challenge Corporation (MCC) compact was completed in September 2013, and Morocco is eligible for a second compact. U.S.-Moroccan military cooperation includes sizable Moroccan purchases of U.S. defense materiel and a large annual bilateral exercise, African Lion.\nAmid widespread political upheaval in the region since 2011, Moroccan officials have urged the United States to expand bilateral ties. A U.S.-Morocco Bilateral Strategic Dialogue was initiated in 2012, with working groups devoted to political, economic, security, and educational/cultural cooperation. (Strategic Dialogues were also initiated with Algeria and Tunisia.) High-level sessions of the Dialogue have been held in both countries, most recently in April 2014 in Morocco, with Secretary of State John Kerry leading the U.S. delegation. King Mohammed VI conducted an official state visit to Washington, DC, in November 2013, his first since 2004. The king met with President Obama at the White House, and a joint statement emphasized shared support for Morocco's \"democratic and economic reforms\" and for bilateral cooperation in a number of domains. In November 2014, Vice President Joe Biden visited Morocco for the Global Entrepreneurship Summit and also met with the king.\nWith regard to the disputed territory of Western Sahara, the United States has recognized neither Morocco's claim of sovereignty nor the self-proclaimed independent government-in-exile, the Sahrawi Arab Democratic Republic (SADR), which is hosted and supported by Algeria. At the same time—in the context of valued bilateral ties with Morocco—the Obama Administration, using phrasing similar to that employed by the George W. Bush Administration, refers to Morocco's proposal for regional autonomy under Moroccan sovereignty as a \"serious, realistic, and credible\" potential approach to the territory's final status. U.S. policy over the past decade has been to support United Nations (U.N.)-facilitated negotiations between Morocco and the independence-seeking Popular Front for the Liberation of Saqiat al Hamra and Rio de Oro (Polisario, which formed the SADR) toward a mutually accepted settlement.\nIn April 2014, the House Foreign Affairs Committee, Subcommittee on the Middle East and North Africa, held a hearing on U.S. policy toward Morocco. Several other hearings during the 113 th Congress also examined U.S. policy interests in Morocco and the wider North Africa region. Congressional views on Morocco and the Western Sahara issue have been expressed in foreign aid appropriations legislation (see \" Recent Congressional Actions \").",
"The Moroccan royal dynasty has ruled the country since the mid-17 th century, remaining relatively intact under French and Spanish colonial protectorates. King Mohammed VI, who inherited the Moroccan throne in 1999, is the preeminent state authority within a complex political system that also includes an elected parliament and local-level representatives. The king has said that he is committed to building a democracy, and in 2011 he introduced a new constitution (later adopted in a popular referendum) that, if fully implemented, could strengthen the legislature, the judiciary, and local-level government. The constitution, however, preserves the king's role as the ultimate arbiter of state decision-making, head of the military, and Morocco's highest religious authority. Although the constitution grants some executive powers to a head of government (prime minister), the king approves and may dismiss cabinet ministers. He may also dissolve parliament, call elections, and exercise certain powers via decree. The king also has a \"shadow government\" of royal advisors and is tied to significant domestic economic enterprises.\nThe 2011 constitutional revision and other reforms initiated during the \"Arab Spring\" did not substantially alter the monarchy's political and economic prerogatives, but they demonstrated responsiveness to public pressures for greater political participation. Many observers argued that in introducing the reforms, the king retained his popular legitimacy and ensured Morocco's continued stability. Ultimately, the degree to which the new constitution leads to significant political changes may depend on how it is interpreted and implemented and the extent to which political parties and other interest groups leverage the political space accorded to them. For example, planned justice sector reforms and decentralization, both nominal priorities of constitutional implementation, have made only halting progress. Constitutional provisions on gender equality and parity, along with civil liberty protections, have yet to be implemented. Protests periodically occur, though they have dwindled in size since their peak in 2011. Some Moroccans continue to call for deeper political changes. Much of the public, however, may have lost any appetite for unrest, in part due to the example of turmoil elsewhere in the region.\nThe bicameral legislature consists of a 270-seat upper house, the Chamber of Counselors, whose members are indirectly elected to nine-year terms, and a 395-seat lower house, the Chamber of Representatives, whose members are directly elected to five-year terms. Sixty seats (about 15%) in the lower house are reserved for women, and 30 seats are reserved for candidates under 40 years of age (candidates for these seats are elected from a separate national list). A law adopted in 2011 expanded previous quotas for women in local-level elected government positions.\nThe Party for Justice and Democracy (PJD, also known as Al Misbah /The Beacon), an Islamist political party, won a plurality of seats (27%) in the most recent elections for the Chamber of Representatives, in 2011. That election was the country's first under the new constitution, which introduced a requirement for the king to appoint the head of government from the largest party in parliament. The PJD's Abdelilah Benkirane was named Prime Minister and leads an often fractious multiparty government coalition. In government, the PJD has focused on reforming fiscally burdensome state pension system and subsidy programs; it hopes to replace the latter with targeted aid for poor households. It has also weighed in on cultural, media, justice sector, and educational policies, sometimes with the apparent aim of introducing greater religiosity into the public sphere, although the party's leadership defines its stance as one of moderation.\nWhile the PJD has been legally recognized for two decades, it had not held cabinet positions prior to 2011. Some observers view the PJD as more driven by constituent concerns and more focused on countering corruption than other political parties, and therefore interested in devolving power away from the monarchy and toward elected government. In turn, the PJD has reportedly faced opposition from pro-palace elites. Public perceptions of these dynamics may underlie the personal popularity of Prime Minister Benkirane, despite regular policy setbacks. Still, the PJD has not demanded deep political changes, preferring to reassure the monarchy in tacit exchange for greater acceptance into national politics. The party's influence over policymaking is further constrained by its slim legislative plurality, the role of royal advisors who sit outside of elected government, and economic limitations. Mutual distrust between Moroccan Islamists and liberals has also inhibited political cooperation, despite a potential shared interest in democratization.\nIn 2013, Prime Minister Benkirane was forced to reshuffle the cabinet after a key coalition member, the Istiqlal (Independence) party, withdrew, leaving the coalition without a majority. After months of stalemate, the National Rally of Independents (RNI), which many observers view as close to the palace, joined the government in its place. In exchange, the PJD relinquished several key portfolios, including the Foreign Ministry. Some observers viewed the PJD as weakened by these events, while others posited that it could capitalize on perceptions that it remains an underdog confronting a system of vested interests.\nSeveral other Islamist movements wield influence while operating outside of formal politics. Religiously conservative Salafist groups, for example, have been alternately targeted and courted by the authorities. The Justice and Charity Organization (JCO or Al Adl Wal Ihsan ), a domestic Sufi movement, is reportedly Morocco's largest grassroots organization. It opposes the monarchy as un-Islamic and undemocratic, and is therefore banned, but its activities are generally tolerated. The JCO eschews violence and often conveys its views in street demonstrations; it was reportedly a key force, in addition to leftist groups, behind Morocco's 2011 protest movement. Some analysts question whether the JCO might move toward more overt political participation in the wake of the death of its founding leader, Sheikh Abdessalem Yassine, in 2012.",
"Moroccan nationals have been implicated in terrorism abroad, and Morocco has suffered from terrorism at home. Within Morocco, numerous small and reportedly unconnected extremist cells adhering to the Salafiya Jihadiya (Reformist Holy War/\"Jihadist\") ideology are generally viewed as the top security threat. The deadliest terrorist attack on Moroccan soil occurred in 2003, when 12 suicide bombers reportedly linked to Al Qaeda and the Moroccan Islamic Combatant Group (GICM, after its French acronym) attacked five Western and Jewish targets in Casablanca, killing themselves and 33 others, and injuring more than 100. Several small-scale attacks have occurred more recently, including two suicide attacks near the U.S. consulate and the American Language Center in Casablanca in 2007, and a bombing at a Marrakesh café popular with tourists in 2011. Moroccan authorities regularly report that they have disrupted terrorist cells plotting attacks against Moroccan government, military institutions, foreigners, and tourist sites.\nRecruitment of Moroccans by transnational terrorist organizations is a key government concern, as is the return of Moroccan nationals who have joined terrorist groups abroad. Some 1,500 Moroccan nationals have reportedly traveled to Syria and Iraq as \"foreign fighters,\" making Morocco one of the largest sources of such combatants, according to statistics published in news reports. Foreign fighters also reportedly include Europeans of Moroccan origin. A Moroccan-led Islamist extremist group operating in Syria, Harakat Sham al Islam (Islamic Movement of the Levant), was reportedly founded by three Moroccans who had been detained at Guantánamo and were released to Moroccan custody between 2004 and 2006. Moroccan authorities claim to have disrupted domestic plots by cells affiliated with the Islamic State and other terrorist groups; in November 2014, a previously unknown Morocco-based group calling itself Jund al Khilafah (Soldiers of the Caliphate) posted an Internet video pledging allegiance to the Islamic State.\nAl Qaeda in the Islamic Maghreb (AQIM), a regional network of Algerian origin and a U.S.-designated Foreign Terrorist Organization (FTO), has carried out attacks in neighboring countries—as have several of its splinter factions and affiliated groups—but not in Morocco to date. In 2014, a State Department official stated in congressional testimony that Morocco's \"holistic counterterrorism strategy\" had made it \"difficult for AQIM to effectively establish a foothold in Morocco.\" AQIM has nonetheless attempted to recruit Moroccans and has called for attacks in the country. In 2013, the group released a 41-minute video assailing the Moroccan monarchy.\nThe State Department characterizes Morocco as \"a long-standing and effective partner\" in counterterrorism. In addition to international cooperation, Morocco's counterterrorism efforts include vigilant security measures, law enforcement efforts, and counter-radicalization programs. Morocco exercises control over religious leaders and institutions and has created theological councils, supervised and trained imams, closed unregulated mosques, retrained some individuals convicted of terror-related crimes to correct their understanding of Islam, and used media efforts to transmit, as one analyst frames it, \"a Moroccan Islam that can compete with political Islamists, salafists, and extremists.\" Morocco has also sought to transmit these values to partner states in West Africa through religious education outreach and exchanges.\nMorocco adopted a broad antiterrorism law after the 2003 terrorist attacks in Casablanca, and a new law in 2014 broadened the scope of terrorism offenses amid rising concerns over possible activities by Islamic State sympathizers. Human rights advocates argue that these laws define terrorism too broadly and contain insufficient civil liberties protections. The State Department reports that Morocco's counterterrorism approach \"has emphasized adherence to human rights standards and the increased transparency of law enforcement procedures.\"\nIn 2011, three European aid workers were kidnapped from the Polisario-administered Western Sahara refugee camps in Tindouf, Algeria, by the Movement for Unity and Jihad in West Africa, an AQIM splinter faction. In reports on the Western Sahara issue, the U.N. Secretary-General has cited concerns about rising insecurity on the eastern side of the berm that demarcates Moroccan-administered areas (to the west) from those controlled by the Polisario. Moroccan officials and some analysts regularly cite fears that an independent Western Sahara would be vulnerable to terrorist and criminal infiltration; some contend that the Polisario itself has links to terrorism. In April 2014, then-Deputy Assistant Secretary of State for Near Eastern Affairs William V. Roebuck testified before Congress that, \"We are not aware of links between, for example, the Polisario, and terrorist organizations.\"",
"The U.S.-based organization Freedom House rates Morocco's degree of political and civil liberties as \"partly free.\" The State Department reports that \"most significant\" human rights problems in Morocco are \"the lack of citizens' right to change the constitutional provisions establishing the country's monarchical form of government, corruption in all branches of government, and widespread disregard for the rule of law by security forces.\" Laws barring acts deemed harmful to the monarchy or to Morocco's claim of sovereignty over Western Sahara limit freedom of expression, assembly, and association. U.N. experts have also expressed concern over the reported use of torture to obtain confessions in criminal cases, a lack of due process for those held in pretrial detention, and Morocco's sweeping anti-terrorism legislation. Religious freedom is subject to a prohibition of proselytization to Muslims, and some Moroccan Christians report police harassment. Moroccan officials often dispute critical reports by human rights activists, while noting a commitment to improving human rights conditions.\nPro-independence and human rights activists operating in Moroccan-administered Western Sahara reportedly face particular state restrictions on their freedom of speech, press, assembly, and association; the use of arbitrary and prolonged detention to quell dissent; and detainee abuse. After human rights groups, including the state-backed National Human Rights Council (CNDH), criticized the use of military tribunals to try civilian detainees accused of committing violence during protests in Western Sahara in 2010, the king promised to end the practice. However, the status of legal reforms introduced in 2014 remains uncertain, and the courts reportedly have not investigated detainee allegations of police torture and coerced confessions.\nMorocco is a transit point and destination for migrants seeking asylum, economic opportunities, or access to Europe via Spanish enclaves on Morocco's northern coast. Morocco's treatment of African migrants, which has reportedly included large-scale expulsions into desert areas, has been widely criticized. In September 2013, the government announced a new migration and asylum policy that promised an end of expulsions and potential legal status. In early 2014, Human Rights Watch reported that summary expulsions appeared to have ceased under the new policy, but that migrants were still subject to abuse by state security forces.\nKing Mohammed VI has backed several major initiatives in select areas of human rights. In 2004, the king supported and parliament adopted significant changes to the Family Code, or Moudawana , that aimed to improve women's legal rights and socio-economic status. The king also created an Equity and Reconciliation Commission to provide an historical record of state abuses before King Mohammed VI ascended the throne in 1999, to account for the \"disappeared,\" and to compensate victims. He has furthermore attempted to recognize and expand the cultural and linguistic rights of ethnic Berber communities, considered the indigenous inhabitants of North Africa. While recognizing these initiatives as important precedents, however, some human rights advocates have criticized them as insufficient or insufficiently implemented.",
"Morocco's economy is relatively diverse: key sectors include agriculture, tourism, mining, and textiles and apparel. Remittances from emigrant workers, mainly in Europe, provide another source of foreign exchange and a social safety net. Through internal and Western Saharan mines, Morocco controls some 75% of world reserves of phosphates, which are used in fertilizers—and of which the United States is a top global consumer. Morocco is considered a lower middle income country; poverty and illiteracy remain widespread, especially in rural areas. The unemployment rate is officially 9% but is double that among youth under 24 years old. Socioeconomic hardships drive emigration and occasional unrest. The state has attempted to address discontent through social programs, public sector hiring initiatives and wage increases, and subsidies. The economy grew by 3.5% in 2014 and is projected to grow 4.7% in 2015.\nMorocco actively encourages foreign investment and trade. It has a Free Trade Agreement (FTA) and bilateral investment treaty with the United States; an Association Agreement with the European Union; FTAs with several other countries in the Middle East and North Africa; and several free-trade zones. It has also recently positioned itself as a platform for global trade and investment in Sub-Saharan Africa. However, bureaucratic red tape, corruption, high labor costs, opaque regulation, and taxation policies are reportedly constraints on competitiveness.\nIn 2012, Morocco and the International Monetary Fund (IMF) agreed to a $6.2 billion, two-year line of credit aimed at proactively reassuring investors. Morocco did not end up drawing on the \"Precautionary and Liquidity Line,\" but the IMF concluded that it had \"provided useful insurance against external risks while anchoring the authorities' reform agenda and sending positive signals to markets.\" A two-year successor arrangement with a $5 billion line of credit was agreed to in July 2014. The IMF has praised efforts under the current PJD-led government to reduce Morocco's fiscal deficit, while continuing to call for further reforms \"to stabilize the economy, strengthen competitiveness, and build the foundation for stronger and more inclusive growth.\"\nThe royal family's role in the economy is reportedly extensive. The phosphate industry and much of the economy are dominated by the royal family and associated elites who control large, multi-sectoral holding companies. In 2009, King Mohammed VI was reported to be one of the world's 15 richest royal figures, even as Morocco is a relatively poor country; in 2014, Forbes estimated his net worth at $2 billion. The royal family reportedly controls a majority stake in the National Investment Company (SNI), which has significant financial, insurance, construction, and commodity interests. The king is also a major landowner.\nMorocco meets most of its energy needs by importing oil and gas. It hopes to find offshore oil, which is currently under exploration, including off the coast of Western Sahara (see below). Morocco has also sought to develop domestic renewable energy sources, with a particular focus on solar energy, which it hopes to use domestically and export to Europe.",
"The dispute between Morocco and the independence-seeking Polisario over the former Spanish colony south of Morocco remains unresolved. Morocco occupies some 85% of the territory, which it considers its southern provinces. Morocco says it will only accept a solution that guarantees it sovereignty over \"the whole of its territories\" and will only negotiate on that basis. A U.N. peacekeeping operation, MINURSO, originally conceived to oversee a referendum on the final status of the region, monitors a 1991 ceasefire between Morocco and the Polisario. Morocco has authorized foreign oil companies to explore off the Saharan coast, and the prospect of discoveries, as yet unrealized, may have hardened its resolve to retain the region.\nTalks between Morocco and the Polisario on the final status of the territory are ongoing under the auspices of the Personal Envoy of the U.N. Secretary General for the Western Sahara, Christopher Ross, a U.S. diplomat. In 2007, King Mohammed VI submitted an autonomy plan for Western Sahara, asserting Moroccan sovereignty, to the United Nations. In line with this initiative, the king has pursued policies of decentralization that he says are intended to empower residents of his Saharan provinces. Neither Morocco nor the Polisario has shown interest in a compromise; Morocco contends that autonomy is itself a compromise. The stalemate appears likely to endure.",
"Morocco's foreign policy focuses on its Western partners, the Middle East, and Sub-Saharan Africa. In addition to Morocco's Foreign Minister, Salaheddine Mezouar, who is from the RNI party, the king and his royal advisors play a key role in foreign policy; they have prioritized close ties with the West while Prime Minister Benkirane has occasionally publicly criticized Western policies. The European Union (EU) is Morocco's top trading partner and provides considerable aid. European leaders appear to hope that Morocco's stability will be preserved amid regional upheaval. They also seek Moroccan cooperation to stem illegal immigration and drug trafficking via Morocco to Europe. Morocco's EU Association Agreement entered into force in 2000, and a 2012 trade agreement expanded the duty-free treatment of agricultural, food, and fisheries products on both sides. A new fishing agreement that includes European access to the coastline of disputed Western Sahara was ratified in 2014, after a hiatus; the previous agreement was discontinued in 2011 due to some EU parliamentarians' objections to conditions in Moroccan-administered Western Sahara, as well as environmental and economic concerns.\nDiplomatic, commercial, and military ties with former colonial powers France and Spain are extensive, and both countries have large immigrant populations of Moroccan origin. Frictions with France nonetheless arose in 2014 over allegations by France-based Moroccan activists of torture in Morocco; statements critical of Morocco that were attributed in the press to a senior French diplomat; and, possibly, France's recent cultivation of closer ties with Algeria. After the January 2015 terrorist attacks in France, Foreign Minister Mezouar declined to attend France's multinational rally against extremism due to the presence of \"blasphemous caricatures of the Prophet.\" Spain, for its part, possesses two territorial enclaves on Morocco's Mediterranean coast, Ceuta and Melilla, which Morocco claims, sometimes causing bilateral tensions. The neighbors also have an unresolved dispute concerning territorial waters between Morocco and the Spanish Canary Islands in the Atlantic Ocean. Still, territorial disputes and occasional criticism by Spanish politicians of Morocco's stance on Western Sahara appear secondary to economic, security, and law enforcement cooperation.\nMorocco positions itself as a moderate Arab state and has sought to play a role in addressing conflicts in the Middle East. In recent years, it has drawn closer to fellow Arab monarchies in the Gulf, which have offered aid, investment, and security cooperation. Morocco broke diplomatic relations with the Syrian government in 2012, and the Moroccan military has reportedly participated in U.S.-led military operations against the Islamic State. The king supports a two-state solution to the Israeli-Palestinian conflict and chairs the Al Quds (Jerusalem) Committee of the Organization of the Islamic Conference, which seeks to bolster Muslim claims to the city. The king recognized President Mahmoud Abbas as the legitimate leader of the Palestinian people in Abbas's dispute with Hamas and has urged Palestinian national unity. Morocco closed Israel's liaison bureau in Morocco and Morocco's office in Tel Aviv during the Palestinian intifada (uprising) in 2001. Still, links between the two countries remain, as some 600,000 Israelis are of Moroccan origin, and thousands travel to Morocco yearly.\nMorocco and Algeria are regional rivals. The two countries fought a war over disputed border territories in 1963-1964, and the border was not demarcated until 1972. It has been closed by Algeria since 1994, after Morocco imposed visa restrictions on Algerian nationals and blamed Algeria for a terrorist attack. The Western Sahara is a key element of bilateral tensions. Moroccan officials frequently indicate their belief that Algeria could solve the Western Sahara issue if it wanted, presumably by pressuring the Polisario, while Algeria argues it is not a party to a dispute that it characterizes as between two sovereign nations (Western Sahara and Morocco). The dispute over the territory of Western Sahara has stymied Moroccan-Algerian relations, Moroccan relations with the African Union (AU), and regional economic and security cooperation.",
"The United States and Morocco have long-term, warm relations; Morocco's monarchy was one of the first governments to recognize the independence of the United States. In 2004, then-President George W. Bush designated Morocco a Major Non-NATO ally. The U.S.-Morocco relationship focuses on promoting regional stability, supporting democratic reform efforts, countering violent extremism, and strengthening trade and cultural ties. The Bilateral Strategic Dialogue initiated in 2012 has resulted in the enumeration of shared commitments in a number of areas, such as implementation of Morocco's new constitution, the promotion of economic growth in Morocco, and coordination on criminal justice, nonproliferation, and counterterrorism.\nBilateral ties have been enhanced by security cooperation and assistance. Over 1,000 U.S. personnel participate annually in a flagship bilateral military exercise, African Lion, and smaller bilateral exercises are held regularly. Recent Moroccan purchases of U.S. defense materiel include 24 F-16 aircraft; 24 T-6 trainer aircraft; 90 AGM-D Maverick air-to-ground missiles; refurbishment worth over $1 billion for 200 Abrams M1A1 tanks acquired as a grant U.S. transfer; advanced AM 120-C7 air-to-air medium-range missiles systems; and Joint Direct Attack Munition (JDAM) missile guidance kits. Sales agreements for U.S.-made military radar systems and Sidewinder missiles were announced in 2011. Morocco is also a top recipient of U.S. Excess Defense Articles (EDA) grants, and a U.S. National Guard State Partnership Program with Utah was established in 2003. Morocco is part of NATO's Mediterranean Dialogue, has hosted and participated in NATO military exercises, and cooperates with NATO's Operation Active Endeavor, monitoring the Mediterranean Sea for terrorists.\nA U.S.-Morocco free trade agreement (FTA) came into effect on January 1, 2006 ( P.L. 108-302 ), eliminating duties on over 95% of all goods and services. Since then, U.S. exports to Morocco have nearly tripled in value, and U.S. imports from Morocco have nearly doubled. However, the agreement has been controversial in Morocco, particularly among labor leaders, and Prime Minister Benkirane suggested in a 2012 address to parliament that Morocco was not sufficiently benefitting from it. Morocco was the United States' 69 th -largest goods trading partner in 2013 (latest available): U.S. exports to Morocco in 2013 were valued at $2.48 billion, and U.S. imports from Morocco at $977 million. The United States and Morocco signed new trade agreements under the FTA in December 2012 and November 2013, and a Customs Mutual Assistance Agreement in November 2013.\nAs noted above (\" Overview \"), the United States has not recognized Morocco's claim of sovereignty over Western Sahara, nor has it recognized the Polisario's self-proclaimed independent government-in-exile, the SADR. The Obama Administration refers to Morocco's proposal to grant Western Sahara autonomy under Moroccan sovereignty as \"a serious, realistic, and credible proposal\" and \"a potential approach that could satisfy the aspirations of the people in the Western Sahara to run their own affairs in peace and dignity.\" At the same time, it maintains that the parties \"have to reach a mutually agreed upon solution\" through negotiations and that the United States cannot \"impose\" a solution. U.S.-Morocco relations were briefly troubled in April 2013 by U.S. support in the U.N. Security Council for adding human rights monitoring to MINURSO's mandate. Morocco vehemently objects to a human rights monitoring role for the mission as an affront to its sovereignty. Ultimately, the proposal did not advance.",
"The United States provides aid to Morocco to help advance democratization, alleviate poverty, increase military effectiveness, counter terrorism, and build trade capacity. The Obama Administration requested $30.9 million in bilateral foreign assistance for Morocco in FY2015 (see Table 1 ), stating that such aid would support Morocco's achievement of \"critical\" reforms.\nThe U.S. Agency for International Development (USAID) current five-year strategy for Morocco, which is designed to support Morocco's development and reform objectives, lists three core objectives: increasing youth employability, expanding civic participation in governance, and enhancing the quality of primary school education. USAID activities in Morocco focus on improving agricultural growth and productivity; enhancing teacher training; building the capacity of local-level government to respond to citizen demands; addressing the needs of the most at-risk youth through engagement in productive social, economic, and civic activities; and assisting Moroccan businesses in meeting the requirements of the U.S.-Morocco FTA.\nIn addition to the bilateral aid cited above, Morocco recently benefitted from a five-year, $697.5 million Millennium Challenge Corporation (MCC) compact, which was completed in 2013. It focused on alleviating poverty through targeted investments in fruit tree productivity, fisheries, artisan production, financial services, and private enterprises. Morocco is eligible for a new compact, for which it is developing proposals. In November 2014, the MCC announced that it expected to invest $50 million to improve Morocco's technical and vocational education system as part of a compact agreement \"to be signed in 2015,\" pending MCC Board approval and congressional notification.\nMorocco also participates in U.S. regional aid programs, including the Trans-Sahara Counterterrorism Partnership (TSCTP), a State Department-led interagency initiative that includes 11 states in North and West Africa; the Administration's Middle East and North Africa Transition Fund, which has provided technical aid for good governance; and grants administered by the Middle East Partnership Initiative (MEPI), the State Department's regional democracy-promotion entity, for women's empowerment, civil society, job growth, and legal reforms. Morocco also receives assistance administered by the international financial institutions (such as the IMF and World Bank), which receive U.S. funding.\nMorocco has committed resources of its own in support of several U.S.-Morocco cooperation initiatives, including the Peace Corps program in Morocco and a five-year \"Virtual Exchange Initiative\" named in honor of the late U.S. Ambassador Christopher Stevens, which aims to connect youth in the Middle East/North Africa and the United States.",
"Many Members of Congress are strongly supportive of the Moroccan government and its stance on Western Sahara, and many have expressed appreciation for King Mohammed VI's reform initiatives. Other Members have expressed concern over Morocco's handling of the Western Sahara issue, and/or over human rights and religious freedom problems. Several hearings in the 113 th Congress examined U.S. policy interests in Morocco and North Africa (see \" Overview \").\nThe explanatory statement accompanying the FY2015 Department of State, Foreign Operations, and Related Programs Appropriations Act (Division J of P.L. 113-235 , the Consolidated and Further Continuing Appropriations Act, 2015) provides $20 million in budget authority for Economic Support Fund (ESF) aid for Morocco (equal to the Administration's bilateral aid request) and $7 million for Foreign Military Financing (FMF) ($2 million more than requested). The explanatory statement \"expects that no [FMF] funds will be used for internal security purposes,\" referring to a provision in the act that FMF funds for Morocco \"may only be used for the purposes requested\" in the Administration's FY2015 congressional budget justification (Division J, §7041[g][2]). Separately, the explanatory statement appears to endorse a requirement for the State Department to report on why it is not implementing a recommendation by its Office of the Inspector-General to close the U.S. Consulate in Casablanca.\nMorocco and the Polisario, and advocates on both sides, regularly appeal to Congress to support their respective positions on Western Sahara. Congressional views on the Western Sahara issue have been stated in official correspondence and in foreign aid appropriations legislation. The FY2014 Consolidated Appropriations Act (Division K of P.L. 113-76 , §7041[h]) provided that bilateral economic assistance appropriated for Morocco \"should also be available for assistance for the territory of the Western Sahara.\" It has been the policy of successive Administrations that funds appropriated for bilateral aid for Morocco may not be programmed in Western Sahara, as doing so could represent a tacit acknowledgment of Moroccan sovereignty. The FY2014 provision did not appear to alter this policy in practice.\nA modified provision contained in the FY2015 Act (Division J of P.L. 113-235 , §7041[g][1]) states that funds appropriated for global bilateral economic assistance \"shall be made available for assistance for the Western Sahara.\" It also requires the State Department to \"consult with the Committees on Appropriations on the proposed uses of such funds.\" The executive branch interpretation of the FY2015 provision, and its implications, remain to be seen.\nThe explanatory statement accompanying P.L. 113-235 endorses a requirement in S.Rept. 113-195 for the State Department to update its report to the appropriators on \"steps taken during the previous 12 months by the Government of Morocco to release political prisoners and support a human rights monitoring and reporting role for the U.N. Mission in Western Sahara.\"",
"The United States and Morocco continue to share an interest in promoting stability and pursuing economic and security cooperation amid ongoing regional tumult. Morocco's role in counterterrorism and regional security is likely to remain of interest to Members of Congress, as is the bilateral trade and investment relationship. Congressional efforts to use foreign aid appropriations legislation to prompt the executive branch to change its policy toward the disputed territory of Western Sahara have gained in prominence in recent years. Some Members have also continued to focus on the degree to which U.S. policy toward Morocco includes the encouragement of human rights and democracy. The role of Moroccan Islamist political parties and movements may also be of congressional interest in the context of regional developments."
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{
"question": [
"How important is Morocco to the U.S.?",
"How does the U.S. aid Morocco?",
"Why have U.S-Morocco relations become more important in recent years?",
"How have U.S.-Morocco relations expanded recently?",
"How is political power managed in Morocco?",
"How has the division of political power in Morocco changed recently?",
"How would the new constitution affect the balance of political power in Morocco?",
"What was the outcome of the first legislative elections?",
"What is the main goal of the PJD?",
"What challenges face the PJD?",
"What is the policy of the United States regarding the territory of Western Sahara?",
"How has Congress stated its view of the Western Sahara issue?",
"What does the Consolidated and Further Continuing Appropriations Act state?",
"How does the U.S. ensure its neutrality in this dispute?",
"What is the focus of Morocco's foreign policy?",
"How has Morocco collaborated with the U.S. regarding foreign policy issues?",
"What is the nature of Morocco's relationship with Algeria?",
"How has the Western Sahara issue impacted the region?"
],
"summary": [
"Successive U.S. Administrations have viewed Morocco as an important regional ally, a partner in counterterrorism, and a free trade counterpart.",
"Morocco receives substantial U.S. development aid, and bilateral trade and investment have increased following a 2006 Free Trade Agreement. Morocco also benefits from U.S. security assistance and military cooperation, and is a purchaser of U.S. defense articles, including F-16 jets.",
"Some observers have placed greater emphasis on the U.S.-Morocco relationship amid regional turmoil and terrorist threats emanating from neighboring states in North Africa and the nearby Sahel region of West Africa.",
"The United States and Morocco initiated a Bilateral Strategic Dialogue in 2012, and King Mohammed VI undertook an official state visit to Washington, DC, in November 2013, his first since 2004.",
"King Mohammed VI, who inherited the throne in 1999, retains supreme political power in Morocco but has taken some liberalizing steps.",
"In 2011, amid popular demonstrations that echoed unrest elsewhere in the region, the king backed a new constitution that was then adopted by referendum.",
"Provisions in the new constitution could strengthen the legislature, judiciary, and local-level government, if fully implemented. It nonetheless preserves the king's role as the arbiter of political decision-making, head of the military, and the country's highest religious authority.",
"Legislative elections held in 2011, the first under the new constitution, brought an Islamist political party, the Justice and Development Party (PJD), to power for the first time.",
"The PJD has sought to bolster the power of elected officials and to institute economic and governance reforms.",
"However, the party has faced challenges in transitioning from an outsider opposition role to the day-to-day responsibility of policymaking. It has also struggled to overcome tensions with pro-palace elites, as well as with nominal allies.",
"With regard to the disputed territory of Western Sahara, which Morocco considers an integral part of its sovereign territory, the United States has recognized neither Morocco's claim to the region, nor the self-declared independent Sahrawi Arab Democratic Republic (SADR), which is backed and hosted by Algeria. U.S. policy over the past decade has been to support U.N.-facilitated negotiations over the territory's final status.",
"Congressional views of the Western Sahara issue have been stated in foreign aid appropriations legislation.",
"Most recently, the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235, Division J, section 7041[g][1]) states that funds appropriated for foreign bilateral economic assistance \"shall be made available for assistance for the Western Sahara.\"",
"It has been the policy of successive Administrations that funds appropriated for bilateral aid for Morocco may not be programmed in Western Sahara, as doing so could represent a tacit acknowledgment of Moroccan sovereignty.",
"Morocco's foreign policy focuses on its Western partners (especially France, Spain, the European Union, and the United States); the Middle East; and francophone Africa.",
"The Moroccan military has reportedly participated in U.S.-led operations to counter the Islamic State organization in Syria.",
"Neighboring Algeria is a regional rival and supports independence for Western Sahara.",
"Friction over the Western Sahara issue has stymied Moroccan-Algerian relations, Moroccan relations with the African Union (Morocco withdrew in 1984 over recognition of the SADR), and regional economic and security cooperation."
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CRS_RL33819
|
{
"title": [
"",
"Major Developments in 2008",
"Major Developments in 2007",
"Political Conditions",
"Background to the Succession",
"Human Rights",
"Overview",
"Varela Project and the National Dialogue",
"Assembly to Promote Civil Society",
"Economic Conditions",
"Economic Changes Under Raúl",
"U.S. Policy Toward Cuba",
"Bush Administration Policy",
"May 2004 Commission for Assistance to a Free Cuba Report",
"July 2006 Commission for Assistance to a Free Cuba Report",
"U.S. Reaction to Fidel's Ceding of Power",
"October 2007 Policy Speech 45",
"U.S. Response to Raúl's Official Selection as President",
"Issues in U.S.-Cuban Relations",
"Debate on the Overall Direction of U.S. Policy",
"Aftermath of 2008 Hurricanes and Tropical Storms",
"Legislative Initiatives",
"Restrictions on Travel and Remittances",
"Legislative Initiatives",
"Agricultural Exports and Sanctions",
"Legislative Initiatives",
"Trademark Sanction65",
"Offshore Oil Sector Development",
"Drug Interdiction Cooperation",
"Legislative Initiatives",
"Cuba and Terrorism81",
"Cuba as the Victim of Terrorism",
"U.S. Funding to Support Democracy and Human Rights",
"Oversight of U.S. Democracy Assistance to Cuba",
"Radio and TV Marti",
"Controversies",
"Funding",
"FY2007 Funding",
"FY2008 Funding",
"FY2009 Request",
"Migration Issues",
"1994 and 1995 Migration Accords",
"Coast Guard Interdictions",
"U.S. Travel Documents",
"Migration Talks",
"Guantanamo Naval Base",
"Legislation in the 110th Congress",
"Approved Measures",
"Additional Legislative Initiatives",
"Legislation in the 109th Congress",
"Appropriations Measures",
"Human Rights Resolutions",
"For Additional Reading",
"Active CRS Reports",
"Archived CRS Reports"
],
"paragraphs": [
"",
"On December 17, 2008, Cuban President Raúl Castro offered to exchange some imprisoned Cuban political dissidents for five Cubans imprisoned for espionage in the United States since 2001. The State Department responded that the jailed dissidents in Cuba should be released immediately without any conditions.\nOn December 10, 2008, the House Appropriations Committee reported its version of the FY2009 Financial Services and General Government Appropriations bill, H.R. 7323 , with several provisions that would have eased restrictions on the sale of U.S. agricultural exports to Cuba and on family travel to Cuba. A draft version of the bill had been approved by the committee on June 25, 2008. No final action was taken on the measure.\nOn November 26, 2008, Cuban President Raúl Castro stated in an interview that he would be willing to meet with President-elect Barack Obama, and suggested the U.S. Naval Base at Guantanamo Bay, Cuba, as a location.\nOn November 24, 2008, the Government Accountability Office (GAO) issued a second report examining USAID's Cuba democracy program. While GAO lauded the efforts taken by USAID to improve oversight and address problems with the program, it also maintained that USAID needed to hire more staff to implement monitoring activities, and that it needed to periodically assess the program's efforts regarding grantees' adherence to internal controls, procurement practices, and compliance with laws and regulations. (U.S. GAO, Foreign Assistance: Continued Efforts Needed to Strengthen USAID's Oversight of U.S. Democracy Assistance for Cuba , GAO-09-165, November 2008.)\nOn November 8, 2008, Hurricane Paloma struck Cuba devastating the town of Santa Cruz el Sur. Raúl Castro stated that overall damages from the series of hurricanes and tropical storm since August amounted to some $10 billion.\nOn September 18, 2008, the House Foreign Affairs Committee's Subcommittee on International Organizations, Human Rights, and Oversight held a hearing on U.S. restrictions on Cuban-American travel to Cuba.\nFrom mid-August through September 10, 2008, four major storms (Hurricanes Gustav and Ike, and Tropical Storms Hanna and Fay) caused widespread damage throughout Cuba. The two hurricanes caused most of the damage. Overall, just 7 people were killed, but the hurricanes severely affected the housing sector (with almost 500,000 homes damaged and over 63,000 destroyed), the power grid, and the agricultural sector. The United States provided assistance through non-governmental organizations. U.S. offers of direct assistance to the Cuban government were rejected. Instead, Cuba called on the United States to allow U.S. companies to sell relief supplies to Cuba. In the aftermath of the hurricanes, several legislative initiatives were introduced – S.Amdt. 5581 (Dodd) to S. 3001 , H.R. 6913 (Flake), and H.R. 6962 (Delahunt) – that would have temporarily eased U.S. embargo restrictions in several areas. No action was taken on these initiatives. (See \" Aftermath of 2008 Hurricanes and Tropical Storms \" below.)\nOn July 21, 2008, the Senate Appropriations Committee reported its version of the FY2009 Agriculture Appropriations bill, S. 3289 ( S.Rept. 110 - 426 ), with a provision (section 737) that would have eased restrictions on travel to Cuba for the sale of agricultural and medical goods. No action was taken on the measure.\nOn July 18, 2008, the Senate Appropriations Committee reported its version of the FY2009 Department of State, Foreign Operations, and Related Programs Appropriations Act, S. 3288 ( S.Rept. 110 - 425 ). Among its Cuba provisions, the bill would have provided $1 million for preliminary work by the Department of State, or other entity designated by the Secretary of State, to establish cooperation with appropriate Cuban agencies on counternarcotics matters. The report to the bill recommended full funding for the Administration's requests of $34.392 million for Cuba broadcasting and $20 million in ESF for Cuba democracy programs, and called for the State Department and USAID to conduct regular evaluations to ensure the cost effectiveness of the programs. No action was taken on the measure.\nOn July 14, 2008, the Senate Appropriations Committee reported its version of the FY2009 Financial Services and General Government Appropriations bill, S. 3260 ( S.Rept. 110 - 417 ), which included provisions that would have eased restrictions on payment terms for the sale of agricultural goods to Cuba (section 618), travel relating to the sale of commercial and agricultural goods (section 619), and family travel (section 620). No action was taken on the measure.\nOn July 11, 2008, the GAO issued a report that criticized the practices of the International Broadcasting Bureau and the Office of Cuba Broadcasting for their practices in awarding noncompetitive contracts in December 2006 to two private U.S. commercial stations to transit Radio and TV Martí. According to GAO, the approach for awarding the two contracts did not reflect sound business practices. (U.S. Government Accountability Office, \"Broadcasting to Cuba, Weaknesses in Contracting Practices Reduced Visibility into Selected Award Decisions,\" GAO-08-764, July 2008.)\nOn June 25, 2008, the House Appropriations Committee approved a draft version of the FY2009 Financial Services and General Government Appropriations bill that included provisions that would have eased restrictions on family travel and U.S. agricultural exports to Cuba. The House Appropriations Subcommittee on Financial Services and General Government had approved the measure on June 17. No action was taken on the measure. (Also see \" Restrictions on Travel and Remittances \" and \" Agricultural Exports and Sanctions \" below.)\nOn June 19, 2008, the European Union approved the permanent lifting of diplomatic sanctions that it had imposed on Cuba in 2003. The action was largely symbolic, because the sanctions had been temporarily suspended since 2005. Cuban Foreign Minister Felipe Perez Roque welcomed the EU's decision, which will be reviewed in 12 months. U.S. State Department officials looked positively at the benchmarks that will be used in the EU's dialogue with Cuba, including Cuba's release of political prisoners, implementation of the International Covenant on Civil and Political Rights, access to the Internet, and allowing all EU delegations to meet with members of the opposition as well as the Cuban government.\nOn June 13, 2008, Cuba's Ministry of Foreign Affairs announced that it deported a U.S. citizen wanted in the United States for sexual exploitation of a minor and for child pornography who had entered Cuba from Mexico in April.\nOn June 4, 2008, the State Department issued its 2008 Trafficking in Persons Report, with Cuba again placed on the Tier 3 list of countries that do not cooperate in the fight against trafficking. According to the report, Cuba is principally a source country for women and children trafficked within the country for the purpose of commercial sexual exploitation. Cuba rejected the report as distorting Cuban reality in an attempt to justify the U.S. embargo. Although countries on the list are subject to U.S. foreign aid sanctions, Cuba is already ineligible for most U.S. assistance because of other aid sanctions.\nOn May 21, 2008, the Senate passed S.Res. 573 (Martinez) by unanimous consent, which recognized Cuba Solidarity Day and the struggle of the Cuban people. On the same day, President Bush called for the Cuban government to take steps to improve life for the Cuban people, including opening up access to the Internet. He also announced that the United States would change U.S. regulations to allow Americans to send mobile phones to family members in Cuba.\nOn May 19, 2008, Cuba accused the chief of the U.S. Interests Section in Havana, Michael Parmly, of carrying mail to dissidents that contained private funds from Santiago Alvarez, a Cuban American currently jailed in Miami on weapons charges.\nIn April 2008, the Cuban government announced that it would be revamping the state's wage system by removing the limit that a state worker can earn. (See \" Economic Changes Under Raúl \" below.)\nIn March 2008, the Cuban government announced the lifting of restrictions on the sale of such electronic consumer products as microwaves, DVD and video players, and on the sale and use of cell phones. It also began rolling out a reform of the agricultural sector focusing on decentralization in order to boost production. The government also lifted a ban on Cubans staying at tourist hotels.\nOn March 11, 2008, the State Department issued its 2007 report on human rights practices in Cuba, maintaining that the Cuban \"government continued to deny its citizens their basic human rights and committed numerous, serious abuses.\" See the full report at http: // www.state.gov / g / drl / rls / hrrpt / 2007 / 100635.htm .\nOn March 7, 2008, President Bush asserted that in order to improve U.S.-Cuban relations, Cuba \"must release all political prisoners...have respect for human rights in word and deed, and pave the way for free and fair elections.\"\nOn March 5, 2008, the House Subcommittee on the Western Hemisphere held a hearing on Cuba in the aftermath of Fidel Castro permanently stepping down from power.\nOn February 24, 2008, Cuba's legislature, the National Assembly of People's Power, selected Raúl Castro as President of the Council of State, a position that makes him Cuba's head of state and government. In a surprise move, the Assembly also selected José Ramón Machado Venture as the Council's First Vice-President, making him the official successor to Raúl according to the Cuban Constitution. A physician by training, Machado is 77 years old and part of the older generation of so-called históricos, part of the 1959 Cuban revolution.\nOn February 19, 2008, Fidel Castro announced that he would not accept the position of President of the Council of State when Cuba's legislature meets on February 24 to select from among its ranks the members of the 31-member Council of State.\nOn February 16, 2008, Cuba released four political prisoners—union activist Pedro Pablo Alvarez Ramos, human rights activist Omar Pernet Hernández, and journalists Jose Gabriel Ramón Castillo and Alejandro González Raga—but sent them into forced exile to Spain. The four had been imprisoned since March 2003.\nOn January 20, 2008, Cuba elected representatives to its 614-member legislature, the National Assembly of People's Power, and Fidel Castro was once again among those elected. As in the past, voters were offered only a single slate of candidates.",
"On December 11, 2007, the Senate Finance Committee held a hearing on the issue of \"Promoting American Agricultural and Medical Exports to Cuba\" and a related bill, S. 1673 (Baucus).\nOn December 10, 2007, Cuba announced that it would sign two international human rights agreements, the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social, and Cultural Rights. Amnesty International welcomed the news, but noted that Cuba's action would only be meaningful if the government changed its policies of intimidation and arrests of political dissidents.\nOn December 4, 2007, Cuban security officials raided a Catholic Church hall in the city of Santiago, using tear gas and force to detain 18 dissidents who had been protesting the recent arrests of youths in Havana. Church officials said that Cuban government officials subsequently apologized for invading church property, and had released the dissidents.\nOn November 30, 2007, the Government Accountability Office (GAO) issued a report on U.S. enforcement of the Cuba embargo. The report recommended: 1) that the Secretary of Homeland Security direct Customs and Border Protection (CBP) to re-evaluate whether the level of resources dedicated to inspecting passengers from Cuba at the Miami International Airport effectively balances its responsibility for enforcing the Cuba embargo with its responsibilities for keeping terrorists, criminals, and inadmissible aliens out of the country; and 2) that the Treasury Department direct the Office of Foreign Assets Control to reassess the allocation of resources for investigating and penalizing violations of the Cuba embargo with respect to the 20 other sanctions programs it administers. (See the full report available at [http://www.gao.gov/docsearch/abstract.php?rptno=GAO-08-80])\nOn November 15, 2007, the House Subcommittee on International Organizations, Human Rights, and Oversight of the Committee on Foreign Affairs held a hearing focusing on the case of Luis Posada Carriles, alleged to be involved in the 1976 bombing of a Cuban airliner that killed 73 people.\nOn November 5, 2007, President Bush awarded Cuban dissident Dr. Oscar Elias Biscet with the Presidential Medal of Freedom. Biscet, who has spent most of the last eight years in jail, was sentenced in 2003 to 25 years in prison.\nOn October 24, 2007, President Bush made a policy speech that reflected a continuation of the sanctions-based approach toward Cuba. The President also proposed three new initiatives to provide support to the Cuban people: allowing licensed groups to provide computers and Internet access to the Cuban people; inviting Cuban youths whose families are oppressed to participate in the Partnership for Latin American Youth scholarship programs; and developing an international multi-billion dollar Freedom Fund for Cuba to help the Cuban people rebuild their economy and make the transition to democracy.\nIn a September 25, 2007, speech before the U.N. General Assembly, President Bush stated that \"the long rule of a cruel dictator is nearing its end\" in Cuba, and called on the United Nations to insist on free speech, free assembly, and free elections as Cuba \"enters a period of transition.\"\nIn a September 17, 2007, speech on Cuba, U.S. Commerce Secretary Carlos Gutierrez stated, \"The Administration's position has been unfailingly clear and consistent. Unless the regime changes, our policy will not. We are prepared to respond to genuine democratic change in Cuba.\"\nOn September 6, 2007, during consideration of the FY2008 foreign aid appropriations measure, H.R. 2764 , the Senate approved S.Amdt. 2694 (Martinez) by voice vote that increased funding for Cuba democracy programs by $30.7 million to fully fund the Administration's request of $45.7 million. The Senate Appropriations Committee report to the bill ( S.Rept. 110-128 ) would have provided $15 million in ESF for Cuba democracy programs.\nOn July 27, 2007, the House rejected, by a vote of 182-245, H.Amdt. 707 (Rangel) to H.R. 2419 , the 2007 farm bill. The amendment would have eased restrictions on the commercial sale of agricultural products to Cuba by clarifying the meaning of \"payment of cash in advance\" for the sale of such products; authorizing direct transfers between U.S. and Cuban financial institutions for such sales; and authorizing the issuance of U.S. visas for Cubans to conduct activities, including phytosanitary inspections, related to such sales.\nOn July 26, 2007, in a speech on Cuba's revolutionary anniversary, Raúl Castro acknowledged that Cuban salaries were insufficient to satisfy needs, and maintained that structural changes were necessary in order to increase efficiency and production. He also reiterated an offer to engage in dialogue with the United States, and strongly criticized U.S. trade and economic sanctions on Cuba.\nOn July 19, 2007, the Senate Appropriations Committee approved its version of the FY2008 Agriculture appropriations bill, which included a provision, adopted in committee by voice vote, that would authorize general licenses for travel to Cuba for the sale and marketing of U.S. agricultural and medical goods. S. 1859 (Kohl) was subsequently introduced and reported by the Senate Appropriations Committee on July 24, 2007 ( S.Rept. 110-134 ), with the provision in Section 741 of the bill.\nOn July 19, 2007, the U.S. International Trade Commission issued a report, requested by the Senate Committee on Finance, maintaining that the U.S. share of Cuba's agricultural, fish, and forest imports would rise from one-third to between one-half and two-thirds if trade restrictions were lifted. According to the report, lifting travel restrictions would result in travel by U.S. citizens to Cuba rising to between 550,000 and 1 million from an estimate of 171,000 in 2005. See the full report available at [http://www.usitc.gov/ext_relations/news_release/2007/er0719ee1.htm]\nOn July 12, 2007, the Subcommittee on International Organizations, Human Rights, and Oversight of the House Committee on Foreign Affairs held a hearing on human rights and U.S. foreign policy that examined the cases of Azerbaijan, Cuba, and Egypt.\nOn July 3, 2007, independent journalist Armando Betancourt Reina was sentenced to 15 months in prison.\nOn June 28, 2007, the House passed H.R. 2829 , the FY2008 Financial Services and General Government Appropriations Act, which contains a provision in Section 903 that would prevent Treasury Department funds from being used to implement a February 2005 tightening of policy requiring the payment of cash in advance prior to the shipment of U.S. agricultural goods to Cuba. The House adopted the provision when it approved H.Amdt. 467 (Moran, Kansas) by voice vote.\nOn June 26, 2007, the Senate approved by unanimous consent S. 1612 , a measure that would amend the International Emergency Economic Powers Act to increase the potential civil and criminal penalties against violators of U.S. sanctions law. Civil penalties would increase to not exceed the greater of $250,000 (from $50,000) or an amount that is twice the amount of the transaction, while criminal penalties would increased to not more than $1 million and/or 20 years imprisonment.\nOn June 22, 2007, the House passed the FY2008 State, Foreign Operations, and Related Agencies Appropriations Act, H.R. 2764 , with several Cuba provisions. It would fully fund the Administration's request for $45.7 million in Economic Support Funds (ESF) for Cuba democracy programs. (The House committee-reported bill would have provided $9 million in ESF for such programs, but during June 21, 2007 floor consideration, the House approved H.Amdt. 351 (Diaz-Balart) by a vote of 254-170 that increased funding for Economic Support Funds (ESF) by $36.7 million in order to fully fund the Administration's request.) The House-passed bill, in Section 607, would prohibit direct funding for Cuba, and, in Section 673, would specifically prohibit International Narcotics Control and Law Enforcement assistance to the Cuban government. The report to the bill, H.Rept. 110-197 , recommended $33.681 million for Cuba broadcasting, $5.019 million below the Administration's request of $38.7 million and identical to the amount provided for FY2007.\nOn May 9, 2007 a federal judge in Texas dismissed immigration fraud charges against Luis Posada Carriles, alleged to be involved in the 1976 bombing of a Cuban airliner and 1997 bombings in Cuba. The judge maintained that the U.S. government mistranslated testimony from Posada and manipulated evidence. Posada had been released from jail in New Mexico on April 19, 2007, and allowed to return to Miami under house arrest awaiting trial.\nOn May 3, 2007, Cuban authorities prevented a hijacking from Havana to the United States by two military recruits who killed an army lieutenant colonel that they had taken hostage. Cuba denounced U.S. immigration policy for encouraging such violent action.\nOn April 25, 2007, Cuba expelled U.S. fugitive Joseph Adjmi to the United States. Adjmi had been convicted of mail fraud in the 1960s, but disappeared before beginning his 10-year sentence.\nOn April 24, 2007, the Cuban government released six dissidents, arrested in 2005, after serving most or all of their sentences.\nOn April 23, 2007, one of Cuba's longest serving political prisoners, Jorge Luis García Pérez, was released from prison after 17 years.\nOn April 16, 2007, many of Cuba's leading dissident groups signed a statement declaring that they were united in their struggle for a peaceful transition toward democracy.\nIn April 2007, the Cuban government conducted secret trials sentencing human rights activist Rolando Jiménez Posada to 12 years in jail, and independent journalist Oscar Sánchez Madan to four years.\nOn February 8, 2007, Cuba extradited alleged Colombia drug cartel leader Luis Hernando Gómez Bustamante to Colombia. Gómez Bustamante was ultimately extradited to the United States in July 2007 to face on drug trafficking charges.\nIn February 2007, the Cuban government released three political prisoners that had been held since July 2005 before a planned protest at the French Embassy: prominent dissident René Gómez Manzano was released February 8, while dissidents Julio César López and Raúl Martinez were released on February 3.\nIn January 11, 2007 testimony before the Senate Select Committee on Intelligence, Defense Intelligence Agency Director Lt. Gen. Michael Maples stated that \"Raúl Castro is firmly in control as Cuba's acting president and will likely maintain power and stability after Fidel Castro dies, at least for the short-term.\"",
"On February 24, 2008, Cuba's legislature selected Raúl Castro as President of the 31-member Council of State, a position that officially made him Cuba's head of government and state. Most observers expected this since he already had been heading the Cuban government on a provisional basis since July 2006 when his brother Fidel Castro, Cuba's long-ruling communist leader, stepped down as President because of poor health.\nFor many years, Raúl, as First Vice President of the Council of State and the Council of Ministers, had been the officially designated successor and was slated to become chief of state with Fidel's departure. Raúl also had served as Minister of the Revolutionary Armed Forces (FAR) since the beginning of the Cuban Revolution. When Fidel stepped down from power in late July 2006 because of poor health, he signed a proclamation that ceded political power to Raúl on a provisional basis, including the positions of First Secretary of the Cuban Communist Party (PCC), Commander in Chief of the Revolutionary Armed Forces (FAR), and President of the Council of State.\nDespite the change in government in February 2008, Fidel still holds the official title of First Secretary of the PCC. In late April 2008, Raúl announced that the PCC's sixth congress would be held at the end of 2009 (the last was held in 1997). Some observers speculate that Fidel Castro could officially be replaced as the head of the party at that time, and it is likely that some of the PCC's 25-member Political Bureau (Politburo) will be replaced.\nWhile it was not a surprise to observers for Raúl to succeed his brother Fidel as head of government, the selection of José Ramón Machado Ventura as the Council of State's First Vice President was a surprise. A physician by training, Machado is 77 years old, and is part of the older generation of so-called históricos of the 1959 Cuban revolution. He has been described as a hard-line communist party ideologue, and reportedly has been a close friend and confident of Raul's for many years. Machado's position is significant because it makes him the official successor to Raúl, according to the Cuban Constitution. Many observers had expected that Carlos Lage, one of five other Vice Presidents on the Council of State, would have been chosen as First Vice President. He was responsible for Cuba's economic reforms in the 1990s, and at 56 years of age, represents a younger generation of Cuban leaders. While not rising to First Vice President, Lage nevertheless retained his position as a Vice President on the Council of State, and also will continue to serve as the Council's Secretary.\nSeveral key military officers and confidants of Raúl also became members of the Council, increasing the role of the military in the government. General Julio Casas Regueiro, 72 years of age, who already was on the Council, became one of its five vice presidents. Most significantly, Casas, who had been first vice minister in the FAR, was selected by Raúl as the country's new Minister of the FAR, officially replacing Raúl in that position. Casas also is chairman of GAESA (Grupo de Administracion Empresarial, S.A.), the Cuban military's holding company for its extensive businesses. Two other military appointments to the Council were Gen. Alvaro López Miera, the army's chief of staff, and Gen. Leopoldo Cintra Frías, who commanded the Western army, one of Cuba's three military regions.\nSince Fidel stepped down from power in 2006, Cuba's political succession from Fidel to Raúl Castro has been characterized by a remarkable degree of stability. Although initially there were not any significant economic changes under Raúl, there were signs that changes could be coming. In July 2007 speech, Raúl maintained that structural changes were needed in the Cuban economy in order to increase efficiency and production. In his first speech as President in February 2008, Raúl promised to make the government smaller and more efficient, to review the potential reevaluation of the Cuban peso, and to eliminate excessive bans and regulations that curb productivity. Since March 2008, the government has implemented a number of economic changes that from the outside might not seem significant, but are significant policy changes for a government that has heretofore followed a centralized communist economic model. (See \" Economic Changes Under Raúl \" below.)\nWhile additional economic changes under Raúl Castro are likely, few expect there will be any change to the government's tight control over the political system, which is backed up by a strong security apparatus. Some observers point to the reduced number of political prisoners, from 283 at the end of 2006 to around 219 in mid-2008 as evidence of a lessening of repression, but dissidents maintain that the overall situation has not improved. Some observers contend that as the new government of Raúl Castro becomes more confident of ensuring social stability and does not feel threatened, it could move to soften its hard repression, but for now the government is continuing its harsh treatment of the opposition. The selection of José Ramón Machado as First Vice President also appears to be a clear indication that the Cuban government has no intention of easing tight control over the political system.\nFor background, also see CRS Report RS22742, Cuba ' s Political Succession: From Fidel to Raul Castro , and CRS Report RL33622, Cuba ' s Future Political Scenarios and U.S. Policy Approaches , written in the aftermath of Fidel Castro's stepping down because of poor health in 2006.",
"Until Fidel stepped down, he had ruled since the 1959 Cuban Revolution, which ousted the corrupt government of Fulgencio Batista. In April 1961, Castro stated that the Cuban Revolution was socialist, and in December 1961, he proclaimed himself to be a Marxist-Leninist. From 1959 until 1976, Castro ruled by decree. A Constitution was enacted in 1976 setting forth the PCC as the leading force in state and society, with power centered in a Political Bureau headed by Fidel Castro. In October 1997, the Cuban Communist Party held its 5 th Congress (the prior one was held in 1991) in which the party reaffirmed its commitment to a single party state and reelected Fidel and Raúl Castro as the party's first and second secretaries.\nCuba's Constitution also outlines national, provincial, and local governmental structures. Legislative authority is vested in a National Assembly of People's Power that meets twice annually for brief periods. When the Assembly is not in session, a Council of State, elected by the Assembly, acts on its behalf. According to Cuba's Constitution, the President of the Council of State is the country's head of state and head of government. Executive power in Cuba is vested in a Council of Ministers, also headed by the country's head of state and government, i.e. the President of the Council of State. From the promulgation of the 1976 Constitution until February 24, 2008, Fidel served as served as head of state and government through his position as President of the Council of State.\nAlthough National Assembly members were directly elected for the first time in February 1993, only a single slate of candidates was offered. Direct elections for the National Assembly were again held in January 1998 and January 2003, but voters again were not offered a choice of candidates. In contrast, at the local level elections for municipal elections are competitive, with from two to eight candidates. To be elected, the candidate must receive more than half of the votes cast. As a result, runoff elections between the two top candidates are common.\nIn 2007, the process of nominating candidates for the local municipal assemblies took place in September 2007. Municipal elections were held October 21, 2007 (with runoffs on October 28), and over 15,000 local officials were chosen. The new municipal assemblies then met on December 2, 2007 to nominate candidates for provincial assemblies and for the National Assembly of People's Power.\nNational Assembly elections were held on January 20, 2008 (along with elections for 1,201 delegates to 14 provincial assemblies), and Fidel Castro was once again among the candidates elected to the now 614-member legislative body. As in the past, voters were only offered a single slate of candidates.\nOn February 24, 2008, the new Assembly was scheduled to select from among its ranks the members of the Council of State and its President. Many observers speculated that because of his poor health, Fidel would choose not be re-elected as President of the Council of State, which would officially confirm his departure from heading the Cuban government. Statements from Castro himself in December 2007 hinted at his potential retirement. That proved true on February 19, 2008, when Fidel announced that he would not accept the position as President of the Council of State, essentially confirming his departure as titular head of the Cuban government.\nBefore Fidel stepped down from power in July 2006, observers discerned several potential scenarios for Cuba's future after Fidel. These fit into three broad categories: the continuation of a communist government; a military government; or a democratic transition or fully democratic government. According to most observers, the most likely scenario, at least in the short term, was continued leadership under Raúl. This was likely for a variety of reasons, but especially because of Raúl's designation by Fidel as successor in the party and his position as leader of the FAR. The FAR has been in control of the government's security apparatus since 1989 and has played an increasing role in Cuba's economy through the ownership of numerous business enterprises. The scenario of a military-led government was viewed by some observers as a possibility only if a successor communist government failed because of divisiveness among leaders or political instability. For many observers, the least likely scenario upon Fidel's death or departure was a democratic transition government. With a strong totalitarian security apparatus, the Castro government successfully impeded the development of independent civil society, with only a small and tightly regulated private sector, no independent labor movement, and no unified political opposition.",
"",
"Cuba has a poor record on human rights, with the government sharply restricting freedoms of expression, association, assembly, movement, and other basic rights. It has cracked down on dissent, arrested human rights activists and independent journalists, and staged demonstrations against critics. Although some anticipated a relaxation of the government's oppressive tactics in the aftermath of the Pope's January 1998 visit, government attacks against human rights activists and other dissidents have continued since that time. The Inter-American Commission on Human Rights maintains in its 2007 annual human rights report that the Cuban government's \"restrictions on political rights, freedom of expression, and dissemination of ideas have created, over a period of decades, a situation of permanent and systematic violations of the fundamental rights of Cuban citizens.\"\nAccording to the State Department's human rights report for 2007, issued in March 2008, the Cuban government continued to commit numerous serious abuses during the year. Among the human rights problems cited in the State Department report were arbitrary arrest and detention of human rights advocates and members of independent professional organizations; harassment, beatings, and threats against political opponents by government-recruited mobs, police, and state security officials; beatings and abuse of detainees and prisoners (which led to the death of two prisoners in 2007); denial of fair trial; harsh and life-threatening prison conditions, including denial of medical care; and interference with privacy, including pervasive monitoring of private communications. As noted in the report, the government tightly controlled Internet access, with citizens only accessing it through government-approved institutions or through a few Internet facilities offered by foreign diplomatic offices. The government reviewed and censored e-mail, and forbade attachments. (See the full State Department human rights report on Cuba, available at http: // www.state.gov / g / drl / rls / hrrpt / 2007 / 100635.htm .)\nThe government conducted a severe crackdown on activists in March 2003 and imprisoned 75 democracy activists, including independent journalists and librarians and leaders of independent labor unions and opposition parties. At present, 55 of the \"group of 75\" political prisoners remain incarcerated. The most recent release of the group of 75 occurred on February 16, 2008, when Cuba released four political prisoners—union activist Pedro Pablo Alvarez Ramos, human rights activist Omar Pernet Hernández, and journalists Jose Gabriel Ramón Castillo and Alejandro González Raga—but sent them into forced exile to Spain. Prior to that, Hector Palacios was released for health reasons in December 2006.\nIn 2007, the government released several other political prisoners, including prominent dissident René Gómez Manzano and two others in February, and Jorge Luis García Pérez and six others in April. Incarcerated for 17 years, García Pérez was one of Cuba's longest serving political prisoners. In August 2007, two more political prisoners were released after serving much of their sentences: Francisco Chaviano Gonzalez, a leader of the dissident Cuban Civil Rights Council, was released on medical parole after serving 13 of 15 years; Lazaro Gonzalez Adan was released after serving three years in prison.\nIn July 2008, the independent Cuban Commission on Human Rights and National Reconciliation (CCDHRN) documented at least 219 political prisoners, down from 234 in January 2008. This number reflected a decline from previous years when the number of prisoners was at least 283 at the end of 2006 and 333 at the end of 2005. The Commission maintains, however, that the real number of prisoners is likely greater because of Cuba's totalitarian regime that does not allow scrutiny of the prison system.\nDespite the reduction in the number of prisoners, human rights activists maintain that the overall situation has not improved. Cuban human rights activist Elizardo Sánchez, the head of the CCDHRN, asserts that the government is still repressing dissidents, with threats, police searches of people's homes, interrogations, and short detentions. Sánchez asserts that the police state is still in force in Cuba, reflected in almost every aspect of national life. In late February 2008, Cuba signed two U.N. human rights treaties: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social, and Cultural Rights. Some considered this a positive step, but others stressed that it remains to be seen whether the Cuban government will take action to guarantee civil and political freedoms. One significant step taken by the government in late March 2008 was the lifting of a ban on Cubans staying at tourist hotels. Although few Cubans will be able to afford the cost of staying in such hotels, the move is symbolically significant and ends the practices of what critics had dubbed \"tourism apartheid.\"\nA human rights group known as the Ladies in White (Damas de Blanco) was formed in April 2003 by the wives, mothers, daughters, sisters, and aunts of the members of the \"group of 75\" dissidents arrested a month earlier in Cuba's human rights crackdown. The group conducts peaceful protests calling for the unconditional release of political prisoners. Dressed in white, its members attend Mass each Sunday at St. Rita's church in Havana and then walk silently through the streets to a nearby park. In October 2005, the group received the Sakharov Prize for Freedom of Thought from the European Parliament. On April 21, 2008, ten members of the Ladies in White were physically removed from a park near the Plaza of the Revolution in Havana when they demanded the release of their husbands and the other members of the \"group of 75\" still imprisoned.\nIn December 2006, independent Cuban journalist Guillermo Fariñas Hernández received the 2006 Cyber Dissident award from the Paris-based Reporters Without Borders. Fariñas went on a seven-month hunger strike in 2006, demanding broader Internet access for Cubans.\nIn November 2007, President Bush awarded Cuban dissident Dr. Oscar Elias Biscet with the Presidential Medal of Freedom. Biscet, who has spent most of the last eight years in jail, was sentenced in 2003 to 25 years in prison. Legislation was introduced in the 110 th Congress in March 2008— H.R. 5627 (Diaz-Balart, Lincoln) and S. 2777 (Martinez)—to award the congressional gold medal to Biscet, although no action was taken on the measures.\nSince late 2007, Cuban Internet blogger Yoaní Sánchez has received considerable international attention for her website, Generación Y, that includes commentary critical of the Cuban government. In May 2008, Sánchez was awarded Spain's Ortega y Gasset award for digital journalism, but the Cuban government did not provide her with an exit permit to accept the award. (Sánchez's website is available at http://www.desdecuba.com/ generaciony/ ).\nIn late 2008, two international press rights groups gave awards to two Cuban independent journalists who have been imprisoned since 2003. In November 2008, the New York-based Committee for the Protection of Journalists selected Héctor Maseda Gutiérrez as a recipient of its international press freedom award, while in early December 2008, the Paris-based press rights groups Reporters Without Borders awarded Ricardo González Alfonso its journalist of the year award. While in prison, Gutiérrez wrote a memoir that he managed to smuggle out of prison one page at a time. Before his imprisonment, González had started an association to improve independent journalism. As of December 2008, 23 journalists were imprisoned in Cuba.\nPrior to the 60 th anniversary of the signing of the Universal Declaration of Human Rights on December 10, 2008, up to a dozen Cuban human rights activists reportedly were detained in order to prevent them from attending planned events.\nOn December 17, 2008, Cuban President Raúl Castro offered to exchange some imprisoned Cuban political dissidents for five Cubans imprisoned for espionage in the United States since 2001. The five Cubans are serving sentences ranging from 15 years to life. Cuba's National Assembly had dubbed the so-called Cuban Five as \"Heroes of the Republic,\" and the Cuban government has called for their return to Cuba. In response to Raúl Castro's offer, the State Department said that the jailed dissidents in Cuba should be released immediately without any conditions.",
"Named for the 19 th century priest, Felix Varela, who advocated independence from Spain and the abolition of slavery, the Varela Project has collected thousands of signatures supporting a national plebiscite for political reform in accordance with a provision of the Cuban Constitution. The referendum, if granted, would call for respect for human rights, an amnesty for political prisoners, private enterprise, and changes to the country's electoral law that would result in free and fair elections. The initiative is organized by Oswaldo Payá, who heads the Christian Liberation Movement.\nIn May 2002, organizers of the Varela Project submitted 11,020 signatures to the National Assembly calling for a national referendum. This was more than the 10,000 required under Article 88 of the Cuban Constitution. Former President Jimmy Carter noted the significance of the Varela Project in his May 14, 2002 address in Havana that was broadcast in Cuba. Carter noted that \"when Cubans exercise this freedom to change laws peacefully by a direct vote, the world will see that Cubans, and not foreigners, will decide the future of this country.\" In response to the Varela Project, the Cuban government orchestrated its own referendum in late June 2002 that ultimately led to the National Assembly amending the Constitution to declare Cuba's socialist system irrevocable. The Varela Project has persevered despite the 2003 human rights crackdown, which included the arrest of 21 Project activists. In October 2003, Oswaldo Payá delivered more than 14,000 signatures to Cuba's National Assembly, again requesting a referendum on democratic reforms. More recently, in October 2008, Varela Project activists launched a third campaign to collect signatures.\nSince December 2003, Payá has been involved in another project known as the National Dialogue with the objective of getting Cubans involved in the process of discussing and preparing for a democratic transition. According to Payá, thousands of Cubans have met in dialogue groups to discuss a working document covering such themes as: economic, political, and institutional changes; social issues; public health and the environment; public order and the armed forces; media, science, and culture; reconciliation; and reuniting with the exile community.",
"Led by three prominent Cuban human rights activists—Marta Beatriz Roque, René Gómez Manzano, and Felix Bone—the Assembly to Promote Civil Society held two days of meetings in Havana on May 20-21, 2005, with some 200 participants. The date was significant because May 20 is Cuba's independence day. Many observers had expected the government to prevent or disrupt the proceedings. The Cuban government did prevent some Cubans and foreigners from attending the conference, but overall the meeting was dubbed by its organizers as the largest gathering of Cuban dissidents since the 1959 Cuban revolution. The Assembly issued a ten-point resolution laying out an agenda for political and economic change in Cuba. Among its provisions, the resolution called for the release of all political prisoners, demanded respect for human rights, demanded the abolition of the death penalty, and endorsed a 1997 dissident document on political and economic rights entitled the \"Homeland Belongs to Us All.\"",
"With the cutoff of assistance from the former Soviet Union, Cuba experienced severe economic deterioration from 1989-1993, with estimates of economic decline ranging from 35-50%, but there has been considerable improvement since 1994. From 1994-2000, as Cuba moved forward with some limited market-oriented economic reforms, economic growth averaged 3.7% annually.\nEconomic growth was strong in the 2005-2007 period, registering an impressive 11.2% in 2005 (despite widespread damage caused by Hurricanes Dennis and Wilma), 12.1% in 2006, and 7.3% in 2007. The economy benefitted from the growth of the tourism, nickel, and oil sectors, and support from Venezuela and China in terms of investment commitments and credit lines. Cuba benefits from a preferential oil agreement with Venezuela, which provides Cuba with more than 90,000 barrels of oil a day. Some observers maintain that Venezuela's oil subsidies amounted to more than $3 billion a year in 2006. Venezuela also helped Cuba upgrade an oil refinery in Cienfuegos, which was inaugurated in 2007.\nIn 2008, economic growth slowed to an estimated 4.5%. This was prompted by several problems, including the declining price of nickel, which accounts for a major share of Cuba's exports, the rising cost of food imports, and the devastation wrought by Hurricanes Gustav and Ike in 2008, particularly in the agricultural sectors.\nOver the years, Cuba has expressed pride for the nation's accomplishments in health and education. In 2005, according to the U.N. Development Program's 2007/2008 Human Development Report, life expectancy in Cuba was 77.7 years, adult literacy was estimated at almost 100%, and the infant mortality rate was 6 per 1,000 live births, the lowest rate in Latin America. For 2006 and 2007, Cuba has boasted an infant mortality rate of 5.3.\nWhen Cuba's economic slide began in 1989, the government showed little willingness to adopt any significant market-oriented economic reforms, but in 1993, faced with unprecedented economic decline, Cuba began to change policy direction. Beginning in 1993, Cubans were allowed to own and use U.S. dollars and to shop at dollar-only shops previously limited to tourists and diplomats. Self-employment was authorized in more than 100 occupations in 1993, most in the service sector, and by 1996 that figure had grown to more than 150 occupations. Also in 1993, the government divided large state farms into smaller, more autonomous, agricultural cooperatives (Basic Units of Cooperative Production, UBPCs). It opened agricultural markets in 1994, where farmers could sell part of their produce on the open market, and it also permitted artisan markets for the sale of handicrafts. In 1995, the government allowed private food catering, including home restaurants ( paladares) , in effect legalizing activities that were already taking place), and approved a new foreign investment law that allows fully owned investments by foreigners in all sectors of the economy with the exception of defense, health, and education. In 1996, it authorized the establishment of free trade zones with tariff reductions typical of such zones. In 1997, the government enacted legislation to reform the banking system and established a new Central Bank (BCC) to operate as an autonomous and independent entity.\nAfter Cuba began to recover from its economic decline, the government began to backtrack on some of its reform efforts. Regulations and new taxes made it extremely difficult for many of the nation's self-employed. Some home restaurants were forced to close because of the regulations. In 2004, the Cuban government limited the use of dollars by state companies for any services or products not considered part of their core business. Some analysts viewed the measure as an effort to turn back the clock on economic reform measures. Also in 2004, Fidel Castro announced that U.S. dollars no longer would be used in entities that currently accept dollars (such as stores, restaurants, and hotels). Instead, dollars had to be exchanged for \"convertible pesos,\" with a 10% surcharge for the exchange. Dollar bank accounts are still allowed, but Cubans are not able to deposit new dollars into the accounts. Beginning in April 2005, convertible pesos were no longer on par with the U.S. dollar, but instead were linked to a basket of foreign currencies. This reduced the value of dollar remittances sent to Cuba and provides more hard currency to the Cuban government.",
"When Raúl Castro assumed provisional power in July 2006, there was some expectation that the government would be more open to economic policy changes, and a debate about potential economic reforms re-emerged in Cuba. On July 26, 2007, in a speech commemorating Cuba's revolutionary anniversary, Raúl Castro acknowledged that Cuban salaries were insufficient to satisfy needs, and maintained that structural changes were necessary in order to increase efficiency and production. He also maintained that the government was considering increasing foreign investment in the country. Some observers maintain that the speech was a forecast for economic reforms under Raúl, while others stressed that only small marginal changes had occurred in Raúl's first year in power.\nIn the aftermath of Raúl's July 2007 speech, Cuban public expectations for economic reform increased. Thousands of officially sanctioned meetings were held in workplaces and local PCC branches around the country where Cubans were encouraged to air their views and discuss the future direction of the country. Complaints focused on low salaries and housing and transportation problems, and some participants advocated legalization of more private businesses. Raised expectations for economic change in Cuba increased the chance that government actually would adopt some policy changes. Doing nothing would run the risk of increased public frustration and a potential for social unrest. Increased public frustration was in evident in a clandestine video, widely circulated on the Internet in early February 2008, of a meeting between Ricardo Alarcón, the head of Cuba's legislature, and university students in which a student was questioning why Cuban wages are so low and why Cubans are prohibited from visiting tourist hotels (a policy subsequently changed in late March 2008) or traveling abroad. The video demonstrated the disillusionment of many Cuban youth with the poor economic situation and repressive environment in Cuba.\nSince Raúl Castro officially assumed the presidency in February 2008, his government has announced a series of economic changes. In his first speech as President in February 2008, Raúl promised to make the government smaller and more efficient, to review the potential reevaluation of the Cuban peso, and to eliminate excessive bans and regulations that curb productivity. In mid-March, the government announced that restrictions on the sales of consumer products such as computers, microwaves, and DVD and video players would be lifted. In late March, it announced that it would lift restrictions on the use of cell phones, and this officially occurred in mid-April.\nOne of Cuba's major reform efforts under Raúl Castro in 2008 was focused on the agriculture sector, a vital issue because Cuba reportedly imports some 80% of its food needs and is paying an increasing amount for such imports because of rising food prices. In an effort to boost food production, the government is giving farmers more discretion over how to use their land and what supplies to buy. Decision-making on agriculture reportedly has been shifted from the national government to the local municipal level, with government bureaucracy reportedly cut significantly.\nIn April 2008, the government announced that it would be revamping the state's wage system by removing the limit that a state worker can earn. This an effort to boost productivity and to deal with one of Cuba's major economic problems: how to raise wages to a level where basic human needs can be satisfied. Cuban state companies reportedly have until August to revise their salary structures in order to reward workers who work hard with more compensation. The problem of low wages in Cuba is closely related to another major economic problem: how to unify the two official currencies circulating in the country—the Cuban convertible peso (CUC) and the Cuban peso, which trades for about 25 to 1 CUC. Most people are paid in Cuban pesos, and the minimum monthly wage in Cuba is about 225 pesos (about $9 U.S. dollars ), but for increasing amounts of consumer goods, convertible pesos are used. Cubans with access to foreign remittances or work in jobs that give them access to convertible pesos are far better off than those Cuban who do not have such access.\nLooking ahead, several factors could restrain the magnitude of economic policy change in Cuba. A number of observers believe that as long as Fidel Castro is around, it will be difficult for the government to move forward with any major initiatives that are viewed as deviating from Fidel's orthodox policies. Other observers point to the significant oil subsidies and investment that Cuba now receives from Venezuela that have helped spur Cuba's high economic growth levels over the past several years and maintain that such support lessens the government's impetus for economic reforms. Another factor that bodes against rapid economic policy reform is the fear that it could spur the momentum for political change. Given that one of the highest priorities for Cuba's government has been maintaining social and political stability, any economic policy changes are likely to be smaller changes introduced over time that do not threaten the state's control.\nThere was some expectation that Raúl Castro would announce additional economic reforms in his July 26, 2008 speech on Cuba's revolutionary anniversary, but there were no such announcements. Instead, Castro acknowledged the \"large number of problems that still need to be resolved, the majority of which directly affect the population.\" Nevertheless, in an address earlier in the month to the National Assembly, Raúl again pointed to the goal of increasing salaries based on job performance. According to Castro: \"Socialism means social justice and equality, but equality of rights and opportunities, not salaries. Equality does not mean egalitarianism.\"",
"In the early 1960s, U.S.-Cuban relations deteriorated sharply when Fidel Castro began to build a repressive communist dictatorship and moved his country toward close relations with the Soviet Union. The often tense and hostile nature of the U.S.-Cuban relationship is illustrated by such events and actions as U.S. covert operations to overthrow the Castro government culminating in the ill-fated April 1961 Bay of Pigs invasion; the October 1962 missile crisis in which the United States confronted the Soviet Union over its attempt to place offensive nuclear missiles in Cuba; Cuban support for guerrilla insurgencies and military support for revolutionary governments in Africa and the Western Hemisphere; the 1980 exodus of around 125,000 Cubans to the United States in the so-called Mariel boatlift; the 1994 exodus of more than 30,000 Cubans who were interdicted and housed at U.S. facilities in Guantanamo and Panama; and the February 1996 shootdown by Cuban fighter jets of two U.S. civilian planes operated by the Cuban American group, Brothers to the Rescue, which resulted in the death of four U.S. crew members.\nSince the early 1960s, U.S. policy toward Cuba has consisted largely of isolating the island nation through comprehensive economic sanctions, including an embargo on trade and financial transactions. The Cuban Assets Control Regulations (CACR), first issued by the Treasury Department in July 1963, lay out a comprehensive set of economic sanctions against Cuba, including a prohibition on most financial transactions with Cuba and a freeze of Cuban government assets in the United States. The CACR have been amended many times over the years to reflect changes in policy, and remain in force today.\nThese sanctions were made stronger with the Cuban Democracy Act (CDA) of 1992 ( P.L. 102 - 484 , Title XVII) and with the Cuban Liberty and Democratic Solidarity Act of 1996 ( P.L. 104 - 114 ), the latter often referred to as the Helms/Burton legislation. The CDA prohibits U.S. subsidiaries from engaging in trade with Cuba and prohibits entry into the United States for any vessel to load or unload freight if it has engaged in trade with Cuba within the last 180 days. The Cuban Liberty and Democratic Solidarity Act, enacted in the aftermath of Cuba's shooting down of two U.S. civilian planes in February 1996, combines a variety of measures to increase pressure on Cuba and provides for a plan to assist Cuba once it begins the transition to democracy. Most significantly, the law codified the Cuban embargo, including all restrictions under the CACR. This provision is especially noteworthy because of its long-lasting effect on U.S. policy options toward Cuba. The executive branch is circumscribed in lifting or substantially loosening the economic embargo without congressional concurrence until certain democratic conditions are met. Another significant sanction in the law is a provision in Title III that holds any person or government that traffics in U.S. property confiscated by the Cuban government liable for monetary damages in U.S. federal court. Acting under provisions of the law, however, both President Clinton and President Bush have suspended the implementation of Title III at six-month intervals.\nIn addition to sanctions, another component of U.S. policy, a so-called second track, consists of support measures for the Cuban people. This includes U.S. private humanitarian donations, medical exports to Cuba under the terms of the Cuban Democracy Act of 1992, U.S. government support for democracy-building efforts, and U.S.-sponsored radio and television broadcasting to Cuba. In addition, the 106 th Congress approved the Trade Sanctions Reform and Export Enhancement Act of 2000 ( P.L. 106 - 387 , Title IX) that allows for agricultural exports to Cuba, albeit with restrictions on financing such exports.\nThe Clinton Administration made several changes to U.S. policy in the aftermath of the Pope's January 1998 visit to Cuba, which were intended to bolster U.S. support for the Cuban people. These included the resumption of direct flights to Cuba (which had been curtailed after the February 1996 shootdown of two U.S. civilian planes), the resumption of cash remittances by U.S. nationals and residents for the support of close relatives in Cuba (which had been curtailed in August 1994 in response to the migration crisis with Cuba), and the streamlining of procedures for the commercial sale of medicines and medical supplies and equipment to Cuba. In January 1999, President Clinton announced several additional measures to support the Cuban people. These included a broadening of cash remittances to Cuba, so that all U.S. residents (not just those with close relatives in Cuba) could send remittances to Cuba; an expansion of direct passenger charter flights to Cuba from additional U.S. cities other than Miami (direct flights later in the year began from Los Angeles and New York); and an expansion of people-to-people contact by loosening restrictions on travel to Cuba for certain categories of travelers, such as professional researchers and those involved in a wide range of educational, religious, and sports activities.",
"The Bush Administration essentially continued the two-track U.S. policy of isolating Cuba through economic sanctions while supporting the Cuban people through a variety of measures. However, within this policy framework, the Administration emphasized stronger enforcement of economic sanctions and further tightened restrictions on travel, remittances, and humanitarian gift parcels to Cuba. There was considerable reaction to the Administration's June 2004 tightening of restrictions for family visits and to the Administration's February 2005 tightening of restrictions on payment terms for U.S. agricultural exports to Cuba.",
"In May 2004, President Bush endorsed the recommendations of a report issued by the inter-agency Commission for Assistance to a Free Cuba, chaired by then-Secretary of State Colin Powell. The Commission made recommendations for immediate measures to \"hasten the end of Cuba's dictatorship\" as well as longer-term recommendations to help plan for Cuba's transition from communism to democracy in various areas. The President directed that up to $59 million be committed to implement key recommendations of the Commission, including support for democracy-building activities and for airborne broadcasts of Radio and TV Marti to Cuba. The report's most significant recommendations included a number of measures to tighten economic sanctions on family visits and other categories of travel and on private humanitarian assistance in the form of remittances and gift parcels. Subsequent regulations issued by the Treasury and Commerce Departments in June 2004 implemented these new sanctions. (The full Commission report is on the State Department website at http://www.state.gov/ p/ wha/ rt/ cuba/ commission/ 2004/ .)\nIn 2005, the Administration continued to tighten U.S. economic sanctions against Cuba by further restricting the process of how U.S. agricultural exporters may be paid for their sales. In July 2005, Secretary of State Condoleezza Rice appointed Caleb McCarry as the State Department's new Cuba Transition Coordinator to direct U.S. government \"actions in support of a free Cuba.\" Secretary Rice reconvened the Commission for Assistance to a Free Cuba in December 2005 to identify additional measures to help Cubans hasten the transition to democracy and to develop a plan to help the Cuban people move toward free and fair elections.",
"In July 2006, the inter-agency Commission for Assistance to Free Cuba issued its second report making recommendations to hasten political change in Cuba toward a democratic transition. The full report is available at http://www.cafc.gov/ rpt/ .\nThe Commission called for the United States to provide $80 million over two years for the following: to support Cuban civil society ($31 million); to fund education programs and exchanges, including university training in Cuba provided by third countries and scholarships for economically disadvantaged students from Cuba at U.S. and third country universities ($10 million); to fund additional efforts to break the Cuban government's information blockade and expand access to independent information, including through the Internet ($24 million); and to support international efforts at strengthening civil society and transition planning ($15 million). According to the Cuba Transition Coordinator, this assistance would be additional funding beyond what the Administration is already currently budgeting for these programs. Thereafter, the Commission recommended funding of not less than $20 million annually for Cuba democracy programs \"until the dictatorship ceases to exist.\" This would roughly double the amount currently spent on Cuba democracy programs.\nThe report also set forth detailed plans of how the U.S. government, along with the international community and the Cuban community abroad, could provide assistance to a Cuban transition government to help it respond to critical humanitarian and social needs, to conduct free and fair elections, and to move toward a market-based economy. The report also outlined a series of preparatory steps that the U.S. government could take now, before Cuba's transition begins, so that it will be well prepared in the event that assistance is requested by the new Cuban government. These included steps in the areas of government organization, electoral preparation, and anticipating humanitarian and social needs.\nThe Commission report received a mixed response from Cuba's dissident community. Although some dissidents, like former political prisoner Vladimiro Roca, maintain that they would welcome any U.S. assistance that helps support the Cuban dissident movement, others expressed concerns about the report. Dissident economist and former political prisoner Oscar Espinosa Chepe stressed that Cubans have to be the ones to solve their own problems. According to Chepe, \"We are thankful for the solidarity we have received from North America, Europe, and elsewhere, but we request that they do not meddle in our country.\" Miriam Leiva, a founding member of the Ladies in White, a human rights organization, expressed concern that the report could serve as a rationale for the government to imprison dissidents. Leiva also faulted the Commission's report for presuming what a Cuban transition must be before U.S. recognition or assistance can be provided. According to Leiva, \"Only we Cubans, of our own volition ... can decide issues of such singular importance. Cubans on the island have sufficient intellectual ability to tackle a difficult, peaceful transition and reconcile with other Cubans here and abroad.\"",
"In response to Fidel Castro's announcement that he was temporarily ceding power to his brother Raúl, President Bush issued a statement on August 3, 2006, that \"the United States is absolutely committed to supporting the Cuban people's aspiration for democracy and freedom.\" The President urged \"the Cuban people to work for democratic change\" and pledged U.S. support to the Cuban people in their effort to build a transitional government in Cuba. U.S. officials indicated that there are no plans for the United States to \"reach out\" to the new leader. Secretary of State Condoleezza Rice reiterated U.S. support for the Cuban people in an August 4, 2006, statement broadcast on Radio and TV Marti. According to Secretary Rice, \"All Cubans who desire peaceful democratic change can count on the support of the United States.\"\nAlthough there was some U.S. concern that political change in Cuba could prompt a migration crisis, there was no unusual traffic after Castro ceded provisional power to his brother. The U.S. Coast Guard had plans to respond to such a migration crisis, with support from the Navy if needed. In her August 4, 2006, message to the Cuban people, Secretary of State Rice encouraged \"the Cuban people to work at home for positive change.\" Department of Homeland Security officials also announced several measures to discourage Cubans from risking their lives on the open seas. U.S. officials also discouraged those in the Cuban American community wanting to travel by boat to Cuba to speed political change in Cuba. (For more, see \" Migration Issues \" below.)\nRaúl Castro asserted in an August 18, 2006, published interview that Cuba has \"always been disposed to normalize relations on an equal plane,\" but at the same time he expressed strong opposition to current U.S. policy toward Cuba, which he described as \"arrogant and interventionist.\" In response, Assistant Secretary of State for Western Hemisphere Affairs Thomas Shannon reiterated a U.S. offer to Cuba, first articulated by President Bush in May 2002, that the Administration was willing to work with Congress to lift U.S. economic sanctions if Cuba were to begin a political opening and a transition to democracy. According to Shannon, the Bush Administration remains prepared to work with Congress for ways to lift the embargo if Cuba is prepared to free political prisoners, respect human rights, permit the creation of independent organizations, and create a mechanism and pathway toward free and fair elections.\nIn a December 2, 2006 speech, Raúl reiterated an offer to negotiate with the United States. He said that \"we are willing to resolve at the negotiating table the longstanding dispute between the United States and Cuba, of course, provided they accept, as we have previously said, our condition as a country that will not tolerate any blemishes on its independence, and as long as said resolution is based on the principles of equality, reciprocity, non-interference, and mutual respect.\"\nOn July 26, 2007, in a speech on Cuba's revolutionary anniversary (commemorating the 1953 attack on the Moncada military barracks), Raúl Castro reiterated for the third time an offer to engage in dialogue with the United States, and strongly criticized U.S. trade and economic sanctions on Cuba. A U.S. State Department spokesman responded that \"the only real dialogue that's needed is with the Cuban people.\"\nIn the aftermath of Fidel's ceding of power to his brother, the Bush Administration established five interagency working groups to manage U.S. policy toward Cuba. The State Department led working groups on diplomatic actions, to build international support for U.S. policies; strategic communications, to ensure that Cubans understand U.S. government positions; and democratic promotion. The Commerce Department led a working group on humanitarian aid, in the event that a democratic transition government requests assistance. The Department of Homeland Security and the National Security Council headed a working group on migration. In addition to these working groups, in August 2006, then-U.S. Director of National Intelligence John Negroponte announced the establishment of the position of Mission Manager for Cuba and Venezuela responsible for integrating collection and analysis on the two countries across the Intelligence Community.\nIn September 2007, President Bush and other key Administration officials made several statements on Cuba. In a speech before the U.N. General Assembly on September 25, President Bush stated that \"the long rule of a cruel dictator is nearing its end,\" and called on the United Nations to insist on free speech, free assembly, and free elections as Cuba \"enters a period of transition.\" U.S. Commerce Secretary Carlos Gutierrez stated in a speech on September 17 that \"unless the regime changes, our policy will not,\" but indicated that the United States is \"prepared to respond to genuine democratic change in Cuba.\" In a speech on September 20, Assistant Secretary of State for Western Hemisphere Affairs Thomas Shannon contended that \"there is a quiet consensus in the Americas and in Europe that Cuba's future must be democratic.\" He maintained that there are differences about \"how to promote Cuba's democratic future\" and pointed out how \"Latin America's historic commitment to the principles of non-intervention and national sovereignty shape how many in the region are prepared to engage with Cuba.\" He maintained, however, that \"helping the Cuban people achieve their democratic destiny and re-integrate into the Americas will be one of the biggest diplomatic challenges we face.\"",
"On October 24, 2007, President Bush made a policy speech on Cuba that reflected a continuation of the sanctions-based approach toward Cuba. According to the President: \"As long as the [Cuban] regime maintains its monopoly over the political and economic life of the Cuban people, the United States will keep the embargo in place.\"\nThe President also proposed three new initiatives to provide support to the Cuban people. First, the President proposed allowing licensed non-governmental organizations and faith-based groups to provide computers and Internet access to the Cuban people if the Cuban government ends restrictions on public Internet access. Second, the President proposed inviting Cuban youths whose families suffer oppression to participate in the Partnership for Latin American Youth scholarship programs if the Cuban government allows them to participate. Third, the President announced a new effort to develop an international multi-billion dollar Freedom Fund for Cuba to help the Cuban people rebuild their economy and make the transition to democracy. The effort would be led by Secretary of State Rice and Secretary of Commerce Gutierrez and involve enlisting foreign governments and international organizations to contribute to the initiative. According to the President, monies from the fund would be available if the Cuban government demonstrates that it has adopted, in word and in deed, fundamental freedoms, including freedom of speech, freedom of association, freedom of press, freedom to form political parties, and freedom to change the government through periodic, multi-party elections.\nIn the speech, President Bush also sent a message to Cuban military, police, and government officials that \"when Cubans rise up to demand their liberty,\" they have a choice to embrace the Cuban people's desire for change or \"defend a disgraced and dying order by using force.\" The President conveyed to these officials that \"there is a place for you in a free Cuba.\"\nThe President also lauded the countries of the Czech Republic, Hungary, and Poland as being vital sources of support and encouragement to Cuba's democratic opposition. He called on other nations to make tangible efforts to show public support for the dissidents, by opening up their embassies in Havana to pro-democracy leaders, use the lobbies of their embassies to give Cubans access to the Internet and books and magazines, and encourage their country's non-governmental organizations to reach out directly to Cuba's independent civil society.",
"In the aftermath of Fidel Castro's February 19, 2008 announcement that he was officially stepping down as head of state, President Bush maintained that he viewed \"this as a period of transition and it should be the beginning of a democratic transition in Cuba.\" State Department officials made clear that U.S. policy would not change. On February 24, 2008, the day that Raúl Castro officially became Cuba's head of state, Secretary of State Condoleezza Rice issued a statement urging \"the Cuban government to begin a process of peaceful, democratic change by releasing all political prisoners, respecting human rights, and creating a clear pathway towards free and fair elections.\"\nIn remarks on Cuba policy in early March 2008, President Bush maintained that in order to improve U.S.-Cuban relations, \"what needs to change is not the United States; what needs to change is Cuba.\" The President asserted that Cuba \"must release all political prisoners ... have respect for human rights in word and deed, and pave the way for free and fair elections.\" He reiterated these words again in a speech to the Council of the Americas on May 7, 2008. On May 21, 2008, President Bush called for the Cuban government to take steps to improve life for the Cuban people, including opening up access to the Internet. He also announced that the United States would change regulations to allow Americans to send mobile phones to family members in Cuba.",
"",
"Over the years, although U.S. policymakers have agreed on the overall objectives of U.S. policy toward Cuba—to help bring democracy and respect for human rights to the island—there have been several schools of thought about how to achieve those objectives. Some advocate a policy of keeping maximum pressure on the Cuban government until reforms are enacted, while continuing current U.S. efforts to support the Cuban people. Others argue for an approach, sometimes referred to as constructive engagement, that would lift some U.S. sanctions that they believe are hurting the Cuban people, and move toward engaging Cuba in dialogue. Still others call for a swift normalization of U.S.-Cuban relations by lifting the U.S. embargo.\nFidel Castro's initially provisional, and now permanent, departure as head of government could eventually foster a re-examination of U.S. policy. In this new context, there are two broad policy approaches to contend with political change in Cuba: a status-quo approach that would maintain the U.S. dual-track policy of isolating the Cuban government while providing support to the Cuban people; and an approach aimed at influencing the Cuban government and Cuban society through increased contact and engagement. (For additional information, see CRS Report RS22742, Cuba ' s Political Succession: From Fidel to Raul Castro . Also see CRS Report RL33622, Cuba ' s Future Political Scenarios and U.S. Policy Approaches , written in the aftermath of Fidel Castro's stepping down from power in July 2006.)\nIn general, those who advocate easing U.S. sanctions on Cuba make several policy arguments. They assert that if the United States moderated its policy toward Cuba—through increased travel, trade, and diplomatic dialogue—then the seeds of reform would be planted, which would stimulate and strengthen forces for peaceful change on the island. They stress the importance to the United States of avoiding violent change in Cuba, with the prospect of a mass exodus to the United States and the potential of involving the United States in a civil war scenario. They argue that since the demise of Cuba's does not appear imminent, even without Fidel Castro at the helm, the United States should espouse a more pragmatic approach in trying to induce change in Cuba. Supporters of changing policy also point to broad international support for lifting the U.S. embargo, to the missed opportunities for U.S. businesses because of the unilateral nature of the embargo, and to the increased suffering of the Cuban people because of the embargo. Proponents of change also argue that the United States should be consistent in its policies with the world's few remaining communist governments, including China or Vietnam, and also maintain that moderating policy will help advance human rights.\nOn the other side, opponents of changing U.S. policy maintain that the current two-track policy of isolating Cuba, but reaching out to the Cuban people through measures of support, is the best means for realizing political change in Cuba. They point out that the Cuban Liberty and Democratic Solidarity Act of 1996 sets forth the steps that Cuba needs to take in order for the United States to normalize relations. They argue that softening U.S. policy at this time without concrete Cuban reforms would boost the Castro government, politically and economically, and facilitate the survival of the communist regime. Opponents of softening U.S. policy argue that the United States should stay the course in its commitment to democracy and human rights in Cuba, and that sustained sanctions can work. Opponents of loosening U.S. sanctions further argue that Cuba's failed economic policies, not the U.S. embargo, are the causes of Cuba's difficult living conditions.",
"From mid-August through early September 2008, two hurricanes and two tropical storms caused widespread damage throughout Cuba. Tropical Storm Fay passed through central Cuba on August 18, causing severe flooding. On August 31, Hurricane Gustav struck the tobacco-growing province of Piñar del Río in western Cuba and the Isle of Youth. Tropical Storm Hanna, which did not strike Cuba directly, caused flooding in eastern Cuba in early September. Hurricane Ike made landfall in eastern Cuba on September 7 as a Category Four hurricane and severely affected both the eastern and western parts of the island, but especially the provinces of Holguin, Camaguey, and Las Tunas in the eastern part of the island. The two hurricanes caused most of the damage. Overall, just 7 people were killed, but the hurricanes severely affected the housing sector (with almost 500,000 homes damaged and over 63,000 destroyed), the power grid, and the agricultural sector. On November 8, 2008, Hurricane Paloma struck Cuba devastating the town of Santa Cruz el Sur. Initially damages from the storms in August and September were estimated to amount to $5 billion, but Raúl Castro noted in the aftermath of Hurricane Paloma that overall damages from the storm since August amounted to some $10 billion.\nThe U.S. Chief of Mission at the U.S. Interests Section in Havana, Jonathan Farrar, issued a disaster declaration for Cuba on September 3, 2008, and the U.S. Agency for International Development (USAID) approved the release of $100,000 in emergency relief funds to nongovernmental organizations in Cuba in response to Hurricane Gustav. On September 12, in response to Hurricane Ike, the U.S. government provided another $100,000 in cash assistance to relief organizations on the ground in Cuba. The State Department maintains that the United States offered to send a humanitarian assessment team to Cuba to determine additional assistance needs, but that the Cuban government rejected the offer. U.S. officials subsequently offered a $5 million aid package for disaster relief for Cuba on September 13 that was also rejected by the Cuban government. USAID Administrator Henrietta Fore reportedly maintained that $2 million in plastic sheeting, hygiene kits, and other relief items would have been provided directly to the Cuban government, but that about $3 million in cash would still be provided through NGOs. The State Department made a new offer to Cuba on September 19 to supply some $6.3 million in corrugated zinc roofs, nails, tools, lumber, sheeting, and light shelter kits that would help some 48,000 people, but the Cuban government did not accept the offer.\nIn addition, according to the State Department, the U.S. government increased authorizations for U.S.-based non-governmental organizations (NGOs) to provide larger amounts of assistance to Cuba in the aftermath of the hurricanes, including expedited authorization over 90 days for up to $10 million per NGO.\nIn response to the U.S. offer to send a disaster assessment team, the Cuban government maintained that it already had a sufficient number of well-trained experts in Cuba, and noted that other countries worldwide were sending humanitarian aid without inspecting the affected areas. Instead, Cuba asked the United States to allow U.S. companies 1) to sell needed relief supplies to Cuba for the repair of housing and electrical networks; and 2) to grant private commercial credit to Cuba in order to buy food in the United States. In response to the U.S. offer to send $2 million in supplies to the Cuban government, the Cuban Interests Section in Washington again called for the United States to allow U.S. companies to sell relief supplies to Cuba, if not on a permanent basis, then at least for the next six months.",
"In the aftermath of the hurricanes, a number of observers, including some Members of Congress, called for the temporary relaxation of restrictions on family travel and remittances (limited to $300 per quarter) as well as on the provision of gift parcels to Cuba, but the Administration did not take any of these actions. Some observers also have called for temporary changes to the U.S. embargo regulations to allow for unrestricted U.S. cash sales to Cuba of food and medicines, farm machinery or equipment, and relief supplies, including building materials and electrical supplies. On September 5, 2008, Chairman of the House Foreign Affairs Committee Howard Berman asked President Bush to suspend for 90 days restrictions on family visits, remittances, and gift parcels.\nSeveral legislative initiatives were introduced that would have temporarily eased U.S. embargo restrictions in several areas. On September 15, 2008, Senator Dodd offered S.Amdt. 5581 to the Department of Defense authorization bill ( S. 3001 ) that would have, for a 180-day period: allowed unrestricted family travel; eased restrictions on remittances by removing the limit and allowing any American to send remittances to Cuba; expanded the list of allowable items that may be included in gift parcels; and allowed for unrestricted U.S. cash sales of food, medicines, and relief supplies to Cuba. The amendment was not considered, and therefore not part of the final bill.\nIn the House, two legislative initiatives were introduced. On September 16, 2008, Representative Flake introduced H.R. 6913 , which would have prohibited any funds from going to the Department of Commerce to implement, administer, or enforce tightened restrictions on the contents of gift parcels to Cuba that were introduced in June 2004. On September 18, 2008, Representative Delahunt introduced H.R. 6962 , the Humanitarian Relief to Cuba Act, which would have, for a 180-day period: allowed unrestricted family travel; eased restrictions on remittances by removing the limit and allowing any American to send remittances to Cuba; and expanded the list of allowable items that may be included in gift parcels.",
"Restrictions on travel to Cuba have been a key and often contentious component of U.S. efforts to isolate the communist government of Fidel Castro for much of the past 40 years. Over time there have been numerous changes to the restrictions and for five years, from 1977 until 1982, there were no restrictions on travel. Restrictions on travel and remittances to Cuba are part of the CACR, the overall embargo regulations administered by the Treasury Department's Office of Foreign Assets Control (OFAC).\nMajor arguments made for lifting the Cuba travel ban are that it contributes to the suffering of Cuban families; it hinders efforts to influence conditions in Cuba and may be aiding Castro by helping restrict the flow of information; it abridges the rights of ordinary Americans; and Americans can travel to other countries with communist or authoritarian governments. Major arguments in opposition to lifting the Cuba travel ban are that more American travel would support Castro's rule by providing his government with potentially millions of dollars in hard currency; that there are legal provisions allowing travel to Cuba for humanitarian purposes that are used by thousands of Americans each year; and that the President should be free to restrict travel for foreign policy reasons.\nUnder the current Bush Administration, enforcement of U.S. restrictions on Cuba travel has increased, and restrictions on travel and on private remittances to Cuba have been tightened. In March 2003, the Administration eliminated travel for people-to-people educational exchanges unrelated to academic course work. In June 2004, the Administration significantly restricted travel, especially family travel, and the provision of private humanitarian assistance to Cuba in the form of remittances and gift parcels. In April 2005, OFAC cracked down on certain religious organizations promoting licensed travel to Cuba and warned them not to abuse their license by taking individuals not affiliated with their organizations. OFAC's actions were prompted by reports that groups practicing the Afro-Cuban religion Santería had been taking large groups to Cuba as a means of skirting U.S. travel restrictions. In 2006, the Administration suspended the licenses of several travel service providers, including one of the largest such providers in Florida, La Estrella de Cuba. Several religious organizations also had their licenses suspended, and church groups and several Members of Congress expressed concern about more restrictive licenses for religious travel.\nAmong the June 2004 restrictions that remain in place are the following:\nFamily visits were restricted to one trip every three years under a specific license and are restricted to immediate family members, with no exceptions. Under previous regulations, family visits could occur once a year under a general license, with travel more than once a year allowed, but under a specific license. Previously travel had been allowed to visit relatives to within three degrees of relationship to the traveler. Cash remittances, estimates of which range from $400 million to $800 million, were further restricted. Quarterly remittances of $300 may still be sent, but are now restricted to members of the remitter's immediate family and may not be remitted to certain government officials and certain members of the Cuban Communist Party. The regulations were also changed to reduce the amount of remittances that authorized travelers may carry to Cuba, from $3000 to $300. Gift parcels were limited to immediate family members and were denied to certain Cuban officials and certain members of the Cuban Communist Party. The contents of gift parcels may no longer include seeds, clothing, personal hygiene items, veterinary medicines and supplies, fishing equipment and supplies, or soap-making equipment. The authorized per diem allowed for a family visit was reduced from the State Department per diem rate (currently $179 per day for Havana) to $50 per day. With the exception of informational materials, licensed travelers may not purchase or otherwise acquire merchandise and bring it back into the United States. Previous regulations allowed visitors to Cuba to import $100 worth of goods as accompanied baggage. Fully-hosted travel, by a person not subject to U.S. jurisdiction, was prohibited as a permissible category of travel. Travel for educational activities was further restricted, including the elimination of educational exchanges sponsored by secondary schools.\nThere was mixed reaction to the tightening of Cuba travel and remittance restrictions. Supporters maintain that the increased restrictions deny the Cuban government dollars that help maintain its repressive control. Opponents argue that the tightened sanctions are anti-family and only result in more suffering for the Cuban people. There were also concerns that the new restrictions were drafted without considering the full consequences of their implementation. For example, the elimination of fully-hosted travel raised concerns about the status of 70 U.S. students receiving full scholarships at the Latin American School of Medicine in Havana. Members of the Congressional Black Caucus, who were instrumental in the establishment of the scholarship program for U.S. students, expressed concern that the students may be forced to abandon their medical education because of the new OFAC regulations. As a result of these concerns, OFAC ultimately licensed the medical students in August 2004 to continue their studies and engage in travel-related transactions.\nOn July 19, 2007, the U.S. International Trade Commission issued a report, requested by the Senate Committee on Finance, maintaining that lifting travel restrictions would result in travel by U.S. citizens to Cuba rising to between 550,000 and 1 million from an estimate of 171,000 in 2005.",
"From 2000-2004, one or both houses of Congress approved amendments to appropriations bills that would have eased restrictions on travel to Cuba in various ways, but these provisions ultimately were stripped out of final enacted measures. The Administration regularly threatened to veto legislation if it contained provisions weakening Cuba sanctions.\nIn the first session of the 110 th Congress, two Senate Appropriations Committee reported-versions of appropriations bills had provisions that would have eased restrictions on travel to Cuba for the marketing and sale of agricultural and medical goods, but ultimately these provisions were not included in the FY2008 Consolidated Appropriations Act ( P.L. 110 - 161 ). The Senate version of the FY2008 Financial Services and General Government appropriations bill, reported July 19, 2007, H.R. 2829 , had a provision in Section 620 that would eased such travel restrictions, while the Senate version of the FY2008 Agriculture appropriations bill, S. 1859 , reported July 24, 2007, had such a provision in Section 741.\nIn the second session of the 110 th Congress, several appropriations bills had provisions that would have eased restrictions on travel to Cuba, but none of these were included in the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that funded appropriations through March 6, 2009. The House version of the FY2009 Financial Services and General Government Appropriations bill, H.R. 7323 , reported by the House Appropriations Committee December 10, 2008 ( H.Rept. 110-920 ), included provisions that would have eased restrictions on family travel. The committee had approved a draft version of the bill on June 25, 2008. The bill would have liberalized family travel to Cuba by allowing for such travel once a year (instead of the current restriction of once every three years) and allowing such travel to visit aunts, uncles, nieces, nephews, and first cousins (instead of currently being limited to immediate family members). The Senate version of the bill, S. 3260 ( S.Rept. 110 - 417 ), reported out of the Senate Appropriations Committee on July 14, 2008, included provisions that would have eased restrictions on family travel and on travel to Cuba relating to the commercial sale of agricultural and medical goods. With regard to family travel (section 620), the bill would provide that no funds may be used to administer, implement, or enforce the Administration's June 2004 tightening of restrictions related to travel to visit relatives in Cuba. With regard to travel for agricultural or medical sales (section 619), the bill would allow for a general license for such travel instead of a specific license that requires permission from the Treasury Department. This is similar to a provision (section 737) in the Senate Appropriations Committee version of the FY2009 Agriculture Appropriations bill, S. 3289 ( S.Rept. 110 - 426 ), reported out of committee on July 21, 2008.\nA number of other initiatives introduced in the 110 th Congress would ease Cuba travel restrictions, but no action was taken on these measures. H.R. 654 (Rangel), S. 721 (Enzi), and Section 254 of S. 554 (Dorgan) would have prohibited the President from regulating or prohibiting travel to Cuba or any of the transactions incident to travel. Two bills that would have lifted overall economic sanctions— H.R. 217 (Serrano) and H.R. 624 (Rangel)—would also have lifted travel restrictions. H.R. 177 (Lee) would have eased restrictions on educational travel to Cuba. H.R. 757 (Delahunt) would have lifted restrictions on family travel and the provision of remittances for family members in Cuba. H.R. 1026 (Moran, Jerry), which would have facilitated the sale of U.S. agricultural products to Cuba, included a provision that would have provided for general license authority for travel-related transactions for people involved in agricultural sales and marketing activities or in the transportation of such sales. H.R. 2819 (Rangel) and S. 1673 (Baucus), which would have eased restrictions on U.S. agricultural and medical exports to Cuba, would also have lifted restrictions on travel to Cuba.\nIn addition, as noted above, several initiative introduced in the aftermath of Hurricanes Gustav and Ike would temporarily ease U.S. embargo restrictions in several areas, including travel and remittances, but no action was taken on these measures. S.Amdt. 5581 (Dodd) to S. 3001 , the FY2009 National Defense Authorization Act, and H.R. 6962 (Delahunt) would have allowed for family travel and unrestricted remittances for six months.",
"U.S. commercial agricultural exports to Cuba have been allowed for several years, but with numerous restrictions and licensing requirements. The 106 th Congress passed the Trade Sanctions Reform and Export Enhancement Act of 2000 or TSRA ( P.L. 106 - 387 , Title IX) that allows for one-year export licenses for selling agricultural commodities to Cuba, although no U.S. government assistance, foreign assistance, export assistance, credits, or credit guarantees are available to finance such exports. TSRA also denies exporters access to U.S. private commercial financing or credit; all transactions must be conducted in cash in advance or with financing from third countries. TSRA reiterates the existing ban on importing goods from Cuba but authorizes travel to Cuba, under a specific license, to conduct business related to the newly allowed agricultural sales.\nIn February 2005, OFAC amended the Cuba embargo regulations to clarify that TSRA's term of \"payment of cash in advance\" means that the payment is received by the seller or the seller's agent prior to the shipment of the goods from the port at which they are loaded. U.S. agricultural exporters and some Members of Congress strongly objected that the action constitutes a new sanction that violates the intent of TSRA and could jeopardize millions of dollars in U.S. agricultural sales to Cuba. OFAC Director Robert Werner maintained that the clarification \"conforms to the common understanding of the term in international trade.\" On July 29, 2005, OFAC clarified that, for \"payment of cash in advance\" for the commercial sale of U.S. agricultural exports to Cuba, vessels can leave U.S. ports as soon as a foreign bank confirms receipt of payment from Cuba. OFAC's action was aimed at ensuring that the goods would not be vulnerable to seizure for unrelated claims while still at the U.S. port. Supporters of overturning OFAC's February 22, 2005 amendment, such as the American Farm Bureau Federation, were pleased by the clarification but indicated that they would still work to overturn the February rule.\nSince late 2001, Cuba has purchased almost $2.6 billion in agricultural products from the United States. Overall U.S. exports to Cuba rose from about $7 million in 2001 to $404 million in 2004. U.S. exports to Cuba declined in 2005 and 2006 to $369 million and $340 million, respectively, but increased to $447 million in 2007. In the first 10 months of 2008, U.S. agricultural exports to Cuba amounted to $608 million, far higher than the same time period in previous years, in part because of the rise in the cost of food prices and because of Cuba's increased food needs in the aftermath of several hurricanes and tropical storms that severely damaged Cuba's agricultural sector.\nOn July 19, 2007, the U.S. International Trade Commission issued a report, requested by the Senate Committee on Finance, maintaining that the U.S. share of Cuba's agricultural, fish, and forest imports would rise from one-third to between one-half and two-thirds if trade restrictions were lifted. See the full report available at http://www.usitc.gov/ ext_relations/ news_release/ 2007/ er0719ee1.htm\nSome groups favor further easing restrictions on agricultural exports to Cuba. They argue that the restrictions harm the health and nutrition of the Cuban population. U.S. agribusiness companies that support the removal of restrictions on agricultural exports to Cuba believe that U.S. farmers are missing out on a market of over $700 million annually so close to the United States. Some exporters want to change U.S. restrictions so that they can sell agriculture and farm equipment to Cuba. Agricultural exporters who support the lifting of the prohibition on financing contend that allowing such financing would help smaller U.S. companies expand purchases to Cuba more rapidly.\nOpponents of further easing restrictions on agricultural exports to Cuba maintain that U.S. policy does not deny such sales to Cuba, as evidenced by the large amount of sales since 2001. Moreover, according to the State Department, since the Cuban Democracy Act was enacted in 1992, the United States has licensed billions of dollars in private humanitarian donations. Opponents further argue that easing pressure on the Cuban government would in effect be lending support and extending the duration of the Castro regime. They maintain that the United States should remain steadfast in its opposition to any easing of pressure on Cuba that could prolong the Castro regime and its repressive policies. Some agricultural producers that export to Cuba support continuation of the prohibition on financing for agricultural exports to Cuba because it ensures that they will be paid.",
"In the first session of the 110 th Congress, Congress approved the FY2008 Consolidated Appropriations Act ( P.L. 110 - 161 ) in December 2007, which dropped provisions easing Cuba sanctions that had been included in the House-passed and Senate-committee versions of H.R. 2829 , the FY2008 Financial Services and General Government appropriations bill, and the Senate-committee version of S. 1859 , the FY2008 agriculture appropriations bill. The House-passed version of H.R. 2829 had a provision in Section 903 that would have prevented Treasury Department funds from being used to implement the February 2005 tightening of policy requiring the payment of cash in advance prior to the shipment of U.S. agricultural goods to Cuba. The House had adopted the provision during June 28, 2007 floor consideration when it approved H.Amdt. 467 (Moran, Kansas) by voice vote. The Senate Appropriations Committee reported version of the bill included a similar provision in Section 619, and in Section 620 that would have ease travel to Cuba for the marketing and sale of agricultural and medical goods. The Administration's statement of policy on the bill maintained that the President would veto the measure if it contained a provision weakening current restrictions against Cuba. The Senate Appropriations Committee-reported version of the S. 1859 ( S.Rept. 110 - 134 ) included a provision that would have authorized general licenses for travel to Cuba for the marketing and sale of agricultural and medical goods.\nIn other first session action, on July 27, 2007, the House rejected (by a vote of 182-245) H.Amdt. 707 (Rangel) to H.R. 2419 , the Farm, Nutrition, and Bioenergy Act of 2007, also known as the 2007 farm bill. The amendment would have eased restrictions on the commercial sale of agricultural products to Cuba by clarifying the meaning of \"payment of cash in advance\" for the sale of such products; authorizing direct transfers between U.S. and Cuban financial institutions for such sales; and authorizing the issuance of U.S. visas for Cubans to conduct activities, including phytosanitary inspections, related to such sales.\nIn the second session of the 110 th Congress, several appropriations bills had provisions that would have eased restrictions on agricultural exports to Cuba, but none of these were included in the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that funded appropriations through March 6, 2009. The House version of the FY2009 Financial Services and General Government Appropriations bill, H.R. 7323 , reported by the House Appropriations Committee December 10, 2008 ( H.Rept. 110-920 ), included provisions easing restrictions on U.S. agricultural exports. The committee had approved a draft version of the bill on June 25, 2008. The bill had a provision that would have prohibited funds in the Act from being used to administer, implement, or enforce an amendment to the Cuban embargo regulations from February 25, 2005, that requires that U.S. agricultural exports must be paid for before they leave U.S. ports. The Senate version of the bill, S. 3260 ( S.Rept. 110 - 417 ), reported by the Senate Appropriations Committee on July 14, 2007, included a similar provision (section 618) easing restrictions on payment terms for the sale of agricultural goods to Cuba. The bill also had a provision easing restrictions on the travel related to the commercial sale of agricultural and medical goods (section 619). This was similar to a provision (section 737) in the Senate Appropriations Committee version of the FY2009 Agriculture Appropriations bill, S. 3289 ( S.Rept. 110 - 426 ), reported out of committee on July 21, 2008. As noted above, none of these provisions were enacted into law.\nSeveral other legislative initiatives introduced in the 110 th Congress would have eased restrictions on the sale of U.S. agricultural exports to Cuba, but none of these were considered:\nH.R. 1026 (Moran, Jerry) would have facilitated the sale of U.S. agricultural products to Cuba by providing for general license authority for travel-related expenses for people involved in sales and marketing activities or in the transportation for such sales; authorizing the issuance of a temporary visa for a Cuban national conducting activities related to the purchase of U.S. agricultural goods, including phytosanitary inspections; clarifying the \"payment of cash in advance\" term used in TSRA to mean that the payment by the purchaser and the receipt of such payment to the seller occurs prior to the transfer of title of the commodity or product to the purchaser and the release of control of such commodity or product to the purchaser; and prohibiting the President from restricting direct transfers from a Cuban financial institution to a U.S. financial institution for U.S. agricultural sales under TSRA. H.R. 2819 (Rangel) and S. 1673 (Baucus), among other provisions, would have clarified the meaning of \"payment of cash in advance;\" authorize direct transfers between Cuban and U.S. financial institutions for the execution of payments for sales pursuant to TSRA; establish an agricultural export promotion program with respect to Cuba; and increase the airport ticket tax for travel to or from Cuba by $1.00, with funds going to a newly established Agricultural Export Promotion Trust Fund. The Senate Finance Committee held a hearing on S. 1673 on December 11, 2007. Two broader bills that would have lifted economic sanctions on Cuba— H.R. 217 (Serrano) and H.R. 624 (Rangel)— included provisions lifting restrictions on agricultural exports to Cuba by amending TSRA. Three bills that would have lifted overall travel restrictions— H.R. 654 (Rangel), S. 554 (Dorgan), and S. 721 (Enzi)—would have had the effect of lifting travel restrictions for those involved in travel related to agricultural sales.",
"A provision in the FY1999 omnibus appropriations measure (Section 211 of Division A, Title II, P.L. 105 - 277 , signed into law October 21, 1998) prevents the United States from accepting payment for trademark registrations and renewals from Cuban or foreign nationals that were used in connection with a business or assets in Cuba that were confiscated, unless the original owner of the trademark has consented. The provision prohibits U.S. courts from recognizing such trademarks without the consent of the original owner. The measure was enacted because of a dispute between the French spirits company, Pernod Ricard, and the Bermuda-based Bacardi Ltd. Pernod Ricard entered into a joint venture with the Cuban government to produce and export Havana Club rum, but Bacardi, whose company in Cuba was expropriated in the 1960s, maintains that it holds the right to the Havana Club name. Although Pernod Ricard cannot market Havana Club in the United States because of the trade embargo, it wants to protect its future distribution rights should the embargo be lifted.\nThe European Union initiated World Trade Organization dispute settlement proceedings in June 2000, maintaining that the U.S. law violates the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). In January 2002, the WTO ultimately found that the trademark sanction violated WTO provisions on national treatment and most-favored-nation obligations in the TRIPS Agreement.\nOn March 28, 2002, the United States agreed that it would come into compliance with the WTO ruling through legislative action by January 3, 2003. That deadline was extended several times since no legislative action had been taken to bring Section 211 into compliance with the WTO ruling. On July 1, 2005, however, in an EU-U.S. bilateral agreement, the EU agreed that it would not request authorization to retaliate at that time, but reserved the right to do so at a future date, and the United States agreed not to block a future EU request. On August 3, 2006, the U.S. Patent and Trademark Office announced that Cuba's Havana Club trademark registration was \"cancelled/expired,\" a week after OFAC had denied a Cuban government company the license that it needed to renew the registration of the trademark.\nTwo different approaches have been advocated to bring Section 211 into compliance with the WTO ruling. Some want a narrow fix in which Section 211 would be amended so that it also applies to U.S. companies instead of being limited to foreign companies. Advocates of this approach argue that it would affirm that the United States \"will not give effect to a claim or right to U.S. property if that claimed is based on a foreign compensation.\" Others want Section 211 repealed altogether. They argue that the law endangers over 5,000 trademarks of over 500 U.S. companies registered in Cuba. They maintain that Cuba could retaliate against U.S. companies under the Inter-American Convention for Trademark and Commercial Protection.\nIn the 110 th Congress, five initiatives— H.R. 217 (Serrano), H.R. 624 (Rangel), H.R. 2819 (Rangel), S. 1673 (Baucus), and S. 1806 (Leahy)—had provisions that would have repealed the Section 211 trademark sanction from law, while two other initiatives— H.R. 1306 (Wexler) and S. 749 (Nelson)—would have advanced the narrow fix to Section 211 in order to comply with the WTO ruling. No action was taken on these measures. Similar legislative initiatives on both sides of the issue were introduced in the 108 th and 109 th Congresses, but no action was taken on these measures. The July 2005 EU-U.S. bilateral agreement, in which the EU agreed not to retaliate against the United States, but reserved the right to do so at a later date, reduced pressure on Congress to take action to comply with the WTO ruling.",
"The issue of Cuba's development of its deepwater offshore oil reserves in the Gulf of Mexico has been a concern among some Members of Congress. According to the U.S. Energy Information Administration, industry analysts maintain that there could be at least 1.6 billion crude oil reserves in Cuba's offshore sector; the U.S. Geological Survey estimated a mean of 4.6 billion barrels of undiscovered oil. In October 2008, an official of Cuba's state oil company, Cubapetroleo (Cupet), maintained there may be more than 20 billion barrels of oil in Cuba's deepwaters, but energy analysts expressed skepticism for such a claim.\nTo date, Cuba has signed agreements for seven concessions involving eight foreign oil companies for the exploration of offshore oil and gas. Repsol (Spain), Norsk-Hydro (Norway), and ONGC (India) are partners in a joint project, while Sherritt International (Canada), ONGC (India), PdVSA (Venezuela), Petronas (Malaysia), PetroVietnam, and Petrobras (Brazil) also have additional concessions. In February 2008, Petrobras signed a wide-ranging agreement for potential exploration and production cooperation with Cuba's state oil company, Cupet. This ultimately led to an oil exploration agreement between Petrobras and Cupet signed in late October 2008. Some Members have expressed concern about oil development so close to the United States and about potential environmental damage to the Florida coast. The Repsol project has plans to drill a second well (the first was drilled in 2004) in mid-2009, and some press reports maintain that if that goes well, Cuban oil could be flowing to the market by 2013.\nAlthough there have been some claims that China is drilling in Cuba's offshore deepwater oil sector, to date its involvement in Cuba's oil sector has been focused on exploring onshore/close coastal oil extraction in Piñar del Rio province through its state-run China Petroleum and Chemical Corporation (Sinopec). China does not have a concession in Cuba's offshore oil sector in the deepwaters of the Gulf of Mexico.\nIn the 110 th Congress, two legislative initiatives— H.R. 1679 (Ros-Lehtinen), S. 876 (Martinez), and S. 2503 (Nelson, Bill)—would have imposed sanctions related to Cuba's offshore oil development on its northern coast, but no action was taken on the measures. H.R. 1679 and S. 876 would have excluded from admission to the United States aliens who have made investments contributing to the enhancement of the ability of Cuba to develop its petroleum resources off its coasts; and require the President to impose sanctions on persons (including foreign subsidiaries) that are determined to have made an investment equal to or exceeding $1 million that contributes to the enhancement of Cuba's ability to develop petroleum resources of the submerged lands off Cuba's coast. S. 2503 would also have excluded from admission to the United States aliens who have directly and significantly contributed to the ability of Cuba to develop its petroleum resources. The bill would also have nullified a 1977 Maritime Boundary Agreement between the United States and Cuba.\nIn contrast, several legislative initiatives – S. 1268 (Dorgan), S. 2953 (Craig), H.R. 3182 (Udall), H.R. 3435 (Pickering) – would have allowed U.S. companies to work with Cuba for the offshore exploration and extraction of oil along Cuba's northern coast. In addition, H.R. 6735 (Hobson) would have terminated the application of restrictions on exploration, development, and production of oil and gas in areas of the outer Continental Shelf adjacent to Cuba. No action was taken on these measures.",
"Because of Cuba's geographic location, the country's waters and airspace have been used by illicit narcotics traffickers to transport drugs for ultimate destinations in the United States. Over the past several years, Cuban officials have expressed concerns over the use of their waters and airspace for drug transit as well as increased domestic drug use. The Cuban government has taken a number of measures to deal with the drug problem, including legislation to stiffen penalties for traffickers, increased training for counternarcotics personnel, and cooperation with a number of countries on anti-drug efforts. Cuba has bilateral counternarcotics agreements with 33 countries and less formal arrangements with 16 others, according to the Department of State. For several years, Cuba's Operation Hatchet has focused on maritime and air interdiction and the recovery of narcotics washed up on Cuban shores. Narcotics smuggling through Cuban territory deceased in 2006, according to both U.S. and Cuban officials. According to the Department of State, Cuba aggressively pursues an internal enforcement and investigation program against its incipient drug market with an effective nationwide drug prevention and awareness campaign, Operation Popular Shield.\nOver the years, there have been varying levels of cooperation with Cuba on anti-drug efforts. In 1996, Cuban authorities cooperated with the United States in the seizure of 6.6 tons of cocaine aboard the Miami-bound Limerick , a Honduran-flag ship. Cuba turned over the cocaine to the United States and cooperated fully in the investigation and subsequent prosecution of two defendants in the case in the United States. Cooperation has increased since 1999 when U.S. and Cuban officials met in Havana to discuss ways of improving anti-drug cooperation. Cuba accepted an upgrading of the communications link between the Cuban Border Guard and the U.S. Coast Guard as well as the stationing of a U.S. Coast Guard Drug Interdiction Specialist (DIS) at the U.S. Interests Section in Havana. The Coast Guard official was posted to the U.S. Interests Section in September 2000, and since that time, coordination has increased.\nThe State Department, in its March 2008 International Narcotics Control Strategy Report , maintains that narcotics cooperation occurs on a case-by-case basis primarily through the Coast Guard DIS, which increased in 2007. The report noted that Cuban authorities carried out some operations in coordination with the Coast Guard DIS in 2007. These included cooperation in the interception of a drug-laden aircraft destined for the Bahamas in February and a joint U.S.-Cuba container inspection at the port of Havana in June. The report also noted that Cuban authorities have provided the DIS more exposure to Cuban counternarcotics efforts, including investigative criminal information, debriefings on drug trafficking cases, visits to the Cuban national canine training center and anti-doping laboratory in Havana, and access to meet with the Chiefs of Cuba's INTERPOL and Customs office.\nCuba maintains that it wants to cooperate with the United States to combat drug trafficking, and on various occasions has called for a bilateral anti-drug cooperation agreement with the United States. In January 2002, Cuba deported to the United States Jesse James Bell, a U.S. fugitive wanted on drug charges, and in early March 2002, Cuba arrested a convicted Colombian drug trafficker, Rafael Bustamante, who escaped from jail in Alabama in 1992. At the time, then Drug Enforcement Administration head Asa Hutchison expressed appreciation for Cuba's actions, but indicated that cooperation would continue on a case-by-case basis, not through a bilateral agreement. In February 2007, Cuba extradited drug trafficker Luis Hernando Gómez Bustamante to Colombia, an action that drew praise from U.S. Assistant Secretary of State for International Narcotics and Law Enforcement Affairs Anne Patterson. Gómez Bustamante was subsequently extradited to the United States in July 2007 to face drug trafficking charges.\nIn April 2008, John Walters, Director of the White House Office of National Drug Control Policy, lauded U.S. anti-drug cooperation with Cuba as a good example of how cooperation has been achieved despite overall political differences between the two countries.",
"Over the past several years, House and Senate versions of Foreign Operations appropriations bills have contained contrasting provisions related to funding for cooperation with Cuba on counternarcotics efforts. House bills have generally prohibited funds for such efforts, while Senate versions would have funded such efforts. Ultimately, none of these provisions were included in enacted measures.\nThis happened again in December 2007 when Congress approved the FY2008 Consolidated Appropriations Act ( P.L. 110 - 161 ). The act dropped contrasting provisions from the House and Senate versions of H.R. 2764 , the FY2008 State, Foreign Operations and Related Agencies Appropriations Act. The House-passed version of H.R. 2764 contained a provision, in Section 673, that would have specifically prohibited International Narcotics Control and Law Enforcement (INCLE) assistance to the Cuban government. In contrast, the Senate-passed version of the bill would have provided, in Section 696, $1 million in INCLE funding for preliminary work by the Department of State, or such other entity as the Secretary of State may designate, to establish cooperation with the Cuban government on counternarcotics matters. The amount would not have been available if Cuba did not have in place appropriate procedures to protect against the loss of innocent life in the air and on the ground in connection with the interdiction of illegal drugs, and if there is credible evidence of involvement of the Cuban government in drug trafficking during the preceding 10 years.\nIn the second session of the 110 th Congress, the Senate Appropriations Committee version of the FY2009 State, Department, Foreign Operations, and Related Agencies Appropriations Act, S. 3288 , contained a provision (section 779) that would have provided for $1 million for preliminary work by the Department of State, or other entity designated by the Secretary of State, to establish cooperation with appropriate Cuban agencies on counternarcotics matters. The money would not be available, however, if the Secretary certifies that Cuba 1) does not have in place procedures to protect against the loss of innocent life in the air and on the ground in connection with the interdiction of illegal drugs; and 2) there is credible evidence of involvement of the government of Cuba in drug trafficking during the preceding 10 years. No action was taken on the measure, and no such provision was included in the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that provided foreign operations funding until March 6, 2009.",
"Cuba was added to the State Department's list of states sponsoring international terrorism in 1982 because of its alleged ties to international terrorism and support for terrorist groups in Latin America. Cuba had a long history of supporting revolutionary movements and governments in Latin America and Africa, but in 1992, Fidel Castro said that his country's support for insurgents abroad was a thing of the past. Cuba's change in policy was in large part because of the breakup of the Soviet Union, which resulted in the loss of billions of dollars in annual subsidies to Cuba, and led to substantial Cuban economic decline.\nCuba remains on the State Department's terrorism list. According to the State Department's Country Reports on Terrorism 2007 report (issued April 30, 2008), Cuba has \"remained opposed to U.S. counterterrorism policy, and actively and publicly condemned many associated U.S. policies and actions.\" The report also noted that Cuba maintains close relationships with other state sponsors of terrorism, such as Iran and Syria, and has provided safe haven for members of several Foreign Terrorist Organizations (FTOs): the Basque Homeland and Freedom (ETA) and two Colombian insurgent groups, the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN). Colombia has publicly acknowledged that it wants Cuba mediation with the ELN.\nThe 2007 report also maintained that Cuba continued to permit U.S. fugitives from justice to live legally in Cuba. Most of the fugitives entered Cuba in the 1970s, and are accused of hijacking or committing violent actions in the United States. The State Department report noted that Cuba stated in 2006 that it would no longer provide safe haven to new fugitives who may enter Cuba. In 2006, Cuba returned a U.S. fugitive who had sequestered his son and flew a stolen plane to Cuba in September. In April 2007, Cuba returned another U.S. fugitive, Joseph Adjmi, who was convicted of mail fraud in the 1960s, but disappeared before beginning his 10-year sentence. On June 13, 2008, Cuba's Ministry of Foreign Affairs announced that it deported another U.S. citizen, Leonard Auerbach, wanted in the United States for sexual exploitation of a minor and for child pornography who had entered Cuba from Mexico in April. More recently, press reports maintain that a number of fugitives from Florida accused of bilking the U.S. government of millions through Medicare fraud have fled to Cuba.\nIn the 110 th Congress, H.R. 525 (King), which was not considered, would have amended the Cuban Liberty and Democratic Solidarity Act of 1996 to require that, in order to determine that a democratically elected government in Cuba exists, the Cuban government extradite to the United States individuals who are living in Cuba in order to escape prosecution or confinement for criminal offense committed in the United States. A similar initiative was introduced in the 109 th Congress, H.R. 332 (King), but no legislative action was taken. In addition, Section101(1)(H) of House-passed H.R. 2601 would have authorized funds for the U.S. Interests Section in Havana to disseminate the names of U.S. fugitives residing in Cuba and any rewards for their capture, but action on the measure was not completed before the end of the Congress.\nIn general, those who support keeping Cuba on the terrorism list argue that there is ample evidence that Cuba supports terrorism. They point to the government's history of supporting terrorist acts and armed insurgencies in Latin America and Africa. They point to the government's continued hosting of members of foreign terrorist organizations and U.S. fugitives from justice. Critics of retaining Cuba on the terrorism list maintain that it is a holdover from the Cold War. They argue that domestic political considerations keep Cuba on the terrorism list and maintain that Cuba's presence on the list diverts U.S. attention from struggles against serious terrorist threats.",
"Cuba has been the target of various terrorist incidents over the years. In 1976, a Cuban plane was bombed, killing 73 people. In 1997, there were almost a dozen bombings in the tourist sector in Havana and in the Varadero beach area in which an Italian businessman was killed and several others were injured. Two Salvadorans were convicted and sentenced to death for the bombings in March 1999, and three Guatemalans were sentenced to prison terms ranging from 10-15 years in January 2002. Cuban officials maintain that Cuban exiles funded the bombings.\nIn November 2000, four anti-Castro activists were arrested in Panama for a plot to kill Fidel Castro. One of the accused, Luis Posada Carriles, was also allegedly involved in the 1976 Cuban airline bombing noted above. The four stood trial in March 2004 and were sentenced on weapons charges in the case to prison terms ranging from seven to eight years. In late August 2004, Panamanian President Mireya Moscoso pardoned the four men before the end of her presidential term. Three of the men are U.S. citizens and traveled to Florida, where they received strong support from some in the Cuban American community, while Posada Carriles reportedly traveled to another country.\nOn April 13, 2005, Posada's lawyer said that his client, reportedly in the United States after entering the country illegally, would seek asylum in the United States because he has a \"well-founded fear of persecution\" for his opposition to Fidel Castro. Posada, a Venezuelan citizen, had been imprisoned in Venezuela for the bombing of the Cuban airliner in 1976, but reportedly was allowed to \"escape\" from prison in 1985 after his supporters paid a bribe to the prison warden. He had been acquitted for the bombing but remained in prison pending a prosecutorial appeal. Posada also reportedly admitted, but later denied, involvement in the string of bombings in Havana in 1997, one of which killed an Italian tourist. Posada subsequently withdrew his application for asylum on May 17, 2005. Later that day, U.S. Immigration and Customs Enforcement (ICE) arrested Posada, and subsequently charged him with illegally entering the United States. A Department of Homeland Security press release indicated that ICE does not generally deport people to Cuba or countries believed to be acting on Cuba's behalf. Venezuela requested Posada's extradition and pledged that it would not hand Posada over to Cuba. On September 26, 2005, however, a U.S. immigration judge ruled that Posada likely faced torture in Venezuela and could not be deported in keeping with U.S. obligations under the Convention Against Torture.\nICE reviewed the case and determined on March 22, 2006, that Posada would not be freed from a detention federal immigration facility in El Paso, Texas. In November 2006, however, a U.S. federal judge, who was considering Posada's plea that he be released, ordered the government to supply evidence, by February 1, 2007, justifying his continued detention. On January 11, 2007, a federal grand jury in Texas indicted Posada on seven counts for lying about how he entered the United States illegally in March 2005, whereupon he was transferred from immigration detention in El Paso to a country jail in New Mexico near the Texas border. The Cuban government responded by maintaining that Posada needs to be charged with terrorism, not just lying about how he entered the United States. Another grand jury in New Jersey is reportedly examining Posada's alleged role in the 1997 bombings in Cuba. Press articles in early May 2007 reported that the FBI has been gathering evidence in the 1997 bombing and that FBI agents have visited Havana as part of their investigation.\nPosada was released from jail in New Mexico on April 19, 2007, and allowed to return to Miami under house arrest to await an upcoming trial on immigration fraud charges, but on May 9, 2007 a federal judge in Texas dismissed the charges. The judge maintained that the U.S. government mistranslated testimony from Posada and manipulated evidence. On June 5, 2007, Justice Department prosecutors filed a notice of appeal with the 5 th U.S. Circuit Court of Appeals in New Orleans and on November 6, 2007, federal prosecutors field a brief requesting that the court reverse the lower court's decision. On June 4, 2008, the appeals court heard arguments from both sides in the case; a ruling reportedly could take several months. Both Cuba and Venezuela strongly denounced Posada's release, contending that he is a terrorist. In late June 2008, Panama's Supreme Court ruled that Posada's 2004 pardon was unconstitutional, and in mid-July 2008, a Panamanian court initiated a request for Posada's extradition to the Panamanian government.\nThe House Subcommittee on International Organizations, Human Rights, and Oversight of the Committee on Foreign Affairs held a hearing focusing on the Posada case on November 15, 2007.",
"Since 1996, the United States has provided assistance—primarily through the U.S. Agency for International Development (USAID), but also through the State Department and the National Endowment for Democracy (NED)—to increase the flow of information on democracy, human rights, and free enterprise to Cuba.\nUSAID's Cuba program has supported a variety of U.S.-based non-governmental organizations with the goals of promoting a rapid, peaceful transition to democracy, helping develop civil society, and building solidarity with Cuba's human rights activists. These efforts are largely funded through Economic Support Funds (ESF) in the annual foreign operations appropriations bill. In recent years, funding for such projects amounted to about $5 million for each of FY2001 and FY2002, $6 million in FY2003, $21.4 million in FY2004 (because of re-programmed ESF assistance to fund the democracy-building recommendations of the Commission to Provide Assistance for a Free Cuba), and $8.9 million in FY2005. In FY2006, $10.9 million in Cuba democracy funding was provided, including $8.9 million in ESF and $2 million in Development Assistance.\nFor FY2007, the Administration requested $9 million in ESF to support the recommendations of the President's Commission for Assistance to a Free Cuba, and to support USAID-administrated democracy and human rights programs. The report to the House-passed version of the FY2007 Foreign Operations appropriations bill, H.R. 5522 ( H.Rept. 109 - 486 ), recognized the work of USAID in promoting democracy and humanitarian assistance for Cuba and urged the agency to continue to promote its Cuba program. The report to the Senate version of H.R. 5522 ( S.Rept. 109 - 277 ) recommended $2.5 million in ESF for Cuba democracy programs, $6.5 million less than the Administration's request. Final action on H.R. 5522 was not completed before the end of the 109 th Congress. Foreign Operations appropriations for FY2007 was funded by a series of continuing resolutions completed in the 110 th Congress. Ultimately, the Administration provided $13.3 million in ESF for Cuba democracy programs in FY2007, $4.3 million more than it requested.\nFor FY2008, Congress fully funded the Administration's request for $45.7 million in ESF for democracy assistance for Cuba in the Consolidated Appropriations Act for FY2008 ( P.L. 110-161 ); an estimated $45.33 million, however, will be provided because of an overall 0.81% rescission. The amount is more than four times the amount provided in FY2006 and more than five times the amount requested in FY2007. According to the State Department's FY2008 Congressional Budget Justification (CBJ), the increase in assistance is in order to fulfill the recommendations of the July 2006 report of the Commission for Assistance to a Free Cuba to provide support for Cuban civil society, expand international awareness, break the regime's information blockade, and continue support for a democratic transition. That report, as described above, recommended $80 million over two years for a variety of measures to hasten Cuba's transition to democracy, and not less than $20 million annually thereafter for Cuba democracy programs.\nBoth the House- and Senate-passed versions of the FY2008 State, Foreign Operations, and Related Agencies Appropriations Act, H.R. 2764 , fully funded the Administration's request for $45.7 million in ESF for Cuba democracy programs. The House committee-reported version of the bill would have provided just $9 million in ESF for such programs, but during June 21, 2007, floor consideration, the House approved H.Amdt. 351 (Diaz-Balart) by a vote of 254-170 that increased funding for ESF by $36.7 million in order to fully fund the Administration's request. The Senate Appropriations Committee report to the bill would have provided $15 million in ESF for Cuba democracy programs. However, during September 6, 2007, floor consideration, the Senate approved S.Amdt. 2694 (Martinez) by voice vote that increased funding for Cuba democracy programs by $30.7 million to fully fund the Administration's request.\nFor FY2009, the Administration requested $20 million in ESF to continue to implement program recommendations of the Commission for Assistance to a Free Cuba. The money would assist human rights activists, independent journalists, Afro-Cubans, and women, youth, and student activists. The report to the Senate Appropriations Committee version of the FY2009 State Department, Foreign Operations, and Related Agencies Appropriations Act, S, 3288 ( S.Rept. 110 - 425 ), recommended fully funding the Administration's request for Cuba, but also called for the State Department and USAID to conduct regular evaluations to ensure the cost effectiveness of the programs. No final action on the appropriations measure was taken in the 110 th Congress, but overall foreign operations funding was continued under a short-term continuing resolution ( P.L. 110-329 ) until March 6, 2009.\nUntil FY2008, NED's democratization assistance for Cuba had been funded largely through the annual Commerce, Justice, and State (CJS) appropriations measure, but is now funded through the State Department, Foreign Operations and Related Agencies appropriations measure. NED funding for Cuba has steadily increased over the past several years: $765,000 in FY2001; $841,000 in FY2002; $1.14 million in FY2003; and $1.15 million in FY2004. For FY2005, NED funded 17 Cuba projects with $2.4 million. For FY2006, NED funded 13 projects with almost $1.5 million, including $0.4 million from State Department ESF. For FY2007, NED funded 12 projects with almost $1.5 million, which included almost $1.4 million funded by the State Department.",
"In November 2006, the Government Accountability Office (GAO) issued a report examining U.S. democracy assistance for Cuba from 1996-2005, and concluded that the U.S. program had significant problems and needed better management and oversight. According to GAO, internal controls, for both the awarding of Cuba program grants and oversight of grantees, \"do not provide adequate assurance that the funds are being used properly and that grantees are in compliance with applicable law and regulations.\" Investigative news reports on the program maintained that high shipping costs and lax oversight have diminished its effectiveness. Representative William Delahunt, Chairman of the House Foreign Affairs Committee's Subcommittee on International Organizations, Human Rights, and Oversight, had requested the GAO study along with Representative Jeff Flake.\nIn March 2008, a White House aide to President Bush, Felipe Sixto, resigned because of alleged misuse of funds when he worked for the Center for a Free Cuba, which has been a major recipient of U.S. democracy funding. On December 19, 2008, Sixto pled guilty to stealing nearly $600,000, and is expected to be sentenced in March 2009. Another group, Grupo de Apoyo a la Democracia (Group in Support of Democracy), is also under investigation by USAID for misuse of funds. Historically these two groups have been the two largest recipients of U.S. democracy funding for Cuba.\nGAO issued a second report examining USAID's Cuba democracy program on November 24, 2008. The report lauded the steps that USAID had taken since 2006 to address problems with its Cuba program and improve oversight of the assistance. These included awarding all grants competitively since 2006, hiring more staff for the program office since January 2008; and contracting for financial services in April 2008 to enhance oversight of grantees. The GAO report also noted that USAID had worked to strengthen program oversight through preaward and follow-up reviews, improving grantee internal controls and implementation plans, and providing guidance and monitoring about permitted types of assistance and cost sharing. The report also maintained, however, that USAID had not staffed the Cuba program to the level needed for effective grant oversight. GAO also noted the difficulty of assessing USAID's action to improve its Cuba program because most of its actions to improve the program were only taken recently. Procurement reviews completed in August 2008 by the new financial services contractor identified internal control, financial management, and procurement weaknesses at three grantees. GAO recommended that USAID: 1) ensure that its Cuba program office is staffed at the level that is needed to fully implement planned monitoring activities; and 2) periodically assess the Cuba program's overall efforts to address and reduce grantee risks, especially regarding internal controls, procurement practices, expenditures, and compliance with laws and regulations.\nThe Cuban American National Foundation (CANF) released a report in May 2008 maintaining that a majority of the assistance for Cuba has been spent in operating expenses by U.S.-based grantees, transition studies, and U.S.-based activities. Among the recommendations in its report, the CANF called for USAID grantees to spend a minimum of 75% of government funds in direct aid to Cuban civil society. It also called for the assistance program to provide direct cash aid to independent civil society groups, dissidents, and families of political prisoners.",
"U.S.-government sponsored radio and television broadcasting to Cuba—Radio and TV Martí—began in 1985 and 1990 respectively. As spelled out in the Broadcasting Board of Governors FY2009 Budget Request , the objectives of Radio and TV Martí are (1) to support the right of the Cuban people to seek, receive, and impart information and ideas through any media and regardless of frontiers; (2) to be effective in furthering the open communication of information and ideas through use of radio and television broadcasting to Cuba; (3) to serve as a consistently reliable and authoritative source of accurate, objective, and comprehensive news; and (4) to provide news, commentary, and other information about events in Cuba and elsewhere to promote the cause of freedom in Cuba.\nUntil October 1999, U.S.-government funded international broadcasting programs had been a primary function of the United States Information Agency (USIA). When USIA was abolished and its functions were merged into the Department of State at the beginning of FY2000, the Broadcasting Board of Governors (BBG) became an independent agency that included such entities as the Voice of America (VOA), Radio Free Europe/Radio Liberty (RFE/RL), Radio Free Asia, and the Office of Cuba Broadcasting (OCB), which manages Radio and TV Marti. OCB is headquartered in Miami, Florida, and operates under the BBG's International Broadcasting Bureau (IBB). Legislation in the 104 th Congress ( P.L. 104 - 134 ) required the relocation of OCB from Washington D.C. to south Florida. The move began in 1996 and was completed in 1998.\nRadio Martí broadcasts on short and medium wave (AM) channels for 24 hours six days per week, and for 18 hours one day per week utilizing transmission facilities in Marathon, Florida and Greenville, North Carolina, according to the BBG.\nTV Martí broadcasts daily from its facilities in Cudjoe Key Florida, on the Hispasat satellite, and is available on the Internet 24 hours a day. It is also available on 176 cable stations throughout Latin America, according to the BBG. Until July 2005, TV Martí had also been broadcast via blimps from facilities in Cudjoe Key, Florida for four and one-half hours daily, but the aerostats were destroyed by Hurricane Dennis. From mid-2004 until 2006, TV Martí programming was transmitted for several hours once a week via an airborne platform known as Commando Solo operated by the Department of Defense utilizing a C-130 aircraft. In August 2006, OCB began to use a contracted private aircraft to transmit pre-recorded TV Martí broadcasts six days weekly, and by late October 2006 the OCB inaugurated an aircraft-broadcasting platform known as Aero Martí with the capability of transmitting live broadcasts. Aero Martí transmits broadcasts five hours daily from Monday to Saturday during the evening. According to OCB, since mid-FY2007, it has had two contracted private aircraft transmitting the broadcasts.\nIn December 2006, the OCB contracted with two private U.S. commercial stations to transmit Radio and TV Martí. It provided a six-month contract with Radio Mambí (710 AM) in Florida, at a cost of $182,500, to broadcast one hour of Radio Martí programming five days a week from midnight to 1:00 am. Radio Mambí is a popular station in south Florida, with a 50,000 watt capacity, that is well-known for its strong anti-Castro stance. A second six-month OCB contract with WPMF (Channel 38) in Miami, known as TV Azteca, at a cost of $195,000, provided for two 30-minute TV Martí newscasts at 6 pm and 11:30 pm weekdays, along with one-minute news updates hourly over a 12 hour period weekdays. OCB chose the station because it is offered on DirecTV and because it has only a small audience in Miami. In June 2007, the two contracts were extended for an additional six months with similar terms. The contract with Radio Mambí subsequently expired in early 2008, whereas TV Martí continues to be shown on Channel 38.",
"Both Radio and TV Martí have at times been the focus of controversies, including questions about adherence to broadcast standards. There have been various attempts over the years to cut funding for the programs, especially for TV Martí, which has not had much of an audience because of Cuban jamming efforts. In December 2006, press reports alleged significant problems in the OCB's operations, with claims of cronyism, patronage, and bias in its coverage. In February 2007, the former director of TV Martí programming pled guilty in U.S. federal court to receiving more than $100,000 in kickbacks over a three-year period from a vendor receiving OCB contracts.\nOver the years, there have been various government studies and audits of Radio and TV Martí, including investigations by the U.S. Government Accountability Office, by a 1994 congressionally established Advisory Panel on Radio and TV Martí, and by the State Department's and BBG's Office Inspector General offices in 1999, 2003, and 2007.\nIn July 2008, GAO issued a report that criticized the IBB's and OCB's practices in awarding the two contracts to Radio Mambí and TV Azteca as lacking discipline required to ensure transparency and accountability. According to GAO, the approach for awarding the Radio Mambi and TV Azteca contracts did not reflect sound business practices.\nThe most recent State Department/BBG Office of Inspector General (OIG) report, issued in June 2007, maintained that OCB has significantly improved its operations under its current director, Pedro Roig, with an organizational realignment that has streamlined operations and has helped improve the quality of broadcasts. According to the report, \"IBB quality reviews show that radio and television broadcasts have markedly improved over the past two years in production quality and content,\" although the report also called for greater emphasis on internal quality control to ensure that editorial standards are followed. The report lauded the introduction of new technology allowing OCB to broadcast television signals live into Cuba using airborne platforms, and maintained that there are indications that more Cubans are watching TV Martí broadcasts. It recommended that the BBG's International Broadcasting Bureau should review and assess the leases with Radio Mambí and TV Azteca at the end of the lease period to determine whether they provide additional listeners and viewers and are worth the cost, or whether they could be replaced with lease options for other stations. Looking ahead, the report maintained that OCB needs a \"long-term strategic plan that anticipates the future needs of the Cuban audience, provides a template on how to compete with commercial broadcasters, and addresses what to do with OCB and its broadcasting facilities if and when uncensored broadcasting is allowed inside a democratic Cuba.\"\nOne of the most controversial aspects of the OIG report, and one that has often been at the center of past congressional debate over TV Martí, is the extent to which TV Martí can be viewed in Cuba. The report maintains that there is anecdotal evidence that the Aero Martí airborne transmissions have increased viewership. The report refers to a January 2007 survey of Cuban arrivals—commissioned by Spanish Radio Productions with the cooperation of Miami Dade College—that found listening rates for Radio and TV Martí within Cuba were significantly higher than previously reported, especially for TV Martí. Although specific survey figures are not cited in the OIG report, OCB officials maintain that the survey shows that 17% of recent Cuban arrivals had watched TV Martí. The OIG report also points to a February 2007 survey by the U.S. Interests Section (USINT) in Havana that reflected increased viewership. According to the BBG, that survey was completed by 500 Cuban visitors to the USINT (where TV Martí can be viewed) in January and February 2007, with 10% of the visitors indicating that they could watch TV Martí via UHF for brief periods.\nOther observers contend that TV Martí can hardly be viewed in Cuba because of the government's jamming efforts. John Nichols, a Pennsylvania State University communications professor, visited Cuba in late June 2007 on a fact-finding mission sponsored by the Center for International Policy (a group that opposes U.S. policy toward Cuba), and concluded \"that the signal from the plane is essentially unusable\" and that there was \"no evidence of significant viewership of TV Martí.\" In interviews with the Associated Press , more than two dozen Cuban immigrants to Florida contended that while Radio Martí can be heard throughout Cuba, TV Martí can rarely be seen. Prior BBG commissioned phone surveys in Cuba from 2003, 2005, and November 2006 estimated past week TV Martí viewership between 0.1% and 0.3% of those surveyed and past month viewership of almost 0.5%. The November 2006 survey, reportedly designed to show the early effects of the Aero Martí transmissions that began in late October, showed no statistically significant change from the 2003 and 2005 surveys. In the same surveys, Radio Martí had listenership of between 1% to 2% in the past week and 4% to 5% in the past month.",
"From FY1984 through FY2007, about $564 million has been spent for broadcasting to Cuba, with $28.6 million in FY2005, $37.5 million in FY2006, and $33.9 million in FY2007, and an estimated $33.4 million in FY2008. For FY2009, the Bush Administration has requested $34.4 million for broadcasting to Cuba. Until FY2005, the Administration provided funding information for Cuba broadcasting with a breakdown of the amounts spent for Radio versus TV Martí. Since FY2005, however, the Broadcasting Board of Governors has not made such a distinction in its annual budget request.",
"The Administration requested $36.279 million for Cuba broadcasting in FY2007, with $2.7 million of this to purchase an aerostat for broadcasting TV Marti. The request was slightly below the $37.129 million appropriated in FY2006 (when Congress funded the Administration's request to acquire and outfit an aircraft for dedicated airborne radio and television broadcasts to Cuba), but almost $9 million above the $27.6 million appropriated in FY2005. On June 29, 2006, the House passed H.R. 5672 , the FY2007 Science, State, Justice, Commerce and Related Agencies appropriations bill, that would fund Cuba broadcasting under the International Broadcasting Operations account. The report to the bill ( H.Rept. 109 - 520 ) recommended $36.102 million for Cuba broadcasting, including $2.7 million to improve transmission capabilities via aerostat for broadcasting TV Martí. The Senate version of H.R. 5522 , the FY2007 Foreign Operations appropriations bill, would fund Cuba broadcasting. The Senate report to the bill ( S.Rept. 109 - 277 ) recommended full funding of the Administration's request of $36.279 million. Final action was not completed on either bill before the end of the 109 th Congress, but ultimately was funded by a series of continuing resolutions completed in the 110 th Congress that provided $33.9 million for Cuba broadcasting for FY2007.",
"For FY2008, the Administration requested $38.7 million for Cuba broadcasting, including $3.2 million to enhance programming to Cuba in support of the recommendations of the July 2006 report of the Commission for Assistance to a Free Cuba. According to the BBG's FY2008 budget request, of the $3.2 million to enhance programming to Cuba, $1.2 million would be to improve programming and Radio and TV Martí program production in OCB's Miami facility by adding a second television studio, virtual sets, and additional portable production capability. The remaining $2 million would be spent to continue and expand transmission leases begun in FY2007 for DirecTV and medium wave radio frequencies.\nCongress provided $33.681 million for Radio and TV Marti in the FY2008 Consolidated Appropriations Act ( P.L. 110 - 161 ), while a 0.81% rescission brought the enacted amount to $33.408 million. This was about $5 million less than the Administration's request and similar to the amount provided for FY2007. Both the House and Senate committee reports to the FY2008 State Department, Foreign Operations, and Related Program Appropriations bill had recommended $33.681 million. S.Amdt. 2695 (Martinez), which was withdrawn from consideration on September 6, 2007, would have increased funding by $5.019 to fully fund the Administration's request.",
"For FY2009, the Administration requested $34.392 million for broadcasting to Cuba, slightly more than provided by Congress in FY2008. The request amount included funding for the airborne platform that the Office of Cuba Broadcasting uses to broadcast Radio and TV Martí. The report to the Senate Appropriations Committee version of the FY2009 State Department, Foreign Operations, and Related Agencies Appropriations Act, S. 3288 ( S.Rept. 110 - 425 ), recommended fully funding the Administration's request for Cuba broadcasting. The 110 th Congress did not finalize FY2009 appropriations, although it did approve the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that provides funding until March 6, 2009.",
"",
"Cuba and the United States reached two migration accords in 1994 and 1995 designed to stem the mass exodus of Cubans attempting to reach the United States by boat. On the minds of U.S. policymakers was the 1980 Mariel boatlift in which 125,000 Cubans fled to the United States with the approval of Cuban officials. In response to Castro's threat to unleash another Mariel, U.S. officials reiterated U.S. resolve not to allow another exodus. Amid escalating numbers of fleeing Cubans, on August 19, 1994, President Clinton abruptly changed U.S. migration policy, under which Cubans attempting to flee their homeland were allowed into the United States, and announced that the U.S. Coast Guard and Navy would take Cubans rescued at sea to the U.S. naval base at Guantanamo Bay, Cuba. Despite the change in policy, Cubans continued fleeing in large numbers.\nAs a result, in early September 1994, Cuba and the United States began talks that culminated in a September 9, 1994 bilateral agreement to stem the flow of Cubans fleeing to the United States by boat. In the agreement, the United States and Cuba agreed to facilitate safe, legal, and orderly Cuban migration to the United States, consistent with a 1984 migration agreement. The United States agreed to ensure that total legal Cuban migration to the United States would be a minimum of 20,000 each year, not including immediate relatives of U.S. citizens. In a change of policy, the United States agreed to discontinue the practice of granting parole to all Cuban migrants who reach the United States, while Cuba agreed to take measures to prevent unsafe departures from Cuba.\nIn May 1995, the United States reached another accord with Cuba under which the United States would parole the more than 30,000 Cubans housed at Guantanamo into the United States, but would intercept future Cuban migrants attempting to enter the United States by sea and would return them to Cuba. The two countries would cooperate jointly in the effort. Both countries also pledged to ensure that no action would be taken against those migrants returned to Cuba as a consequence of their attempt to immigrate illegally. On January 31, 1996, the Department of Defense announced that the last of some 32,000 Cubans intercepted at sea and housed at Guantanamo had left the U.S. Naval Station, most having been paroled into the United States.",
"Since the 1995 migration accord, the U.S. Coast Guard has interdicted thousands of Cubans at sea and returned them to their country, while those deemed at risk for persecution have been transferred to Guantanamo and then found asylum in a third country or eventually the United States. Those Cubans who reach shore are allowed to apply for permanent resident status in one year, pursuant to the Cuban Adjustment Act of 1966 (P.L. 89-732). This so-called \"wet foot/dry foot\" policy has been criticized by some as encouraging Cubans to risk their lives in order to make it to the United States and as encouraging alien smuggling. Others maintain that U.S. policy should welcome those migrants fleeing communist Cuba whether or not they are able to make it to land.\nThe number of Cubans interdicted at sea by the U.S. Coast Guard has risen in recent years, from 931 in 2002 to 2,952 in 2005, almost twice the number interdicted in 2004. In 2006, Cuban interdictions drooped to 2,293, but 2007 saw a large increase with 3,197 Cubans interdicted for the year. As of late June 2008, over 1,000 Cuban migrants were interdicted at sea. In recent years, increasing numbers of Cuban migrants attempting to reach the United States have been intercepted in Mexico, with some 1,359 intercepted in 2007 and some 1,000 in the first four months of 2008. Cuba and Mexico are reportedly negotiating a migration agreement to curb the irregular flow of migrants through Mexico.\nU.S. prosecution against migrant smugglers in Florida has increased in recent years with numerous convictions. There have been several violent incidents in which Cuban migrants have brandished weapons or in which Coast Guard officials have used force to prevent Cubans from reaching shore. In late December 2007, a Coast Guard official in Florida called on the local Cuban American community to denounce the smuggling and stop financing the trips that are leading to more deaths at sea. The Cuban government also has taken forceful action against individuals engaging in alien smuggling. Prison sentences of up to three years may be imposed against those engaging in alien smuggling.\nIn the aftermath of Fidel Castro's July 2006, announcement that he was temporarily ceding political power to his brother, Department of Homeland Security officials announced several measures to discourage Cubans from risking their lives on the open seas. On August 11, 2006, Department of Homeland Security (DHS) Deputy Secretary Michael P. Jackson urged \"the Cuban people to stay on the island\" and discouraged \"anyone from risking their life in the open seas in order to travel to the United States.\" At the same time, DHS announced additional measures to discourage Cubans from turning to alien smuggling as a way to enter the United States. The measures support family reunification by increasing the numbers of Cuban migrants admitted to the United States each year who have family members in the United States, although the overall number of Cubans admitted to the United States annually will remain at about 21,000. Cubans who attempt to enter the United States illegally will be deemed ineligible to enter under this new family reunification procedure. In another change of policy, Cuban medical personnel currently conscripted by the Cuban government to work in third countries are now allowed to enter the United States; their families in Cuba are also allowed to enter the United States.\nIn March 2007, some 50 federal, state, and local agencies conducted a two-day mass migration response exercise in Florida, dubbed Operation Vigilant Sentry, that was designed to prepare for potential mass migration from Cuba in the event of the collapse of the communist government. Coordinated by the Coast Guard, the exercise was designed to improve migrant-interdiction skills as well as skills to intercept vessels heading to Cuba.",
"On July 17, 2007, Cuba's Ministry of Foreign Affairs issued a statement maintaining that the United States had only awarded 10,724 visas for permanent legal migration to the United States so far in FY2007 as of the end of June 2007, out of an annual minimum of 20,000 agreed to in the 1994 bilateral migration accord. The State Department subsequently responded that the United States was not going to meet its minimum quota because Cuba has impaired the ability of the U.S. Interests Section in Havana to operate in several ways. It maintained that Cuba has refused to allow the U.S. Interests Section to hire local staff to replace those who have resigned or retired; for over a year, has held at least 28 shipping containers with essential supplies and materials for the operation of the diplomatic facility; and has refused to issue temporary visas for U.S. technical personnel to visit Havana to maintain systems in the diplomatic facility. In early October 2007, an official at the U.S. Interests Section in Havana said that the United States had issued only about 15,000 of the 20,000 emigrant visas and blamed Cuba because of the inability to hire local personnel.\nOn November 21, 2007, the Department of Homeland Security announced that it was creating a new Cuban Family Reunification Parole (CFRP) Program that offers beneficiaries of approved family-based immigration visa petitions an opportunity to come to the United States rather than remain in Cuba to apply for a green card. According to U.S. Citizenship and Immigration Services (USCIS), the purpose of the program is to expedite family reunification through safe, legal, and orderly channel of migration to the United States and to discourage dangerous and irregular maritime migration. Those granted parole into the United States will count towards the annual 20,000 figure set forth in the 1994 migration accord.",
"Semi-annual U.S.-Cuban talks alternating between Cuba and the United States had been held regularly on the implementation of the 1994 and 1995 migration accords, but the State Department cancelled the 20 th round of talks scheduled for January 2004, and no migration talks have been held since. According to the State Department, Cuba has refused to discuss five issues identified by the United States: (1) Cuba's issuance of exit permits for all qualified migrants; (2) Cuba's cooperation in holding a new registration for an immigrant lottery; (3) the need for a deeper Cuban port used by the U.S. Coast Guard for the repatriation of Cubans interdicted at sea; (4) Cuba's responsibility to permit U.S. diplomats to travel to monitor returned migrants; and (5) Cuba's obligation to accept the return of Cuban nationals determined to be inadmissible to the United States. In response to the cancellation of the talks, Cuban officials maintained that the U.S. decision was irresponsible and that Cuba was prepared to discuss all of the issues raised by the United States.",
"The 45-square mile U.S. Naval Station at Guantanamo Bay, Cuba, has been a U.S. base since 1903, and under a 1934 treaty that remains in force, the U.S. presence can only be terminated by mutual agreement or by abandonment by the United States. When Fidel Castro assumed power in the 1959 Cuban revolution, the new government gave assurances that it would respect all its treaty commitments, including the 1934 treaty covering the Guantanamo base. Subsequently, however, as U.S.-Cuban relations deteriorated, the Cuban government opposed the presence as illegal.\nThe mission of the base has changed over time. During the Cold War, the base was viewed as a good location for controlling Caribbean sea lanes, as a deterrent to the Soviet presence in the Caribbean, and as a location for supporting potential military operations in the region. In 1994-1995, the base was used to house thousands of Cubans and Haitians fleeing their homeland, but by 1996 the last of the refugees had departed, with most Cubans paroled into the United States, pursuant to a May 1995 U.S.-Cuban migration accord. Since the 1995 accord, the U.S. Coast Guard has interdicted thousands of Cubans at sea and returned them to Cuba, while a much smaller number, those deemed at risk for persecution, have been taken to Guantanamo and then granted asylum in a third country.\nAnother mission for the Guantanamo base emerged with the U.S.-led global campaign against terrorism in the aftermath of the September 11, 2001, terrorist attacks in the United States. With the U.S. war in Afghanistan in 2001, the United States decided to send some captured Taliban and Al Qaeda fighters to be imprisoned in Guantanamo. Although the Cuban government has objected to the U.S. presence at Guantanamo, it did not initially oppose the new mission of housing detainees. Defense Minister Raúl Castro noted that, in the unlikely event that a prisoner would escape into Cuban territory, Cuba would capture the prisoner and return him to the base. The Cuban government, however, has expressed concerns about the treatment of prisoners at the U.S. base and has said it will keep pressing the international community to investigate the treatment of terrorist suspects. In January 2005, it denounced what it described as \"atrocities\" committed at the Guantanamo base.\nSome Members of Congress have called for the closure of the Guantanamo detention facility. In the 110 th Congress, S. 1249 (Feinstein) and H.R. 2212 (Harman) would have required the President to close the detention facility at Guantanamo within one year, while S. 1469 (Harkin) would have require the closure of the facility within 120 days. The final version of H.R. 1585 , the FY2008 defense authorization bill, H.R. 1585 , had a provision (Section 1067) requiring the Secretary of Defense to prepare a report within 60 days on transferring individuals detained at Guantanamo. (An earlier version of that provision was first added to the bill by H.Amdt. 297 (Moran, Virginia), approved during May 17, 2007 House floor consideration.) The President ultimately vetoed H.R. 1585 on December 28, 2007 for other policy reasons, but the new version of the FY2008 defense authorization bill, H.R. 4986 , approved by both houses in January 2008 and signed into law on January 28, 2008 ( P.L. 110 - 181 ) contains the identical provision on Guantanamo in Section 1067.\nWith regard to the future of the Guantanamo base, a provision in the Cuban Liberty and Democratic Solidarity Act of 1996 ( P.L. 104 - 114 , Section 210) states that once a democratically elected Cuban government is in place, U.S. policy is to be prepared to enter into negotiations either to return the base to Cuba or to renegotiate the present agreement under mutually agreeable terms.",
"",
"P.L. 110 - 161 ( H.R. 2764 ). FY2008 Consolidated Appropriations Act. H.R. 2764 was originally introduced and reported by the House Committee on Appropriations ( H.Rept. 110 - 197 ) on June 18, 2007 as the FY2008 State, Foreign Operations, and Related Agencies Appropriations Act. The House passed (241-178) the measure on June 22, 2007. The Senate Appropriations Committee reported the bill on July 10, 2007 ( S.Rept. 110 - 128 ), and the Senate passed (81-12) it on September 6, 2007. On December 17, 2007, H.R. 2764 subsequently became the vehicle for the FY2008 Consolidated Appropriations Act, which included 11 FY2008 appropriations measures. The President signed the measure into law on December 26, 2007.\nAs signed into law, Division J of the Consolidated Appropriations Act covers State Department, Foreign Operations, and Related Agencies appropriations. The law has the following Cuba provisions:\nSimilar to previous years, Section 607 of Division J would prohibit direct funding for Cuba. This provision had been included in both the House and Senate versions of the bill. Section 620 of Division J adds Cuba to the list of countries requiring a special notification to the Appropriations Committees for funds obligated or expended under the act. This provision had been included in the Senate version of the bill. Section 691(b) of Division J provides that Cubans who supported an anti-Castro guerrilla group in the 1960s know as the Alzados are eligible for U.S. refugee status. The Senate version of the bill had included this provision. As set forth in the joint explanatory statement, the measure provides $45.7 million in ESF for Cuba democracy programs as requested by the Administration. Both the House- and Senate-passed versions of H.R. 2764 fully funded the Administration's request for $45.7 million in ESF for Cuba democracy programs. The House committee-reported bill would have provided $9 million in ESF for such programs, but during June 21, 2007, floor consideration, however, the House approved H.Amdt. 351 (Diaz-Balart) by a vote of 254-170 that increased ESF by $36.7 million in order to fully fund the Administration's request. The Senate Appropriations Committee report to the bill would have provided $15 million in ESF for Cuba democracy programs, but during September 6, 2007, floor consideration, the Senate approved S.Amdt. 2694 (Martinez) by voice vote that increased funding for Cuba democracy programs by $30.7 million to fully fund the Administration's request. As set forth in the joint explanatory statement, the measure provides $33.681 million for Radio and TV Marti broadcasting to Cuba, $5.019 million below the Administration's request of $38.7 million and identical to the amount provided for FY2007. Both the House and Senate committee reports to the bill had recommended $33.681 million for Cuba broadcasting. S.Amdt. 2695 (Martinez), which was withdrawn from consideration on September 6, 2007, would have increased funding by $5.019 to fully fund the Administration's request. The measure does not include contrasting provisions related to counternarcotics assistance for Cuba that were included in the House and Senate versions of the bill. Section 673 of the House bill would have specifically prohibited International Narcotics Control and Law Enforcement (INCLE) assistance to the Cuban government. Section 696 of the Senate bill would have provided $1 million in INCLE assistance for preliminary work by the Department of State, or such other entity as the Secretary of State may designate, to establish cooperation with the Cuban government on counternarcotics matters.\nThe final enacted measure does not include provisions easing Cuba sanctions that had been included in the House and Senate-committee versions of the FY2008 Financial Services and General Government Appropriations Act or the Senate-committee reported version of the FY2008 Agriculture Appropriations bill.\nP.L. 110 - 96 ( S. 1612 ). International Emergency Economic Powers Enhancement Act. Introduced and reported by the Committee on Banking, Housing, and Urban Affairs on June 13, 2007 ( S.Rept. 110 - 82 ). Senate approved, amended, by unanimous consent on June 26, 2007. House approved by voice vote October 2, 2007. As approved, the bill amends the International Emergency Economic Powers Act (IEEPA) to increase the potential civil penalty imposed on any person who commits an unlawful act under the act to not exceed the greater of $250,000 (from $50,000) or an amount that is twice the amount of the transaction. The bill also increases a criminal penalty to not more than $1 million and/or 20 years imprisonment.\nS.Res. 573 (Martinez). Celebrates Cuba Solidarity Day, recognizes the injustices face by the Cuban people, and stands in solidarity with the Cuban peoples as they continue to work towards democratic changes in their homeland. Introduced and passed by the Senate on May 21, 2008, by unanimous consent.",
"H.Res. 995 (Diaz - Balart, Mario). Commemorates the 12 th anniversary of the 1996 shooting down of two unarmed U.S. civilian aircraft by the Cuban regimes. Introduced February 25, 2008; referred to the House Committee on Foreign Affairs.\nH.R. 177 (Lee). Pursuit of International Education (PIE) Act of 2007. Prohibits the use of funds available to the Department of the Treasury to implement regulations from June 2004 that tightened restrictions on travel to Cuba for educational activities. Introduced January 4, 2007; referred to Committee on Foreign Affairs.\nH.R. 216 (Serrano). Baseball Diplomacy Act. Waives certain prohibitions with respect to nationals of Cuba coming to the United States to play organized baseball. Introduced January 4, 2007; referred to Committees on Foreign Affairs and Judiciary.\nH.R. 217 (Serrano). Cuba Reconciliation Act. Lifts the trade embargo. Removes provisions restricting trade and other relations with Cuba, including repeal of the Cuban Democracy Act of 1992, the Cuban Liberty and Democratic Solidarity Act of 1996, and provisions of Section 211 of the Department of Commerce and Related Agencies Appropriations Act, 1999 related to transactions or payments with respect to trademarks. Introduced January 4, 2007; referred to the Committees on Foreign Affairs, Ways and Means, Energy and Commerce, Judiciary, Financial Services, Oversight and Government Reform, and Agriculture.\nH.R. 275 (Smith, Christopher). Would promote freedom of expression on the Internet, and protect U.S. businesses from coercion to participate in repression by authoritarian foreign governments. Introduced January 5, 2007, and referred to Committees on Foreign Affairs and on Energy and Commerce. Reported by the House Committee on Foreign Affairs December 10, 2007 ( H.Rept. 110 - 481 , Part 1).\nH.R. 525 (King). Amends the Cuban Liberty and Democratic Solidarity Act of 1996 to require that, in order to determine that a democratically elected government in Cuba exists, the government extradite to the United States convicted felon William Morales and all other individuals who are living in Cuba in order to escape prosecution or confinement for criminal offense committed in the United States. Introduced January 17, 2007; referred to the Committee on Foreign Affairs.\nH.R. 624 (Rangel). Free Trade With Cuba Act. Would lift most economic sanctions on Cuba, including a trademark sanction in Section 211 of the Department of Commerce and Related Agencies Appropriations Act, 1999. Introduced January 22, 2007; referred to the Committees on Foreign Affairs, Ways and Means, Energy and Commerce, Judiciary, Financial Services, Oversight and Government Reform, and Agriculture.\nH.R. 654 (Rangel). Export Freedom to Cuba Act of 2007. Would lift overall restrictions on travel to Cuba. Introduced January 24, 2007; referred to House Committee on Foreign Affairs.\nH.R. 757 (Delahunt). Cuban-American Family Restoration Act. Would lift restrictions on family travel and the provision or remittances for family members in Cuba. Introduced January 31, 2007; referred to House Committee on Foreign Affairs.\nH.R. 1026 (Moran, Jerry). Agricultural Export Facilitation Act of 2007. Would facilitate the sale of U.S. agricultural products to Cuba by providing for general license authority for travel-related expenditures for persons engaging in sales and marketing activities for agricultural products or in the transportation by sea or air of such products; authorizing a consular officer to issue a temporary visa for a Cuban national conducting activities related to the purchase of U.S. agricultural goods, including phytosanitary inspections; clarifying the \"payment of cash in advance\" term used in the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) to mean that the payment by the purchaser and the receipt of such payment to the seller occurs prior to the transfer of title of the commodity or product to the purchaser and the release of control of such commodity or product to the purchaser; and prohibiting the President from restricting direct transfers from a Cuban financial institution to a U.S. financial institution for U.S. agricultural sales under TSRA. Introduced February 13, 2007; referred to House Committees on Foreign Affairs, Judiciary, Financial Services, and Agriculture.\nH.R. 1306 (Wexler)/ S. 749 (Nelson). Identical bills would modify the prohibition on recognition by U.S. courts of certain rights relating to certain marks, trade names, or commercial names. H.R. 1306 introduced March 1, 2007; referred to House Committee on the Judiciary. S. 749 introduced March 2, 2007; referred to Senate Committee on the Judiciary.\nH.R. 1679 (Ros - Lehtinen). Caribbean Coral Reef Protection Act. Would exclude from admission to the United States aliens who have made investments contributing to the enhancement of the ability of Cuba to develop its petroleum resources off its coast; require the President to impose economic sanctions on persons (including foreign subsidiaries) that are determined to have made an investment equal to or exceeding $1 million that contributes to the enhancement of Cuba's ability to develop petroleum resources of the submerged lands off Cuba's coast. Introduced March 26, 2007; referred to House Committee on the Judiciary, and in addition to the Committees on Foreign Affairs, Financial Services, and Oversight and Government Reform. Similar, but not identical, to S. 876 described below.\nH.R. 2419 (Peterson). Farm, Nutrition, and Bioenergy Act of 2007. Introduced May 22, 2007; House passed July 27, 2007. Senate passed December 14, 2007. During House floor consideration on July 27, 2007, the House rejected (182-245) H.Amdt. 707 Rangel, that would have clarified the meaning of \"payment of cash in advance\" for the sale of agricultural commodities to Cuba; authorized direct transfer between U.S. and Cuban financial institutions for a product authorized for sale under the Trade Sanctions Reform and Export Enhancement Act of 2000; and would have authorized the issuance of U.S. visas for Cubans to conduct activities, including phytosanitary inspections, related to the export of U.S. agricultural goods to Cuba.\nIn the Senate, S.Amdt. 3660 (Baucus), which would have eased restrictions on U.S. agricultural sales to Cuba, was proposed on December 11, 2007, but subsequently withdrawn the same day. Several amendments regarding Cuba were submitted, but never proposed: S.Amdt. 3668 (Baucus), would have eased restrictions on U.S. agricultural exports to Cuba; S.Amdt. 3796 (Nelson, Bill), would have required a certification of certain human rights conditions in Cuba before restrictions on U.S. agricultural exports to Cuba would be eased; S.Amdt. 3792 (Martinez), would have expressed the sense of the Senate regarding the human rights situation in Cuba; and S.Amdt. 3793 (Martinez), would have prevented the easing of restrictions on U.S. agricultural exports to Cuba as long as the country is identified by the Secretary of State as a \"state sponsor of terror.\"\nH.R. 2819 (Rangel)/ S. 1673 (Baucus). Promoting American Agricultural and Medical Exports to Cuba Act of 2007. H.R. 2819 introduced June 21, 2007; referred to the Committees on Foreign Affairs, Ways and Means, Judiciary, Agriculture, and Financial Services. S. 1673 introduced June 21, 2007; referred to the Committee on Finance, which held hearings on December 11, 2007. Among other provisions, the bills would clarify the meaning of \"payment of cash in advance;\" authorize direct transfers between Cuban and U.S. financial institutions for the execution of payments for sales pursuant to the Trade Sanctions Reform and Export Enhancement Act; establish an agricultural export promotion program with respect to Cuba; repeal the so-called Section 211 Cuba trademark sanction; lift restrictions on travel to Cuba; repeal an onsite verification requirement for the commercial sale of medicines and medical devices to Cuba; and increase the airport ticket tax for travel to or from Cuba by $1.00, with funds going to a newly established Agricultural Export Promotion Trust Fund.\nH.R. 2829 (Serrano). FY2008 Financial Services and General Government Appropriations Act. Introduced and reported by House Appropriations Committee ( H.Rept. 110 - 207 ) June 22, 2007. Reported by Senate Appropriations Committee July 13, 2007 ( S.Rept. 110 - 129 ). House passed (240-179) June 28, 2007. As approved by the House, Section 903 would have prevented Treasury Department funds from being used to implement a February 2005 regulation that requires the payment of cash in advance prior to the shipment of U.S. agricultural goods to Cuba. The House adopted the provision during June 28, 2007 floor consideration when it approved H.Amdt. 467 (Moran, Kansas) by voice vote. The Senate Appropriations Committee version had a similar provision in Section 619, as well as another provision in Section 620 that would have allowed for travel to Cuba under a general license for the marketing and sale of agricultural and medical goods. The Cuba provisions of both the House and Senate versions of the bill were not included in the final enacted version of the measure, which was included as Division D of the FY2008 Consolidated Appropriations Act ( P.L. 110 - 161 , H.R. 2764 ).\nH.R. 3161 (DeLauro)/ S. 1859 (Kohl). FY2008 Agricultural, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act. H.R. 3161 introduced and reported by House Appropriations Committee July 24, 2007; House passed August 2, 2007. S. 1859 introduced and reported by Senate Appropriations Committee July 24, 2007 ( S.Rept. 110 - 134 ). Section 741 of the Senate bill would authorize travel to Cuba under a general license for the marketing and sale of agricultural and medical goods to Cuba. The Cuba provision in the Senate version was not included in the final enacted version of the measure, which was included as Division A of the FY2008 Consolidated Appropriations Act ( P.L. 110 - 161 , H.R. 2764 ).\nH.R. 3182 (Udall). U.S. Participation in Cuban Energy Exploration Act. Would allow U.S. persons to participate in energy development offshore from Cuba and other nearby countries. Introduced July 25, 2007; referred to the Committees on Foreign Affairs and Ways and Means.\nH.R. 3435 (Pickering). SAFE Energy Act of 2007. Includes provisions that would allow authorize activities and exports for the exploration of hydrocarbon resources from any portion of any foreign exclusive economic zone that is contiguous to the exclusive economic zone of the United States (section 201); and that would allow for travel-related transactions under a general license for travel to Cuba by persons engaging in hydrocarbon exploration and extraction activities (section 202). Introduced August 3, 2007; referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Science and Technology, Natural Resources, Armed Services, Foreign Affairs, and Intelligence.\nH.R. 5627 (Diaz - Balart, Lincoln)/ S. 2777 (Martinez). Similar bills to award the congressional gold medal to Dr. Oscar Elias Biscet, in recognition of his courageous and unwavering commitment to democracy and human rights in Cuba. Both bills were introduced March 13, 2008, with H.R. 5627 referred to the House Committee on Financial Services and S. 2777 referred to the Senate Committee on Banking, Housing, and Urban Affairs.\nH.R. 6735 (Hobson). Would terminate the application of restrictions on exploration, development, and production of oil and gas in areas of the outer Continental Shelf adjacent to Cuba. Introduced July 31, 2008; referred to the Committee on Natural Resources.\nH.R. 6913 (Flake). Would provide that no funds made available to the Department of Commerce may be used to implement, administer, or enforce certain amendments made to regulations relating to license exemptions for gift parcels and humanitarian donations for Cuba. Introduced September 16, 2008; referred to House Committee on Foreign Affairs.\nH.R. 6962 (Delahunt). Humanitarian Relief to Cuba Act. Would, for a 180-day period: allow unrestricted family travel; ease restrictions on remittances by removing the limit and allowing any American to send remittances to Cuba; and expand the list of allowable items that may be included in gift parcels. Introduced September 18, 2008; referred to House Committee on Foreign Affairs.\nH.R. 7323 .(Serrano). FY2009 Financial Services and General Government Appropriations bill. Introduced and reported by the House Appropriations Committee on December 10, 2008 ( H.Rept. 110-920 ). The committee had approved a draft version of the bill on June 25, 2008. The bill has several provisions that would have eased Cuba sanctions. Section 621 would have prohibited funds in the Act from being used to administer, implement, or enforce new language in the Cuban embargo regulations added on February 25, 2005 (31CFR Part 515.533) that requires that U.S. agricultural exports to Cuba must be paid for before they leave U.S. ports. Section 622 would have allowed for family travel once a year (instead of the current restriction of once every three years). Section 623 would have expanded family travel to visit an aunt, uncle, niece, nephew, or first cousin (instead of the current restriction limiting such travel to visit a spouse, child, grandchild, parent, grandparent, or sibling.) The report to the bill would require the Treasury Department's Office of Foreign Assets Control (OFAC) to provide detailed information on OFAC's Cuba-related licensing and enforcement actions. None of these provisions were included in the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that provided funding until March 6, 2009.\nS. 554 (Dorgan). Act For Our Kids. Title I, Section 101 would terminate U.S. government-sponsored television broadcasting to Cuba and prohibit funding. Title II, Section 254, the Freedom to Travel to Cuba Act of 2007, would prohibit the President from regulating or prohibiting travel to or from Cuba by U.S. citizens or legal residents, or any of the transactions ordinarily incident to such travel. Introduced February 12, 2007; referred to Senate Committee on Finance.\nS. 721 (Enzi). Freedom to Travel to Cuba Act of 2007. Would prohibit the President from regulating or prohibiting travel to or from Cuba by U.S. citizens or legal residents, or any of the transaction ordinarily incident to such travel. Introduced March 1, 2007; referred to Committee on Foreign Relations.\nS. 876 (Martinez). Would exclude from admission to the United States aliens who have made investments contributing to the enhancement of the ability of Cuba to develop its petroleum resources off its coast; require the President to impose economic sanctions on persons (including foreign subsidiaries) that are determined to have made an investment equal to or exceeding $1 million that contributes to the enhancement of Cuba's ability to develop petroleum resources of the submerged lands off Cuba's coast. Introduced March 14, 2007; referred to the Committee on Banking, Housing, and Urban Affairs. Similar, but not identical, to H.R. 1679 described above.\nS. 1268 (Dorgan). Would provide for the development of certain outer Continental resources. Amends the Cuba embargo regulations to provide for general license authority for travel-related expenditures by persons engaging in hydrocarbon exploration and extraction activities. Introduced May 2, 2007; referred to the Committee on Energy and Natural Resources.\nS. 1806 (Leahy). Would repeal the so-called Section 211 Cuba trademark sanction provision of the FY1999 Department of Commerce and Related Agencies Appropriations Act. Introduced July 17, 2007; referred to Senate Committee on the Judiciary.\nS. 2503 (Nelson, Bill). Would nullify the 1977 Maritime Boundary Agreement between the United States and Cuba, and would exclude from admission to the United States any aliens who have directly and significantly contributed to the ability of Cuba to develop its petroleum resources. Introduced December 18, 2007; referred to the Committee on the Judiciary.\nS. 2953 (Craig). Domestic Offshore Energy Security Act of 2008. Includes provisions (in section 2) that would: authorize activities and exports for the exploration of hydrocarbon resources from any portion of any foreign exclusive economic zone that is contiguous to the exclusive economic zone of the United States; and allow for travel-related transactions under a general license for travel to Cuba by persons engaging in hydrocarbon exploration and extraction activities. Introduced May 1, 2008; referred to the Committee on Energy and Natural Resources.\nS. 3001 (Levin). FY2009 National Defense Authorization Act. S.Amdt. 5581 (Dodd) , submitted on September 15, 2008, would, for a 180-day period: allow unrestricted family travel; ease restrictions on remittances by removing the limit and allowing any American to send remittances to Cuba; expand the list of allowable items that may be included in gift parcels; and allow for unrestricted U.S. cash sales of food, medicines, and relief supplies to Cuba. The amendment was not considered and therefore not included in the final bill.\nS. 3260 (Durbin). Financial Services and General Government Appropriations Act, 2009. Introduced and reported by Senate Appropriations Committee ( S.Rept. 110 - 417 ) on July 14, 2008. Includes provisions easing restrictions on payment terms for the sale of agricultural goods to Cuba (section 618), travel relating to the commercial sale of agricultural and medical goods (section 619), and family travel (section 620). None of these provisions were included in the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that provided funding until March 6, 2009.\nS. 3288 (Leahy). Department of State, Foreign Operations, and Related Programs Appropriations Act, 2009. Introduced and reported by Senate Appropriations Committee ( S.Rept. 110 - 425 ) July 18, 2008. Includes several Cuba provisions: section 706 continues a prohibition on assistance to Cuba, unless the President determines that it is in the national interest of the United States; section 719 continues the provision from FY2008 that requires that any assistance for Cuba go through the regular notification procedures of the Committees on Appropriations; section 779 provides for $1 million for preliminary work by the Department of State, or other entity designated by the Secretary of State, to establish cooperation with appropriate Cuban agencies on counternarcotics matters, although the money would not be available if the Secretary certifies that Cuba 1) does not have in place procedures to protect against the loss of innocent life in the air and on the ground in connection with the interdiction of illegal drugs; and 2) there is credible evidence of involvement of the government of Cuba in drug trafficking during the preceding 10 years. The Senate Appropriations Committee report to the bill recommended full funding for the Administration's requests of $34.392 million for Cuba broadcasting and $20 million in ESF for Cuba democracy programs, and called for the State Department and USAID to conduct regular evaluations to ensure the cost effectiveness of the programs.\nS. 3289 (Kohl). Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2008. Introduced and reported by Senate Appropriations Committee ( S.Rept. 110 - 426 ) July 21, 2008. Includes a provision (section 737) that would ease restrictions on travel to Cuba for the sale of agricultural and medical goods. This provision was not included in the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that provided funding until March 6, 2009.",
"The following listing consists of enacted appropriations measures with Cuba-related provisions, FY2007 appropriations bills with Cuba provisions that were not completed by the end of the 109 th Congress, and human rights resolutions that were approved. For a complete listing of legislative initiatives in the 109 th Congress, see CRS Report RL32730, Cuba: Issues for the 109th Congress , by [author name scrubbed].",
"P.L. 109 - 102 ( H.R. 3057 ). FY2006 Foreign Operations, Export Financing, and Related Programs. Signed into law November 14, 2005. Funds FY2006 democracy and human rights funding for Cuba. The Administration requested $15 million in ESF assistance for democracy activities for Cuba. Neither the House nor the Senate versions addressed this issue, and the conference report did not include a specific earmark for Cuba.\nP.L. 109 - 108 ( H.R. 2862 ). FY2006 Science, State, Justice, Commerce, and Related Agencies Appropriations Act. Reported by Appropriations Committee ( H.Rept. 109 - 118 ). House passed June 16, 2005. Senate passed September 15, 2005. Conference report ( H.Rept. 109 - 272 ) filed November 7, 2005. House approved conference November 9; Senate approved conference November 16, 2005. Signed into law November 22, 2005. The report to the House bill included a committee recommendation of $27.9 million for Cuba broadcasting, $10 million below the Administration's request, and did not provide funding for an aircraft to transmit Radio and TV Marti programming. Senate action on appropriations for Cuba broadcasting were included in the Senate version of H.R. 3057 rather than H.R. 2862 , and fully funded the Administration's request of $37.7 million. The conference report fully funded the Administration's request of $37.7 million for Broadcasting to Cuba under the International Broadcasting Operations account.\nH.R. 5384 (Bonilla). FY2007 Agriculture Appropriations bill. Introduced and reported by House Appropriations Committee May 12, 2006; passed House May 23, 2006. Senate Appropriations Committee reported its version June 22, 2006 ( S.Rept. 109 - 266 ). The Senate version contained a provision, Section 755, providing for travel to Cuba under a general license for travel related to the sale of agricultural and medical goods to Cuba. Currently such travel is provided under a specific license issued by the Treasury Department on a case-by-case basis. Final action was not completed by the end of the 109 th Congress.\nH.R. 5522 (Kolbe). FY2007 Foreign Operations, Export Financing and Related Programs. Introduced June 5, 2006, and reported by the House Appropriations Committee ( H.Rept. 109 - 486 ); House passed (373-34) June 9, 2006. The Senate Appropriations reported its version of the bill July 10, 2006 ( S.Rept. 109 - 277 ). With regard to Cuba democracy programs, the Senate-reported version recommended $2.5 million in ESF, $6.5 million less than the request, while the House report to the bill recognized the work of USAID in promoting democracy and humanitarian assistance for Cuba and urged the agency to continue to promote its Cuba program. With regard to counternarcotics cooperation with Cuba, the House-passed bill, in Section 570, would have provided that no International Narcotics Control and Law Enforcement (INCLE) funds may be made available for Cuba, while the Senate-reported version, in Section 551(e), would have provided $5 million in INCLE funds for preliminary work to establish cooperation with Cuba. The money would not be available if the President certified that Cuba did not have in place appropriate procedures to protect against the loss of innocent life in the air and on the ground in connection with the interdiction of illegal drugs and there was evidence of involvement of the Cuban government in drug trafficking. The Senate-reported version also would have funded Cuba broadcasting, with the Senate report to the bill recommending full funding of the Administration's $36.279 million request. The House would have funded Cuba broadcasting in H.R. 5672 , the FY2007 Science, State, Justice, Commerce and Related Agencies appropriations bill, described below. Final action was not completed before the end of the 109 th Congress.\nH.R. 5576 (Knollenberg). FY2007 Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act. Introduced June 9, 2006; reported by House Appropriations Committee ( H.Rept. 109 - 495 ). House passed (406-22) June 14, 2006. Reported by Senate Appropriations Committee ( S.Rept. 109 - 293 ) July 26, 2006. Both the House and Senate versions of the bill include a provision (Section 950 in the House version and Section 846 in the Senate version) that prohibits funds from being used to implement tightened restrictions on financing for U.S. agricultural exports to Cuba that were issued in February 2005. In the House bill, the provision was added by H.Amdt. 1049 (Moran, Kansas), approved by voice vote during floor consideration on June 14, 2006. Final action on the measure was not completed by the end of the 109 th Congress.\nH.R. 5672 (Wolf). FY2007 Science, State, Justice, Commerce and Related Agencies appropriations. Introduced June 22, 2006; reported by House Appropriations Committee ( H.Rept. 109 - 520 ). House passed June 29, 2006. As approved, Cuba broadcasting is to be funded under the International Broadcasting Operations account. The report to the bill recommends $36.102 million for Cuba broadcasting, including $2.7 million to improve transmission capabilities via aerostat for broadcasting TV Marti. Final action on the measure was not completed before the end of the 109 th Congress.",
"H.Con.Res. 81 (Menendez). Expresses the sense of Congress regarding the two-year anniversary of the human rights crackdown in Cuba. Introduced March 2, 2005; approved by the House Committee on International Relations March 9, 2005. House passed (398-27, 2 present) April 27, 2005.\nH.Res. 193 (Diaz - Balart, Mario) . Expresses support of the House of Representatives to the organizers and participants of the May 20, 2005, meeting in Havana of the Assembly to Promote Civil Society. Introduced April 6, 2005; approved by the Committee on International Relations April 27, 2005. House passed (392-22, 1 present) May 10, 2005.\nH.Res. 388 (Diaz - Balart, Lincoln). Expresses the sense of the House of Representatives regarding the Cuban government's extreme repression against members of Cuba's pro-democracy movement in July 2005; condemns gross human rights violations committed by the Cuban regime; calls on the Secretary of State to initiate an international solidarity campaign on behalf of the immediate release of all Cuban political prisoners; calls on the European Union to reexamine its current policy toward the Cuban regime; and calls on the U.S. Permanent Representative to the United Nations and other international organizations to work with member countries of the U.N. Commission on Human Rights (UNCHR) to ensure a strong resolution on Cuba at the 62 nd session of the UNCHR. Introduced July 26, 2005. House passed (393-31) September 29, 2005.\nS.Res. 140 (Martinez). Expresses support of the Senate for the May 20, 2005 meeting in Havana of the Assembly to Promote Civil Society. Introduced May 12, 2005; Senate approved by unanimous consent May 17, 2005.\nS.Res. 469 (Lieberman). Condemns the April 25, 2006, beating and intimidation of Cuban dissident Martha Beatriz Roque. Introduced May 8, 2006; Senate passed May 25, 2006, by unanimous consent.",
"",
"CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances , by [author name scrubbed].\nCRS Report RS22742, Cuba ' s Political Succession: From Fidel to Raul Castro , by [author name scrubbed].\nCRS Report RL34523, Financial Services and General Government (FSGG): FY2009 Appropriations , by [author name scrubbed].\nCRS Report RS22094, Lawsuits Against State Supporters of Terrorism: An Overview , by [author name scrubbed].\nCRS Report RL31258, Suits Against Terrorist States by Victims of Terrorism , by [author name scrubbed].\nCRS Report RL32014, WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases , by [author name scrubbed].",
"CRS Report RS20450, The Case of Elian Gonzalez: Legal Basics , by [author name scrubbed] (pdf).\nCRS Report RL33622, Cuba ' s Future Political Scenarios and U.S. Policy Approaches , by [author name scrubbed].\nCRS Report RL32251, Cuba and the State Sponsors of Terrorism List , by [author name scrubbed].\nCRS Report RL32730, Cuba: Issues for the 109 th Congress , by [author name scrubbed].\nCRS Report RL31740, Cuba: Issues for the 108 th Congress , by [author name scrubbed].\nCRS Report RL30806, Cuba: Issues for the 107 th Congress , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL30628, Cuba: Issues and Legislation In the 106 th Congress , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL30386, Cuba-U.S. Relations: Chronology of Key Events 1959-1999 , by [author name scrubbed] (pdf).\nCRS Report RS20468, Cuban Migration Policy and Issues , by [author name scrubbed].\nCRS Report RL33499, Exempting Food and Agriculture Products from U.S. Economic Sanctions: Status and Implementation , by [author name scrubbed].\nCRS Report RS22094, Lawsuits Against State Supporters of Terrorism: An Overview , by [author name scrubbed].\nCRS Report RL32826, The Medical Device Approval Process and Related Legislative Issues , by [author name scrubbed].\nCRS Report 94-636, Radio and Television Broadcasting to Cuba: Background and Issues Through 1994 , by [author name scrubbed] and [author name scrubbed] (pdf).\nCRS Report RS21764, Restricting Trademark Rights of Cubans: WTO Decision and Congressional Response , by [author name scrubbed]."
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{
"question": [
"What has been the U.S. policy towards Cuba since the 1960s?",
"What was the main Cuban issue in the 110th Congress?",
"How was discussion in the 110th Congress different from previous years?",
"How did Cuban leadership change in 2008?",
"How did Congress fund the Administration's request for funding for Cuban democracy programs?",
"How did the House vote on H.Amdt. 707?",
"How did the Senate vote on S.Res. 573?",
"What other bills regarding Cuba were presented in the sessions?",
"What legislative initiatives on Cuba were introduced in the 110th Congress?",
"What was the proposed goal of S. 554?",
"How would these initiatives affect sanctions?",
"How would these initiatives affect trademarks?"
],
"summary": [
"Since the early 1960s, U.S. policy toward Cuba has consisted largely of isolating the communist nation through economic sanctions, which the Bush Administration has tightened significantly. A second policy component has consisted of support measures for the Cuban people, including private humanitarian donations and U.S.-sponsored radio and television broadcasting to Cuba.",
"As in past years, the main issue for U.S. policy toward Cuba in the 110th Congress was how to best support political and economic change in one of the world's remaining communist nations.",
"Unlike past years, however, Congress examined policy toward Cuba in the context of Fidel Castro's departure from heading the government because of poor health.",
"Raúl Castro, who had served as provision head of government since July 2006, was selected on February 24, 2008 by Cuba's legislature to continue in that role officially.",
"In the first session of the 110th Congress, Congress fully funded the Administration's FY2008 request for $45.7 million for Cuba democracy programs in the Consolidated Appropriations Act for FY2008 (P.L. 110-161).",
"In other first session action, on July 27, 2007, the House rejected H.Amdt. 707 to H.R. 2419, the 2007 farm bill, that would have facilitated the export of U.S. agricultural exports to Cuba.",
"In the second session, the Senate approved S.Res. 573 on May 21, 2008, which recognized the struggle of the Cuban people.",
"In both sessions, there were Cuba provisions in several House and Senate appropriations measures (H.R. 2829, H.R. 3161, S. 1859, H.R. 7323, and S. 3260) that would have eased restrictions on travel and on U.S. agricultural sales to Cuba, but none of these provisions were included in enacted measures.",
"Several of these initiatives would have eased sanctions: H.R. 177 (educational travel); H.R. 216 (Cuban baseball players); H.R. 217 and H.R. 624 (overall sanctions); H.R. 654, S. 554, and S. 721 (travel); H.R. 757 (family travel and remittances); H.R. 1026 (sale of U.S. agricultural products); H.R. 2819/S. 1673 (sale of U.S. agricultural and medical products and travel); and S. 1268, S. 2953, H.R. 3182, and H.R. 3435 (development of Cuba's offshore oil).",
"S. 554 would have terminated U.S.-government sponsored television broadcasting to Cuba.",
"Several initiatives would have tightened sanctions: H.R. 525 (related to U.S. fugitives in Cuba), and H.R. 1679/S. 876 and S. 2503 (related to Cuba's offshore oil development).",
"Two initiatives, H.R. 1306 and S. 749, would have amended a provision of law restricting the registration or enforcement of certain Cuban trademarks; five initiatives—H.R. 217, H.R. 624, H.R. 2819, S. 1673, and S. 1806—would have repealed the trademark sanction."
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GAO_GAO-17-3
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{
"title": [
"Background",
"Design Standards, Building Codes, and Voluntary Certifications Provide Guidelines for Infrastructure Construction",
"Standards-Developing Organizations Are the Primary Source of Design Standards, Building Codes, and Voluntary Certifications",
"Standards-Developing Organizations Develop Certain Design Standards, Building Codes, and Voluntary Certifications through a Formal, Consensus-Based Process",
"Federal Law and Policies Govern the Participation of Agency Officials in the Development of Design Standards, Building Codes, and Voluntary Certifications",
"Design Standards, Building Codes, and Voluntary Certifications Play a Role in the Federal Fiscal Exposure to the Effects of Climate Change",
"Standards- Developing Organizations Have Not Generally Used Forward-Looking Climate Information in Design Standards, Building Codes, and Voluntary Certifications",
"Reports and Representatives of Standards- Developing Organizations Identified Institutional and Technical Challenges to Using Forward-Looking Climate Information",
"Institutional Challenges",
"Technical Challenges",
"Agencies Have Initiated Some Actions and Could Take More to Help Address Challenges, According to Reports, Standards- Developing Organizations, and Agency Officials",
"Agencies Have Initiated Some Actions that Could Help Standards- Developing Organizations Address Institutional and Technical Challenges",
"Opportunities Exist for Federal Agencies to Take Additional Actions, According to Reports, Representatives of Standards-Developing Organizations, and Agency Officials",
"Conclusions",
"Recommendation for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: Comments from the Department of Commerce",
"Appendix III: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"Design standards, building codes, and voluntary certifications provide guidelines for the construction of infrastructure. Standards-developing organizations are the primary source of the standards, codes, and certifications that federal, state, local, and private-sector infrastructure planners follow. Standards-developing organizations typically develop standards, codes, and certifications through a formal, consensus-based process, and federal law and policies govern the participation of agency officials in their development. Design standards, building codes, and voluntary certifications play a role in the federal fiscal exposure to the effects of climate change.",
"Design standards, building codes, and voluntary certifications provide guidelines for the construction of infrastructure, specifically:\nDesign Standards. OMB Circular A-119—which establishes policies on the federal government’s role in development and use of standards—defines “standards” to include the common and repeated use of rules, conditions, guidelines, or characteristics for products or related processes and production methods. For example, the American Society of Civil Engineers issued a design standard that specifies minimum structural load requirements under various types of conditions, taking into accounts factors such as soil type and potential for floods, snow, rain, ice, and wind.\nBuilding Codes. Building codes are minimum safeguards to ensure the public health, safety, and general welfare of the occupants of new and existing buildings and structures, according to the International Code Council, a standards-developing organization. For example, building codes may ensure that exterior walls and roofs are resistant to the weather, such as by including flashing and drainage. Building codes may reference one or more design standards.\nVoluntary Certifications. Voluntary certifications assess infrastructure across a spectrum of key criteria, including environmental performance, and recognize those that go beyond minimum code compliance. For example, the U.S. Green Building Council developed the Leadership in Energy and Environmental Design (LEED) certification, which offers four ratings levels—certified, silver, gold, and platinum—depending on how many points a project earns in various categories.\nIn addition to design standards, building codes, and voluntary certifications, broader considerations, such as planning ordinances and asset management, may govern the construction of infrastructure. For example, planning ordinances may specify where to site new residential or commercial buildings and place conditions on their design, such as building height. Further, asset management—a decision-making approach for providing the best level of service to customers at the lowest appropriate cost—can guide what to build. For example, builders and owners may use an asset management framework to decide whether to repair or replace a building or another physical asset. In this report, we focus on the use of climate information in standards, model codes, and certifications, although climate information may also be relevant to broader planning processes and asset management decisions.",
"In the United States, standards-developing organizations are the primary source of design standards, building codes, and voluntary certifications that federal, state, local, and private-sector infrastructure planners follow. For example, a 2015 report by the National Institute of Building Sciences’ Consultative Council on the priorities of the building industry stated that standards-developing organizations develop and maintain standards and codes, while state and local governments adapt, adopt, and enforce them. In April 2013, we found that federal agencies rely on professional associations in adopting design standards. In 2015, we found that federal agencies and the private sector use voluntary certifications that third-party organizations—such as standards-developing organizations— develop. A variety of organizations, including professional societies and trade associations such as the American Society of Civil Engineers and the International Association of Plumbing & Mechanical Officials, develop design standards, building codes, and voluntary certifications. Members of these organizations can include academics; professionals, such as architects, engineers, and planners; and federal, state, and local government officials.\nVarious federal laws and regulations govern the use of design standards, building codes, and voluntary certifications that standards-developing organizations issue, including the following:\nThe National Technology Transfer and Advancement Act of 1995, as amended (NTTAA), codified the OMB Circular A-119 directive for federal agencies to use voluntary consensus standards in lieu of government-unique standards except where inconsistent with law or otherwise impractical.\nFederal Highway Administration (FHWA) regulations incorporate, by reference, certain design standards that the American Association of State Highway and Transportation Officials develops, thereby requiring their use for projects in the National Highway System.\nThe Public Buildings Amendments of 1988 requires that each building constructed or altered by GSA or any other federal agency, to the maximum extent feasible, comply with one of the nationally recognized model building and other applicable codes.\nThe Cranston-Gonzalez National Affordable Housing Act, as amended, requires the Secretaries of Agriculture and HUD to establish by regulation energy efficiency standards for certain housing (i.e., public housing and homes whose mortgages are insured by HUD’s Federal Housing Administration) that meet or exceed the requirements of specified design standards and building codes and, in certain circumstances, to amend the regulation when the standards or codes are revised.\nThe Energy Conservation and Production Act, as amended, requires the Secretary of Energy to determine whether each revision of certain model energy codes for residential and commercial buildings would improve energy efficiency. If the Secretary makes an affirmative determination, states have 2 years to certify that they have determined whether it was appropriate to revise their residential building energy code to meet or exceed the revised model code and updated their commercial building energy code to meet or exceed the revised model codes.\nIf a federal agency chooses to use a green building voluntary certification for a covered new building or major renovation, it must meet the certification standards in DOE’s regulations. The regulations require that the system used to certify the building be developed by an organization that provides an opportunity for developing the system through a consensus-based process and subject to periodic evaluation and assessment of the environmental and energy benefits that result, among other things.",
"Standards-developing organizations follow similar, formal, consensus- based processes in the development of American National Standards— which include design standards, building codes, and voluntary certifications. The American National Standards Institute, an organization that accredits standards-developing organizations, established requirements for due process that standards-developing organizations must follow when developing American National Standards. In 2000, NIST and the American National Standards Institute signed a memorandum of understanding to, among other things, improve communication and coordination among the private and public sector on voluntary standards issues. This memorandum recognizes NIST’s responsibility to coordinate standards activities with responsible federal agencies to use voluntary consensus standards to the extent practicable, participate appropriately in their development, and ensure that they meet federal agency needs. It recognizes the American National Standards Institute’s role of accrediting standards developers and approving proposed standards as American National Standards. Standards- developing organizations that plan to develop an American National Standard use a process that may differ in some of the details, such as how to determine consensus, but must follow the principles of due process, including openness; balance of interests; and consensus and the same basic steps, as seen in figure 1. 1. Initiate standards-developing activity. Members of standards- developing organizations and, in some cases, members of the public may propose to initiate standards activity. Proposals may include information about the need for and anticipated benefits to the public of the new or revised standard, as well as potential costs. The standards-developing organization determines whether to draft a new standard or revise an existing standard. If the standards-developing organization agrees to draft a new standard or revise the existing one, it directs a committee to undertake the activity. The committee may include members of the organization as well as nonmembers—i.e., representatives of companies and nonprofit organizations and government officials with subject-matter expertise who serve on a voluntary basis. 2. Draft new or revised standard. The committee drafts the new or revised standard and seeks public input by notifying members of the standards-developing organization, the American National Standards Institute, and other interested parties. 3. Review draft standard. The committee considers public comments and the views of all interested parties and revises the draft standard. 4. Finalize draft standard. The committee uses a consensus-based process to vote on whether to approve the draft standard. For example, to approve a draft standard, some standards-developing organizations require a supermajority—at least two-thirds—of the members who cast ballots as well as resolution of any negative comments. The standards-developing organization must provide an appeals process for procedural decisions, including whether a technical issue was afforded due process. 5. Issue new or revised standard. If the draft standard is approved, the standards-developing organization issues the new or revised standard and notifies the American National Standards Institute. The committee establishes a schedule for review, generally at least every 5 years. At that time, the standards-developing organization may reaffirm, revise, or withdraw the standard.",
"Federal law requires agencies to participate in the development of standards when it is in the public interest and is compatible with agency mission, authority, priorities, and budget resources. In addition, NIST is authorized to cooperate with other departments and agencies of the federal government, state and local governments, and private organizations, among other entities, in establishing voluntary consensus standards and codes. The Energy Policy Act of 1992 requires DOE to support the upgrading of model building energy codes for new buildings and periodically review their technical and economic basis. OMB Circular A-119 encourages federal representatives to participate actively and on an equal basis with other members, consistent with the procedures of the standards bodies, in the standards organization, including in developing and adopting new standards by being fully involved in discussions and technical debates, registering opinions, and serving in leadership positions if selected. OMB Circular A-119 notes that agency representatives should avoid the practice or the appearance of undue influence relating to their participation in standards bodies and activities. The Secretary of Commerce, through NIST, coordinates and fosters the implementation of OMB Circular A-119.",
"In our prior work, we found that decisions regarding how to account for climate change in the design of infrastructure—such as those in design standards, building codes, and voluntary certifications—could affect the federal fiscal exposure. In our February 2015 high-risk update, we noted that, among other things, governmentwide improvement is needed to reduce federal fiscal exposure, since climate change may affect the federal government in various ways, such as through its role as a provider of aid in response to disasters. In our past work, we have found that infrastructure is typically designed to operate within past climate conditions. For example, in April 2013, we found that changes in the climate may reduce the useable lifespan of infrastructure like bridges that are expected to last as long as 50 to 100 years because historical weather patterns—in particular, those related to extreme weather—no longer provide reliable predictions for planning purposes. Also in our April 2013 report, we found that taking actions to adapt to the effects of climate change—such as raising river or coastal dikes to protect infrastructure from sea level rise, building higher bridges, or increasing the capacity of stormwater systems—may be costly, but that there is a growing recognition that the cost of inaction could be greater.\nAs a result of the increasing costs of natural disasters, such as Hurricane Sandy, federal agencies, state and local officials, and private-sector entities have begun to acknowledge the role of design standards, building codes, and voluntary certifications in managing the fiscal exposure to extreme weather events and the potential long-term effects of climate change, according to reports and our prior work. For example, in 2013, the Hurricane Sandy Rebuilding Strategy—which identified actions that federal agencies can take to enhance resilient rebuilding—noted that investments now will last for decades, so current construction must be completed to standards that anticipate future conditions and risks. In July 2015, we found that some state and city officials in areas affected by Hurricane Sandy have strengthened their building codes to enhance the resilience—the ability to adapt to changing conditions and withstand and rapidly recover from disruption—of communities to future disasters. In October 2014, we found that, according to a representative of an insurance industry group, more resilient building codes would help reduce exposure to weather-related risks, including hurricanes, floods, wildfires, hail, and wind storms, which are associated with climate change. Further, in May 2014, we found that Department of Defense (DOD) installation planners are unlikely to go beyond current building codes, which could limit their ability to consider climate change in their facility investment decisions.",
"Standards-developing organizations generally have not used forward- looking climate information in design standards, building codes, and voluntary certifications and instead have relied on historical observations, according to our analysis, reports we reviewed, and representatives of standards-developing organizations we interviewed. Specifically, according to our analysis of documents that standards-developing organizations provided to us, standards, codes, and certifications do not use forward-looking climate information. Reports and representatives of standards-developing organizations stated that such standards, codes, and certifications were generally based on climate information from historical observations. For example, a 2014 report by the National Institute of Building Sciences’ Consultative Council on the priorities of the building industry stated that standards and codes are based on the science and experience of the past. In a 2011 report, authors from the University of Michigan and the U.S. Green Building Council stated that climate-related decisions for the design of infrastructure are based on historic climate data and past trends. In addition, representatives of standards-developing organizations told us they use climate information based on historical observations in standards, codes, and certifications.\nFurther, standards-developing organizations vary in whether they update the climate information in design standards, building codes, and voluntary certifications on a regular basis, according to our analysis. Some standards-developing organizations periodically update the climate information they use. For example, the American Society of Heating, Refrigerating, and Air-Conditioning Engineers uses climate information— including average monthly temperatures and various measures of humidity—based on historical data that it updates periodically to balance both long-term and recent climate change trends and incorporate changes in climate as they occur. However, other organizations do not regularly update the climate information they use. For example, the International Code Council uses climate zones based on observations of annual precipitation and average temperatures from 1961 through 1990 to specify insulation levels for condensation control and has not updated these observations in 26 years. Moreover, the International Association of Plumbing & Mechanical Officials uses rainfall rates from a 1961 federal technical paper for the sizing of stormwater drainage pipes. Representatives from the International Code Council told us that the organization may not be updating this information because being able to do so would depend on whether federal agency officials or other participants provide more recent information during the standards- developing process.\nSome standards-developing organizations have taken preliminary steps, such as issuing guidance and statements, that may lead to the use of forward-looking climate information in standards, codes, and certifications. For example, in 2015 the American Society of Civil Engineers issued a white paper about adapting engineering practices to a changing climate that recommended, among other things, that engineers work with scientists to better understand future climate extremes to improve the planning and design of infrastructure. The American Association of State Highway and Transportation Officials provides guidance on its website to better prepare transportation design managers and engineers for changing climate trends. Further, the American Institute of Architects and the National Institute of Building Sciences worked with 19 organizations, including standards-developing organizations, to issue a statement indicating their commitment to, among other things, improving the resilience of infrastructure. In a progress report on this statement, signatories made initial commitments to develop design standards that are informed by climate data. In addition, the American Association of State Highway and Transportation Officials is funding a Transportation Research Board project to develop tools that hydraulic engineers could use to account for climate change in their designs.\nSome standards-developing organizations also encourage the use of forward-looking climate information on a more limited basis. For example, the U.S. Green Building Council has offered an optional pilot credit for its voluntary certification that encouraged the use of forward-looking climate information. The U.S. Green Building Council suggested various sources for forward-looking climate information, including (1) local climate change studies, if available; (2) consultation with climate scientists; or (3) U.S. regional predictions based on information available from EPA, NOAA, FEMA, and the USGCRP. In addition, the Green Building Initiative, a different standards-developing organization, includes the EPA National Stormwater Calculator as a possible information source for its voluntary certification. The calculator allows users to consider future climate change scenarios to demonstrate performance for the voluntary certification. Further, representatives from the Green Building Initiative told us that they may add references to forward-looking climate information in their voluntary certification to address the Council on Environmental Quality’s recently updated Guiding Principles.",
"Standards-developing organizations face institutional and technical challenges to using the best available forward-looking climate information in design standards, building codes, and voluntary certifications, according to reports we reviewed and representatives of these organizations and federal officials we interviewed.",
"Institutional challenges to using forward-looking climate information in design standards, building codes, and voluntary certifications include a standards-developing process that (1) must balance various interests and (2) can be decentralized and slow to change, according to reports we reviewed and representatives of standards-developing organizations we interviewed. First, with regard to the challenge of balancing various interests, as stated in GSA’s 2014 climate change risk-management plan, it is unlikely that building codes will meet the needs for site-specific climate resistant design of buildings in a timely way because of the rapidly changing climate and the divergent motivations and beliefs of stakeholders that participate in the code development process.\nRepresentatives of some standards-developing organizations told us that the various interests of their members drive their process. For example, representatives of one standards-developing organization told us that their members have not expressed interest in standards that use forward- looking climate information because it would require increased upfront construction costs. Representatives of two other standards-developing organizations noted that in some cases their standards are for equipment with a relatively short life-cycle—as little as 10 to 15 years—so they would not realize appreciable benefits from increased resilience.\nSecond, design standards and building codes can be slow to change, as stated in a 2015 report on adapting infrastructure to climate change by the American Society of Civil Engineers. Representatives of some standards-developing organizations told us that the process they follow to develop their standards is decentralized and can be slow to change. For example, they stated that they cannot use forward-looking climate information unless someone submits a proposal that includes forward- looking climate information and their members reach consensus to approve the proposal. Further, representatives of two standards- developing organizations told us they reference climate information from other standards-developing organizations in their standards, so it would be difficult for them to unilaterally begin to use forward-looking climate information. In addition, representatives of other standards-developing organizations told us that standards and codes are by their nature stable and slow to change. For example, representatives of one standards- developing organization stated that code development is a conservative process and does not accept change easily, and representatives from another standards-developing organization stated that following the consensus process takes time.",
"Technical challenges to using forward-looking climate information include difficulty (1) identifying the best available forward-looking climate information and (2) incorporating it into design standards, building codes, and voluntary certifications, according to reports, federal officials, and representatives of standards-developing organizations. First, with respect to identifying the best available forward-looking climate information, authors from the University of Michigan and the U.S. Green Building Council noted a lack of connection between climate change research and the design of infrastructure in their 2011 report. Further, participants in our July 2015 Comptroller General’s Forum on Preparing for Climate- Related Risks: Lessons from the Private Sector stated that the absence of consistent, authoritative climate information made it hard for private- sector entities to consider climate information in planning. Representatives of some standards-developing organizations told us they had difficulties identifying the best available forward-looking climate information models. For example, representatives of one standards- developing organization stated that they are not aware of updated tools— such as interactive web-based projections of flood hazards for particular locations—or forward-looking climate information from the last 4 or 5 years. In addition, representatives of some standards-developing organizations told us that they could not identify forward-looking climate information with sufficient specificity. For example, representatives of one standards-developing organization stated that they need forward-looking climate information for a site-specific project area rather than at the country or state level, which is what is available from climate models. Representatives of another standards-developing organization stated that they needed additional detailed information, such as whether any projected increased precipitation would occur evenly throughout the year or in concentrated bursts.\nSecond, it can be difficult to incorporate forward-looking climate information into planning decisions, such as those involved in developing design standards, building codes, and voluntary certifications, according to reports, including the Third National Climate Assessment, and USGCRP officials. For example, in 2014, the Transportation Research Board found that climate models do not generally provide climate information that is directly usable in design—they require some translation or derivation—because, for example, they do not account for seasonal or spatial variability. USGCRP officials told us that it may be difficult for standards-developing organizations to move from using historical observations, such as average summer heating degree days, to model projections on the basis of a variety of assumptions. Representatives of one standards-developing organization told us that climate models provide a wide range of possible temperatures that is difficult to use in their standards because the technical committee does not know how to reflect this variability. In addition, representatives of some standards-developing organizations told us that it is difficult to reconcile the dynamic nature of climate change with the stable framework of infrastructure design. Moreover, representatives of some standards- developing organizations stated that they do not have such expertise in- house and would have to rely on outside experts to provide forward- looking climate information during the standards-developing process. Representatives of another organization stated that using forward-looking climate information would increase the complexity of their voluntary certification and could deter potential users.",
"Federal agencies have initiated some actions to help standards- developing organizations address institutional and technical challenges to using forward-looking climate information. Moreover, according to reports we reviewed, our prior work, and representatives of some standards- developing organizations and agency officials we interviewed, agencies have opportunities to take additional actions. These sources also indicated that taking further actions to address these challenges could present an additional benefit by reducing the federal fiscal exposure.",
"Federal agencies have initiated some actions that could help standards- developing organizations address institutional and technical challenges to using forward-looking climate information. Officials from USGCRP and from some federal agencies, including DOT and NOAA, told us they have initiated efforts to coordinate with other federal agencies to provide the best available forward-looking climate information to standards- developing organizations. For example, DOT and NOAA officials told us that they participate in the Mitigation Framework Leadership Group (MitFLG), which, since 2013, has coordinated federal, state, and local government efforts to mitigate the impact of hazards, including natural disasters. Further, officials from NOAA told us they provided information on their Digital Coast tools, including the Sea Level Rise Viewer, to a standards-developing organization at its request, and that they generally make these and other tools publicly available. Officials from EPA stated that they consulted with a standards-developing organization to develop a tool that provides forward-looking climate information to water utility owners and operators and helps them assess the related climate risks at their individual utilities, but that they have not directly provided this information to standards-developing organizations.\nOfficials from FEMA and NIST told us they have taken actions to help make design standards, building codes, and voluntary certifications more resilient to natural disasters. For example, in response to a proposal from FEMA, the 2015 International Code Council residential building code increased the minimum required building elevation above the 100-year flood plain by 1 foot. FEMA officials told us that they proposed this change because they determined it would be cost-effective under current climate conditions. Furthermore, in November 2015, MitFLG—which FEMA chairs—issued a draft implementation strategy that seeks to encourage federal support for more resilient standards and codes, but the strategy does not specifically focus on using forward-looking climate information. In 2015, NIST convened the Community Resilience Panel for Buildings and Infrastructure Systems, which seeks to, among other things, identifys gaps in standards and codes to make infrastructure more resilient to extreme weather and other risks. The President’s 2013 Climate Action Plan recognized the panel’s role in helping to improve the resilience of infrastructure, although NIST officials told us that the panel does not currently focus on addressing potential climate change effects.",
"According to reports we reviewed, our prior work, and representatives of some standards-developing organizations and federal agency officials we interviewed, opportunities exist for agencies to take additional actions that may help address the challenges standards-developing organizations face to using forward-looking climate information. Specifically, according to these sources, federal agencies with a role in coordinating, developing, and adopting standards, codes, and certifications or assessing and responding to climate-related issues could help address the challenges standards-developing organizations face by taking two types of actions. First, agencies could improve interagency coordination to address institutional challenges. Second, agencies could provide the best available forward-looking climate information to standards-developing organizations to help address their technical challenges. In addition, helping standards-developing organizations address these challenges could present opportunities to reduce federal fiscal exposure to the effects of climate change, according to federal agency officials, our prior work, and reports we reviewed.\nImproving Interagency Coordination to Help Address Institutional Challenges Federal agencies with a role in coordinating, developing, and adopting standards, codes, and certifications or assessing and responding to climate-related issues could improve interagency coordination to help address the institutional challenges standards-developing organizations face, according to reports we reviewed, our prior work, and representatives of standards-developing organizations and federal agency officials we interviewed. For example, a 2015 report from the National Institute of Building Sciences’ Consultative Council on the priorities of the building industry found that efforts to improve resilience, such as incorporating anticipated climate change effects into design standards and building codes, would benefit from a coordinated effort among federal agencies that address climate-related issues. Further, a 2012 National Academies report found that the roles and responsibilities for improving the resilience of buildings are not coordinated by the federal government, either through a single agency or authority, or through a unified vision. This report stated that a national vision could be a more effective approach to encouraging resilience. Also, in November 2015, we found that providing climate information is an inherently interagency activity that relies on the cooperation and shared resources of many agencies, but interagency coordination is weak by design. In that report we found that agency climate programs were created to meet individual agency missions and are not necessarily focused on the needs of other decision makers.\nBoth representatives of standards-developing organizations and federal agency officials we interviewed recognized the need for improved coordination to address institutional challenges to using climate information in design standards, building codes, and voluntary certifications. Representatives of several standards-developing organizations stated that improved coordination among federal agencies could help increase the legitimacy and visibility of efforts to use forward- looking climate information in standards, codes, and certifications. GSA’s March 2016 standards for government-owned and -leased buildings noted that federal leadership is essential—especially for buildings that are vulnerable to climate change and critical to the public good—because building codes do not consider climate change. Emphasizing the key role for the federal government, OMB officials stated that standards and codes are critically important to planning for climate change and that proactive federal engagement with standards-developing organizations is necessary. In addition, USGCRP officials stated that there is a need for conversations among a coordinated group of federal agencies and standards-developing organizations to help address the institutional challenges these organizations face.\nFederal policy directs agency standards executives—senior-level officials who coordinate agency participation in standards organizations—to coordinate their views on matters of paramount importance when they participate in the same standards activities. The President has also established a council to, among other things, coordinate interagency efforts on priority federal government actions related to climate preparedness and resilience. First, OMB Circular A-119 directs agency standards executives to coordinate their views on matters of paramount importance when they participate in the same standards activities so as to present, whenever feasible, a single, unified position, and where not feasible, a mutual recognition of differences. OMB Circular A-119 also directs the Secretary of Commerce, who has delegated this responsibility to NIST, to coordinate and foster executive branch implementation of the Circular, which addresses federal participation in the development and use of voluntary consensus standards, and to sponsor, support, and chair the Interagency Committee on Standards Policy (ICSP). According to the ICSP charter, the objective of the ICSP is to help foster cooperative participation by the federal government, among others, in standards activities. The ICSP coordinates with a view to encouraging more effective federal participation in the development of standards, among other things. Second, acknowledging that the management of climate change risks requires deliberate preparation, close cooperation, and coordinated planning by the federal government, Executive Order 13653 established the interagency Council on Climate Preparedness and Resilience. The Council is to, among other things, (1) coordinate interagency efforts on priority federal government actions related to climate preparedness and resilience and (2) facilitate the integration of climate science in policies and planning of government agencies and the private sector. In 2016, the Council issued a report, noting that with respect to integrating climate resilience into agencies’ missions, operations, and culture, strong coordination across the federal government creates the best outcomes.\nOfficials from the Executive Office of the President and federal agencies told us that they have not specifically coordinated efforts to help standards-developing organizations use the best available forward- looking climate information. Officials from USGCRP and the Office of Science and Technology Policy also stated that interagency coordination is unlikely to produce new climate analyses that depart from agency missions. NIST officials stated that they coordinate other governmentwide activities related to standards, codes, and certifications—for example, the ICSP serves as a forum for federal agencies to share best practices. NIST officials also told us that they coordinate the federal use of standards but they do not have the authority to coordinate federal agencies’ participation in the standards-developing process. However, as we noted above, OMB Circular A-119 directs the Secretary of Commerce to coordinate and foster executive branch implementation of the Circular, which addresses federal participation in the development of voluntary consensus standards, among other things. Moreover, NIST is authorized to cooperate with other federal agencies, among other entities, in establishing voluntary consensus standards and codes.\nProviding the Best Available Forward-Looking Climate Information to Help Address Technical Challenges Federal agencies that participate in the standards-developing process and respond to climate-related issues could help address technical challenges by providing the best available forward-looking climate information for consideration in the standards-developing process, according to reports we reviewed, our prior work, and representatives of some standards-developing organizations and federal agency officials we interviewed. For example, in November 2014, the State, Local, and Tribal Leaders Task Force on Climate Preparedness and Resilience reported that the greatest need is often not the creation of new data or information but assistance and tools for decision makers to navigate the wide array of resources already available. The Task Force also recommended that the federal government help establish standards for climate resilience in infrastructure, thus encouraging their adoption by the private sector, other levels of government, and nongovernmental organizations. Similarly, we found in November 2015 that federal technical assistance could help decision makers access, translate, and use climate information. In April 2013, we found that the federal government plays a critical role in producing the information needed to facilitate a more informed response to the effects of climate change. However, in this report we stated that this information exists in an uncoordinated confederation of networks and is not easily accessible. Representatives of some standards-developing organizations told us that federal agencies have the expertise and resources to identify and help incorporate the best available forward- looking climate information in standards, codes, and certifications. For example, representatives of some standards-developing organizations we interviewed stated that USGCRP agencies could work with standards- developing organizations to provide forward-looking climate information. Representatives of one standards-developing organization stated that federal agencies could provide, for example, projections of snow levels, minimum and maximum temperatures, storm surges, and coastal wind speeds. OMB officials and representatives of some standards-developing organizations stated that federal efforts would be more effective if agencies worked directly with standards-developing organizations rather than making information and tools publicly available.\nFederal law requires federal agencies to participate in the standards- developing process under certain circumstances. As required by the NTTAA and consistent with OMB Circular A-119, federal agencies must consult with standards-developing organizations and participate in the development of technical standards when such participation is in the public interest and compatible with the agencies’ missions, authorities, priorities, and budget resources. Federal policies also direct agencies to mitigate the effects of natural disasters, including by communicating and using the best available localized climate projections, and to help translate climate science for risk-management decision making. Specifically, the National Mitigation Framework states, among other things, that reducing long-term vulnerability can include adopting and enforcing hazard-resistant design standards and building codes. It identifies as a critical task for improving community resiliency the communication and use of the best available localized climate projections so that the public and private sectors can make informed decisions. In addition, OMB Circular A-11, which provides guidance on the preparation and execution of the President’s budget, directs agency proposals for construction of federal facilities to comply with relevant guidance on climate change. Further, USGCRP’s 2012 strategic plan calls on USGCRP to assist in the translation of science for societal benefit and related risk-management decision making. It also notes that it will be critical for USGCRP to build new partnerships with engineers, architects, and planners and their supporting federal agencies because of the vulnerability of infrastructure to the effects of climate change.\nOfficials from some federal agencies, including FEMA, and USGCRP told us that they have provided forward-looking climate information to standards-developing organizations to a limited extent because they do not have clear direction to do so. FEMA officials told us that although MitFLG has coordinated federal, state, and local government hazard mitigation efforts, it does not have any measures that focus on providing forward-looking climate information to standards-developing organizations. Officials from USGCRP told us that they need to improve their understanding of the information needs of standards-developing organizations in order to take them into account for USGCRP research and product development. Further, officials from USGCRP told us that they are beginning to engage the civil engineering community, including standards-developing organizations, in this discussion. Such engagement is consistent with USGCRP’s strategic plan, which notes that it will be critical for USGCRP to build new partnerships with engineers, architects, and planners because of the vulnerability of infrastructure to the effects of climate change. However, officials also noted that USGCRP assists many users and sectors and does not have the practical or financial capacity to provide detailed, tailored analyses for each sector. NIST officials told us that they have not provided forward-looking climate information to standards-developing organizations for various reasons, including because they have not conducted research on the way climate change may impact design standards. These officials stated that their research focuses on improving the resilience of communities to a variety of disruptive events but leaves it to the communities to decide for themselves what the appropriate levels of risk, mitigation, and response should be, given their local resources. However, by consulting with MitFLG and USGCRP, NIST could help coordinate a governmentwide effort to provide the best available forward-looking climate information to standards-developing organizations for consideration in the development of design standards, building codes, and voluntary certifications.\nHelping Standards-Developing Organizations Address Challenges Presents a Benefit by Reducing the Federal Fiscal Exposure to the Effects of Climate Change Helping standards-developing organizations consider forward-looking climate information in the development of voluntary consensus standards that promote the safety, reliability, productivity, and efficiency of infrastructure presents an additional benefit by reducing the federal fiscal exposure, according to federal agency officials, our prior work, and reports we reviewed. First, helping standards-developing organizations could help increase the efficiency and consistency of federal efforts to mitigate the risk that climate change poses to federal facilities. For example, GSA officials told us that the use of forward-looking climate information in developing standards and codes would help mitigate much of the climate risk to their facilities (i.e., government-owned and -leased buildings), lessening the need for the resource-intensive screenings that GSA currently conducts. Specifically, GSA officials stated that they are screening fiscal year 2017 capital building projects for climate risk in an effort to reduce or eliminate emergency response costs over the lifespan of the new buildings. GSA’s climate risk screen uses forward-looking climate information from the Third National Climate Assessment to consider—for each new building—the importance of the project to the mission of the agency, expected service life, historic or cultural status, and whether the building is vulnerable to projected changes in the climate. Second, as previously noted, federal, state, local, and private- sector decision makers use the design standards, model building codes, and voluntary certifications that standards-developing organizations issue to plan and construct infrastructure that may be paid for with federal funds, insured by federal programs, or eligible for federal disaster assistance—key aspects of federal fiscal exposure to climate change. For example, in 2015, the National Institute of Building Sciences’ Consultative Council reported that communities need standards and codes that can help them recognize the risks associated with a changing climate and prevent disruptive hazards from becoming disasters. Similarly, in 2014, the State, Local, and Tribal Leaders Task Force on Climate Preparedness and Resilience reported that anticipating and planning for climate change impacts now—including through the standards and codes that communities adopt—can reduce harm and long-term costs.",
"Extreme weather costs the federal government billions of dollars each year and poses a significant risk to infrastructure, such as buildings, roads, and power lines that provides essential services to the American public. Ongoing and future changes to the climate have the potential to compound these risks and increase federal fiscal exposure. Design standards, building codes, and voluntary certifications play a role in ensuring the resilience of federal and nonfederal infrastructure to the effects of natural disasters and extreme weather but generally use climate information based on historical observations. We have previously found that using the best available climate information, including forward-looking projections, can be a part of a risk-management strategy for federal, state, local, and private-sector decisions and investments. However, standards-developing organizations, not federal agencies, are the primary source for standards, codes, and certifications that specify how weather and climate information is considered in infrastructure planning. These organizations face institutional and technical challenges to using forward- looking climate information, and federal agencies have initiated actions that could help them address these challenges. For example, NIST convened a panel to, among other things, identify gaps in standards and codes to make infrastructure more resilient to extreme weather and other risks. Various reports we reviewed and representatives of standards- developing organizations and agency officials we interviewed identified additional actions federal agencies could take to help standards- developing organizations use forward-looking climate information. Some agencies, such as GSA, are beginning to consider the risk climate change poses to their infrastructure, but these efforts are done on a case-by-case basis. Taking a coordinated, governmentwide approach could present an additional benefit by reducing federal fiscal exposure. Given NIST’s statutory authority and role in coordinating implementation of OMB Circular A-119, it is well-positioned to convene federal agencies for such an effort.",
"To help reduce federal fiscal exposure by enhancing the resilience of infrastructure to extreme weather, we recommend that the Secretary of Commerce, through the Director of NIST, in consultation with MitFLG and USGCRP, convene federal agencies for an ongoing governmentwide effort to provide the best available forward-looking climate information to standards-developing organizations for their consideration in the development of design standards, building codes, and voluntary certifications.",
"We provided the Department of Commerce, DHS, and the Office of Science and Technology Policy with a draft of this report for comment. The Department of Commerce neither agreed nor disagreed with our recommendation and provided written comments, which are summarized below and reproduced in appendix II. DHS did not provide written comments. The Office of Science and Technology Policy did not provide official written comments, but, along with OMB and USGCRP, provided technical comments, which we incorporated as appropriate.\nIn its response, the Department of Commerce stated that it strongly supports efforts to foster greater and more effective participation by federal agencies in the development of consensus standards for climate resilience in infrastructure and other areas. However, the Department of Commerce stated that GAO’s recommendation that NIST coordinate a governmentwide effort to deliver the best available climate change information to standards-developing organizations is inconsistent with NIST's well-established role in the voluntary consensus standards- developing process. Specifically, it noted that NIST does not have the necessary expertise to play the role of arbiter of what climate information is “best.” We agree that NIST should not play the role of arbiter of what climate information is “best,” which is why we recommended that NIST coordinate the governmentwide effort to provide the best available forward-looking climate information to standards-developing organizations in consultation with MitFLG and USGCRP. As we found in our 2015 report on climate information, reducing the risks and realizing the opportunities of climate change require making good decisions based on reliable and appropriate information about past, present, and future climate, as well as properly integrating that information into the decision- making process. That 2015 report also found that the federal government has a key role in providing authoritative climate information to meet the needs of federal, state, local, and private-sector decision makers. USGCRP, in particular, is well-positioned to perform this role and has the necessary expertise to identify the best available forward-looking climate information because, as we noted in our report, it coordinates global change research across 13 federal agencies.\nThe Department of Commerce further noted that NIST could—consistent with its mission and authority—convene stakeholders, including federal agencies, to discuss forward-looking climate information for potential use by the standards community. Our recommendation reflected that NIST is the entity responsible for coordinating executive branch implementation of OMB Circular A-119, which governs federal participation in the development and use of voluntary consensus standards. However, in response to the Department of Commerce’s comments, we clarified our recommendation to better reflect its views of NIST’s mission and authority. The Department of Commerce also provided technical comments, which we incorporated as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to appropriate congressional committees; the Secretary of Commerce; the Secretary of Homeland Security; the Director of the Office of Science and Technology Policy; and other interested parties. In addition, this report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix III.",
"Our objectives were to examine (1) what is known about the use of forward-looking climate information in design standards, building codes, and voluntary certifications; (2) challenges, if any, that reports and representatives of standards-developing organizations identified to using forward-looking climate information; and (3) any actions that federal agencies have taken to help address these challenges and additional actions, if any, that reports, representatives of standards-developing organizations, and agency officials identified.\nTo address our audit objectives, we reviewed reports by selected standards-developing organizations, federal agencies, and experts in the development and use of standards and climate change that we identified through scoping interviews and prior work. We also conducted interviews with representatives of standards-developing organizations and agency officials. We focused on standards-developing organizations that develop design standards, building codes, and voluntary certifications in four infrastructure sectors: energy, government facilities, transportation systems, and water and wastewater systems. These sectors provide cities, neighborhoods, and buildings with essential services; permit movement and connection; and are components of critical infrastructure, according to the Department of Homeland Security’s 2013 National Infrastructure Protection Plan. We identified standards-developing organizations through interviews with academics, subject-matter experts, and representatives of professional societies, as well as through our prior work. We selected 17 organizations that develop such standards, codes, and certifications for which climate information is relevant. For example, they incorporate or reference information about the intensity, duration, and frequency of precipitation, average daily temperatures, or flood hazards. A majority of the standards-developing organizations we selected—14 of 17—are accredited by the American National Standards Institute or similarly follow an open, consensus-based process to develop their standards, codes, or certifications. We asked each of the representatives of organizations we interviewed whether there were other organizations we should contact and adjusted our list as needed. While the standards-developing organizations we selected do not represent all organizations that develop standards, codes, and certifications in the infrastructure sectors on which we focused, they include all the major standards-developing organizations within the sectors that met our selection criteria. Table 1 lists the organizations we reviewed and the areas of focus—the scope and purpose—of their design standards, building codes, and voluntary certifications.\nTo address our first objective, we reviewed reports by standards- developing organizations and subject-matter experts and documents that standards-developing organizations provided to us. For example, standards-developing organizations provided us with examples of one or more standards, codes, or certifications that referenced climate information such as average temperatures or rainfall rates to show how this information is typically used. We interviewed representatives of these organizations using semi-structured interview techniques, including a mixture of both open-ended and closed-ended questions. Some of the questions in our interviews were about the organizations’ use of historical observations and forward-looking climate information and other actions they may have taken to consider how climate change may affect their standards, codes, and certifications. In this report, we defined “use forward-looking climate information” to mean that the standards- developing organization specified a particular source or sources of data and required their use in order to meet the design standard or building code or to earn the voluntary certification. Similarly, to address our second objective, we reviewed reports by standards-developing organizations, federal agencies, and subject-matter experts. Other questions in our interviews with representatives of standards-developing organizations, as seen above, were aimed at identifying any challenges they face and steps they plan, if any, to address these challenges.\nTo address our third objective, we identified and analyzed federal laws, policies, and reports relevant to federal use of design standards, building codes, and voluntary certifications; preparedness for natural disasters; and potential responses to the effects of climate change on infrastructure. These laws, policies, and reports included the National Technology Transfer and Advancement Act of 1995, as amended; Office of Management and Budget (OMB) Circulars A-11 and A-119; Executive Order 13653; and the National Mitigation Framework. We also examined our prior work on the federal response to climate change, federal green buildings, and response to natural disasters. As part of our interviews with representatives of standards-developing organizations, described above, we asked them to identify the types of federal actions that could help address any challenges they face. We also interviewed officials from agencies and entities with a role in coordinating, developing, and adopting standards, codes, and certifications; assessing the impacts of climate change; or helping to coordinate the federal government response to climate change to identify any actions they have taken and any additional actions they could take. These agencies and entities were the Department of Commerce’s National Institute of Standards and Technology and National Oceanic and Atmospheric Administration; the Department of Energy; the Department of Homeland Security’s Federal Emergency Management Agency; the Department of Housing and Urban Development; the Department of Transportation; the Environmental Protection Agency; and the General Services Administration and, within the Executive Office of the President, the Council on Environmental Quality, the National Security Council, OMB, the Office of Science and Technology Policy, and the U.S. Global Change Research Program.\nWe analyzed standards-developing organizations’ responses to our interview questions and other information to identify the actions these organizations have taken to use forward-looking climate information, any challenges they face in doing so, and any actions that federal agencies have taken, and additional actions they could take, if any, to help address these challenges. We identified categories of challenges and agency actions on the basis of scoping interviews with academics and subject- matter experts, reports, and our analysis of the interviews with representatives of standards-developing organizations and federal agency officials. These categories encompassed a majority of the challenges and actions we identified and were mutually exclusive. We categorized challenges as either institutional or technical. Categories of federal actions were improving coordination of federal efforts to help standards-developing organizations use the best available forward- looking climate information and providing such information for consideration in the standards-developing process. We did not report on challenges and actions that did not fit within the categories we developed because they were generally outside the scope of our review. For example, some challenges and federal actions were related to the adoption and enforcement of design standards and building codes. We compared relevant federal laws, policies, and reports with the actions that federal agencies have taken and could take that, according to reports we reviewed and representatives of standards-developing organizations and agency officials we interviewed, could help standards-developing organizations address the challenges they face.\nWe conducted this performance audit from July 2015 to November 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"",
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"In addition to the individual named above, Joseph Dean Thompson (Assistant Director), Mark Braza, Alicia Cackley, Martin (Greg) Campbell, Christopher Currie, Swati Deo, Kathryn Godfrey, Brian Lepore, Armetha Liles, Tim Persons, Kiera Reifschneider, Oliver Richard, Michelle Sager, Amber Sinclair, Jeanette Soares, Ruth Solomon, Anne Stevens, Marie Suding, Kiki Theodoropoulos, and David Wise made key contributions to this report."
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"question": [
"To what extent have standard-developing organizations made use of predicted climate information?",
"How do these organizations update climate information?",
"How do organizations plan to make use of projected climate information?",
"How does the American Society of Civil Engineers plan to use forward-looking climate data?",
"What role have agencies played in informing standard-developing organizations?",
"How has NIST provided standards-developing organizations with climate information?",
"How does USGCRP plan on sharing climate information?",
"How could other agencies help address the challenges of using forward-looking climate information?",
"What does federal policy dictate regarding agency standards executives?",
"What does policy state regarding the Secretary of Commerce?",
"What was GAO asked to review?",
"What does this report examine?",
"How did GAO collect data for this report?"
],
"summary": [
"Selected standards-developing organizations generally have not used forward-looking climate information—such as projected rainfall rates—in design standards, building codes, and voluntary certifications and instead have relied on historical observations.",
"Further, some organizations periodically update climate information in standards, codes, and certifications, but others do not.",
"Some standards-developing organizations have taken preliminary steps that may lead to the use of forward-looking climate information.",
"For example, in 2015, the American Society of Civil Engineers issued a paper that recommended engineers work with scientists to better understand future climate extremes.",
"Agencies have initiated some actions and could take more to help standards-developing organizations address challenges, according to various reports, representatives of standards-developing organizations, and agency officials.",
"For example, in 2015, the National Institute of Standards and Technology (NIST) convened a panel that seeks to identify gaps in standards and codes to make infrastructure more resilient to extreme weather.",
"In addition, officials from the U.S. Global Change Research Program (USGCRP)—which coordinates research across 13 federal agencies—told GAO they have begun discussions with representatives of standards-developing organizations on their climate information needs.",
"Specifically, agencies that address climate issues could improve interagency coordination to help standards-developing organizations address institutional challenges and could provide the best available forward-looking climate information to help them address technical challenges.",
"Federal policy directs agency standards executives—senior-level officials who coordinate agency participation in standards organizations—to coordinate their views when they participate in the same standards activities so as to present, whenever feasible, a single, unified position.",
"The policy also directs the Secretary of Commerce, who has delegated the responsibility to NIST, to coordinate and foster executive branch implementation of the policy governing federal participation in the development of voluntary consensus standards.",
"GAO was asked to review the use of forward-looking climate information by standards-developing organizations.",
"This report examines (1) what is known about the use of such information in standards, codes, and certifications; (2) challenges standards organizations face to using climate information; and (3) actions federal agencies have taken to address such challenges and additional actions they could take.",
"GAO analyzed laws and policies, reviewed reports, and interviewed representatives from 17 selected organizations and officials from agencies that address climate issues."
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GAO_GAO-15-416
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{
"title": [
"Background",
"PSDA, Advance Directives, and Advance Care Planning",
"Covered Providers and CMS Oversight",
"CMS Oversees Covered Providers’ Implementation of the Advance Directive Requirement by Providing Guidance and Monitoring Implementation",
"CMS Provides Guidance to Help Covered Providers Implement the Advance Directive Requirement to Maintain Written Policies and Procedures",
"CMS Monitors Covered Providers’ Implementation of the Advance Directive Requirement",
"Approaches Used to Inform Individuals about Advance Directives Vary by Provider Type, but Providers Face Similar Challenges",
"Many Adults Have Advance Directives, but the Prevalence Varies by Provider Type, Demographics, and Over Time",
"Agency Comments",
"Appendix I: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgements"
],
"paragraphs": [
"",
"As amended, the PSDA requires Medicare and Medicaid funded hospitals, nursing homes, hospices, HHAs, and managed care plans— including MA and Medicaid health maintenance organizations—to maintain written policies and procedures related to advance directives. Among other things, the policies and procedures maintained by covered providers are required to specify that the provider will: (1) provide written information to all adult individuals receiving medical care by or through the provider on their rights under state law to make decisions concerning medical care, including the right to execute an advance directive; and (2) document in the medical record whether the individual has an advance directive.\nThe PSDA defines an advance directive as a written instruction, such as a living will or durable power of attorney for health care, recognized under state law (whether statutory or as recognized by the courts of the state) and relating to the provision of such care when the individual is incapacitated. For example, an advance directive may be used to record an individual’s wish to receive all available medical treatment, to withdraw or withhold certain life sustaining procedures, or to identify an agent to make medical decisions on the individual’s behalf if necessary. The most common forms of advance directives are living wills and health care powers of attorney.\nDuring the last 6 months of life, many individuals receive care from one or more covered providers, including hospitals and nursing homes, and having an advance directive that specifies an individual’s treatment preferences to covered providers in preparation for difficult medical decisions that may arise at the end of life may be useful. According to the IOM, advance directives are most effective when used as part of advance care planning, which may involve multiple, in-depth discussions with family members, legal and financial counsel, and healthcare providers, and may also include the formulation of medical orders. The IOM also reported that multiple discussions at various stages of life are needed, with greater specificity as an individual’s health deteriorates, because an individual’s medical conditions and treatment preferences may change over time. Therefore, a comprehensive approach to end-of-life care, rather than any one document, such as an advance directive, helps to ensure that medical treatment given at the end of life is consistent with an individual’s preferences.",
"The six provider types covered by the PSDA provide or arrange for Medicare or Medicaid health care services in multiple settings for individuals of varying demographics. For example, nursing homes generally provide care in an institutional setting to older individuals who have chronic conditions, such as congestive heart failure, while hospices generally deliver palliative care in an institutional, home, or home-like setting to critically ill individuals of various ages who are close to the end of life. The characteristics and distribution of individuals enrolled in MA and Medicaid managed care also have similarities and differences. For example, individuals enrolled in MA may be disabled or elderly (over the age of 65), and individuals enrolled in Medicaid managed care may include adults who are also disabled and elderly. However, in 2013, CMS reported that half of the Medicaid population was children in comparison to Medicare in which 83 percent of beneficiaries were over age 65. In addition, while most individuals enrolled in Medicare are not enrolled in a managed care plan, over 70 percent of individuals enrolled in Medicaid are enrolled in some form of Medicaid managed care, according to CMS. However, the distribution of individuals enrolled in Medicaid across various demographic groups—disabled, elderly, adults, and children— varies widely by state.\nIn order to participate in the Medicare or Medicaid programs, covered providers must comply with applicable federal standards, including PSDA requirements. CMS is responsible for oversight of providers’ compliance with PSDA requirements and does so through both state survey agencies and accrediting organizations.\nCMS enters into agreements with state survey agencies to conduct oversight activities of covered providers. Specifically, four of the six covered provider types—hospitals, nursing homes, HHAs, and hospices—must demonstrate their compliance with federal standards to a state survey agency. These agencies conduct surveys of covered providers—observations, interviews, and document/record reviews—that assess compliance with applicable requirements for Medicare and/or Medicaid participation. The survey process covers multiple standards. For example, there are about 200 quality and safety standards for nursing homes that range from determining the prevalence of pressure sores and use of restraints to documenting the posting of an individual’s bill of rights.\nHowever, in some cases, particularly for hospitals, accrediting organizations provide primary oversight. Specifically, hospitals, HHAs, and hospices that choose to undergo accreditation by an accrediting organization, rather than certification from a state agency, must demonstrate to the accrediting organization their ability to meet the standards of accreditation, including PSDA standards. The accreditation organization subsequently recommends to CMS certification of providers meeting such standards. The processes that accrediting organizations use to certify providers for Medicare participation are subject to CMS review and approval. In addition, under agreements with CMS, state survey agencies annually survey a sample of accredited providers to verify the results of surveys conducted by the accrediting organizations, and assess the organizations’ ability to monitor providers’ compliance with federal standards.\nThe two remaining covered provider types—MA and Medicaid managed care plans—must contract with CMS or individual states to participate in the Medicare or Medicaid programs. Specifically, under MA, CMS contracts with private health plans to provide covered services to individuals who enroll in an MA plan, while under Medicaid managed care, individual states contract with private health plans to cover medical services; however, both MA and Medicaid managed care plans are prospectively paid a per person, or capitated, payment.",
"",
"CMS develops and disseminates guidance through operations manuals, memoranda, or model documents to five of the six covered provider types—hospitals, nursing homes, HHAs, hospices, and MA plans—to inform these providers of the requirement to maintain written policies and procedures about advance directives and to describe how the agency will monitor providers’ implementation. For example, CMS issues operations manuals specific to five provider types that describe the advance directive requirement and how each of these providers is required, in accordance with federal regulations, to maintain and provide each patient with written notice of the provider’s policies related to advance directives. These operations manuals also describe how the providers are required to maintain policies related to documentation of an individual’s advance directive in the individual’s medical record. CMS shares oversight of Medicaid managed care plans, the sixth covered provider type, with individual states. CMS is responsible for approving managed care contracts to ensure that they conform to advance directive requirements in federal regulation, and states are responsible for administering these contracts, including providing guidance to plans and ensuring that plans comply with contractual requirements, according to CMS officials. As a result, CMS does not issue guidance to Medicaid managed care plans.\nCMS also provides an operations manual to four covered provider types—hospitals, nursing homes, HHAs, and hospices—to help these providers understand the standards state survey agencies will use during surveys to monitor the providers’ implementation of the advance directive requirement. Covered provider types may use this information to ensure that survey standards are met. In addition, CMS’s guidance informs the standards that accrediting organizations use during surveys to monitor accredited providers’ implementation of the advance directive requirement, because these standards must be approved by CMS as meeting or exceeding the Medicare standards. Guidance in the operations manual describes to state survey agencies and covered providers the activities and documents that may be observed and reviewed during surveys. For example, the operations manual indicates that state survey agencies may review the provider’s policies, examine an individual’s medical records for documentation that required information was provided to the individual, and whether or not the individual has an advance directive; or conduct interviews with other individual patients and provider staff to understand how the provider’s policies are implemented. One stakeholder we spoke with that represented HHAs reported that the survey process described in the operations manual demonstrates the importance that CMS places on advance directives.\nAdditionally, CMS issues memoranda available to state survey agencies and four of the six covered provider types—hospitals, nursing homes, HHAs, and hospices—that contain clarifications and new or revised guidance related to the advance directive requirement. For example, in September 2012, a CMS memorandum notified state survey agencies that CMS had updated its guidance regarding how survey agencies should assess nursing home compliance with the advance directive requirement and encouraged survey agencies to share the information with providers. Further, in October 2013, a CMS memorandum to state survey agencies clarified nursing homes’ cardiopulmonary resuscitation (CPR) policies in the context of an individual’s advance directive. According to the memorandum, nursing homes must provide CPR to all individuals in their care unless an individual’s advance directive specifies otherwise, and may not establish or implement facility-wide “no CPR” policies. The memorandum instructs state survey agencies to examine nursing home policies and individuals’ medical records to ensure that no such policy has been established or implemented. A stakeholder that represented nursing home providers reported that the memoranda and updated survey guidance for nursing home providers clarified and reinforced CMS’s expectations for nursing homes’ policies related to advance directives, and demonstrated CMS’s focus on providing oversight in this area.\nIn addition to the guidance that CMS provides to MA plans—the fifth provider type—through the Medicare Managed Care Manual (chapter 4 entitled, “Benefits and Beneficiary Protections”), CMS also provides MA plans with model documents used to inform enrollees about advance directives to demonstrate how plans are to implement the guidance in the manual. For example, the model document contains the exact wording that the plans must use to inform individuals enrolled in MA plans about their right to formulate an advance directive. MA plans are required to provide this document, called an Evidence of Coverage, to each individual at initial enrollment and each year thereafter. According to CMS officials, MA plans are not permitted to modify the language in the model document unless otherwise instructed by CMS. Officials also reported that CMS annually reviews the policies and procedures in the model document and, when necessary, updates them to ensure that they reflect current laws and CMS policies. CMS relies on states to provide guidance to Medicaid managed care plans—the sixth provider type—because states are responsible for administering contracts with these plans.",
"CMS’s activities to monitor covered providers’ implementation of the advance directive requirement vary across the six covered provider types and include periodic surveys, contract reviews, and the collection of certain related data. CMS enters into agreements with state survey agencies to conduct most surveys. Specifically, under agreements with CMS, state survey agencies periodically survey four of the six provider types—hospitals, nursing homes, HHAs, and hospices. Survey frequencies for each provider type are determined by statute or CMS policy. For example, the frequency of nursing homes, HHAs, and beginning in 2015, hospice standard surveys is statutorily determined and must occur, on average, every year for nursing homes and every 3 years for HHAs and hospices. The frequency of hospital standard surveys is determined by CMS and should occur, on average, every 3 years. According to CMS officials, state survey agencies follow up with providers to correct deficiencies found during surveys, and may work with CMS to impose enforcement actions, such as civil monetary penalties and termination, on providers that do not correct deficiencies in a timely manner.\nThrough state survey agencies, CMS retains data regarding deficiencies related to advance directives identified during surveys of hospitals, nursing homes, HHAs, and hospices. The data—which, according to CMS officials, the agency uses for enforcement actions—indicate that the rate of noncompliance with the advance directive requirement among these four covered provider types in 2012 and 2013 was less than 3 percent for the providers surveyed in each given year. For example, about 2 percent of the 14,161 nursing homes that were surveyed in 2013 had a deficiency related to the advance directive requirement. Deficiencies related to the advance directive that were identified during surveys of the four provider types included providers’ failure to inform individuals about advance directives, including failure to provide individual patients with written information about the providers’ policies regarding advance directives. Providers also failed to accurately document an individual’s advance directive in the medical record. Surveyors based their findings on observations, medical record reviews, and interviews with provider staff, and noted that a provider’s failure to ensure that individuals have an opportunity to formulate complete and accurate directives has the potential to cause harm to individuals who may receive treatment or have treatment withheld when their exact treatment preferences are not known. In addition, accrediting organizations— through findings from periodic surveys of providers that would include findings related to providers’ compliance with the advance directive requirement—may recommend to CMS whether accredited providers should maintain their certification.\nIn addition to the survey process for hospitals, nursing homes, HHAs, and hospices, CMS reviews contracts from the two remaining covered provider types—MA plans and Medicaid managed care plans. Specifically, CMS reviews MA and Medicaid managed care plan contract provisions addressing compliance with applicable requirements, including the advance directive requirement. According to CMS officials, each MA plan must annually renew its contract with CMS indicating that it will comply with Medicare laws and regulations, which includes the advance directive requirement. Although the MA plan’s contract application indicates that CMS may conduct monitoring activities, such as on-site visits to the plan’s facilities to verify the plan’s compliance with Medicare requirements, CMS does not currently conduct such activities related to the advance directive requirement. CMS officials told us that current audits of MA plans are focused on outcome based measures, such as plans’ coverage determinations, which would not indicate noncompliance with the advance directive requirement.\nFor Medicaid managed care plans, CMS officials reported that CMS staff review contracts between the plan and individual states prior to implementation of a new plan contract or when revisions are made to an existing approved contract to ensure that the contract addresses provisions related to advance directives. CMS staff use a contract review checklist that includes the regulatory language related to the advance directive requirement when conducting their review. For example, staff are to indicate on the review checklist whether the contract under review requires that the plan maintain written policies and procedures on advance directives for all adult individuals receiving medical care by or through the plan. However, CMS does not currently have data on the extent to which Medicaid managed care plans’ contracts address the advance directive requirement. Although CMS recently began electronically collecting contract review data, the data will indicate the extent to which plans’ contracts address advance directive requirements, but not the extent to which plans’ implementation is in compliance with the contractual provisions. CMS does not conduct audits of Medicaid managed care plans to monitor implementation or identify noncompliance with contractual provisions. CMS officials reported that this is because individual states are legally responsible for monitoring the Medicaid managed care plans with which they contract.",
"Providers use various approaches to inform individuals about their right to have an advance directive, either as part of the admission or the enrollment process depending on the type of covered provider, according to CMS and stakeholder officials, and the limited amount of information found in the literature about certain types of providers. For example, four of the provider types—hospitals, nursing homes, HHAs, and hospices— provide individuals with information about their right to formulate an advance directive during the admission process, according to interviews with stakeholder officials representing these provider types and 10 studies. In contrast, MA plans and Medicaid managed care plans provide written information to individuals on their right to formulate an advance directive during the enrollment process, according to stakeholders we interviewed. MA plans provide individuals enrolling in the plan with a model document developed by CMS—the Evidence of Coverage—to inform individuals about their right to have an advance directive, according to CMS officials. Medicaid managed care plans also provide written information at the time of enrollment, according to a stakeholder official that represented a Medicaid managed care plan.\nProviders’ approaches also vary in the extent to which they each discuss information about advance directives with individuals, according to the literature and stakeholder officials. Specifically, hospital staff do not generally discuss advance directives with individuals during the admission process, as five stakeholders, including officials representing three provider types and individuals close to the end of life, and six studies noted. By contrast, staff for three other covered provider types— nursing homes, HHAs, and hospices—nurses, social workers, or case managers generally discuss advance directives during the admissions process as part of one or more advance care planning discussions with individual patients, according to the findings from four studies and five stakeholders. However, information on the extent to which MA and Medicaid managed care plan providers discuss advance directives with individuals enrolled in the plans is more limited. Specifically, we did not identify any peer reviewed studies in our literature review that addressed MA and Medicaid managed care plans. In addition, although a stakeholder representing both an MA plan and Medicaid managed care plan told us that while the stakeholder’s plans require their providers to discuss advance directives with individual enrollees during an initial health assessment and during annual visits with their physicians, not all plans take a similar approach.\nCovered providers generally document whether an individual has an advance directive either in paper medical records or in an electronic health record, according to the limited information in the literature and the stakeholder officials we interviewed. Specifically, each stakeholder official we spoke with and six studies we reviewed found that all six covered provider types document individuals’ advance directives using either paper medical records or electronic health records, and some of these sources indicated that providers may also keep a copy of individuals’ directives in these records if such documents are available.\nProviders face similar challenges in informing individuals about advance directives and documenting them, according to the literature and stakeholder officials. The challenges to informing individuals about advance directives include discomfort talking about end-of-life issues, confusion about which staff should have the discussions with individuals, and lack of staff time to have the discussions. Specifically, 18 studies found and five stakeholder officials representing providers and seniors confirmed that providers, individual patients, or both are often uncomfortable talking about end-of-life issues, in some cases even when an individual is close to the end of life. For example, 9 studies found that physicians often do not communicate poor prognoses with individuals, in part, due to their discomfort to do so, which can deprive individuals of the opportunity to understand that they are nearing the end of life and the opportunity to discuss their advance care preferences in that context. Three studies also found confusion about which staff—nurses, social workers, or physicians—should have discussions to inform individuals about advance directives, although most individuals prefer to have these discussions with their physicians, according to 3 other studies. In addition, 10 studies found that physicians may either not have the time or do not spend the time discussing end-of-life issues with individual patients. Two stakeholders that represented managed care plans and seniors also noted the time constraints physicians face when discussing advance directives with individual patients.\nOther challenges that providers face informing individuals about advance directives are associated with individuals’ lack of understanding about advance directives and challenges informing certain demographic groups about them, according to the literature. Specifically, 13 studies found that many individuals lack an understanding about advance directives, assume incorrectly that these documents are expensive or require attorneys, or have difficulty understanding complex medical information included in some advance directive forms. Thirteen studies also identified challenges specific to Latinos or African Americans, such as language barriers, lack of trust in health care providers, or fear that advance directives may prevent them from getting the care they want to receive.\nIn addition to the challenges with informing individuals about advance directives, providers face similar challenges documenting this information, such as errors in individuals’ medical records and challenges related to access or updates to advance directives, according to the literature and stakeholder officials. Specifically, nine studies found errors in individuals’ records related to advance directives, such as lack of documentation about advance directives that should have been included in the records— in one case despite the fact that individuals had recently discussed directives with providers. In addition, five studies reported challenges related to access to this information, such as challenges identifying where a copy of individuals’ directives may be located or concerns that information about directives may not be transferred with individuals if they are moved from one provider to another; for example, from a nursing home to a hospital. Similar concerns about access to documents were reiterated by four stakeholders we interviewed that represented providers and seniors. Two stakeholders representing nursing homes and managed care plans reported that providers face difficulties ascertaining in the documentation whether individuals had recently reviewed or updated their directives, or if the directives in individuals’ records were current.\nProviders may better address challenges to inform individuals about advance directives and document them by using leading practices, according to the literature and stakeholders. Some of the leading practices for informing individuals about advance directives include patient education, materials tailored for specific groups, or an iterative advance care planning process. For example, one study using the Respecting Choices program—an advance care planning model developed by Gunderson Health System that includes multiple stages of care planning involving patients, providers, and communities— demonstrated that a provider using patient education and staff training efforts can increase the extent to which individuals understand and complete advance directives. In addition, 12 studies suggested that providers use materials designed for specific groups, such as videos, for those with low literacy or information developed for those with specific medical conditions that can help individuals better understand and communicate their preferences with providers. Eleven studies and four stakeholders that represented providers and individuals nearing the end of life also suggested using an iterative advance care planning process, such as a process that would start with community education about advance directives, continue with increasingly specific discussions with providers as an individual’s health deteriorates, and culminate with the completion of increasingly specific documents, such as advance directives or medical orders, as an individual nears the end of life. Fifteen studies noted the importance of such planning when individuals are diagnosed with a major illness or impending loss of decision-making capacity so that the individuals can communicate their preferences with providers before they are unable to do so.\nProviders may also use leading practices to better address challenges to documenting information about advance directives in order to help ensure the accuracy and the accessibility of this information in an individual’s medical record, according to the literature and stakeholder officials. For example, five studies found that using specific documentation methods, such as spreadsheets or electronic health record systems, can improve the accuracy—including quantity and quality—of the information about advance directives maintained in individuals’ medical records. Six studies also suggested that providers adopt electronic health record systems that, in addition to indicating whether individuals have an advance directive, could contain copies of the directives to ensure that individuals’ preferences are more easily accessible to providers and families, especially for individuals that may transfer from one provider to another.",
"Many adults in the United States have advance directives. In 2013, about 47 percent of adults over the age of 40 had an advance directive, according to IOM’s report Dying in America. In addition, an earlier nationally representative survey that included younger adults age 18 and older found that an estimated 26 percent of this population had an advance directive during the 2009 and 2010 time period.\nThe prevalence of individuals with advance directives varies by the type of provider that individuals are served by—hospitals, nursing homes, HHAs, and hospices—according to the literature. For three of these four provider types (hospice, nursing homes, and HHAs), a 2011 National Center for Health Statistics report found that 88 percent of discharged hospice patients in 2007 had advance directives, compared to 65 percent of nursing home patients in 2004, and 28 percent of HHA patients in 2007. (See fig. 1.) Among the four covered provider types for which information was available, our analysis of 12 studies found that hospital patients were least likely to have advance directives and that hospice patients, who are by definition close to the end of life, were the most likely to have advance directives as compared with nursing home and HHA patients. We did not find peer reviewed studies in our literature review on the prevalence of those with advance directives among individuals enrolled in MA and Medicaid managed care plans, although these individuals may also be served by the other four covered provider types.\nIn addition to variations by provider type, the prevalence of advance directives also varies among individuals based on certain demographic characteristics, such as medical conditions including chronic and life threatening diseases, according to the literature. For example, in 2010, individuals 18 years of age and older with chronic diseases were more likely than those without such diseases to have advance directives, with an estimated 33 percent and 22 percent prevalence, respectively. (See fig. 2.) A total of 20 studies found that individuals with certain medical conditions were more likely to have advance directives than healthier individuals. In general, certain medical conditions—such as diabetes, malignancies, renal dysfunction, dementia, or declining health—increased the likelihood that individuals had advance directives, according to the literature.\nThe prevalence of advance directives also varies by age, race, income, education, and gender, according to the literature. Older individuals were more likely to have advance directives than younger individuals. For example, a 2009 and 2010 nationally representative survey found that an estimated 51 percent of individuals 65 years of age and older had advance directives, while among individuals 18 to 34 years old, an estimated 12 percent had advance directives. The survey also indicated that an estimated 31 percent of whites compared to an estimated 17 percent of African Americans or Latinos had advance directives. In addition, this study found that an estimated 32 percent of individuals with incomes of $75,000 or more had advance directives in comparison to an estimated 21 percent of those with incomes under $25,000. Similarly, prevalence among individuals with post-graduate educations compared to those who had not completed high school was an estimated 38 percent and an estimated 14 percent, respectively, according to the study. Women were also more likely to have advance directives than men, an estimated 28 percent versus 25 percent, according to the study. In addition to this study, 36 studies found variations in the prevalence of advance directives by age, race, income, education, or gender.\nThe prevalence of advance directives has been increasing over time, according to the literature and CMS data. For example, prevalence within the older population has increased over time, according to a study examining the prevalence of advance directives for those 60 years of age or older who died between 2000 and 2010. This study found that individuals 60 years of age and older who died during that period with an advance directive increased from an estimated 47 percent to 72 percent. Available information on nursing home residents also shows an increase over time. Our analysis of CMS data found that the proportion of nursing home patients with advance directives has increased between 2004 and 2014. We found that the average percentage of nursing home patients who had an advance directive increased from 46 percent in 2004 to 55 percent in 2014, based on data from nursing homes that were surveyed during that time. (See fig. 3.) However, the percentage of nursing home residents having advance directives fluctuated over this period. Eight additional studies found increases in the prevalence of those with advance directives over time for a specific group, such as those from one state or type of provider. Factors that may have contributed to the increasing prevalence of individuals with advance directives over time, according to the literature, include community education efforts and provider staff training.",
"We requested comments on a draft of this product from HHS. HHS provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Health and Human Services, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix I.",
"",
"",
"In addition to the contact named above, James C. Musselwhite Jr., Assistant Director; George Bogart; Kye Briesath; Leia Dickerson; Julianne Flowers; Jennel Lockley; Drew Long; and Vikki Porter made key contributions to this report."
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"question": [
"What does CMS do regarding the PSDA?",
"What are covered providers?",
"How does CMS communicate with the covered providers?",
"How does CMS ensure implementation of the advance directive requirement?",
"How are individuals informed about advanced directives?",
"How do different providers inform individuals about advance directives?",
"What challenges do providers face in informing individuals about advance directives?",
"How can providers address these challenges?",
"How many adults have advance directives?",
"What is the prevalence of advance directives among adults over the age of 40?",
"Why does the prevalence of advance directives vary?",
"What factors make individuals more likely to have advance directives?",
"What are advance directives?",
"Why might individuals benefit from having advance directives?",
"Under what circumstances are advance directives most effective?",
"What was GAO asked to review?",
"What does this report examine?",
"How did GAO make use of CMS documents?",
"What other information did GAO make use of?"
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"summary": [
"The Centers for Medicare & Medicaid Services (CMS) oversees providers' implementation of the advance directive requirement in the Patient Self Determination Act (PSDA) to maintain written policies and procedures to inform individuals about advance directives, and document information about individuals' advance directives in the medical record by providing guidance and monitoring covered providers.",
"Covered providers include hospitals, nursing homes, home health agencies (HHAs), hospices, and Medicare Advantage (MA) plans that receive Medicare and Medicaid payments.",
"CMS, an agency within the Department of Health and Human Services (HHS), provides operations manuals, memoranda, and model documents to these providers to inform them about the advance directive requirement and describe how the agency will monitor providers' implementation.",
"CMS enters into agreements with state survey agencies to periodically survey and report data, which CMS collects, on deficiencies related to advance directives for hospitals, nursing homes, HHAs, and hospices. CMS also relies on accrediting organizations to survey providers that participate in the Medicare program through accreditation and subsequently make recommendations to CMS regarding providers' participation in Medicare. In addition, CMS reported reviewing MA and Medicaid managed care plans' contracts to determine that they include the advance directive requirement.",
"Approaches used to inform individuals about advanced directives vary by type of provider, but providers face similar challenges, according to stakeholders interviewed and literature GAO reviewed.",
"For example, hospitals, nursing homes, HHAs, and hospices inform individuals about advance directives during the admission process, while MA plans and Medicaid managed care plans inform individuals during enrollment.",
"Challenges in informing individuals about advance directives include discomfort talking about end-of-life issues and lack of staff time for such discussions.",
"Providers may address these challenges by using leading practices, such as patient education or population specific materials.",
"Many adults have advance directives, but estimated prevalence varies by provider type and an individual's demographic characteristics.",
"In 2013, 47 percent of adults over the age of 40 had an advance directive, according to the Institute of Medicine (IOM) report, Dying in America .",
"However, the prevalence of individuals with advance directives varies by type of provider and demographic characteristic.",
"However, the prevalence of individuals with advance directives varies by type of provider and demographic characteristic.",
"Advance directives, such as living wills or health care powers of attorney, specify—consistent with applicable state law—how individuals want medical decisions to be made for them should they become unable to communicate their wishes.",
"Many individuals receive medical care from Medicare and Medicaid funded providers during the last 6 months of life, and may benefit from having advance directives that specify treatment preferences.",
"According to IOM, advance directives are most effective when part of a comprehensive approach to end-of-life care called advanced care planning.",
"GAO was asked to review information related to advance directives.",
"This report examines (1) how CMS oversees providers' implementation of the PSDA requirement; (2) what is known about the approaches providers use and challenges they face to inform individuals about advance directives; and (3) what is known about the prevalence of advance directives and how it varies across provider types and individuals' demographic characteristics.",
"To do this work, GAO reviewed CMS documents and survey data reported by state survey agencies into CMS's Certification and Survey Provider Enhanced Reporting system about covered providers' implementation of the PSDA requirement.",
"GAO also conducted a literature review of peer reviewed articles and federal government reports. In addition, GAO interviewed CMS officials and stakeholders representing providers and individuals likely to benefit from advance directives."
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CRS_R44784
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{
"title": [
"",
"Farm Policy Considerations for the 115th Congress",
"Budget Situation and Outlook",
"Budget Basics",
"2014 Farm Bill Spending",
"Future Baseline",
"Farm Economy and International Environment",
"Farm Safety Net Programs",
"Effectiveness of the Current Farm Safety Net",
"Program Design and Operation",
"Commodity Programs",
"Crop Insurance",
"Disaster Assistance",
"Budget Considerations",
"Commodities Covered Under Safety Net Programs",
"Role of Cotton in the Next Farm Safety Net",
"Generic Base Issue and Peanuts",
"Dairy Margin Protection Program (MPP)",
"ARC Yield Calculation Issue",
"Farm Program Reallocation: ARC versus PLC",
"Sugar Program",
"Program Payment Limits and Farm Size",
"Farm Policy Alignment with U.S. Trade Commitments",
"Effectiveness of the Current Farm Safety Net",
"Specialty Crops, Certified Organic and Local Foods",
"Existing Farm Bill Provisions",
"Issues and Options",
"Animal Agriculture",
"Existing Farm Bill Provisions",
"Issues and Options",
"Agricultural Credit",
"Existing Farm Bill Provisions",
"Issues and Options",
"Agricultural Research",
"Existing Farm Bill Provisions",
"Issues and Options",
"Agricultural Trade and Export Promotion",
"Existing Farm Bill Provisions",
"Issues and Options",
"International Food Aid and Assistance",
"Existing Farm Bill Provisions",
"Issues and Options",
"Food and Nutrition",
"Program Design and Operation",
"Supplemental Nutrition Assistance Program (SNAP)",
"The Emergency Food Assistance Program (TEFAP)",
"Commodity Supplemental Food Program",
"Other Farm Bill Programs",
"Programs in Lieu of SNAP",
"Senior Farmers' Market Nutrition Program (SFMNP)",
"School and Institution Food Programs",
"Community Food Projects",
"Issues and Options",
"SNAP Categorical Eligibility, Asset Limits",
"Work-Related Rules in SNAP",
"SNAP-Eligible Foods, Retailer Standards",
"Conservation and Environment",
"Existing Farm Bill Provisions",
"Issues and Options",
"Budget and Baseline",
"Program Backlog",
"Working Lands or Land Retirement",
"Targeting and Partnerships",
"Compliance Requirements",
"Environmental Regulation",
"Rural Development",
"Existing Farm Bill Provisions",
"Issues and Options",
"Energy",
"Existing Farm Bill Provisions",
"Issues and Options",
"Forestry",
"Existing Farm Bill Provisions",
"Issues and Options",
"Appendix. Titles and Subtitles of the 2014 Farm Bill (Agricultural Act of 2014, P.L. 113-79)"
],
"paragraphs": [
"T he farm bill is an omnibus, multi-year law that governs an array of agricultural and food programs. Although agricultural policies are sometimes created and changed by freestanding legislation or as part of other major laws, the farm bill provides a predictable opportunity for policymakers to comprehensively and periodically address agricultural and food issues. The farm bill is renewed about every five years.\nThe Agricultural Act of 2014 ( P.L. 113-79 , H.Rept. 113-333 ), referred to here as the \"2014 farm bill,\" is the most recent omnibus farm bill. It was enacted in February 2014 and generally expires in 2018. It succeeded the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 , \"2008 farm bill\"). The 2014 farm bill contains 12 titles encompassing farm commodity revenue supports, agricultural conservation, international food aid and agricultural trade, nutrition assistance, farm credit, rural development, agricultural research, forestry, bioenergy, horticulture and organic agriculture, crop insurance and disaster assistance, and livestock issues. Provisions in the 2014 farm bill reshaped the structure of farm commodity support, expanded crop insurance coverage, consolidated conservation programs, reauthorized and revised nutrition assistance, and extended authority to appropriate funds for many U.S. Department of Agriculture (USDA) discretionary programs through FY2018.\nThe omnibus nature of the bill can create broad coalitions of support among sometimes conflicting interests for policies that individually might not survive the legislative process, but it can also stir competition for available funds, particularly among producers of different commodities or between those who have differing priorities. Such competition often results in farm state lawmakers seeking urban legislators' backing for commodity price supports in exchange for votes on domestic food assistance programs—and vice versa. In recent years, a more diverse range of groups has become involved in the debate, including national farm groups, commodity associations, state organizations, nutrition and public health officials, and advocacy groups representing conservation, recreation, rural development, local and urban farming facilities, faith-based interests, land-grant universities, and certified organic production.\nFor more background on the farm bill and the major provisions in the 2014 farm bill, see CRS Report R43076, The 2014 Farm Bill (P.L. 113-79): Summary and Side-by-Side , and CRS Report RS22131, What Is the Farm Bill?\nThis report provides background on each of the major titles of the current farm bill and previews of some of the potential issue s that could factor into the debate. (For a list of contributors to this report and for more direct assistance on specific programs and topics, see table on previous page for contact information for individual CRS staff.)",
"Since the 1930s, periodic farm bills have traditionally focused on farm commodity program support for a handful of staple commodities—corn, soybeans, wheat, cotton, rice, dairy, and sugar. In recent farm bills, however, the breadth of the farm bill has steadily grown to include new and expanding food and agricultural interests. Titles have been added to address emerging issues, and the farm bill has become increasingly omnibus in nature. Prominent additions to the farm bill have been nutrition assistance, farmland conservation, agriculture-based biofuels, and horticulture (specialty crops, such as fruits and vegetables, and organic agriculture). Farm bill titles have also become increasingly integrated. For example, the conservation and commodity titles both include provisions that affect land use and markets. Support for specialty crops, despite its stand-alone title, includes a series of provisions contained in other farm bill titles. The text box below briefly describes provisions in these titles. See the Appendix at the end of this report for a complete list of titles and subtitles of the 2014 farm bill.\nAs the 115 th Congress considers a new farm bill, it does so in an economic setting of generally lower farm prices and income for the main commodity crops as well as continued focus on the overall cost of nutrition assistance programs. The largest of these programs—the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program)—accounts for the overwhelming majority of total farm bill spending. At the same time, some groups continue to call for further expansion of the farm bill to create and/or expand support for other competing policy priorities and to address equitability concerns across the nation's farm sectors. These include enhanced support for small and medium-sized farms, specialty crops, cottonseed, organic agriculture, local and regional food systems, urban farming, healthy and nutritious foods, food waste reduction, research, conservation, and rural development, among others. Efforts to reduce overall farm bill costs, given overall constraints on federal spending, may create heightened competition and tension among a range of U.S. farm policy stakeholders. There is also general uncertainty regarding priorities for farm policy under the new Trump Administration.\nPotential expiration of the current farm bill and the consequences of allowing it to expire may also motivate legislative action. When a farm bill expires, not all programs are affected equally. Some programs cease to operate unless reauthorized, while others might continue to pay old obligations, as provided under current law. For example, the farm commodity programs would not only expire but revert to permanent law dating back to the 1940s. Nutrition assistance programs require periodic reauthorization, but appropriations can keep them operating. Many discretionary programs would lose statutory authority to receive appropriations, though annual appropriations could provide funding and implicit authorization. Other programs have permanent authority and do not need to be reauthorized (e.g., crop insurance).\nWhether to retain the nutrition title in a new farm bill or to consider nutrition programs separately was debated during consideration of the 2014 farm bill. In 2013, after a farm bill with a nutrition title was defeated on the House floor, the House passed the bills separately—a farm bill without a nutrition title and a nutrition-only bill. After the conference committee negotiations began, the bills were joined together. The enacted law included a nutrition title. Some continue to argue for a separate SNAP reauthorization, but many farm and nutrition policy stakeholders argue for retaining the nutrition title in a new farm bill. Farm bills since 1973 have included reauthorization of the Food Stamp Program (renamed SNAP by the 2008 bill). This partnership between nutrition programs and farm programs is generally understood to generate rural and urban support for the farm bill. (For more information, see \" Food and Nutrition .\")",
"",
"As with all areas of the federal budget, agriculture faces spending constraints. Budget issues are usually an important element when debate on a new farm bill begins. Federal spending is divided into two main categories: mandatory and discretionary spending. In the farm bill, mandatory spending—which does not require a separate appropriation—is authorized primarily for the farm commodity programs, crop insurance, nutrition assistance programs, and some conservation and trade programs. Discretionary spending is authorized for everything else that is not considered mandatory spending, including most rural development programs, research and education programs, and agricultural credit. Research, bioenergy, and rural development programs sometimes secure both types of funding, but most of their funding is discretionary. Programs with discretionary spending are authorized in the farm bill but are paid for separately in annual appropriations under the jurisdiction of the appropriations committees.\nMandatory spending programs often dominate the farm bill debate and its budget. The farm bill \"pays\" for mandatory spending in addition to determining its policy. These procedures follow a framework of budget enforcement laws that use projected \"baseline\" and \"scores\" from the Congressional Budget Office (CBO). An earlier pivotal decision may be whether the multi-year baseline projection, described below, is the appropriate amount for the farm bill or whether more or less spending should be built into the farm bill budget.\nThe CBO baseline is a projection at a particular point in time of what future federal spending on mandatory programs would be assuming current law remains intact. This baseline is the benchmark against which proposed changes in law are measured. When a new bill is proposed that would affect mandatory spending, the impact ( score ) is measured in relation to the baseline. Changes that increase spending relative to the baseline have a positive score; those that decrease spending relative to the baseline have a negative score. Increases in cost above the baseline may be subject to budget constraints such as pay-as-you-go (PAYGO) requirements. Reductions from the baseline may be used to offset other provisions or reduce the deficit.\nHaving a baseline essentially gives programs built-in future funding if policymakers decide that the programs should continue. Straightforward reauthorization would not have a scoring effect. However, programs without a continuing baseline beyond the end of a farm bill do not have assured future funding. Reauthorization would have a positive score that increases the bill's cost.",
"When the 2014 farm bill was enacted, four titles accounted for 99% of anticipated farm bill mandatory spending: nutrition, crop insurance, conservation, and farm commodity support ( Table 1 ). The nutrition title, which includes SNAP, comprised 80% of the total. Commodity support and crop insurance combined to be 13% of mandatory spending, with another 6% of costs in USDA conservation programs. The trade title was next in size, providing less than 0.5% of the total.\nIn dollars, the projected cost of the 2014 farm bill when it was enacted was $484 billion for the largest four titles and $489 billion for all 12 titles ( Table 1 ).\nIn the years since enactment of the farm bill, CBO has updated its projections of government spending based on new information about the economy and program participation. However, reductions in projected farm bill spending since enactment do not generate savings that can be credited elsewhere, and higher-than-projected costs do not imply insufficient resources. Three years after enactment, the current projected cost of the 2014 farm bill is $456 billion for the four largest titles (FY2014-FY2016 actuals, and updated projections for FY2017-FY2018; Table 1 , Figure 1 ). For the FY2014-FY2018 period, this is $28 billion less (-6%) than what was projected at enactment. Lower farm commodity prices have reduced the projected cost of crop insurance and increased the cost of the counter-cyclical farm subsidies, while lower-than-expected enrollment in SNAP has reduced nutrition title costs. These changes reflect shifts in the underlying economy—that is, the farm bill is costing $28 billion less than initially expected.",
"For a new farm bill, there is presently no official baseline covering all titles. The official \"scoring baseline\" during 2017 would likely be the March 2017 CBO baseline, and a farm bill enacted in 2018 would likely use the March 2018 CBO baseline for the FY2019-FY2028 period. However, early baseline projections indicate a continuation of the economic changes above. The January 2017 CBO baseline projection for the four largest titles of the farm bill (assuming current law continues) is $435 billion over the next five years FY2018-FY2022 and $870 billion for the next 10 years FY2018-FY2027 ( Table 2 ). The nutrition title is about 77% of these amounts, compared to about 80% when the 2014 farm bill was enacted. Beyond these four titles, other farm bill programs with baseline can be expected to add about another $4 billion of baseline over the five-year period.\nFigure 2 shows how the relative proportions of farm bill spending have shifted over time. The figure combines actual USDA spending data (FY1990-FY2016) and CBO projections for those programs (FY2017 through FY2027). Since 1990, conservation and crop insurance spending have steadily risen as policy and enrollment have increased participation. Farm commodity program spending has risen and fallen with changing market price conditions and policy responses, though costs have generally decreased recently as counter-cyclical payments were smaller due to higher market prices. This trend, however, has reversed at least temporarily in the current projections for future spending. Nutrition assistance rose sharply after the recession in 2009 but began to decline during the economic recovery and is expected to continue to decline in the near future.",
"The U.S. agricultural sector experienced a golden period from 2010 to 2014, driven largely by strong commodity prices and agricultural exports. This period included a four-year run of record farm income and land values that culminated with the enactment of the 2014 farm bill. Since 2014, the U.S. farm economic outlook has changed dramatically. Bountiful U.S. crop harvests and fading international demand prospects have put downward pressure on commodity prices, farm incomes, and asset values while raising farm sector debt and debt-to-asset ratios. USDA projects that U.S. net farm income—a key indicator of U.S. farm well-being—will fall to $62.3 billion in 2017, down 9% from 2016 and down 50% from 2013's record of $123.7 billion. The 2017 forecast would represent the third year of decline and would be the lowest national net farm income since 2002.\nThe forecast for lower net farm income is primarily the result of the outlook for both lower crop and livestock receipts. Record grain, oilseed, and meat supplies in 2016 have depressed prices for most commodities—especially when compared with the period of 2011-2013, when prices for many major commodities experienced record or near-record highs. Agricultural exports were projected higher in 2017 at $134 billion, up 3% from 2016 but well below 2014's record $152.3 billion—due largely to a strong U.S. dollar coupled with a continued weak economic outlook in several major foreign importing countries. Despite the year-over-year decline, U.S. agricultural exports are still projected to account for over 30% of farm sector gross earnings in 2017.\nFarm wealth is also projected to decline for a third year in 2017 (down about 1% from 2016) to $2,836 billion. Farm asset values reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments. The outlook for lower commodity prices and the expected decline from the past four years' strong outlook for the general farm economy have reversed the growth of farmland values. Because they comprise such a significant portion of the U.S. farm sector's asset base, change in farmland values is a critical barometer of the farm sector's financial performance. Farm credit conditions also appear to be deteriorating: Loan delinquencies and requests for loan extensions are increasing, and interest rates are rising.\nDespite the downturn in the U.S. agricultural sector's financial outlook, it is still outperforming U.S. households in general. At the farm-household level, average farm household incomes have been well ahead of average U.S. household incomes since the late 1990s. In 2015 (the last year with comparable data), the average farm household income (including off-farm income sources) of $119,880 was about 51% higher than the average U.S. household income of $79,263.\nThe outlook for lower commodity prices and farm income and wealth suggests a weakening financial picture for the agricultural sector heading into 2017 but with substantial regional variation. Relatively weak prices for most major program crops and livestock products signal tougher times ahead for agricultural producers and are expected to trigger substantial payments under the new safety net programs of the 2014 farm bill. However, actual 2017 agricultural economic well-being will hinge on crop harvests and prices, as well as domestic and international macroeconomic factors, including economic growth and consumer demand.",
"The federal government supports farm income and helps farmers manage risks associated with variability in crop yields and prices through a collection of programs often referred to as the \"farm safety net.\" These programs include (1) commodity-based revenue support programs; (2) disaster assistance programs, which are reauthorized by periodic farm bills (most recently by Title I of the 2014 farm bill); and (3) federal crop insurance, which is permanently authorized under the Federal Crop Insurance Act of 1980. Each of these three components is covered in this section and summarized in Table 3 . Through the first three years of the 2014 farm bill (2014 to 2016), USDA estimates the cost of farm safety net programs at $14.2 billion per year ($5.2 billion for commodity programs, $2.4 billion for disaster assistance, and $6.6 billion for crop insurance).\nMost of the cost for the farm safety net is traditionally attributed to a few major crops. For example, CBO projects that corn (48%), wheat (14%), soybeans (13%), rice (7%), peanuts (7%), and sorghum (3%) will cumulatively account for 91% of commodity program payments under revenue support programs in FY2017. Similarly, in 2016 four crops accounted for 77% of crop insurance premium subsidies: corn (38%), soybeans (20%), wheat (12%), and cotton (8%). Although these seven crops receive a majority of farm program support, they do not constitute a majority of farm output value: From 2010 to 2016, these crops accounted for 32% of total farm receipts (including fruits and vegetables, livestock, dairy, and poultry).\nFarm support began with the 1930s Depression-era efforts to generally raise farm household income when commodity prices were low because of prolonged weak consumer demand. While initially intended to be a temporary effort, the commodity support programs survived but have been modified away from supply control and management of commodity stocks to direct revenue support payments. Similarly, federal crop insurance has expanded over the decades, with expanded commodity coverage and increased producer subsidies.",
"Many policymakers and farmers consider federal support of farm businesses necessary for financial survival, given the unpredictable nature of agricultural production and markets. Yet some producers have criticized farm safety net programs for being too slow to respond to disasters, for not being well integrated, or for not providing adequate risk protection.\nIn contrast, long-time farm program critics question the need for any farm subsidies, contending that government funding could be better spent advancing environmental goals or improving productivity. Many environmental groups argue that subsidies encourage overproduction on environmentally fragile land. Others cite economic arguments against the programs—that they are a market-distorting use of taxpayer dollars, capitalize benefits to the owners of the resources, encourage concentration of production, favor large-scale farming at the expense of small or beginning farms, pay benefits to high-income recipients or when there are no losses, and harm farmers in lower-income foreign nations.\nCongressional limits on the federal budget, particularly constraints on new spending, could play an important role in the policy design of the farm safety net in a new farm bill. Several other critical policy issues and options have emerged that are also likely to factor into the debate shaping a new farm bill. These issues include the general perception that the current suite of safety net programs is failing to provide a sufficient safety net for both cotton producers and dairy operations. In addition, the current policy design favors planting peanuts on generic base acres despite market incentives to the contrary: In the past, policymakers have expressed their intent to avoid such market distortions in the farm safety net design. Also, large county-level variations in Agricultural Risk Coverage at the county level (ARC-CO) program—attributable to county yield data shortcomings—have emerged in 2014 and 2015 payments and could be addressed by a new farm bill. Additional issues and options for a new farm bill are discussed in the report sections titled \" Budget Considerations \" and \" Commodities Covered Under Safety Net Programs .\"",
"",
"The commodity provisions of the 2014 farm bill provide support for 26 farm commodities including food grains, feed grains, oilseeds, upland cotton, peanuts, pulse crops, and milk. Producers of program commodities are eligible for a variety of payments, much of which is financed through mandatory funding by USDA's Commodity Credit Corporation ( Table 3 ).\nRevenue support programs include ARC and the Price Loss Coverage (PLC) programs created under the 2014 farm bill. PLC is a revamped version of the counter-cyclical price support program from the 2008 farm bill, but it relies on elevated support prices. ARC is a shallow-loss revenue program that uses five-year Olympic moving averages of historical data for national farm prices and county yields to determine a revenue guarantee. The ARC program is available at either the county level for individual commodities (ARC-CO) or the farm level (ARC-IC) on a whole farm basis for all program crops. Both ARC and PLC make payments on a delayed basis, because their payment formulas require an entire marketing year worth of monthly price data. For example, for corn grown and harvested in 2016, complete data for the season-average farm price are not available until September 2017, and payments are made after October 1, 2017.\nIn addition to ARC and PLC, producers of an expanded list of other \"loan commodities\" are eligible for benefits under nonrecourse marketing assistance loans (MALs). Current farm law also mandates that raw cane and refined beet sugar prices are supported through a combination of limits on domestic output that can be sold for human use, nonrecourse loans for domestic sugar, and quotas that limit imports.\nThe 2014 farm bill made significant changes to the structure of U.S. dairy support programs, including the elimination of several major farm revenue support programs from the 2008 farm bill and their replacement by two new support programs: the Margin Protection Program (MPP) and the Dairy Product Donation Program (DPDP). The MPP is a voluntary program that makes payments to participating farmers when a formula-based national margin—calculated as the national average farm price for all milk minus a national-average feed cost ration —falls below a producer-selected insured margin that can range from $4.00 per hundredweight (cwt.) to $8.00/cwt. Milk producers must pay an annual administrative fee of $100 for each participating dairy operation and statutorily fixed premiums that rise steadily for higher margin protection levels and greater volumes of insured milk.\nIn contrast to producers of traditional farm bill commodities, producers of specialty crops (e.g., fruits, vegetables, and tree nuts) and livestock have generally received little or no direct government support through commodity programs. Instead, these commodities benefit from federal investments in agricultural research and extension programs and from federal support for food and nutrition programs. These farms may manage risks through business diversification, purchase of federal crop insurance, and participation in federal disaster assistance programs.",
"The federal crop insurance program provides risk management tools to address losses in revenue or crop yield—revenue policies represent about 77% of total premiums; yield policies about 23%. Federally subsidized policies protect producers against losses during a particular season, with price guarantee levels established early in the year using the preplanting values of harvest-time futures contracts. This is in contrast to commodity programs, where protection levels are fixed in statute (e.g., PLC reference prices and MAL loan rates) or use five-year Olympic moving average data for national farm prices and county yields to determine a revenue guarantee (e.g., ARC-CO).\nFederal crop insurance has grown in importance as a farm risk management tool since the early 1990s, due in large part to increasing federal subsidy intervention. The federal government pays about 62%, on average, of the farmer's crop insurance premium. Thus, as both participation in crop insurance programs and the value of insured crops have grown over time, so too has the absolute level of federal premium subsidies. From 2006 through 2015, the federal crop insurance program cost taxpayers, on average, $7.2 billion per year, including premium subsidies of $5.6 billion, administrative and delivery support of $1.4 billion, and other costs of $0.2 billion.\nCrop insurance has perhaps the widest commodity and regional coverage of any federal farm program. In 2016, crop insurance policies covered 290 million acres and more than 100 commodities including fruit trees, nursery crops, dairy and livestock margins, pasture, rangeland, and forage. Major field crops such as corn, soybeans, wheat, and cotton are covered in most counties where they are grown, and crop insurance covers at least 85% of planted acres for each of these crops. Crop insurance is also available for over 80 specialty crops. In 2014, specialty crop policies covered more than 7.7 million acres, which constituted 53% to 75% of specialty crop area, depending on how total area is calculated.\nA prominent crop insurance feature of the 2014 farm bill is the authorization of two new policies designed to reimburse \"shallow losses\"—an insured producer's out-of-pocket loss associated with the policy deductible—STAX and SCO. STAX is made available for upland cotton producers, while SCO is made available for other crops. STAX, or the Stacked Income Protection Plan, was created in response to upland cotton's removal from eligibility for Title I revenue support programs as the result of a final ruling from a World Trade Organization (WTO) dispute settlement case successfully brought by Brazil against U.S. cotton support programs.\nTo address conservation concerns, the 2014 farm bill links eligibility for crop insurance premium subsidies to compliance with wetland and conservation requirements for highly erodible land. Also, crop insurance subsidies are reduced for plantings on native sod acreage in certain states.",
"The 2014 farm bill permanently authorized four agricultural disaster programs for livestock and fruit trees: (1) the Livestock Indemnity Program (LIP); (2) the Livestock Forage Disaster Program (LFP); (3) the Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP); and (4) the Tree Assistance Program (TAP). The programs provide compensation for a portion of lost production following a natural disaster. These programs, originally established in the 2008 farm bill for only four years, were authorized retroactively (with no expiration date) to cover losses beginning in FY2012.\nAll programs except ELAP receive uncapped mandatory funding via the CCC. That is, LIP, LFP, and TAP receive \"such sums as necessary\" to reimburse eligible producers for their losses. ELAP is capped at $20 million per year, and loss payments are reduced in order to fit under the cap.\nThe four permanent disaster assistance programs (LIP, LFP, ELAP, and TAP) in combination with federal crop insurance and the Noninsured Crop Disaster Assistance Program (NAP) cover nearly the entire U.S. farm sector with a permanent disaster program. This broad array of disaster support reduces the potential need for emergency assistance that Congress previously provided to farmers and ranchers in the form of ad hoc disaster payments.",
"CBO periodically undertakes 10-year baseline projections for the total cost of mandatory USDA programs under the assumption that current legislation remains intact for the projection period. The 2014 farm bill expires at the end of 2018 (calendar year for dairy and marketing year for program crops) unless it is reauthorized. If a new farm bill is finalized by 2018, then the CBO baseline budget projection for FY2019-FY2028 produced in March 2018 would provide the official benchmark used to write such a new farm bill.\nThe CBO score establishes a baseline against which policy proposals are measured for their budgetary impact. The CBO baseline score for agricultural programs is particularly important under current PAYGO restrictions, because it represents the pool of money available for farm safety net programs including both commodity and crop insurance programs. Under PAYGO, any changes to the farm bill—including the farm safety net and other programs—must either fit within the CBO baseline score or find equivalent offsets within the larger federal budget score.\nAs with most farm bills, a critical factor in determining the baseline budget for a new farm bill will be the price outlook for the program crops. Since payments under both the revenue-support programs—ARC and PLC—and the marketing assistance loan program are counter-cyclical to market conditions, an outlook for low commodity prices relative to program support levels could result in CBO projections of higher annual farm program outlays. A large CBO projected baseline could provide policymakers with greater flexibility in redesigning the farm safety net if they are so inclined.\nCurrently, CBO projects farm program outlays for FY2017-FY2027 at about $14 billion per year on average—including $5.5 billion for commodity programs, $7.9 billion for crop insurance, and $0.3 billion for annual disaster assistance. These projections compare with the final CBO score for the 2014 farm bill of $13.4 billion in average annual outlays for the farm safety net, including $4.4 billion annually for commodity programs (plus disaster assistance) and $9.0 billion for crop insurance. Thus, commodity programs are currently costing about $1 billion more per year on average than projected, while crop insurance is averaging about $1 billion less. Actual historical outlays during FY2006 to FY2014 were higher still at $15.4 billion per year on average—$6.7 billion for commodity programs, $7.1 billion for crop insurance, and $1.7 billion for disaster assistance. The highest combined outlay for USDA safety net programs was recorded in FY2005 at $24.8 billion.",
"The extent of current commodity coverage of the farm safety net is primarily a result of the historical and evolving nature of farm policy. Producers of major commodities have benefited the most from farm programs because farmers and policymakers representing those commodities shaped the programs from their inception. Since then, other commodity advocates have not had the interest or sufficient political support to add their commodities to the mix. Coverage could be increased by enhancing crop insurance for nonprogram crops, developing a new whole-farm revenue support program that would encompass all crops grown on a farm or revising the current whole-farm insurance product so it would be more widely accepted by producers.",
"Perhaps the most notable omission from eligibility for the Title I revenue support programs (ARC and PLC) is upland cotton, which, as mentioned earlier, was removed from eligibility under the 2014 farm bill in response to a WTO dispute settlement case. Instead, cotton producers were given their own insurance-based program—STAX. In contrast to the revenue guarantees available under ARC and PLC, which have a statutorily fixed lower bound, the revenue guarantee under STAX is recalculated each year. Thus it decreases following consecutive years of market declines—as has been the case since 2014. Many cotton producers contend that STAX is both expensive and ineffective, since the STAX revenue guarantee has fallen below their cost of production and, thus, no longer serves as a useful safety net. This perception has contributed to low participation: In 2016, only 25% of cotton-planted acres were insured under STAX.\nIn 2016, the U.S. cotton sector requested that USDA designate cottonseed as an \"other oilseed,\" thus allowing cottonseed to be eligible for the ARC and PLC payments. However, then-Secretary of Agriculture Tom Vilsack contended that he did not have such authority. Furthermore, some argued that designating cottonseed as a program crop would constitute reopening the 2014 farm bill and could have substantial costs associated with such a decision. According to news reports, USDA's internal estimates in early 2016 projected related costs in excess of $1 billion (or about $100 per acre) annually. Such potentially large support payments could significantly affect producer crop choices and could attract the attention of other WTO members, including Brazil.",
"In response to the removal of cotton from eligibility for ARC and PLC payments, the 2014 farm bill reclassified former cotton base acres from the 2008 farm bill as \"generic\" base acres. Generic base acres are added to a producer's total base for potential payments but only if a program-eligible crop is planted on them. In other words, ARC and PLC payments on generic base acres are coupled to actual plantings. As a result, a combination of market conditions and government program incentives determine producer planting choices on generic base. Because of a favorable advantage stemming from peanuts' disproportionately high PLC reference price relative to both other program crop reference prices and to current market conditions, peanut production is favored on generic base acres over other crops. This unintended outcome has resulted in the outlook for large government payments to peanut producers relative to other crops: CBO projects annual USDA peanut program outlays (ARC, PLC, and MAL combined) of $580 million, or $349 per harvested acre, through 2027. This compares with CBO projected program payments of $30 per harvested acre for corn, $7 for soybeans, $32 for wheat, and $199 for rice.",
"The U.S. dairy industry, like the agriculture sector in general, has experienced a sharp downturn in both market and financial conditions the past two years. Despite a significant drop in milk prices, minimal support payments have been made under MPP through the first three years of operation (and these have been largely offset by producer-paid premiums). By June 2016, farm-level milk prices had fallen by 42% from their September 2014 high. However, this output price decline was largely offset by a similar decline for major feed grain prices, thus preventing the MPP margin from falling below meaningful program payment triggers. As a result, the dairy sector has expressed widespread dissatisfaction with the program. In 2016, 54% of dairy operations were enrolled in MPP, and most of those (77%) were enrolled at the minimum $4.00/cwt. catastrophic level, thus missing out on MPP payments made when the margin briefly fell below the $6.00/cwt. threshold in May-June 2016.",
"Significant discrepancies in county-level payments for 2014 and 2015 were discovered under the ARC-CO program due, in part, to how USDA's National Agricultural Statistics Service (NASS) calculates average county yields. NASS relies on a cascading sequence of prioritized county-level data for its calculations. With respect to ARC-CO revenue calculations, the top data priority is based on NASS surveys of producers in counties with production of major program crops to obtain estimates of planted and harvested area, yields, and production. USDA currently requires that the NASS survey yield estimate be used if there are at least 30 producer survey responses or when survey responses represent at least 25% of a county's harvested acreage. If neither of these conditions is met, then the NASS county yield estimate is based on crop insurance data held by RMA. A comparison of the two estimates suggests that RMA yields are frequently higher than NASS yields. As a result, payments to producers in counties where RMA yields are used can be substantially lower than payments in counties using NASS yields. USDA is under no legislative requirement or guidance for this cascade policy. With no short-term fix in sight, the issue of substantial disparities in payment rates may reemerge for ARC-CO crop payments in future years. Barring any near-term fix by USDA, lawmakers could address county-to-county payment disparities in the context of a new farm bill.",
"Under the 2014 farm bill, producers were give a one-time choice that would last for the duration of the 2014 farm bill (2014 through 2018) for how to allocate their historical base acres across crops and by program: ARC or PLC. Most corn (93%) and soybean (97%) base acres opted for ARC-CO, while most rice (99%), peanut (100%), and barley (75%) base acres were placed under PLC. Wheat base acres were divided: 56% selected ARC-CO, 43% PLC. Less than 1% of all farms selected ARC-IC. It is unknown if a new farm bill will retain the ARC and PLC programs and, if so, whether farmers will be given a new opportunity to reallocate their base acres between the two revenue programs. However, current market conditions and the long-term outlook for relatively low prices tend to favor PLC for all program crops. CBO projections assume that participating farmers can reallocate their base acres among PLC, ARC-CO, and ARC-IC in 2019 and that most farmers significantly expand their base acres signed up under PLC: corn producers shift from a 7% share to 82%, soybeans from 3% to 49%, and wheat from 43% to 82%, according to CBO's January 2017 baseline. As a result, the CBO projections show PLC outlays exceeding ARC outlays by 2020.",
"Unlike other commodity programs in the 2014 farm bill, Congress reauthorized the sugar program with no changes. Also, in contrast to dairy and other commodity programs, Congress structured the sugar program to operate at no cost to the federal government—an objective that has been largely achieved over the last decade with the exception of the 2012/2013 crop year, when low sugar prices triggered forfeitures under the program, resulting in federal outlays of $259 million. An issue that is currently outside the purview of the farm bill but could influence the debate over the U.S. sugar program is trade in imported sugar from Mexico. Subsequent to the enactment of the 2014 farm bill, the United States and Mexico reached agreements that regulated bilateral trade in Mexican sugar, including setting volume limits and minimum export prices and other parameters around this trade that are unique in the U.S. sugar market.\nThe U.S.-Mexico sugar suspension agreements are controversial. A broad cross-section of participants in the U.S. sugar market have asserted that the agreements are not working as intended and may not have succeeded in entirely eliminating the injury caused to U.S. sugar interests. These stakeholders also contend that these agreements could undermine various objectives of the U.S. sugar program—including that it operate at no cost—if market distortions created by these agreements trigger forfeitures of domestic sugar leading to government outlays. Given the importance of Mexican sugar as a source of supply to the U.S. sugar market, revising the agreements, withdrawing from them, or allowing them to remain in force as agreed upon in December 2014 could each have implications for the program.\nAs concerns the sugar program itself, sugar producers and processors—as represented by the American Sugar Alliance—have favored retaining the current program structure. They contend that it should not be eliminated prior to addressing foreign sugar subsidies that distort the world sugar market and thus pose a threat to efficient U.S. producers. Sugar users generally view the current program as overly prescriptive, which they argue has led to overly tight supplies and elevated prices in the domestic market. They advocate for providing USDA with greater program flexibility for managing domestic sugar supplies and allocating import quotas.",
"Payment limits for the farm commodity programs, with the exception of the marketing assistance loan program, either set the maximum amount of farm program payments that a person can receive per year or set the maximum amount of income that an individual can earn and still remain eligible for program benefits (i.e., a means test). The payment limits issue is controversial, because it directly addresses questions about the size of farms that should be supported, whether payments should be proportional to production or limited per individual, and who should receive payments. Some policymakers want limits to be tightened in order to save money, to respond to general public concerns overpayments to large farms, and to reduce the possibility of encouraging expansion of large farms at the expense of small farms. Others say larger farms should not be penalized for the economies of size and efficiencies they have achieved. Crop insurance has no payment limits, a feature that some policymakers say makes crop insurance an attractive centerpiece of farm policy because it helps small and large farms alike, with neither apparently gaining at the expense of the other.",
"Trade plays a critical role in the U.S. agricultural sector: Exports account for over 30% of U.S. farm sector gross earnings. As a WTO member, the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy. Because the United States plays such an important role in so many global agricultural markets, its farm policy is often subject to intense scrutiny, particularly for compliance with current WTO rules—as evidenced by the 2009 WTO challenge successfully brought by Brazil against U.S. cotton support programs. In particular, the United States faces pressure to minimize any \"trade-distorting\" incentives inherent in its farm safety net programs.\nCBO projections suggest that the United States is unlikely to violate its WTO spending limit of $19.1 billion for nonexempt, trade-distorting amber box outlays. Perhaps more relevant to U.S. agricultural trade is the concern that, because the United States plays such a prominent role in most international markets for agricultural products, any distortion resulting from U.S. policy would be both visible and vulnerable to challenge under WTO rules. An unexpected period of extended low market prices in future years could generate substantial PLC and/or ARC-CO outlays and lead to a potential challenge, particularly if the current farm safety net structure is retained under a new farm bill.",
"Some producers have criticized farm safety net programs for being too slow to respond to disasters, for not being well integrated, or for not providing adequate risk protection. In contrast, long-time farm program critics question the need for any farm subsidies, contending that government funding could be better spent advancing environmental goals or improving productivity. Others cite economic arguments against the programs—that they distort production, capitalize benefits to the owners of the resources, encourage concentration of production, harm smaller domestic producers and farmers in lower-income foreign nations, and pay benefits to high-income recipients or when there are no losses.",
"During the past few farm bill debates, a diverse set of agricultural producers—covering specialty crops, certified organic agriculture, and local and regional foods—have argued that their sectors should occupy a larger role in farm bill policy discussions and that benefits supporting major commodity producers should be extended to these producers in order to create \"a broader, more equitable farm bill.\" Producers in these sectors are not eligible for support under USDA's farm commodity revenue support programs, but these sectors are eligible for other types of USDA programs and support throughout several farm bill titles. These include, but are not limited to, programs in the nutrition, conservation, research, crop insurance, disaster assistance, rural development, and trade titles. Other federal agencies also play important roles in these sectors.\nSpecialty crops—defined as \"fruits and vegetables, tree nuts, dried fruits, and horticulture and nursery crops (including floriculture)\" —comprise a major part of U.S. agriculture. In 2012, the value of farm-level specialty crop production totaled nearly $60 billion, representing about one-fourth of the value of U.S. crop production but only 3% of all harvested cropland acres. USDA reports that retail sales of fresh and processed fruits and vegetables for at-home consumption total nearly $100 billion annually. Exports of U.S. specialty crops totaled about $26 billion in 2015. In 2012, about 244,000 farming operations grew more than 350 types of fruit, vegetable, tree nut, flower, nursery, and other horticultural crops. Specialty crop production is concentrated in California, Florida, Washington, Oregon, North Dakota, and Michigan, but every state has some commercial specialty crop production.\nAgricultural products certified as \"USDA organic\" account for a small but growing share of the U.S. farming sector. USDA reports that farm sales of certified organic products totaled $5.5 billion in 2014, spanning an array of plant and animal products. Leading organic commodities based on farm value include milk, eggs, broiler chickens, lettuce, apples, meat products, grapes, corn for grain, hay, and spinach. In 2014, there were more than 14,000 organic farms and ranches, covering a total of 3.7 million acres, or about 1% of total U.S. cropland in farms. Production is concentrated in California, Florida, Washington, Pennsylvania, Oregon, Texas, and Wisconsin, but USDA reports organic production in each U.S. state. At the retail level, U.S. organic sales totaled $43.3 billion in 2015, representing roughly 5% of all food sales in the United States. Exports of all U.S. organic products total about $2 billion annually.\nIn addition, a range of farm businesses are considered to be engaged in local food production. There is no established definition of what constitutes a \"local food,\" but generally local food systems refer to agricultural production and marketing that occurs within a certain geographic proximity (between farmer and consumer) or that involves certain social or supply chain characteristics in producing food (such as small family farms, urban gardens, or farms using sustainable agriculture practices). Sales of locally produced foods also comprise a small but growing part of U.S. agricultural sales. Though estimates vary, USDA reports that local food sales totaled an estimated $6.1 billion in 2012, reflecting sales from nearly 164,000 farmers selling locally marketed foods. This represents 8% of U.S. farms and an estimated 1.5% of the value of total U.S. agricultural production.",
"The 2008 farm bill expanded support and funding for existing specialty crop and organic programs and created new incentives for producers under a new bill title, \"Horticulture and Organic Agriculture.\" The 2014 farm bill reauthorized many of the existing farm bill provisions and increased spending on programs supporting specialty crops and certified organic agriculture, as well as local foods, as part of the \"Horticulture\" title. When the 2014 farm bill was enacted, CBO estimated that mandatory outlays for programs authorized in the horticulture title would increase nearly $340 million over the next five years (FY2014-FY2018) compared with the previous five-year period. Despite this increase, funding under this title still comprises a small share—less than one-half of 1%—of total mandatory farm bill spending. Across all farm bill titles, mandatory spending for specialty crops, organic agriculture, and local food systems was expected to average about $770 million annually (FY2014-FY2018). Key programs include the Specialty Crop Block Grant Program (SCBGP), the Specialty Crop Research Initiative (SCRI), pest and disease prevention programs (including the so-called Section 10007 program), and nutrition programs targeting fruits and vegetables. The 2014 farm bill also provided for an additional roughly $300 million in average annual appropriations across related programs.\nIn general, the types of programs in which many of these groups share a common interest are USDA marketing and promotion programs (including rural development programs), domestic food and nutrition programs, research and cooperative extension programs, and conservation programs, among others. Although USDA has historically not provided direct support for specialty crops and organic production, over the decades Congress has authorized a wide range of programs in these areas that are viewed as facilitating the growth of and benefiting the economic health of these and related sectors. A discussion of the programs of particular importance to specialty crop and certified organic producers is in CRS Report R42771, Fruits, Vegetables, and Other Specialty Crops: Selected Farm Bill and Federal Programs ; and CRS Report R43950, Local Food Systems: Selected Farm Bill and Other Federal Programs .",
"Despite some shared program interests and a shared farm bill title, there are often significant differences between U.S. specialty crop and organic producers in terms of their overall farm bill priorities and in the types of key farm bill programs each group supports. The U.S. horticulture sector is among the most diverse of U.S. farm sector groups, with advocates spanning a wide range of policy priorities. The certified organic and the local foods sectors are even more diverse, with wide-ranging priorities. Given the perception of the importance of fruits and vegetables within many varied policy arenas, including child nutrition and wellness, and continued calls for enhanced equity across farm sectors, the specialty crop industry is expected to call for continued expansion of funding for a range of existing USDA programs. Similarly, continued growth in both consumer demand and producer investment in the certified organic and locally produced food sectors is likely to drive calls for increasing support for these markets both within USDA and at the state and local levels. Such expansion proposals may draw resistance from more traditional agricultural producers as well as by more established program recipients within the fruit and vegetable sectors due to competition for limited funds.\nPreviously, farm bill recommendations by specialty crop interest groups (as well as some leading fruit and vegetable producing state agencies, such as California) spanned most farm bill titles. Most groups supported maintaining funding for each of the primary nutrition programs—such as the Fresh Fruit and Vegetable (Snack) Program, minimum purchase requirements under the Section 32 program, and the DOD Fresh program—and also called for changes to improve the nutritional status of U.S. food stamp recipients. They also recommended expanded funding for block grants, plant pest and disease programs, research programs (such as SCRI), and disaster assistance (including raising payment limitations on tree replacement). Within export promotion, these groups recommended maintaining funding for USDA's Market Access Program (MAP) and expanding the Technical Assistance for Specialty Crops (TASC) to address sanitary and phytosanitary and technical barriers to U.S. specialty crop exports. They also recommended that certain conservation programs be expanded to assist specialty crop producers and that AGI limitations not apply to conservation programs. Finally, SCFBA recommended continued funding for the Value-Added Producer Grant Program and other changes to certain rural development title programs that affect farmworkers.\nFarm bill recommendations promoted by the organic industry that could resurface in the next farm bill are focused on existing programs, including funding for the National Organic Program and the National Organic Certification Cost-Share Program and support for research under the Organic Agriculture Research and Extension Initiative (OREI) and the Organic Transitions Integrated Research Program (ORG). Other priorities have included improving organic producers' access to USDA conservation programs and crop insurance, as well as addressing certain marketing issues, such as organic data collection at USDA and potential losses associated with contamination of organic crops from genetically engineered crops.\nMany of the farm bill programs supporting specialty crops and organic agriculture are also supported by organizations promoting local and regional food systems. Some of the leading programs for local food producers also include the Farmers Market and Local Food promotion programs, the Senior Farmers Market Nutrition Program, and also related policies and incentives under SNAP, such as the Food Insecurity Nutrition Incentives, support for Community Food Projects, and Farm to School provisions. These groups also generally promote several rural development programs, including the Rural Micro-Entrepreneur Assistance Program. They also promote grant and loan programs that broadly support strategic regional community and economic development as well as beginning and socially disadvantaged farmers and ranchers.\nIn anticipation of the 2018 farm bill reauthorization, the ranking member of the Senate Agriculture Committee, Senator Debbie Stabenow, introduced the Urban Agriculture Act of 2016 ( S. 3420 ) in the 114 th Congress. This bill proposed to expand existing farm programs and funding, as well as fund new programs and incentives, to promote urban agriculture by expanding provisions in several titles throughout the farm bill. Proposed provisions include expanded support for competitive grants and research initiatives supporting urban farming along with expanded risk management tools, among other provisions. When this bill was introduced, it was widely noted as being intended to become part of the 2018 farm bill and could be reintroduced in the 115 th Congress. In addition, in the 114 th Congress, comprehensive legislation was introduced to address food waste and recovery in both the House ( H.R. 4184 ) and Senate ( S. 3108 ). These bills proposed to expand the mission and funding for several existing federal programs to cover a range of food waste efforts, including additional funds for loans and grants to support composting and energy projects. Other bills addressing food waste were also introduced in the 114 th Congress, and the House Agriculture Committee held a hearing on the subject in May 2016. Accordingly, food waste efforts could be considered as part of the larger farm bill debate.",
"Farm bills have traditionally not provided livestock and poultry producers with farm revenue support programs like those for major crops such as grains, oilseeds, and cotton. Instead, the livestock and poultry industries look to the federal government for leadership in protecting animal health; establishing transparent, science-based rules for trading animal products; resolving foreign trade disputes; and assuring that supplies of domestic and imported meat and poultry are safe, of high quality, and free from pests and diseases.",
"The \"Miscellaneous\" title of the 2014 farm bill contained eight provisions addressing livestock and poultry producers. Five provisions were related to animal health. These included funding and certification process changes for the Trichinae Certification Program and additional funding for three other programs: the (1) National Aquatic Animal Health Plan, (2) the National Animal Health Laboratory Network, and (3) the National Poultry Improvement Plan. It also included a sense of Congress provision that feral swine eradication be considered a high priority.\nIn addition, the last farm bill addressed both country-of-origin labeling (COOL) and USDA catfish inspection, which were originally in the 2008 farm bill. The 2014 farm bill directed USDA to conduct an economic analysis of the COOL rule that USDA wrote and amended to implement 2008 farm bill requirements. During the 2014 farm bill debate, the United States was in the midst of a WTO dispute settlement case over COOL with Canada and Mexico, and the WTO had determined that COOL violated U.S. WTO obligations. Congress repealed the beef and pork COOL provisions in December 2015. The 2014 farm bill also confirmed the catfish inspection provision that transferred catfish inspection from the Food and Drug Administration to USDA. It also defined catfish as \"all fish of the order 'Siluriformes'\" in order to require inspections of both domestic and imported catfish. USDA issued the final rule in December 2015 that went into effect in March 2016.\nFinally, the farm bill provided funding for the National Sheep Industry Improvement Center, which works to enhance the sheep and goat industry. Aside from the animal-related provisions in the miscellaneous title, the 2014 farm bill's permanent reauthorization of disaster assistance programs was a key achievement for livestock and poultry producers. (See discussion in \" Farm Safety Net Programs .\")",
"In the upcoming farm bill debate, Congress is expected to consider extending support for the livestock and poultry sectors through reauthorizing and funding existing animal health programs, which protect the health of animals and the livelihood of producers. In particular, the outbreak of highly pathogenic avian influenza (HPAI) in 2014-2015 in U.S. laying hen flocks and the subsequent economic losses for producers and disruptions in trade for the entire poultry industry demonstrated the crucial role that USDA plays in animal health. Ongoing concerns about HPAI suggest that the livestock and poultry industries may be interested in engaging Congress on possible policies such as expanded indemnities or animal disease insurance that could aid producers affected by outbreaks.\nThe livestock industry would like USDA to develop a vaccine stockpile for foot-and-mouth disease (FMD). Congressional hearings in 2016 addressed FMD and preparedness at USDA's Animal and Plant Health Inspection Service (APHIS) in the event that it should ever be reintroduced into the United States. The last U.S. FMD outbreak was in 1929. Another FMD outbreak would be devastating for U.S. livestock producers, with estimated annual losses of nearly $13 billion over 10 years, according to one study. U.S. law does not allow for the domestic production of FMD vaccine. USDA stockpiles viral antigen concentrate (VAC) that is used to produce vaccine doses. USDA's current vaccine supplies, however, would be insufficient in the event of a large FMD outbreak. The livestock industry is calling for USDA to expand funding and capabilities to provide sufficient doses of vaccine if ever needed.\nExpansion of feral swine eradication programs is another potential farm bill issue. Feral hogs were found in 39 states in 2016. By one estimate, feral swine cause $1 billion in damages to agriculture and another $1.5 billion to other parts of the U.S. economy in crop and natural resource destruction annually. Feral swine are also a vector for animal disease. Congress appropriated $20 million to APHIS in 2014 for feral swine programs that are undertaken cooperatively with states and tribal nations. Congress could consider whether additional support for expanding existing funding and programs is merited.\nDuring past farm bill debates, there has been interest is addressing consolidation and competition in the livestock and poultry sectors. USDA rules proposed by the Grain Inspection, Packers and Stockyards Administration (GIPSA) in 2010—partly finalized in 2011 and partly reproposed in 2016—continue to divide livestock and poultry producers, agricultural associations, and Members of Congress. It is now up to the Trump Administration to decide whether to proceed with the GIPSA rules released by the Obama Administration in December 2016. Some farm and rancher groups and rural advocacy groups may look to the farm bill as an opportunity to propose new policies that support producers, especially contract growers.\nCurrent law under the Animal Welfare Act (9 U.S.C. §2131 et seq.) requires minimum care standards for most types of warm-blooded animals bred for commercial sale, used in research, transported commercially, or exhibited to the public. Although farm animals are exempt, they are covered by other federal laws addressing humane transport and slaughter. Some members of the House and Senate Agriculture Committees have expressed a preference for farmers to continue to pursue voluntary approaches to farm animal welfare. Increased consumer interest in farm animal welfare, as well as interest among some Members of Congress, may lead to proposals addressing animal welfare on the farm. For example, since FY2007, horse slaughter has been debated each year during appropriations debates, and Congress has prohibited USDA's Food Safety Inspection Service (FSIS) from carrying out horse slaughter every year except FY2012-FY2014. In the 115 th Congress, the Safeguard American Food Exports Act of 2017 ( H.R. 113 ) proposed deeming horse meat as unfit for human consumption and banning the transport of horses to be slaughtered for human consumption. A new farm bill could be viewed as an avenue to permanently settle the annual appropriations debate on horse slaughter.",
"The federal government has a long history of providing credit assistance to farmers. This intervention has been justified by many factors, including market failure due to imperfect knowledge of information between lenders and farmers, lack of competition in some rural lending markets, insufficient lending resources in rural areas, and the desire to targeted lending to disadvantaged groups.\nThe agricultural lender with the greatest connection to the federal government is the USDA Farm Service Agency (FSA). It issues direct loans to farmers who cannot qualify for regular commercial credit and guarantees the repayment of certain loans made by other lenders. FSA also has statutory mandates to target loans to beginning farmers and socially disadvantaged groups based primarily on race and gender. Of the $350 billion in total farm debt as of year-end 2015, FSA provides about 2% through direct loans and guarantees about another 4%-5%.\nAnother agricultural lender with a federal mandate is the Farm Credit System (FCS). FCS is a cooperatively owned and federally chartered private lender with a statutory mandate to serve only agriculture-related borrowers. FCS makes loans to creditworthy farmers. It is not a lender of last resort but it is a government-sponsored enterprise receiving tax benefits, among other preferences, in return for restrictions on its lending base. FCS accounts for about 40% of farm debt. A third agricultural lender created by federal statute is Farmer Mac, another government-sponsored enterprise that is privately held and provides a secondary market for agricultural loans.\nThe statutory authority for FSA, FCS, and Farmer Mac is permanent, but farm bills often make adjustments to eligibility criteria and the scope of operations.",
"The 2014 farm bill made relatively small policy changes to USDA and FCS farm lending programs. It eliminated term limits on USDA-guaranteed farm operating loans, gave USDA discretion to recognize alternative legal entities to qualify for farm loans, and allowed alternatives to meet a three-year farming experience requirement. It also increased the maximum size of down payment loans. It further increased the percentage of a conservation loan that can be guaranteed, added another lending priority for beginning farmers, and facilitated loans for the purchase of highly fractionated land in Indian reservations. The farm bill also stated that compensation decisions for FCS executives rests with FCS boards of directors.",
"Credit issues are not expected to be a major part of a new farm bill, and changes that might occur are not expected to be particularly significant or comprehensive within the scope of agricultural credit statutes. Nonetheless, several issues could arise as legislation develops, including:\nFurther targeting of FSA lending resources to beginning and socially disadvantaged farmers; Providing carve-outs for emerging or nontraditional parts of the agricultural industry, such as local or regional food systems, organic agriculture, and sustainable production, or providing financing for farmers, cooperatives, and/or food businesses that serve food deserts or finance urban agriculture; and Determining the scope of FCS and/or Farmer Mac lending activities, including the carve-outs mentioned above.",
"USDA was created in 1862 in part to support agricultural research in an expanding, agriculturally dependent country. USDA conducts intramural research at federal facilities with government-employed scientists and supports external research at universities and other facilities through competitive grants and formula-based funding. The breadth of contemporary USDA research spans traditional agricultural production techniques, organic and sustainable agriculture, bioenergy, nutrition needs and composition, food safety, animal and plant health, pest and disease management, economic decisionmaking, and other social sciences affecting consumers, farmers, and rural communities.\nFour agencies carry out USDA's research and education activities, grouped together into the Research, Education, and Economics (REE) mission area. The Agricultural Research Service (ARS) is USDA's intramural science agency and conducts research on food and agriculture issues of national and regional importance. The National Institute of Food and Agriculture (NIFA) sponsors extramural research by distributing federal funds to land-grant universities and other outside partners for state- and regional-level research, education, and extension activities. The Economic Research Service (ERS) conducts economic and social science research about agriculture, rural development, food, commodity markets, and the environment. Finally, the National Agricultural Statistics Service (NASS) conducts the Census of Agriculture and provides official statistics on agricultural production and other relevant indicators about the farm sector.",
"The research title of the 2014 farm bill reauthorized funding for various USDA research activities through FY2018, subject to appropriations, and amended authority so that only competitive grants can be awarded under certain programs. Mandatory spending was increased for several programs, including the Specialty Crop Research Initiative (SCRI), the Organic Agricultural Research and Extension Initiative (OREI), and the Beginning Farmer and Rancher Development Program (BFRDP). It also provided mandatory funds to establish the Foundation for Food and Agriculture Research, a nonprofit corporation designed to accept private donations and award grants for collaborative public/private partnerships among USDA, academia, and the private sector.",
"Several research programs mentioned above received mandatory funding in the 2014 farm bill but do not have a budget baseline that extends beyond FY2018. If policymakers want to continue these programs in a new farm bill, they would need to pay for them with other offsets. These include $100 million over five years for both OREI and BFRDP and $200 million to establish the Foundation for Food and Agriculture Research ($200 million in FY2014).\nUSDA differs from most other federal science agencies in allocating more than half of its annual research appropriation to intramural research agencies, including ARS, ERS, and NASS. Coordinating intramural and extramural research objectives and activities continues to be a concern and could be considered as part of a new farm bill debate. Likewise, the appropriate split between formula funding and competitive funding for extramural research in NIFA remains a concern of various interests. Lastly, within the competitive grants programs, especially the flagship Agriculture and Food Research Initiative (AFRI), allocation and prioritization of funding among various research areas remains a concern. Interest groups that want more funding for their research needs and commodities may seek inclusion via farm bill legislation.",
"The federal government provides support for U.S. agricultural exports through two types of programs: export market development and export credit guarantees. The 2014 farm bill repealed the Dairy Export Incentive Program, thereby eliminating the use of direct export subsidies for U.S. agricultural products. Legislative authorizations for agricultural trade programs are included in the trade title of the 2014 farm bill. USDA's export promotion programs are administered by USDA's Foreign Agricultural Service (FAS) and generally funded using mandatory monies. One of the larger programs, MAP, was targeted for cuts or elimination in a number of deficit reduction proposals but was retained intact in the 2014 farm bill.",
"Export market development programs—whose primary aim is to assist U.S. industry efforts to build, maintain, and expand overseas markets for U.S. agricultural products—include MAP, the Foreign Market Development Program (FMDP), the Emerging Markets Program (EMP), the Quality Samples Program (QSP), and TASC. The 2014 farm bill extended budget authority for these programs through FY2018, making funding mandatory and thus not subject to annual appropriations.\nThe 2014 farm bill also reauthorized GSM-102, the FAS-administered short-term export credit guarantee program, and the Facility Guarantee Program (FGP). Under these programs, the CCC provides payment guarantees for the commercial financing of U.S. agricultural exports. GSM-102 guarantees repayment of commercial financing by approved foreign banks, mainly of developing countries, for up to two years for the purchase of U.S. farm and food products. FGP guarantees financing of goods and services exported from the United States to improve or establish agriculture-related facilities in emerging markets.\nWhile the 2014 farm bill extended these programs largely intact, it did make several changes. To comply with a WTO decision in a cotton case won by Brazil, Congress made several changes to GSM-102. These changes included shortening the loan guarantee period from three years to two, repealing a requirement that the Secretary of Agriculture maximize the amount of credit guarantees available each year, and removing a provision that restricted the Secretary from adjusting program fees to fully cover the cost of operating the program. Congress also broadened the scope of TASC to fund projects that address technical barriers to trade beyond sanitary and phytosanitary measures.\nAt a more strategic level, the 2014 farm bill directed USDA to consult with the House and Senate Agriculture Committees and Appropriations Committees and then propose a plan to reorganize the international trade functions of USDA. The law directs that the plan establish an Under Secretary for Farm and Foreign Agricultural Affairs within USDA, a position that would require Senate confirmation. Currently, USDA's Under Secretary for Farm and Foreign Affairs oversees FAS and the export programs the agency administers, as well as several major domestic farm program areas. At a hearing of the Senate Agriculture Committee in September 2016, former USDA Secretary Vilsack said he intended to lay the groundwork for the next Administration to pursue this task. At the beginning of 2017, however, USDA had not transmitted a reorganization plan to Congress.",
"Federal support for agricultural export promotion invariably raises questions about the appropriateness of government support for private sector export promotion and the effectiveness and impact of these programs. Some have argued that MAP and FMDP are forms of corporate welfare in that they fund activities that private firms and industry groups could and should fund themselves. Other critics argue that the principal beneficiaries of export promotion programs are foreign consumers and that funds could be better spent, for example, on educating U.S. firms about how to export and on overcoming trade barriers.\nQuestions about whether export promotion programs are as effective as they could be, and whether new approaches to facilitating and promoting U.S. farm exports may be needed (or both), could be topics of discussion in a new farm bill, considering that the value of U.S. exports and farm income have both declined since the enactment of the previous farm bill. The eligibility of certain types of organizations and producer groups, and the levels of funding for various programs are likely topics of debate as policymakers consider farm bill trade programs. Congress could also revisit the unfinished business of its directive to reorganize the international trade functions of USDA under a new Under Secretary position with a unique focus on promoting U.S. farm and food exports. Other trade-related issues that are outside the context of the farm bill—but may arise in the debate around the trade title in view of lower farm export sales in recent years—may include various multilateral and bilateral trade negotiations that are generally supported by some U.S. agricultural groups.",
"The United States has led global funding support for international food assistance for over 60 years. These programs originated with blended goals to support the domestic agricultural safety net, agricultural trade goals, and the maritime industry in addition to supporting efforts to alleviate hunger abroad. This blending of objectives is manifested through statutory requirements that most U.S. international food assistance be (1) based on the donation of U.S. agricultural commodities to be distributed as food or sold to generate funds for development programs and (2) shipped primarily on U.S.-flag vessels.\nTwo agencies implement the international food assistance programs authorized under the farm bill: the U.S. Agency for International Development (USAID), and FAS. USAID implements the largest program, Food for Peace Title II (Emergency and Private Assistance Programs), which averaged $1.8 billion in annual outlays from FY2006-FY2015. FAS implements all other international food assistance programs funded through the farm bill authorization, with total annual average outlays of $395 million per year from FY2006-FY2015.",
"The United States provides U.S. agricultural commodities, procured by USDA, as the primary form of emergency and economic development assistance in response to food security problems in developing countries. The suite of programs that govern U.S. international food assistance was reauthorized in the trade title of the 2014 farm bill. Programs include (1) Food for Peace, (2) Food for Progress, (3) the McGovern-Dole International Food for Education and Child Nutrition Program, and (4) the Bill Emerson Humanitarian Trust. The Food for Peace Act's Title II, Emergency and Private Assistance Programs, is the primary vehicle for U.S. international food aid. Title II of Food for Peace is administered by USAID. Title II provides donations of U.S. agricultural commodities to respond to emergency food needs or to be used in development projects. All other food aid programs are administered by FAS. The 2014 farm bill also enacted modest flexibilities into the Food for Peace Act.\nThe 2014 farm bill also made permanent the Local and Regional Food Aid Procurement Projects program (which was authorized in the 2008 farm bill as a temporary pilot program), but it also changed its funding from mandatory to discretionary, increasing the authorization from $60 million total during FY2009-FY2012 to $80 million per year, subject to annual appropriations. It also introduced additional reporting requirements on administrative costs, transportation, storage, and cost recovery of monetized food aid authorized through the farm bill.",
"U.S. international food assistance programs have evoked considerable debate on whether to relax, retain, or strengthen statutory requirements that affect implementation of the programs. The 115 th Congress might continue these discussions or might consider new legislation that also addresses global hunger issues.\nIn previous Congresses, debate about U.S. international food assistance programs intensified during farm bill discussions and other legislative proposals. Issues that Congress discussed included whether to alter requirements on where food aid is purchased, how it is transported, and the extent to which U.S. agricultural commodities must be sold (or \"monetized\") to support Food for Peace development programs. Proponents for increased flexibility argue that requirements on sourcing and transportation increase program expenses, and flexibility could allow U.S. international food assistance programs to benefit more people at no additional cost. Supporters of the existing program mechanisms cite the value of leveraging the international programs to also support U.S. agriculture, shipping, and military readiness.\nThe 2016 Global Food Security Act ( P.L. 114-195 ) codified a new program—the Emergency Food Security Program (EFSP)—but did not alter programs that are authorized through the farm bill. The new EFSP operates without restrictions on sourcing or shipping—cash transfers are permissible. The Global Food Security Act mandated additional coordination efforts of all U.S. programs that address hunger internationally. Authorizations for food aid programs under both the farm bill and the act expire after FY2018. The simultaneous expiry of these programs with similar goals and distinct reporting mechanisms may generate congressional discussion on how to coordinate oversight and reauthorization across both agricultural and foreign affairs jurisdictions. USAID's Office of Food for Peace implements EFSP, but the program does not operate with funding authorized through the Food for Peace Act. The program reports to the foreign affairs committees, not to the agricultural committees.",
"Domestic food assistance programs reauthorized in the farm bill's nutrition title include the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program), the Emergency Food Assistance Program (TEFAP), the Commodity Supplemental Food Program (CSFP), the Food Distribution Program on Indian Reservations (FDPIR), and other programs administered by USDA's Food and Nutrition Service (FNS). According to CBO's projected costs at the time of enactment, the nutrition title makes up nearly 80% of spending under the 2014 farm bill (though subsequent estimates show that actual spending has been less than was projected at that time; see Table 1 and Figure 1 ). SNAP accounts for the vast majority of the spending in this title. At the time of enactment, the policy changes contained in the nutrition title of the 2014 farm bill were projected to save $8 billion relative to baseline spending over 10 years (FY2014-FY2023). The savings are primarily from changes to SNAP, but there are increasing investments in some areas.\nMost farm bill domestic food assistance programs—except for CSFP, FDPIR, and the administrative cost component of TEFAP—are generally treated as mandatory spending for budget purposes. SNAP is open-ended mandatory spending and is funded through appropriations laws. As such, amending SNAP eligibility, benefits, or other program rules can have a budgetary impact, but the availability of appropriated funding also affects operations. Discretionary spending programs in the farm bill include CSFP, the administrative cost component of TEFAP, and a portion of FDPIR.\nTypically, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the child nutrition programs (National School Lunch Program, School Breakfast Program, Child and Adult Care Food Program, Summer Food Service Program, and others) are not reauthorized in the farm bill. These programs, located in the Child Nutrition Act of 1966 and the Richard B. Russell National School Lunch Act, were last reauthorized in 2010 in P.L. 111-296 , the Healthy, Hunger-Free Kids Act of 2010. Despite efforts to complete the next child nutrition reauthorization during the 114 th Congress, the legislation did not advance beyond committees.",
"The sections to follow provide program background and highlight some of the 2014 farm bill's major changes. For a more comprehensive treatment of the 2014 farm bill's nutrition title, see CRS Report R43332, SNAP and Related Nutrition Provisions of the 2014 Farm Bill (P.L. 113-79) .",
"Formerly known as the Food Stamp Program, SNAP provides benefits to eligible low-income households on electronic benefit transfer (EBT) cards. Benefits can be exchanged for eligible foods at authorized retailers. In FY2016, an average of 44.2 million individuals in 21.8 million households participated in SNAP each month. Federal spending for FY2016 totaled approximately $70.8 billion. The vast majority of the spending ($66.6 billion, 94%) was the cost of benefits themselves, which are 100% federally financed.\nSNAP eligibility and benefits are calculated on a household basis. Financial eligibility is determined through a traditional or a categorical eligibility path. Under traditional eligibility, applicant households must meet gross income, net income, and asset tests. Specifically, household gross monthly income (all income as defined by SNAP law) must be at or below 130% of the federal poverty level, and household net monthly income (with SNAP-specified deductions subtracted) must be at 100% of the federal poverty level. The traditional asset rules are set at $2,000 per household (inflation adjusted). (Households that contain an elderly or disabled member have a higher asset limit and also do not have to meet the gross income test.) Under categorical eligibility, SNAP eligibility is automatically conveyed based upon the applicant's participation in other means-tested programs, namely Supplemental Security Income (SSI), Temporary Assistance for Needy Families (TANF), or General Assistance (GA). Because TANF is a broad-purpose block grant, the state option to extend SNAP eligibility to applicants that receive a TANF-funded benefit allows states to offer program eligibility under rules that vary from those discussed in this paragraph, including an elimination of the asset test (\"broad-based categorical eligibility\"). Applicants are also subject to nonfinancial rules, which include work-related requirements such as a time limit for Able-Bodied Adults Without Dependents (ABAWDs). If eligible for SNAP, an applicant household undergoes a calculation of its monthly benefit amount (or allotment) based on household size and any applicable SNAP deductions.\nAlthough the nutrition title of the 2014 farm bill ( P.L. 113-79 ) contains a number of provisions that changed aspects of SNAP, Congress retained most of SNAP's existing authorizing law. The 2014 farm bill amended how Low-Income Home Energy Assistance Program (LIHEAP) payments are treated in the calculation of SNAP benefits, reducing benefit amounts in some states. The law included policies related to the SNAP Employment and Training (E&T) program, including a pilot project authority and related funding ($200 million over FY2014 and FY2015) for states to implement and for USDA to evaluate a variety of work programs for SNAP participants. Since SNAP provides benefits redeemable for SNAP-eligible foods at SNAP-eligible retailers, much of SNAP law pertains to retailer authorization and benefit issuance and redemption. The 2014 farm bill included changes to retailer and redemption provisions. The law now requires stores to stock more fresh foods, requires retailers to pay for their EBT machines, and provides additional funding for combatting trafficking (the sale of SNAP benefits). The 2014 farm bill also includes $100 million in mandatory funding (over 10 years) for Food Insecurity Nutrition Incentive grants, which will support organizations that offer bonus incentives for SNAP purchases of fruits and vegetables.",
"Under TEFAP, the federal government provides USDA-purchased commodity foods to states. This assistance supplements other sources of food aid for needy persons and is often provided in concert with food bank and homeless shelter projects as either food packages or meals. States make eligibility decisions for TEFAP assistance and choose local administering agencies. National emergency provider and food bank networks (such as Feeding America) are also heavily involved. In addition to state allocations in entitlement commodities, each state receives a share of discretionary money to fund expenses of administration and distribution (e.g., storage, transportation) of the commodities. State entitlements to TEFAP commodities are supplemented with bonus commodities (about $305 million in FY2016) that USDA has acquired in its agriculture support programs.\nThe 2014 farm bill increased mandatory funding for TEFAP entitlement commodities. According to CBO's estimate (which accounts for inflation), the 2014 farm bill increases funding for TEFAP's entitlement commodities by $125 million over 5 years and $205 million over 10 years. The increases first took effect in FY2015 with an increase of $50 million above prior law. Among other changes, the 2014 law also requires funding for TEFAP to be available to be spent over a two-year period.",
"CSFP provides supplemental foods primarily to low-income elderly persons. For elderly participants, eligibility is limited to those with income below 130% of the federal poverty income guidelines. USDA purchases the foods and distributes them to grantees. CSFP grantees also receive funding for administrative costs. Commodities and administrative funding are generally apportioned by the number of persons served in the prior year. If new money is appropriated or if allocated \"slots\" are not used, new projects can be added. In FY2016, 47 states, the District of Columbia, and two Indian Tribal Organizations (ITOs) operated CSFP projects.\nThe 2014 farm bill changed CSFP's eligibility rules, phasing out eligibility for low-income pregnant, postpartum, and breastfeeding women, infants, and children. According to FY2016 FNS administrative data, nearly all of the over 585,000 program participants were elderly (defined as 60 years of age or older).",
"",
"Puerto Rico, American Samoa, and the Commonwealth of the Northern Mariana Islands (CNMI) do not participate in the SNAP program. Instead, they receive a nutrition assistance block grant, under which they administer a nutrition assistance program with service delivery unique to each territory. Indian tribal organizations may choose to operate FDPIR instead of having the state offer SNAP benefits. The full cost of benefits and most administrative expenses are covered by the federal government. This option operates on over 250 Indian reservations in 22 states. The 2014 farm bill included policies related to the programs in lieu of SNAP. For instance, it required certain feasibility studies of the food assistance programs in Puerto Rico and CNMI.",
"Under the SFMNP, low-income seniors receive vouchers that they can redeem at farmers' markets and roadside stands for fresh produce. The 2014 farm bill maintained mandatory funding at $20.6 million per year.",
"As discussed above, the school meals programs are reauthorized in legislation separate from the farm bill. However, the 2014 farm bill did include several provisions and resources that pertain to the child nutrition programs, in particular the USDA commodity foods served in the school meal programs. Related policies include:\nProcessing of USDA c ommodities. The 2014 law extended the authority for USDA to enter into reprocessing agreements with private companies to process commodity foods. The law also included a new provision that allowed USDA to contract with processors and retain title to those foods while processing. USDA purchases of fresh fruits and vegetables; farm to school. The 2014 law continued the requirement that $50 million of USDA's additional acquisitions of fruits and vegetables be fresh fruit and vegetables. The law also created a pilot grant program that would allow eight states to use this funding for their own local sourcing of fresh fruits and vegetables. Pulse crop pilot program. The new law included the Senate bill's proposal to create a pilot project to purchase pulse crops (dry beans, dry peas, lentils, and chickpeas) and pulse crop products for schools. Up to $10 million in appropriations was authorized. Fresh Fruit and Vegetable (\"snack\") Program. This program was permanently authorized and funded in the 2008 farm bill, but in 2014 a pilot was authorized to test and evaluate providing fruit and vegetable snacks in other forms.",
"In the 1996 farm bill (Federal Agriculture Improvement and Reform Act of 1996, P.L. 104-127 ), Congress established a program of assistance for community food projects intended to promote innovative local self-help initiatives to meet nutrition and farm needs. The 2014 farm bill made some amendments to the grant program and increased mandatory funding from $5 million per year to $9 million per year (beginning FY2015).",
"As discussed earlier, the 2014 farm bill was formulated and enacted amid contentious debate that centered on SNAP spending, eligibility and benefit rules, and inclusion of certain programs in the farm bill. It is possible that some of the controversial policies included in House-passed bills but not in the enacted law will be debated again in the 115 th Congress's consideration of the next nutrition title. The Trump Administration may affect how and what issues are discussed in the next reauthorization. Developments in the 114 th Congress—namely the findings from the bipartisan congressional commission, the National Commission on Hunger, and the House Committee on Agriculture's 114 th Congress hearing series, \"Past, Present, and Future of SNAP\" —may also preview future issues and options. It is also possible that SNAP, as the lion's share of the farm bill's mandatory spending, will be part of budgetary decisionmaking for the bill as a whole. The sections to follow briefly discuss examples of SNAP issues that came up during the last farm bill or have come up since that time.",
"In current law, SNAP eligibility is available to applicants that already receive benefits from low-income programs, including SSI, TANF, and state-financed GA programs. As of August 2016, 42 states adopted the \"broad-based\" categorical eligibility option, which gives states increased flexibility with the income and asset limits. Because of this \"broad-based\" option, most states are assessing applicants' eligibility without conducting an assessment of their assets. As these policies are considered, possibly in a new farm bill, so may be the role of asset tests in general.",
"SNAP law has rules on employment or work-related activities for able-bodied, nonelderly adult participants. Some rules apply in all states that operate SNAP—for example, requiring unemployed program participants to register for work and accept a suitable job if offered one. However, some requirements can vary by state, depending on how each state designs its own SNAP Employment and Training Program (E&T)—for example, whether a work registrant's E&T participation is voluntary or mandatory.\nIn addition to the nationwide and state-specific work eligibility rules, SNAP law has a time limit for ABAWDs who are not working a minimum of 20 hours per week. If such individuals do not work the required number of hours, they can receive no more than three months of benefits over a 36-month period. SNAP law also authorizes waivers (tied to job availability in a state or portions of a state) and exemptions from the time limit. Some controversy has developed in recent years, including the years of the 2014 farm bill's formulation, because the vast majority of states had statewide waivers from enforcing the time limit. Currently, fewer states are eligible for those statewide waivers, and the time limit is becoming more prevalent. Participants are increasingly being time-limited off benefits, and there are anecdotal reports of food banks experiencing increased demand as a result.\nA new farm bill may consider work-related rules. As mentioned earlier, the 2014 law ultimately authorized and funded E&T pilot programs in 10 states; each pilot is participating in a rigorous evaluation. It is possible that a new farm bill could propose changes to work-related rules based on (likely interim) findings from the evaluation of the 2014 farm bill's pilot programs and/or political and ideological positions around work requirements.",
"For decades, policymakers and the general public have debated what SNAP benefits should be allowed to purchase and whether further restrictions would promote better eating habits. Under current law, SNAP benefits can buy most foods for household consumption sold at SNAP-authorized retailers. In recent months, FNS released a study of SNAP participants' foods purchased, and the House Committee on Agriculture held a hearing on SNAP-eligible foods. A new farm bill may revisit rules around eligible foods or eligible retailers or may propose policy options to promote healthier eating for SNAP participants.\nThe current definition of SNAP-eligible foods is in federal law. If states or localities wish to implement SNAP-eligible foods policies different than this definition—for instance, one restricting sugar-sweetened beverage purchases—they must apply to USDA for permission to run demonstration projects. Over the years, some states have sought permission to restrict foods from SNAP purchase, but USDA has not yet approved one.\nThe last two farm bills expanded federal funding to provide and test incentives for SNAP participants' purchases of fruits and vegetables. The 2008 farm bill authorized and funded the \"Healthy Incentives Pilot.\" The 2014 farm bill authorized and funded the Food Insecurity Nutrition Incentive grant program. It is possible that a new farm bill could further support incentive-based approaches.\nThe 2014 farm bill required significant changes to the inventory requirements for SNAP-authorized retailers. The changes to stocking requirements will go into effect in May 2017 for new applicant stores and January 2018 for currently authorized stores. Retailers' experiences under the new rules may impact development of a new farm bill.",
"The conservation title of the farm bill generally contains a number of reauthorizations, amendments, and new programs that encourage farmers and ranchers to voluntarily implement resource-conserving practices on private land. Starting in 1985, farm bills have greatly broadened the range of topics considered to be conservation. While the number of programs has increased and techniques to address resource problems continue to emerge, the basic approach has remained unchanged: financial and technical assistance supported by education and research programs.",
"USDA currently administers a number of conservation programs that assist private landowners with natural resource concerns. These programs provide technical and financial assistance to willing landowners in exchange for the implementation of resource-conserving practices. Some of these programs focus on improving or restoring resources that have been degraded, while others create conditions to limit degradation in the future. In most cases, conservation programs have multiple resource conserving goals related to soil, water, and wildlife.\nSince 1985, each succeeding farm bill has expanded the range of natural resource problems to be addressed as well as the number of conservation programs and level of funding. The 2014 farm bill reauthorized, repealed, consolidated, and amended a number of conservation programs. Generally, farm bill conservation programs can be grouped into the following categories based on similarities: working land programs, land retirement programs, easement programs, conservation compliance programs, and other programs and overarching provisions (see text box below). For more information, see CRS Report R40763, Agricultural Conservation: A Guide to Programs .\nMost of these programs are authorized to receive mandatory funding (i.e., they do not require an annual appropriation) and include authorities that expire with other farm bill programs at the end of FY2018. Other types of conservation programs—such as watershed programs, emergency land rehabilitation programs, and technical assistance—are authorized in other nonfarm bill legislation. Most of these programs have permanent authorities and receive appropriations annually through the discretionary appropriations process. These programs are not generally addressed in the context of a farm bill unless amendments to the program are proposed.",
"",
"The conservation title is one of the larger nonnutrition titles of the farm bill, accounting for 6% of the total projected 2014 farm bill, or $58 billion of the total $956 billion in 10-year mandatory funding authorized (FY2014-FY2023). Current budgetary constraints continue to drive the debate on conservation in a new farm bill. Similar to the conditions during debate on the 2014 farm bill, the current farm bill debate may be driven in part by demand for fiscal restraint. Ultimately the 2014 farm bill reduced the conservation title by $3.97 billion over 10 years, or 24% of the total $16.5 billion in savings. In addition to a reduction in mandatory authorization, the conservation title continues to be affected by budgetary dynamics such as sequestration and reductions through annual appropriations. It remains uncertain what impact these reductions will have on a new farm bill's baseline. While most producers are in favor of conservation programs, it is unclear how much of a reduction in other farm program spending they would be willing to support to expand or maintain conservation efforts.",
"Arguments for expanding conservation in earlier farm bills proved particularly persuasive when documentation was presented of large backlogs of interested and eligible producers that were unable to enroll because of a lack of funds. Debate on a new farm bill could see similar arguments, as demand to participate in many of the conservation programs exceeds the available program dollars several times over. For example, in FY2015 (most recent data available), the working lands programs funded 27% of the applications received for CSP, 31% of the applications received for EQIP, and 12% of the applications received for AMA. The FY2016 CRP general sign-up resulted in 1.9 million acres offered for enrollment and 411,000 acres accepted (22%). The acceptance rate was even lower for the CRP grasslands enrollment, which had over 1 million acres offered and 101,000 accepted acres (10%). Easements under ACEP also faced a limited acceptance rate, with agricultural land easements enrolling 26% of applications and wetland reserve easements accepting 38% of offers in FY2015 (most recent data available). The new RCPP also experienced high demand, accepting 88 of the 147 projects proposed (60%) in FY2017 and 84 of the 265 project proposed (32%) in FY2016. Large, ongoing backlogs could provide a case for additional funding, while other policy mechanisms could be proposed to reduce demand.",
"Land retirement programs (e.g., CRP) provide producers with financial incentives to temporarily remove from production and restore environmentally sensitive land. In contrast, working lands programs (e.g., EQIP) allow land to remain in production and provide producers with financial incentives to adopt resource-conserving practices. Over time, high commodity prices, changing land rental rates, and new conservation technologies have led to a shift in farm bill conservation policy toward an increased focus on conservation working lands programs. Some of this shift has already occurred in the last decade and was continued in the 2014 farm bill as the percentage of mandatory program funding for land retirement programs has declined relative to working lands programs. With lower commodity prices, a new farm bill could shift this focus again, potentially increasing funding for land retirement programs. Most conservation and wildlife organizations support both land retirement and working lands programs, but the appropriate \"mix\" continues to be debated. With any proposal, it is likely that environmental interests will not support a reduction in one without an increase in the other.",
"Interest is increasing in programs that partner with state and local communities to target conservation funding to local areas of concern. These partnership programs leverage private funding with federal funding to multiply the level of assistance in a select area. A number of these partnership programs were repealed in the 2014 farm bill and replaced with the new Regional Conservation Partnership Program (RCPP). The program receives $100 million annually in mandatory funding and redirects 7% of the funding from other programs—EQIP, ACEP, CSP, and HFRP—to partnership agreements. Now in its fourth year of project selection, RCPP has received considerable interest (see backlog discussion above). Some praise the program's ability to leverage nonfederal funding and incorporate the use of other state and local partners in a targeted effort. Others question whether the program redirects funds to areas with the greatest established support rather than those with the greatest resource concerns.",
"The 1985 farm bill created the highly erodible lands (HEL) conservation and wetland conservation compliance programs, which tied various farm program benefits to conservation standards. The provision has since been amended numerous times to remove certain benefits and add others. Most recently, the 2014 farm bill added crop insurance premium subsidies as a program benefit that could be denied if conservation standards were not met. In 2015, USDA issued a requirement that to remain eligible for crop insurance premium subsidies, producers must certify their compliance with the conservation compliance provisions through a standard form. Following the 2015 deadline, USDA reported a 98.2% certification rate, suggesting that those not certified were likely no longer farming or had filed forms with discrepancies that may still be reconciled. Despite this high compliance rate, many view the conservation compliance requirements as burdensome, and they continue to be unpopular among producer groups. Since its introduction in the 1985 farm bill, conservation compliance has remained a controversial issue, and debate will likely continue.",
"Farm bill conservation programs are a voluntary federal policy to address environmental impacts related to agriculture. Another way for the federal government to address environmental impacts is through regulation. Increasingly, conservation programs are called upon to prevent or reduce the need for environmental regulation. While a new farm bill debate will not likely focus specifically on environmental regulations—because most environmental law originates outside the House and Senate Agriculture Committees—debate could focus on strengthening the voluntary response to environmental issues through conservation programs. This, in turn, could influence the funding debate and the portion of the overall farm bill budget made available for conservation programs.",
"Since 1973, omnibus farm bills have included a rural development title. How to create and support new competitive advantage in rural areas so these areas can better compete in a global economic environment is a key issue framing current debates about the future of rural America. While the search for new sources of rural economic development is part of the policy equation, also increasingly appreciated is the need to develop new approaches for federal assistance to rural areas that go beyond the largely piecemeal programming that has long characterized rural economic development policy.\nThe rural development title of farm bills generally provides assistance for rural business creation and expansion and also rural infrastructure with traditional assistance for housing, electrical generation and transmission, broadband, water and wastewater, and economic and institutional capacity in local communities. In the past several farm bills, policymakers have also supported innovative and alternative business development (e.g., bioenergy, value-added production, local food production) and innovative mechanisms to finance it (e.g., the Rural Microentrepreneur Assistance Program). Support for such alternative approaches is expected to continue as policymakers recognize the great diversity among rural communities, with some rural areas growing and prospering and others falling further behind as their primary industries (including agriculture) decline and population outmigration continues, particularly among younger, educated residents.",
"The rural development title of the 2014 farm bill generally reauthorized or amended long-standing programs under the Consolidated Farm and Rural Development Act (P.L. 92-419) and the Rural Electrification Act of 1937. New programs are also authorized under these statutes.\nConcerns about how effectively USDA targets its rural development loan and grant assistance have been a recurring consideration for policymakers and rural development practitioners. The general concern is that rural development funding may not be targeted as well or as effectively as it could be. The 2014 farm bill directed USDA to begin collecting data regarding economic activities created through its rural development grants and loans and to measure the short- and long-term viability of award recipients. It also directed USDA to report to Congress every two years on rural employment generation, new business start-ups, and any increased local revenue.\nThe 2014 farm bill authorized a new Strategic Economic and Community Development initiative to support economic development plans on a multi-jurisdictional basis, giving priority to certain projects and reserving 10% of available appropriations for community facilities, rural utilities, and rural business, among other types of operations. The bill created other rural development programs and/or modified or reauthorized other existing programs. It authorized the Rural Energy Savings Program to provide loans to utility districts and Rural Utility Service borrowers to assist rural households and small businesses in implementing energy efficiency measures. It also authorized the Rural Business Development Grants program, merging the general functions of two grant programs—the Rural Business Enterprise and the Rural Business Opportunity grant programs—which were terminated. It also reauthorized loans and loan guarantees under the Business and Industry Guaranteed Loan Program for locally or regionally produced agricultural food products—those products that travel less than 400 miles between production and marketing—and targeted low-income areas without access to fresh fruits and vegetables. Priority is given to projects benefitting underserved communities (i.e., those with limited access to affordable, healthy foods and with high rates of poverty or food insecurity). Grants were also authorized to fund technical assistance and training.\nIn addition to these programs, the rural development title includes other provisions to reauthorize and/or amend a wide variety of loan and grant programs that provide further assistance in four key areas: (1) broadband and telecommunications, (2) rural water and wastewater infrastructure, (3) business and community development, and (4) regional development. Each of these programs has authorized discretionary spending subject to annual appropriations, with the exception of one mandatory spending authorization of $150 million for reducing the backlog of pending water and wastewater applications.\nThe 2014 farm bill also modified the definition of rural area for the Housing Act of 1949. The provision increased the maximum eligible population threshold to 35,000 from 25,000 and permits any rural area that was eligible in the 1990, 2000, and 2010 censuses to remain eligible for Rural Housing Service programs until the 2020 decennial census.",
"Some policymakers contend that current farm policies, which rely heavily on commodity support for a few production sectors, play a lesser role in the vitality of most rural areas. Rural manufacturing, which tends to be lower-skilled and lower-waged, continues to lose out to foreign competition. While transformation to a service economy continues in rural America, service employment in many rural areas also tends to be in lower-wage personal services rather than business and producer services.\nEconomic development efforts in some areas have targeted entrepreneurial strategies and microenterprise development, including new markets for value-added agricultural products. Rather than simply seeking to attract relocating businesses, these approaches attempt to capitalize on a particular area's distinctive social, economic, and environmental assets and advantages to build endogenously on existing local and regional strengths. Developing a regional entrepreneurial culture seems to be an important approach in these efforts.\nThe mixed success of these and past efforts, as helpful to rural areas as they may be, suggests to many rural development experts and policymakers that the current structure of federal assistance to rural areas needs to be reexamined. For example, regularly tweaking the definition of rural to determine eligibility for certain programs seems unlikely to produce significantly improved economic development outcomes. Some contend that greater emphasis on the socioeconomic relations between rural communities and urban areas within a regional context could lay the foundation for more successful rural (and regional) development outcomes. While both the 2008 and 2014 farm bills provided a greater emphasis on regional efforts, some policymakers believe that redesigning existing programs to better target regional efforts could yield positive results. To that end, the 2014 farm bill authorized a new data collecting activity to assess the effectiveness of federal development assistance to rural businesses.\nApplication processes for program loans and grants can be a barrier for many rural projects, especially those in smaller, poorer rural areas. The way assistance is currently provided (mostly through direct and guaranteed loans) has limitations because it is often driven by individual projects rather than integrated into an overall development strategy. Many rural communities may benefit from technical assistance support for strategic planning. The Obama Administration saw interagency coordination among federal agencies that target rural areas (e.g., Department of Housing and Urban Development, Department of Health and Human Services) as in need of significant improvement.\nThese are not so much new concerns about federal assistance to rural areas as they are continuing issues identified by rural development experts and rural policymakers. In the current budget environment, it may be difficult to advance substantively new approaches to rural development in a new farm bill. However, with many in Congress concerned that current federal approaches to rural development need to be reexamined and programs better targeted to overall development strategies, a new farm bill is likely the major legislative vehicle to address these issues.",
"Commercial interest in renewable energy, mainly ethanol and biodiesel production, expanded rapidly with the enactment of the Renewable Fuel Standard (RFS) and in response to a strong rise in domestic and international fuel prices. Many policymakers view agriculture-based biofuels as a catalyst for rural economic development, an important source of demand for agricultural production, and a home-grown response to lowering U.S. dependence on imports of foreign energy. USDA renewable energy programs have been used to incentivize adoption of renewable energy projects including solar, wind, and anaerobic digesters. Initially, the primary focus of these programs was to promote U.S. biofuels production and use—including cornstarch-based ethanol, soybean-based biodiesel, and cellulosic ethanol—but over time their focus has shifted toward promoting renewable power, biomass-based products, and efforts to bring biomass-based fuel, such as cellulosic ethanol, and other advanced renewable fuels to market.\nMany of the federal programs that currently support renewable energy production are outside the purview of USDA and have legislative origins outside of the farm bill. The 2002 farm bill (Farm Security and Rural Investment Act of 2002, P.L. 107-171 ) was the first omnibus farm bill to explicitly include an energy title. The energy title authorized grants, loans, and loan guarantees to foster research on agriculture-based renewable energy, share development risk, and promote the adoption of renewable energy systems. The 2002 farm bill was followed by two major energy bills (the Energy Policy Act of 2005, P.L. 109-58 ; and the Energy Independence and Security Act of 2007, P.L. 110-140 ), which established and expanded the RFS along with several other renewable energy programs.",
"The 2014 farm bill built on the 2008 farm bill, which had refocused earlier biofuels policy initiatives in favor of noncorn feedstocks, especially cellulosic-based feedstocks. This was in response to growing concerns about the emerging spillover effects of increased corn use for ethanol production. Like the 2002 and 2008 farm bills, the 2014 farm bill contained a distinct energy title that extended most of the existing bioenergy programs. In reauthorizing these programs, Congress significantly reduced mandatory funding, which was lowered to $694 million (FY2014-FY2018) from $1 billion under the 2008 farm bill. Discretionary funding authorization was also reduced to $765 million from $1.1 billion under the 2008 farm bill. Subsequent to the enactment of the 2014 farm bill, Congress has rescinded or reduced funding for a number of these programs through annual appropriations bills. Congress has also generally refrained from providing discretionary funding for these programs, with the exception of limited funds it has appropriated for the Rural Energy for America Program (REAP) and the Sun Grant Initiative. While most of the farm bill energy programs are authorized in the energy title, several programs are contained in other titles.\nAmong significant changes to these programs that were ushered in by the 2014 farm bill, Congress made a number of substantive changes to BCAP, including lowering rates for establishment and matching payments, altering eligibility requirements, and sharply curbing the previously open-ended availability of funding. The 2014 law also precluded the use of REAP funding for retail energy dispensers (such as blender pumps) and repealed the Forest Biomass for Energy Program and the Agricultural Bioenergy Feedstock and Energy Efficiency Research and Extension Initiative, in addition to several bioenergy-related studies. The Rural Business-Cooperative Service within USDA's Rural Development Agency administers the major grant, loan, and loan guarantee programs—BAP, RAP, and REAP. In contrast, FSA administers BCAP, and NIFA administers BRDI.",
"Among the farm bill's bioenergy programs, only REAP is authorized beyond FY2018, as the law provides mandatory funding for REAP for FY2014 and each fiscal year thereafter. Mandatory baseline funding authority for several other bioenergy programs expires prior to FY2018, including RAP (after FY2014), BAP (FY2016), and BRDI (FY2017). An upcoming farm bill could provide an opportunity for Congress to consider the ongoing utility of these programs in light of budgetary constraints. For instance, mandatory funding for BCAP, which was authorized at \"such sums as necessary\" in the 2008 farm bill, was limited to $25 million annually under the 2014 farm bill. Since then, Congress has further limited funding for BCAP through annual appropriations laws, most recently limiting it to $3 million for FY2016.\nMost of these programs were conceived in a prior era when oil prices were higher, the United States was more dependent on imported energy, and new techniques for extracting tight oil deposits and shale gas (such as directional drilling and hydraulic fracturing) were not being deployed widely enough to bring onto the market transformational quantities of domestic oil and gas. These changes largely occurred after the 2008 farm bill was enacted. At the same time, biofuels and renewable energy may have tangible advantages in that they are not derived from finite resources, can offer environmental benefits compared with traditional energy alternatives, and can provide an economic benefit to rural America. These are among the considerations that Congress could weigh as it considers the direction of energy policy and the role of a new farm bill in defining the opportunities the agricultural sector and rural America may have in contributing to the country's energy future.",
"",
"One-third of the land area in the United States is forestland (766 million acres). These lands provide wood for lumber, plywood, paper, and other materials, as well as a host of ecological services, including recreation, clean water, wildlife habitat, and more. The federal government owns one-third of the forestland in the United States (238 million acres), and nonindustrial private landowners (private, noncorporate entities that do not own wood processing facilities) own 298 million acres (39%).\nThe Forest Service is the principal federal forest management agency, managing 19% of all U.S. forestlands (145 million acres). In addition to administering the National Forest System (NFS), the Forest Service provides technical and financial assistance—primarily through state forestry agencies—to nonfederal landowners. The Forest Service also conducts research to advance the science of forestry and engages in international forestry assistance and research efforts.\nPast farm bills have contained forestry provisions or a separate forestry title. Although many forestry provisions are permanently authorized, a new farm bill would allow Congress to modify programs to support assistance to nonfederal forest owners, forest research, and the management of federal forests. The forestry title of the 2014 farm bill repealed, modified, created, and reauthorized several forestry programs. For example, the 2014 farm bill permanently authorized stewardship contracting and extended the good neighbor authority nationwide. A new farm bill may modify existing programs and possibly establish new options for forestry research, management of federal lands, and assistance to nonfederal forest owners.",
"Among the issues that might be considered in a new farm bill's forestry title are expanded wildfire protection, support of woody biomass for energy, and additional controls to address invasive species.\nThe threat of wildfires to forests, communities, and homes seems to have grown. The 2002 farm bill authorized a new community wildfire protection program, but the program has been funded only as part of state fire assistance. New programs to enhance wildfire protection on both federal and nonfederal lands might be considered in a new farm bill.\nInterest in producing energy from woody biomass and other renewable sources (as discussed above) derives from both supply and demand. Supply could come from efforts to reduce wildfire threats and to control invasive species. Demand is likely to be driven by state and federal requirements for renewable transportation fuels and possibly for electricity production. Many of the energy programs face budgetary challenges, and a new farm bill might extend, expand, alter, or terminate these programs or possibly replace them with alternative approaches.\nInvasive species, typically exotic plants and animals, are increasingly displacing or harming native plants and animals in the United States and worldwide. Invasive species have been described as one of the four major threats to the nation's forests and rangelands. Options and opportunities to prevent and control the spread of invasive species, especially forest pests and especially on private forestlands, might be a farm bill issue.",
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{
"question": [
"How was the 2014 farm bill enacted?",
"How has the scope of farm bills changed recently?",
"What is the scope of the 2014 farm bill?",
"What were the main provisions in the 2014 farm bill?",
"What was the estimated cost of the 2014 farm bill mandatory programs?",
"How were the costs distributed across the titles?",
"What title used the vast majority of the funding?",
"What has traditionally been a primary focus of omnibus farm bills?",
"How did the 2014 farm bill affect farm safety net programs?",
"How were cotton producers affected by the bill?",
"How were dairy producers affected by the bill?",
"How effective were the new cotton and dairy programs?",
"What is a major concern in any new farm bills?",
"What are the projected future costs of the current programs?",
"How does this compare to the actual costs of the program?"
],
"summary": [
"It was enacted in February 2014 and succeeded the Food, Conservation, and Energy Act of 2008 (P.L. 110-246, \"2008 farm bill\").",
"In recent decades, the breadth of farm bills has steadily grown to include new and expanding food and agricultural interests.",
"The 2014 farm bill contains 12 titles encompassing farm commodity revenue supports, farm credit, trade, agricultural conservation, research, rural development, energy, and foreign and domestic food programs, among other programs.",
"Provisions in the 2014 farm bill reshaped the structure of farm commodity support, expanded crop insurance coverage, consolidated conservation programs, reauthorized and revised nutrition assistance, and extended authority to appropriate funds for many U.S. Department of Agriculture (USDA) discretionary programs through FY2018.",
"When the 2014 farm bill was enacted, the Congressional Budget Office (CBO) estimated that the total cost of mandatory programs would be $489 billion over the five years FY2014-FY2018.",
"Four titles accounted for 99% ($483.8 billion) of anticipated farm bill mandatory program outlays: nutrition, crop insurance, conservation, and farm commodity support.",
"The nutrition title, which includes the Supplemental Nutrition Assistance Program (SNAP), comprised 80% of the total, with the remaining 20% mostly geared toward agricultural production across other titles.",
"Traditionally, a primary focus of omnibus farm bills has been commodity-based revenue support policy—namely, the methods and levels of federal support provided to agricultural producers.",
"The 2014 farm bill amended U.S. farm safety net programs by expanding crop insurance provisions and modifying counter-cyclical support while eliminating direct payments to growers of grains, cotton, and peanuts.",
"Upland cotton was removed from eligibility for participation in the new revenue support programs as part of compliance with a World Trade Organization dispute settlement case with Brazil. Instead, cotton producers were offered an insurance-like support program that protects against within-season revenue shortfalls.",
"Another major change involved dairy: Previous support programs were replaced with a new insurance-like margin program that insures against shortfalls in the difference between milk prices and feed costs.",
"Most farm program proponents agree that the new cotton and dairy programs have performed ineffectively and are likely to see proposals for change.",
"One of the principal drivers of a new farm bill debate will be the federal budget.",
"According to CBO estimates, if ongoing programs were to continue under current law, mandatory farm bill spending by the four largest titles—nutrition, crop insurance, farm commodity programs, and conservation—is projected to be about $435 billion over the next five years (FY2018-FY2022), with domestic nutrition assistance accounting for nearly 77% of the total.",
"This compares with actual costs for the first three years of the 2014 farm bill and projections for its last two years, which suggest that these four titles may cost $456 billion over FY2014-FY2018."
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GAO_GAO-16-399
|
{
"title": [
"Background",
"Responsibilities for Oversight of Imported Food Products",
"FDA’s Approach to Overseeing the Safety of Imported Food",
"PREDICT Uses Data and Analyzes the Data by Applying Rules That Contribute to Risk-Based Scores, but FDA Does Not Have a Documented Process for Obtaining Some Data",
"PREDICT Uses a Variety of Data, but FDA Does Not Have a Documented Process for Obtaining Open Source Data",
"Data from Non-FDA Domestic Sources",
"Data from Foreign Sources",
"Open Source Data",
"PREDICT Analyzes Data by Applying Rules That Contribute to Risk-Based Scores and Recommended Actions",
"The Implementation of FSMA Will Provide PREDICT with Additional Data on Imported Food",
"FDA Assessed the Effectiveness of PREDICT in 2013, but Some Recommended Improvements Have Yet to Be Implemented",
"FDA’s Ongoing Monitoring Shows That PREDICT Is Effectively Targeting Higher-Risk Items for Examination",
"FDA Conducted an Internal Evaluation of PREDICT and Developed 24 Recommendations to Improve the Tool",
"FDA Has Implemented Many, but Not All, of Its Recommendations",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: Comments from the Department of Health and Human Services",
"Appendix III: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"This section discusses the offices within FDA and other federal agencies that help oversee imported food products. It also discusses FDA’s approach for overseeing the safety of the imported food products for which it is responsible, including milk, seafood, fruits, and vegetables.",
"FDA’s responsibilities for overseeing the safety of imported food products are divided among its product centers and program offices. For example, the Center for Food Safety and Applied Nutrition (CFSAN) is responsible for regulating food and cosmetics products. FDA’s Office of Regulatory Affairs (ORA) is the lead office for ensuring the safety of imported food through various field activities, such as inspections of firms, review of imported products, examination of products, and sample collection and analysis. ORA works closely with the centers and with the Office of International Programs (OIP), which coordinates some of the agency’s international activities. FDA has staff in China, Chile, Costa Rica, India, Mexico, and the European Union. These foreign offices help ORA obtain foreign scientific and regulatory information, conduct investigations and facility inspections in foreign countries, and facilitate collaboration with foreign regulators in areas of common interest.\nPrimary responsibility for imported food safety is divided between FDA and FSIS, but other federal agencies play a role. For example, CBP supports FDA in its enforcement of its food safety regulations at the border, among other things. CBP’s automated systems process all imported shipments, including food. In addition, NMFS provides fee-for- service inspection services, upon request, to the seafood industry— including domestic and foreign processors, distributors, and other firms— for example, to certify that these seafood firms comply with FDA’s Hazard Analysis and Critical Control Point regulations and other federal food safety standards. Some retailers request this certification as a condition for purchasing seafood products.",
"FDA oversees the safety of imported food by promoting corporate responsibility, examining food prior to it entering into U.S. commerce to help ensure that unsafe food does not enter the country, and responding when unsafe food does enter the country.\nIn 2011, FSMA provided FDA with new provisions that hold imported foods to the same standards as domestic foods and prevent unsafe food from entering the country. These new provisions included new requirements and authorities for FDA, including a requirement to develop a comprehensive plan to expand the food safety capacity of foreign governments; a requirement to increase inspections of foreign food facilities and the authority to enter into cooperative arrangements with foreign governments to facilitate the inspection of foreign food facilities; the authority, under certain circumstances, to require as a condition of admission that imported food be accompanied by certifications or assurances from accredited third-party certification bodies, agencies, or representatives of foreign governments where the food originated; and the authority to require importers to verify that their foreign suppliers meet applicable U.S. food safety standards.\nOwing in part to the volume of imported food, FDA cannot physically examine every shipment; the agency examines about 1 percent of entry lines annually. FDA electronically screens all imported food shipments to determine which imports to physically examine at the border and which imports to allow into U.S. commerce.\nThe electronic screening process consists of two phases: (1) Prior Notice screening, which is intended to protect against potential terrorist acts and other public health emergencies, and (2) admissibility screening, which is intended to ensure that the food is admissible under the Food, Drug, and Cosmetic Act (FDCA). Imported food products are generally considered admissible if they are in compliance with applicable FDCA regulations that ensure food is not adulterated, misbranded, manufactured or packed under insanitary conditions, or restricted in sale in the country in which it was produced or from which it was exported, among other things.\nThe first phase, Prior Notice screening, requires that an importer, broker, or other entity submit notification to FDA of food being imported or offered for import into the United States before that food arrives at the port of entry. Prior Notice information includes data such as the names and addresses of the manufacturer or grower, importer, owner, and ultimate consignee (the “deliver to” location); FDA product code for the food item; and country of production. Information that FDA uses for Prior Notice review can either be submitted electronically through CBP’s system, which passes the information to FDA, or submitted electronically directly to FDA. FDA targets, screens, and reviews the information to ensure that the information meets the Prior Notice requirements and to determine whether the food potentially poses a terrorism threat or other significant health risk. If such risks are identified, FDA is to work with CBP to examine the shipment upon arrival at the port. If adequate Prior Notice information is not provided, the food is subject to refusal of admission and may not be delivered to the importer, owner, or consignee. If FDA subsequently verifies that adequate Prior Notice information is provided and the food does not appear to pose a terrorism threat, the shipment is allowed to proceed to FDA’s admissibility screening.\nDuring the second phase, admissibility screening, FDA electronically screens entry lines using PREDICT to determine their level of risk. “Risk”—reflected by the PREDICT risk score—includes factors such as the inherent health risk of the product, compliance risk associated with firms, facility inspection results, and broker history, among others, and is then compared to all other entry lines within a specified commodity over the past 30 days. If PREDICT determines that an entry line poses a low risk, PREDICT recommends the entry be allowed to enter into U.S. commerce, and another FDA system, called the Operational and Administrative System for Import Support (OASIS), issues a system- generated “May Proceed” message, allowing the product into U.S. commerce without further review. If PREDICT determines that the entry line poses a high risk, an entry reviewer decides whether to examine the entry line for admissibility. The entry reviewer determines if the entry line is under import alert. If the entry line is not under import alert and no further examination is needed, the entry reviewer allows the entry line into U.S. commerce by issuing a manual “May Proceed” message through OASIS. The entry reviewer may determine that a field or laboratory examination is needed for an entry line that is not under an import alert. In this case, an FDA investigator examines the entry either at the port of entry or at another location, such as the importer’s or consignee’s warehouse or a cold storage facility. The investigator may examine a product’s label to determine whether it meets labeling requirements. Additionally, the investigator may examine the shipment for rodent or insect activity or inadequate storage while in transit, among other things. Figure 2 shows FDA investigators examining imported food.\nIf the product does not appear to be violative after the examination, the owner or consignee receives a notice stating that the line is released, and the product is allowed into U.S. commerce.\nIf the product appears to be violative, the investigator may decide to take samples from the product for a laboratory examination to test for rodent or insect activity and other such elements that could confirm that the entry is violative. If the samples indicate that the food is not violative, the owner or consignee receives a notice stating that the line is released, and the product is allowed into U.S. commerce. If the samples are violative, the owner or consignee receives a notice stating that the line is being detained and is subject to refusal. Once the owner or consignee receives a notice stating that the line is being detained and is subject to refusal, the owner or consignee may request that FDA immediately refuse the product, and the product must either be exported or destroyed. If the owner or consignee does not request refusal, then the owner or consignee decides whether to submit testimony or request to “recondition” the product—for example, relabeling the product or converting the product into a type of product not regulated by FDA. If the owner or consignee submits testimony regarding the admissibility of the food or FDA approves a request to recondition the product, then an FDA hearing determines whether the product should be released. If FDA determines that the owner or consignee has provided sufficient information to overcome the appearance of a violation, the owner or consignee receives a notice stating that the product is released. If FDA determines that the owner or consignee’s actions failed to bring the product into compliance, the food must be exported or destroyed.\nIf the product is subject to an import alert, FDA determines whether the product should be detained without physical examination. If FDA determines that the product should not be detained, the owner or consignee receives a notice stating that the product is released. If FDA determines that the product should be detained, FDA issues a notice stating that the line is being detained and is subject to refusal, and the owner or consignee decides whether to export or destroy the product. Figure 3 illustrates the key elements of FDA’s screening process.\nFrom 2012 to 2014, about 0.1 percent of all food entry lines were refused and exported or destroyed each year. During this period the countries with the highest number of entry lines that were refused were India, Mexico, and China and the most commonly refused items included rice, herbals and botanicals (not teas), tuna, shrimp and aquaculture- harvested seafood products, and vitamins and minerals.\nWhen unsafe food enters the country, FDA may respond by issuing advisories about the affected food. Depending on the circumstances, FDA may also use other enforcement tools, such as seizure, injunction, and administrative detention. FDA can also seek voluntary recalls of unsafe food. If a responsible party does not voluntarily recall the food, FDA may issue a mandatory recall order, provided that certain criteria are met.\nIn early 2010, FDA began an effort to assess foreign food safety systems to determine whether certain other countries have a regulatory system— including food safety statutes, regulations, and an implementation strategy—that is comparable to the U.S. food safety system. Under this effort, FDA in 2010 developed a systems recognition tool to assess the overall food safety systems of foreign countries for foods under FDA’s jurisdiction. FDA completed its on-site review for a systems recognition pilot with New Zealand food safety authorities in late 2010 and established a Systems Recognition Arrangement in 2012. In May 2016, FDA reported that it had established a similar arrangement with Canada.",
"PREDICT uses a variety of data and FDA-created rules—conditional statements that tell PREDICT how to react when encountering particular information—to analyze these data and to identify high-risk imported food shipments. These data include information from FDA sources; non-FDA domestic sources, such as other federal and state agencies; and foreign sources, such as foreign governments. Some of the domestic and foreign sources are open sources—that is, publicly available. FDA does not currently have a documented process for obtaining open source data. PREDICT analyzes all of the data by applying rules that contribute to risk- based scores. PREDICT then recommends potential FDA actions, such as holding an entry line for examination or allowing it to proceed into commerce.",
"PREDICT uses a variety of data to estimate the risk of imported food. These data come from internal FDA sources, other domestic sources, and foreign sources. Figure 4 provides an overview of the types of data sources PREDICT uses.\nMany of the data PREDICT uses come from sources within FDA. These include electronic sources, such as databases, and human sources, such as FDA officials.\nElectronic sources. Most of the electronic FDA sources that PREDICT uses are databases that contain historical data about products, firms, and other elements of imported shipments, such as the geographic location of facilities. PREDICT uses numerous kinds of historical data stored in various FDA databases, such as data about (1) the previous field examination and facility inspection history of foreign firms, (2) the track record of importers and brokers, and (3) the types of food products historically imported from other countries. One of the other databases that PREDICT uses contains official FDA safety violation data, such as FDA import alerts and import bulletins. Another database that PREDICT uses contains registration data for facilities that manufacture, process, or pack a specific type of food product, acidified and low-acid canned foods, which are specifically tracked because growth of the botulinum bacterium in canned food may cause a deadly form of food poisoning.\nHuman sources. The human FDA sources that PREDICT draws upon include FDA officials who compile and report data based on their knowledge of products, firms, and other elements of imported shipments, such as country of origin. For example, certain PREDICT rules use FDA’s knowledge and experience to determine the inherent risk of certain food products, and certain other PREDICT rules draw from data reported by FDA entry reviewers about the past record of products or firms.",
"According to FDA officials, PREDICT also uses data from sources outside of FDA, including domestic sources, such as databases from states and other federal agencies. For example, PREDICT uses data from CBP. Specifically, CBP collects entry data from importers for products being imported into the United States and electronically transfers the data to FDA. PREDICT also uses data from other federal agencies, such as from NMFS. NMFS maintains a list of approved seafood establishments, based on its fee-for-service inspections, on its website and may provide this list electronically to FDA upon request. However, FDA only requests information from NMFS on an occasional, as-needed basis. For example, FDA requested information from NMFS in 2010 during the Gulf of Mexico oil spill. More recently, FDA requested NMFS audit reports and facility approvals for certain overseas locations.",
"FDA officials told us that PREDICT also uses data from foreign sources, such as foreign governments. Specifically, FDA’s domestic and overseas offices obtain information from foreign regulatory counterparts on an occasional, as-needed basis about food safety in their respective countries and provide summary information to ORA that may be used in PREDICT. FDA officials told us that the agency may receive nonpublic information from foreign governments only in cases where formal arrangements called Confidentiality Commitments are in place. Of the more than 230 entities from which the United States imports food, FDA has 39 foods-related Cooperative Arrangements with 24 foreign governments—including 1 arrangement with the European Union, which has 28 member countries. FDA officials told us that they are in the process of developing additional cooperative arrangements.\nAn FDA office that is involved in obtaining information from foreign regulatory counterparts is OIP, which has offices in the United States and abroad that help obtain foreign scientific and regulatory information by coordinating with foreign regulators or accessing foreign media sources. One country covered by OIP’s Office of Regional and Country Affairs is Japan. In March 2011, after a 9.0 magnitude earthquake and subsequent tsunami in Japan, the Fukushima Daiichi nuclear power plant suffered extensive damage. The Office of Regional and Country Affairs coordinated with the Japanese government to identify Japanese exports that have a high risk of contamination. As a result, FDA issued Import Alert 99-33: “Detention Without Physical Examination of Products from Japan Due to Radionuclide Contamination.” This alert informs FDA field personnel that they may detain without physical examination certain food shipments from Japan. FDA officials told us that years after the disaster, the agency continues to obtain information from the Japanese government, and the import alert is still in place and was last revised in April 2016. As of March 10, 2014, FDA had tested 1,345 import and domestic samples specifically to monitor for Fukushima contamination. Of the 1,345 samples, 2 were found to contain detectable levels of a contaminant, but the levels posed no public health concern.",
"Both the non-FDA domestic sources and the foreign sources may include open sources—that is, sources that are publicly available, such as newspapers and Internet blogs. Data from open sources may provide information about events—such as food recalls and natural disasters— that could affect the risk of imported foods. Although ORA collects some open source data on its own, it also relies on other FDA offices and federal agencies that gather open source data for their own purposes and that may communicate to ORA information that seems relevant to the import screening mission. For example, OIP’s Europe office monitors news related to FDA-regulated products in Europe. If OIP obtains recall information that it deems significant to FDA-regulated commodities, it communicates the information to ORA and other relevant FDA offices. ORA may also obtain open source data from other federal agencies, such as from the agencies represented at CBP’s Commercial Targeting and Analysis Center, which targets and screens commercial shipments that may pose a threat to the health and safety of U.S. consumers. Open source data have proven useful in the past. For example, in August 2015, an explosion occurred at a warehouse in the port of Tianjin, China, involving hazardous chemicals, including cyanide, posing a potential threat to public health. In the aftermath, OIP, through its China Office, collected information about the explosion from local media sources. As a result, FDA increased surveillance of FDA-regulated imports from manufacturing, processing, and/or packing facilities in the Tianjin area. In this particular instance, FDA also notified importers of this increased level of surveillance.\nPrior to 2015, FDA had a formal contract dedicated to the collection of open source data for PREDICT. FDA’s 2013 PREDICT operating manual, PREDICT Guide: Rules and Scoring, documented how the agency was to obtain open source data, the type of data to be provided by the contracted company—such as data about natural disasters—and how PREDICT used the data. According to the manual, the PREDICT Open- Source Intelligence Team used open source data to locate news stories pertaining to food safety around the world, looking specifically for geophysical events (e.g., tsunamis, typhoons, and earthquakes) or ecological events (e.g., algal blooms, overuse of antibiotics, and contamination from various spills that could affect FDA-regulated commodities). Analysts then researched each event or action to understand the content and context of the issue, develop an analytic conclusion, and recommend a risk score and expiration date.\nFDA terminated that contract because the agency determined that it was not cost-effective, given the availability of information from other public sources, such as the Internet and other offices within the agency. The 2015 version of FDA’s PREDICT operating manual does not document the process for identifying the type of open source data to collect, obtaining such data, and determining how PREDICT is to use the data. Instead, FDA relies on ORA officials to informally communicate and obtain information from officials in other FDA offices and from other federal agencies on an ad hoc basis. FDA told us that because the agency did not renew the contract, the 2015 version omitted references to obtaining and using open source information. ORA officials told us they now use a variety of informal and situation-dependent methods to obtain open source intelligence, but these methods are not formally documented. We have previously found that by using informal coordination mechanisms, agencies may rely on relationships with individual officials to ensure effective collaboration and that these informal relationships could end once personnel move to their next assignments. Under federal standards for internal control, agencies are to clearly document internal control, and the documentation is to appear in management directives, administrative policies, or operating manuals. Without a documented process, FDA does not have reasonable assurance that it is consistently identifying the type of open source data to collect, obtaining such data, and determining how PREDICT is to use the data in a regular and systematic manner. A senior ORA official in its Division of Import Operations told us that formalizing and documenting the process by which FDA receives information from other entities would improve the current process for using open source information.",
"FDA creates rules, conditional statements that tell PREDICT how to react when encountering particular situations. For example, if a certain PREDICT rule encounters the term “tamarind” in the description of a product, it should recommend detaining the item without physical examination. This rule was created as the result of an incident in which filth was found in tamarind products. PREDICT’s application of rules generates a cumulative risk score for each entry line; the cumulative risk score includes factors such as the product’s inherent risk and the manufacturing firm’s facility inspection history. The risk score can indicate a negative risk value (signifying low risk) or a positive risk value (signifying higher risk). The individual risk values assigned to the various elements of the entry line help produce the cumulative risk score for the entire entry line and possibly also one or more recommended actions.\nThe application of a rule may prompt a flag (for example, an import alert flag), which may provide information—such as that a manufacturer’s product was recently examined or that the product was refused admission by one or more foreign countries—and recommended an action. For example, it may point out that some of the entry line data are missing or invalid—based on a comparison with other FDA databases—and recommend performing a manual review of databases.\nAfter PREDICT has applied the rules to the entry data, entry reviewers analyze the results. The first thing an entry reviewer sees is the main entry review screen, which lists all the current entry lines to be reviewed and their PREDICT risk scores and flags. The entry reviewer can click on a PREDICT risk score to see a table, referred to as the PREDICT Mashup. The PREDICT Mashup displays the individual risk values that contributed to the overall PREDICT risk score for that entry line. For example, the PREDICT Mashup may show that PREDICT assigned the product’s manufacturer a risk-based score of 10 for its facility inspection history, which would signify a high risk. The same Mashup may show that PREDICT assigned the product’s country of origin a risk-based score of 3 for its history, which would signify a lower risk. The entry reviewer can also “roll over,” or move the cursor over, flags to obtain more information. For example, an entry reviewer may roll over a “recent targeted activity” flag—which indicates that this product from this manufacturer was recently examined—to obtain information (sometimes through another database) about when the product was examined and the results of the examination.\nThe entry reviewer uses all of this information to decide how to proceed. For example, the entry reviewer may decide to allow the entry line to proceed into commerce or to hold it for examination or laboratory analysis. Any action taken by the entry reviewer, including the results of any examination, will become part of the history of the facility, which will then contribute to future PREDICT scores.",
"FSMA, which was enacted in 2011, contains provisions that will provide PREDICT with additional data to analyze (i.e., from additional sources) when estimating the risk of imported food. FDA officials told us that even with the changes brought about by FSMA, PREDICT will continue to be used to target imports for examination but will now draw data from even more sources. FDA officials identified five FSMA provisions and authorities as likely to generate the most data for use in PREDICT. Of these five, the first three are as follows:\nForeign Supplier Verification Program (FSVP): The FSVP rule requires importers to verify that their foreign suppliers use processes and procedures that provide the same level of public health protection as the hazard analysis and risk-based preventive controls and other applicable requirements of FDCA. For example, importers must develop, maintain, and follow an FSVP that provides adequate assurances that the foreign supplier is producing food that is, among other things, not adulterated (e.g., that it does not contain Salmonella) and is not misbranded with respect to labeling for the presence of major food allergens. Verification activities could include monitoring records, annual on-site inspections or review of such inspections performed by a qualified auditor, and testing and sampling of shipments. The date by which importers must comply with the FSVP regulations depends on a number of factors.\nInspection of foreign food facilities: FSMA includes a provision that authorizes FDA to direct resources according to the known safety risks of facilities, especially those that present a high risk. The law directs FDA to inspect at least 600 foreign facilities within 1 year of enactment of FSMA and, in each of the 5 years following that period, to inspect at least twice the number it inspected during the previous year.\nLaboratory accreditation: FSMA also includes a provision that requires FDA to establish a program for the testing of food by accredited laboratories and to recognize accreditation bodies for accrediting the laboratories, including independent private laboratories. The provision requires owners or consignees to have food products tested by an accredited laboratory in certain circumstances, including when a food product is under an import alert that requires successful consecutive tests. The results of these tests may be submitted to FDA electronically and used to determine compliance and admissibility of the food product. FDA has not yet issued a proposed rule for establishing the program, but an agency official stated that the agency is working on a rule now.\nThe other two FSMA provisions likely to generate data for use in PREDICT are related to third-party certification, for which FDA issued the final rule in November 2015. FSMA directs the establishment of a system for the recognition of accreditation bodies to accredit third-party certification bodies (also known as auditors) to certify that a foreign facility, or any product produced by the facility, meets the applicable FDA food safety requirements. If an accredited third-party certification body or its audit agent discovers a condition that could cause or contribute to a serious risk to public health, the certification body must immediately notify FDA. The following two FSMA provisions rely on third-party certifications and will likely generate data for use in PREDICT:\nVoluntary Qualified Importer Program (VQIP): FSMA requires FDA to establish a program that offers expedited review and entry to certain participating importers that import food from foreign facilities certified by accredited third-party certification bodies. FDA published draft guidance for VQIP in the Federal Register in June 2015. According to an FDA Fact Sheet on VQIP, the agency expects to begin receiving applications for the program in January 2018.\nImport certifications: Under FSMA, FDA has the authority, under certain circumstances, to require certifications or other assurances from agencies, or representatives of foreign governments where the food originated, or an accredited third-party certification body. FDA can determine that an article of food requires certification based on, among other factors, the known safety risks associated with the food; the country, territory, or region of origin of the food; or evidence that the food safety systems for that product are inadequate. FDA published the final rule on accreditation of third-party certification bodies in the November 27, 2015, Federal Register.\nBecause some of these FSMA-related programs are still new and not yet fully implemented, the details of how certain data generated by these programs will be integrated into PREDICT are not finalized, but according to FDA officials, PREDICT will use data produced by these programs and authorities in a variety of ways. Implementation of FSVP, for example, will identify importers that are not in compliance, and PREDICT would use that information in assigning risk scores to products from those importers. The food products from suppliers and importers that have a history of noncompliance with food safety regulations will receive higher PREDICT risk scores than those that are consistently in compliance. In addition, if the results from an inspection of a foreign food facility show that the facility is noncompliant, that information would be provided to PREDICT, and PREDICT would use that information in assigning risk scores to imports from that facility. Figure 5 shows how the implementation of FSMA will add to the data sources already used by PREDICT.",
"FDA has assessed the effectiveness of PREDICT by ongoing monitoring of key program data and by conducting an evaluation of the tool in 2013, and it has implemented many, but not all, of the 2013 evaluation’s recommendations to improve PREDICT. Data maintained by agency officials show that PREDICT is working properly to focus reviewers’ attention on food items that have a high probability of being violative. Moreover, when FDA officials conducted an evaluation of the system in 2013, results showed that PREDICT was working well to provide staff with the data they need to make informed entry review decisions. However, the agency has not yet implemented all of the 24 recommendations resulting from that evaluation.",
"FDA officials told us that they conduct monitoring of PREDICT on an ongoing basis and that the data they collect as part of this monitoring show that PREDICT is working as intended—that is, PREDICT is focusing entry reviewers’ attention on items determined to be of higher risk. Data provided by FDA from fiscal years 2012 to 2014 confirmed that in general, PREDICT is fulfilling this role. Our analysis of these data showed that in general, the higher the PREDICT risk score, the more often entry lines were examined and the more often they were found violative. As tables 1, 2, and 3 show, for fiscal years 2012 through 2014, entry lines that received higher PREDICT scores generally were more often selected for a field examination, for a label examination, or for sampling, and entry lines with higher PREDICT scores were more often found violative.\nIn all 3 years we reviewed, items with the highest PREDICT scores— those from 91 to 100—were selected for examination more often than items with lower PREDICT scores. For example, in fiscal year 2012, FDA examined or sampled more than 39,000 entry lines with a PREDICT score from 91 to 100, or about 6.5 percent of all entry lines in this range, nearly double the percentage of entry lines examined in the next-highest 10 point risk score range and at least 6 times more than entry lines with a score of 50 or less.\nThe tables also show that in each of the 3 years we reviewed, the higher the PREDICT score, the higher the percentage of entry lines that were found to be violative. For example, in fiscal year 2014, FDA selected for examination about 45,000 of the nearly 1.3 million entry lines with PREDICT scores of 91 to 100. Of these, nearly 12 percent, or 5,363 line items, were found to be violative, almost double the percentage of violation rates found in the next-highest range of PREDICT scores.",
"In May 2013, FDA completed an internal evaluation of PREDICT’s effectiveness that examined five processes: work planning, examinations and sampling, entry review, rules management, and communication. To conduct this evaluation, FDA officials gathered information through a variety of methods, including analysis of entry line data and the entry review process, interviews with stakeholders from the various FDA centers, and surveys of PREDICT users in the field. Overall, the evaluation showed that PREDICT is helping to expedite the release of low-risk items and to identify violative imports.\nAs a result of the internal evaluation, FDA developed a total of 24 recommendations: 23 for improving the five processes noted above and another recommendation concerning the development of performance metrics. The list below shows the categories of recommendations and the number of recommendations in each category: work planning (4), examination and sampling (4), entry review (6), performance metrics (1). rules management (5), communication (4), and FDA prioritized each of its 24 recommendations according to the feasibility of near-term implementation and the impact on operations or public health, among other things. A recommendation was determined to have high feasibility if resources were available to implement it and the implementation plan was clear. A recommendation was determined to have high impact if, for example, many stakeholders cited the problem that the recommendation was intended to solve. As figure 6 shows, of the 24 recommendations, 6 were determined to be highly feasible, and 16 were determined to be of high impact or medium/high impact; 2 recommendations were determined to be both highly feasible and of high impact.\nExamples of FDA’s recommendations and how they were prioritized include analyze and set specific “May Proceed” thresholds by commodity (designated as both highly feasible and of high impact), develop a system to test PREDICT rules (designated as highly feasible and of medium impact), and identify sources of delays associated with the sampling process (designated as of medium feasibility and medium impact).",
"FDA has evaluated the 24 recommendations and has implemented many, but not all, of them. According to agency officials, the agency has implemented 15, partially implemented another 6, and not implemented 3 (see fig. 7).\nOf the 15 recommendations that were implemented, 13 were designated either as highly feasible or of high or medium/high impact. Both of the recommendations determined to be both highly feasible and of high impact were implemented, including the recommendation to analyze and set specific “May Proceed” thresholds by commodity. Of the 6 that were partially implemented—which includes the recommendation to develop a system to test PREDICT rules—5 were designated as either highly feasible or of high or medium/high impact. Finally, of the 3 that were not implemented—which includes the recommendation to identify sources of delays associated with the sampling process—1 was of low feasibility and high impact, 1 was of medium feasibility and high impact, and 1 was of medium feasibility and medium impact.\nFederal standards for internal control state that agencies are to ensure that the findings of audits and other reviews are promptly resolved. To that end, agencies are to complete, within established time frames, all actions that correct or otherwise resolve the matters brought to management’s attention. According to FDA officials, the reason for partially implementing or not implementing recommendations was often a lack of resources. For example, FDA officials said that a lack of resources was why they only partially implemented the recommendation to develop a system to test PREDICT rules and did not implement the recommendation to identify sources of delays associated with the sampling process. Agency officials agree that implementing the remaining recommendations would improve the effectiveness of PREDICT, but the agency has not yet established time frames for completing the implementation of the remaining recommendations. Establishing a practical timeline for implementing the remaining recommendations as resources become available would provide FDA with reasonable assurance that the improvements are made and that PREDICT remains an effective tool for screening imports.",
"The volume of FDA-regulated imported food continues to grow, as does the need to ensure that such imports are safe. FDA physically examines about 1 percent of food shipment entry lines annually. The agency developed PREDICT to help target food shipments deemed higher risk and subject them to additional scrutiny. FDA’s assessment of PREDICT shows that the tool is generally working to focus FDA’s resources on the examination of food items determined to be of highest risk and expediting the release of lower-risk food items.\nPREDICT analyzes imported food entry lines using data from various sources, including FDA sources, other domestic sources, and foreign sources. Some of the domestic and foreign sources are open sources, and FDA uses such sources to obtain information about imported foods on an ad hoc basis. However, FDA does not have a documented process for identifying the type of open source data to collect, obtaining such data, and determining how PREDICT is to use the data. Without such a documented process, FDA does not have reasonable assurance that it will consistently obtain open source data for PREDICT in a regular and systematic manner.\nIn addition, FDA’s May 2013 evaluation of PREDICT identified 24 recommendations to improve the tool, and FDA has fully implemented 15 of these recommendations. FDA officials explained that resource constraints have often limited their ability to fully implement all the remaining recommendations. Agency officials agree that implementing these recommendations would improve the effectiveness of PREDICT, but the agency has not yet established time frames for doing so. Establishing a practical timeline for implementing the remaining recommendations would help FDA ensure that the improvements are made and that PREDICT remains an effective tool for helping to prevent high-risk foods from entering the United States.",
"To further enhance FDA’s PREDICT tool and its ability to ensure the safety of imported food, we recommend that the Secretary of Health and Human Services direct the Commissioner of FDA to take the following two actions: document the process for identifying the type of open source data to collect, obtaining such data, and determining how PREDICT is to use the data and establish a timeline for implementing, as resources become available, the remaining recommendations from FDA’s 2013 evaluation of PREDICT.",
"We provided the departments of Commerce, Health and Human Services, and Homeland Security a draft of this report for their review and comment. In an e-mail, the Department of Commerce stated that it had no comments. The Department of Health and Human Services generally concurred with the recommendations and provided written comments on the draft, which are summarized below and presented in their entirety in appendix II of this report. The Department of Homeland Security provided technical comments, which we incorporated as appropriate.\nIn its written comments, the Department of Health and Human Services concurred with our first recommendation and concurred in part with the second. For our first recommendation, HHS stated that ORA plans to work with appropriate units across the agency to develop and document a formal process to identify the type of information to collect, how to obtain the information, and how PREDICT may use it. For our second recommendation, HHS stated that it has recently fully implemented one of the internal recommendations from the 2013 internal evaluation that was previously designated as “partially implemented.” However, because HHS did not provide evidence of fully implementing the recommendation, we were unable to verify such implementation and made no change to the report. The Department also stated that it is supportive of the remaining recommendations from its 2013 internal evaluation but noted that establishing an implementation timeline is based on consideration of the feasibility and impact relative to available FDA resources and other FDA priorities, such as FSMA. The department indicated that the goals of the unimplemented recommendations may ultimately be achieved via these other FDA initiatives.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Commerce, the Secretary of Health and Human Services, the Secretary of Homeland Security, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff members who made key contributions to this report are listed in appendix III.",
"You asked us to examine how the Food and Drug Administration (FDA) is using Predictive Risk-based Evaluation for Dynamic Import Compliance Targeting (PREDICT) to protect the safety of the U.S. food supply. Our objectives in this report were to examine (1) the data used by PREDICT and how PREDICT analyzes these data to identify high-risk food shipments for examination; (2) how implementation of the FDA Food Safety Modernization Act (FSMA) will affect PREDICT; and (3) the extent to which FDA has assessed the effectiveness of PREDICT and used the results of those assessments to improve the tool.\nTo determine the data used by PREDICT and how PREDICT analyzes these data to identify high-risk food shipments for examination, we reviewed documents that described the data used by PREDICT and interviewed FDA officials. We assessed the data sources, data quality controls, and the methodology used by PREDICT and determined that they were sufficiently reliable to support accurate descriptions of the system inputs, processes, and resulting risk scores. We also assessed the data used by PREDICT to ensure that they were sufficiently reliable to describe factors considered by PREDICT and system rules used to generate risk scores. We interviewed FDA officials in the Office of International Programs to understand how FDA coordinates with foreign governments to obtain data for PREDICT. We also reviewed how the agency identifies, obtains, and uses open source information and compared this process to criteria for documentation found in the federal standards for internal control. To determine the extent to which the implementation of FSMA will affect PREDICT, we reviewed FSMA, FDA’s rules implementing FSMA, and FDA planning documents and interviewed FDA officials. To determine the extent to which FDA has assessed the effectiveness of PREDICT and used the results of those assessments to improve the tool, we interviewed FDA officials about ongoing monitoring of PREDICT, reviewed the 2013 evaluation that FDA has conducted on PREDICT, and assessed the extent to which FDA has implemented the recommendations from the evaluation. We then compared FDA’s actions to the criteria found in the federal standards for internal control regarding the findings of audits and other reviews. In addition, we examined data provided by FDA on PREDICT risk scores and violation rates from fiscal years 2012 through 2014, the most recent years for which data were available, and determined that the data were sufficiently reliable for our purposes, as discussed above.\nTo inform all three objectives, we conducted site visits at four FDA and U.S. Customs and Border Protection (CBP) facilities located at ports of entry located in Baltimore, Maryland; Otay Mesa in San Diego, California; Long Beach California; and Los Angeles, California. We selected these sites to include air, ship, and truck ports of entry; variable geographic locations; the variability of food products that enter through the ports; and proximity to an FDA office. The information we obtained at these sites is not generalizable to all facilities and ports of entry. In addition, we interviewed officials from CBP and the National Marine Fisheries Service to understand how FDA coordinates with other federal agencies to protect the safety of the U.S. food supply. We also interviewed officials from a number of stakeholder organizations that are affected by PREDICT or contributed to PREDICT’s development.\nWe conducted this performance audit from January 2015 to May 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"",
"",
"",
"In addition to the contact named above, Anne K. Johnson (Assistant Director), Kevin Bray, Ellen Fried, Steven Putansu, Gloria Ross, Stuart Ryba, Sara Sullivan, Vasiliki Theodoropoulos, and Karen Villafana made key contributions to this report."
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"question": [
"How does the PREDICT tool calculate risk scores for imported food?",
"What data does PREDICT rely on?",
"How does the ORA obtain open source data?",
"How does this process compare to federal standards?",
"How does the lack of a documented process negatively affect ORA's operations?",
"How did the FMSA affect PREDICT?",
"What FMSA provisions are likely to generate data?",
"How will PREDICT use the data?",
"How useful will the data be?",
"How did the FDA assess the effectiveness of PREDICT?",
"To what extent is PREDICT working as intended?",
"What was the result of the FDA's evaluation?",
"To what extent has the FDA implemented the recommendations?",
"Why hasn't the FDA implemented all recommendations?",
"How are federal agencies supposed to deal with the findings of reviews?",
"What role does imported food play in the U.S. food supply?",
"What role does the FDA play in the U.S. food supply?",
"To what extent does the FDA physically examine imported food?",
"How does the FDA estimate the risks of imported products?",
"What was GAO asked to review?",
"What does this report examine?",
"How did GAO source data for this report?"
],
"summary": [
"The Food and Drug Administration's (FDA) Predictive Risk-based Evaluation for Dynamic Import Compliance Targeting (PREDICT) tool uses a variety of data and analyzes data by applying rules—conditional statements that tell PREDICT how to react when encountering particular information—to generate risk scores for imported food.",
"Many of the data used by PREDICT come from internal FDA sources, such as FDA databases. PREDICT also uses data from sources outside of FDA, such as other federal agencies, states, and foreign governments. Some of the data are open source data—information that is publicly available, such as information from newspapers and websites.",
"FDA's Office of Regulatory Affairs (ORA) relies on other FDA offices and federal agencies to provide open source data for PREDICT, but ORA does not have a documented process for identifying, obtaining, and using the data, relying instead on an ad hoc process.",
"Federal standards for internal control call for agencies to document internal controls.",
"Without a documented process for identifying, obtaining, and using open source data, FDA does not have reasonable assurance that ORA will consistently identify, obtain, and use such data for PREDICT.",
"The implementation of the FDA Food Safety Modernization Act (FSMA), enacted in 2011, will provide PREDICT with additional data for estimating the risk of imported food.",
"FDA identified FSMA provisions likely to generate data, including the Foreign Supplier Verification Program (FSVP), which requires importers to verify that their foreign suppliers use processes and procedures that provide the same public health protection as applicable U.S. requirements.",
"Because FSVP and other FSMA-related programs are still new and not yet fully implemented, the details of how PREDICT will use the data have not been worked out.",
"However, according to FDA officials, the data will be useful. For example, FSVP data will identify suppliers that are not in compliance with standards, and PREDICT will use those data in assigning risk scores to imports from those suppliers.",
"FDA has assessed the effectiveness of PREDICT by monitoring of key data and by conducting an internal evaluation of the system, and it has implemented many, but not all, of its recommendations from the evaluation.",
"GAO's analysis of FDA data from fiscal year 2012 through 2014 shows that in general, PREDICT is working as intended: imported food with higher-risk scores is more likely to be physically examined and to be found in violation of food safety standards or labeling requirements.",
"As a result of the evaluation, FDA developed 24 recommendations for improving PREDICT and prioritized these recommendations based on feasibility and impact.",
"According to FDA, the agency has fully implemented 15, partially implemented 6, and not implemented 3 of the recommendations.",
"FDA officials said that the agency has not fully implemented all recommendations because of a lack of resources.",
"However, federal standards for internal control specify that agencies are to ensure that the findings of reviews are promptly resolved. To that end, agencies are to complete, within established time frames, all actions that correct or otherwise resolve the matters brought to management's attention.",
"Imported food makes up a substantial and growing portion of the U.S. food supply.",
"FDA is responsible for oversight of more than 80 percent of the U.S. food supply.",
"However, because the volume of imported food is so high, FDA physically examines only about 1 percent of imported food annually.",
"In 2011, FDA implemented PREDICT, a computerized tool intended to improve FDA's targeting of imports for examination by estimating the risk of imported products.",
"GAO was asked to review how FDA is using PREDICT to protect the U.S. food supply.",
"This report examines (1) the data used by PREDICT and how PREDICT analyzes these data to identify high-risk food shipments for examination, (2) how implementation of FSMA will affect PREDICT, and (3) the extent to which FDA has assessed the effectiveness of PREDICT and used the assessments to improve the tool.",
"To address these issues, GAO analyzed FDA documents, interviewed FDA officials, and analyzed data from fiscal years 2012 through 2014."
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CRS_R42337
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{
"title": [
"",
"Background",
"Status and Detention of Persons in War",
"U.S. Practice—Detention of Enemies on U.S. Territory",
"The \"Quasi War\" with France and the War of 1812",
"The Civil War",
"Ex Parte Milligan",
"Other \"Insurrections\"—Moyer v. Peabody",
"World War I",
"Treatment of Enemies During World War II",
"Ex Parte Quirin",
"In Re Territo",
"Internment of Enemy Civilians",
"The Cold War",
"The Emergency Detention Act",
"The Non-Detention Act",
"Recent \"Enemy Combatant\" Cases Continued",
"The Padilla Case",
"The Al-Marri Case",
"Hedges v. Obama",
"The Role of Congress",
"Congressional Authority",
"Legislation in the 112th Congress",
"Proposed Legislation",
"Conclusion"
],
"paragraphs": [
"The detainee provisions passed as part of the National Defense Authorization Act for FY2012 (2012 NDAA; P.L. 112-81 ), affirm that the Authorization for Use of Military Force (AUMF) in response to the terrorist attacks of September 11, 2001, authorize the detention of persons captured in connection with hostilities. The act provides for the first time a statutory definition of covered persons whose detention is authorized pursuant to the AUMF. During consideration of the detention provision, much of the debate focused on the applicability of this detention authority to U.S. citizens and other persons within the United States. Congress ultimately adopted a Senate amendment to clarify that the provision is not intended to affect any existing law or authorities relating to the detention of U.S. citizens or lawful resident aliens, or any other persons captured or arrested in the United States. This report analyzes the existing law and authority to detain, as \"enemy combatants,\" U.S. persons, which, for the purpose of this report means persons who are generally understood to be subject to U.S. territorial jurisdiction or otherwise entitled to constitutional protections; that is, American citizens, resident aliens, and other persons within the United States.",
"In June, 2004, the Supreme Court handed down a series of opinions related to wartime detention authority. In Hamdi v. Rumsfeld , a plurality of the Court held that a U.S. citizen allegedly captured during combat in Afghanistan and incarcerated at a Navy brig in South Carolina could be held as an enemy combatant as part of the necessary force authorized by Congress after the terrorist attacks of September 11, 2001 , but that he was entitled to notice and an opportunity to be heard by a neutral decision maker regarding the government's reasons for detaining him. The government instead reached an agreement with the petitioner that allowed him to return to Saudi Arabia, where he also holds citizenship, subject to certain conditions. On the same day, the Court in Rumsfeld v. Padilla overturned a lower court's grant of habeas corpus to another U.S. citizen in military custody in South Carolina on jurisdictional grounds, sending the case to a district court in the Fourth Circuit for a new trial. The vacated decision of the U.S. Court of Appeals for the Second Circuit had held that the circumstance of a U.S. citizen arrested in the United States on suspicion of planning to carry out a terrorist attack there was fundamentally different from the case of a citizen captured on the battlefield overseas, and that the detention of such a citizen without trial was therefore precluded by the Non-Detention Act, 18 U.S.C. Section 4001(a), which provides that no U.S. citizen may be detained except pursuant to an act of Congress. A plurality of the Court found in Hamdi that the President's detention of a U.S. citizen captured on the battlefield is not foreclosed by the Non-Detention Act because an act of Congress, the AUMF, explicitly authorized such detention, but emphasized the narrow limits of the authority it was approving:\nThe AUMF authorizes the President to use \"all necessary and appropriate force\" against \"nations, organizations, or persons\" associated with the September 11, 2001, terrorist attacks. 115 Stat. 224. There can be no doubt that individuals who fought against the United States in Afghanistan as part of the Taliban, an organization known to have supported the al Qaeda terrorist network responsible for those attacks, are individuals Congress sought to target in passing the AUMF. We conclude that detention of individuals falling into the limited category we are considering, for the duration of the particular conflict in which they were captured, is so fundamental and accepted an incident to war as to be an exercise of the \"necessary and appropriate force\" Congress has authorized the President to use.\nThe plurality went on to describe the kind of detention it had in mind was the traditional practice of detaining prisoners of war under long-standing law of war principles:\nFurther, we understand Congress' grant of authority for the use of \"necessary and appropriate force\" to include the authority to detain for the duration of the relevant conflict, and our understanding is based on longstanding law-of-war principles. If the practical circumstances of a given conflict are entirely unlike those of the conflicts that informed the development of the law of war, that understanding may unravel. But that is not the situation we face as of this date. Active combat operations against Taliban fighters apparently are ongoing in Afghanistan. The United States may detain, for the duration of these hostilities, individuals legitimately determined to be Taliban combatants who \"engaged in an armed conflict against the United States.\" If the record establishes that United States troops are still involved in active combat in Afghanistan, those detentions are part of the exercise of \"necessary and appropriate force,\" and therefore are authorized by the AUMF.\nJustice Souter, joined by Justice Ginsburg joined the plurality opinion to provide sufficient votes to vacate the decision below and remand the case to give Hamdi an opportunity to contest his detention. However, finding no explicit authority in the AUMF (or other statutes) to detain persons as enemy combatants, they would have determined that 18 U.S.C. Section 4001(a) precludes the detention of American citizens as enemy combatants altogether. They rejected the theory that the detention was authorized as a necessary incident to the use of military force because \"the Government's stated legal position in its campaign against the Taliban ... is apparently at odds with its claim here to be acting in accordance with customary law of war and hence to be within the terms of the Force Resolution in its detention of Hamdi.\" In other words, the two Justices appeared to agree in principle that the AUMF could authorize the detention of prisoners of war, but took the view that the government's failure to accord the Taliban detainees rights under the Geneva Convention vitiated that authority.\nJustice Scalia, joined by Justice Stevens, dissented, arguing that \"our constitutional tradition has been to prosecute [U.S. citizens accused of waging war against the government] in federal court for treason or some other crime\" unless Congress has suspended the Writ of Habeas Corpus pursuant to the Constitution's Suspension Clause, Art. I, Section 9, cl. 2. They viewed as \"unthinkable that the Executive could render otherwise criminal grounds for detention noncriminal merely by disclaiming an intent to prosecute, or by asserting that it was incapacitating dangerous offenders rather than punishing wrongdoing.\" Under their view, even if the AUMF did authorize detention in sufficiently clear language to overcome the prohibition in 18 U.S.C. Section 4001(a) (which, in their view, clearly it did not), Hamdi's detention would have been unconstitutional without a proper suspension of the Writ. Justice Scalia described his position as pertaining only to U.S. citizens detained within the United States (regardless of where captured), suggesting that only citizens who were concededly members of enemy forces may be detained as prisoners of war within the United States.\nJustice Thomas also dissented, essentially agreeing with the government's position that the detention of enemy combatants is an unreviewable aspect of the war powers constitutionally allocated to the political branches. He agreed that the AUMF provides sufficient authority to detain enemy combatants, meaning that a majority of the Court approved that position, but he would have given utmost deference to the Executive branch and accorded little in the way of due process. Finally, he questioned whether other acts of war, such as bombings and missile strikes, would also be subject to due process inquiry.\nAlthough a bare majority of the Court, led by Chief Justice Rehnquist, declined to decide in Padilla whether the detention authority approved in Hamdi would apply to a U.S. citizen arrested in the United States, four Justices who dissented on the question of jurisdiction also indicated they would have upheld the Second Circuit's grant of the petition on the merits. Apparently rejecting the Bush Administration's contention that it had the authority to detain a U.S. citizen who was alleged to be \"closely associated with Al Qaeda\" and to have \"engaged in ... hostile and war-like acts, including ... preparation for acts of international terrorism\" against the United States in order to extract intelligence and prevent him from aiding Al Qaeda, Justice Stevens, joined by Justices Souter, Ginsburg, and Breyer, wrote:\nExecutive detention of subversive citizens, like detention of enemy soldiers to keep them off the battlefield, may sometimes be justified to prevent persons from launching or becoming missiles of destruction. It may not, however, be justified by the naked interest in using unlawful procedures to extract information. Incommunicado detention for months on end is such a procedure. Whether the information so procured is more or less reliable than that acquired by more extreme forms of torture is of no consequence. For if this Nation is to remain true to the ideals symbolized by its flag, it must not wield the tools of tyrants even to resist an assault by the forces of tyranny.\nGiven Justice Scalia's dissent in Hamdi , it appeared in 2004 that a majority of the Supreme Court as it was then constituted would have determined that the Non-Detention Act precludes the detention of a U.S. citizen without trial based on an alleged association with Al Qaeda and participation in a terrorist plot far from any conventional battlefield, at least within the United States. A separate majority of the same Court took the view that the Non-Detention Act does not preclude the detention of a U.S. citizen picked up on the battlefield in Afghanistan, albeit apparently for different reasons. There also appears to have been a majority on the Court who believed that indefinite detention solely for the purpose of interrogation would be impermissible even where they agreed the law of war supports detention. Finally, a majority took the position that a U.S. citizen detained under the authority of the AUMF would have the right to a meaningful opportunity to be heard before a neutral decision maker in order to contest the factual basis for the detention, although there was disagreement as to the precise level of due process such a hearing would be constitutionally required to provide.\nA majority of the Hamdi Court appears to have accepted the view that, in principle, U.S. citizens who join an enemy armed force and engage in hostilities against the United States may be treated as enemy belligerents on the same basis that alien enemy belligerents may be so treated under the laws and usages of war. It seems to follow that the same criteria and definition used to determine the status of aliens who are believed to be enemy belligerents would apply equally to U.S. citizens. Thus, there is little reason to suppose that the contours of the legal category of persons subject to detention, as it has been developed by the lower courts interpreting Hamdi , by the executive branch, and most recently, by Congress, will differ according to citizenship. It may be the case that U.S. citizenship will entitle citizen-detainees to more procedural rights in contesting the factual basis for their detention than alien detainees have enjoyed. Moreover, there is no dispute that citizens detained in U.S. custody abroad may seek habeas review, and Congress has not stripped the courts of jurisdiction over non-habeas cases by U.S. citizens detained as enemy belligerents, as it has done with respect to aliens, nor has it established jurisdiction in military commissions to try citizens for war crimes. On the other hand, lower courts have applied the plurality opinion in Hamdi , which decision expressly deals with the rights of a U.S. citizen-detainee, as a baseline for determining the procedural rights due to aliens detained at Guantanamo in habeas proceedings, apparently without requiring proof of the existence of \"exigent circumstance.\" Assuming that the Supreme Court jurisprudence establishes that citizens accused of participating in hostilities against the United States may be treated the same as similarly situated aliens, the seemingly relaxed procedural rights and evidentiary burden applicable in the Guantanamo cases may also apply to any habeas cases involving citizen-detainees.\nThe Supreme Court has not yet addressed on the merits whether an alien lawfully present in the United States can be detained under the authority of the AUMF based on activity conducted there. A noncitizen could not invoke the Non-Detention Act, but might nevertheless be able to contest whether the government's facts support an enemy combatant designation. After all, the Hamdi plurality suggested there may be a distinction based on the fact that that case involved a capture on a foreign battlefield . At about the same time that it issued Hamdi and Padilla , the Court denied certiorari to review the case of Ali Saleh Kahlah al-Marri, a Qatari student who had been arrested in Peoria, IL in late 2001 but declared an \"enemy combatant\" prior to trial and transferred to military custody in South Carolina. His petition for habeas corpus was dismissed for lack of jurisdiction by the U.S. Court of Appeals for the Seventh Circuit.\nBoth al-Marri and Padilla filed new petitions for habeas corpus in the Fourth Circuit, meaning that the issue of detention authority with respect to citizens and aliens within the United States would have to be relitigated there before the Supreme Court would have another opportunity to address it. As we explain more fully below, the Fourth Circuit ultimately confirmed both detentions, but without establishing a conclusive test for determining which persons arrested within the United States are subject to detention under AUMF authority. Supreme Court review was avoided in both cases after the government filed charges against the petitioners and moved them into the civilian court system. The only opinion left standing, that which affirmed the detention of Jose Padilla on grounds very different from the original allegations that had been addressed by the Second Circuit, does little to expand the understanding of detention authority beyond that which Hamdi already established, that is, that detention is justified in the case of a person who fought alongside enemy forces against the United States on a foreign battlefield.\nAssuming, per Hamdi , that Congress intended in 2001 to authorize the use of force in compliance with the law of war, and considering that Congress expressly incorporated the law of war into the detention authority in the 2012 NDAA, a survey of international law regarding such detentions may be pertinent to a determination of the detention authority preserved under the 2012 NDAA. Accordingly, this report summarizes wartime detention under international law and surveys relevant U.S. practice before returning to the Fourth Circuit's treatment of the Padilla and al-Marri cases. The report also summarizes the case of Hedges v. Obama , in which plaintiffs sought an injunction against enforcement of the detention provision of the 2012 NDAA.",
"The law of war divides persons in the midst of an armed conflict into two broad categories: combatants and civilians. This fundamental distinction determines the international legal status of persons participating in or affected by combat, and determines the legal protections afforded to such persons as well as the legal consequences of their conduct. Combatants are those persons who are authorized by international law to fight in accordance with the law of war on behalf of a party to the conflict. Civilians are not authorized to fight, but are protected from deliberate targeting by combatants as long as they do not take up arms. In order to protect civilians, the law of war requires combatants to conduct military operations in a manner designed to minimize civilian casualties and to limit the amount of damage and suffering to that which can be justified by military necessity. To limit exposure of civilians to military attacks, combatants are required, as a general rule, to distinguish themselves from civilians. Combatants who fail to distinguish themselves from civilians run the risk of being denied the privilege to be treated as prisoners of war if captured by the enemy.\nThe treatment of all persons who fall into the hands of the enemy during an international armed conflict depends upon the status of the person as determined under the four Geneva Conventions of 1949. Under these conventions, parties to an international armed conflict have the right to capture and intern enemy soldiers as well as civilians who pose a danger to the security of the state, at least for the duration of hostilities. The right to detain enemy combatants is not based on the supposition that the prisoner is \"guilty\" as an enemy for any crimes against the Detaining Power, either as an individual or as an agent of the opposing state. POWs are detained for security purposes, to remove those soldiers as a threat from the battlefield. The law of war encourages capture and detention of enemy combatants as a more humane alternative to accomplish the same purpose than by wounding or killing them.\nEnemy civilians may be interned for similar reasons, when found on the territory belonging to or occupied by a belligerent, although the law of war does not permit them to be treated as lawful military targets. As citizens of an enemy country, they may be presumed to owe allegiance to the enemy. The law of war traditionally allowed for their internment and the confiscation of their property, not because they are suspected of having committed a crime or even of harboring ill will toward the host or occupying power but, rather, they are held in order to prevent their acting on behalf of the enemy and to deprive the enemy of resources it might use in its war efforts. Congress has delegated to the President the authority, during a declared war or by proclamation, to provide for the restriction, internment or removal of enemy aliens deemed dangerous. The Supreme Court has upheld internment programs promulgated under the Alien Enemy Act. This form of detention, like the detention of POWs, is administrative rather than punitive, and thus no criminal trial is required. The Detaining Power may punish enemy soldiers and civilians for crimes committed prior to their capture as well as during captivity, but only after a fair trial in accordance with the relevant convention and other applicable international law.\nThe foregoing describes the law that applies in the case of international armed conflict, that is, armed conflict between two states, as defined by the Geneva Conventions. Non-international armed conflict is governed by Common Article 3 of the Geneva Conventions and Additional Protocol II (\"AP II\"), or at least those parts of AP II that reflect customary international law (the United States has not ratified AP II). Common Article 3 does not recognize a distinction between combatant and civilian status, and neither expressly permits nor prohibits detention. Rather, it provides minimal protections for those who fall into the hands of one of the parties to the armed conflict. Some international legal scholars believe that detention is permitted in non-international conflicts to at least the same extent that it is practiced in international armed conflicts, while others argue that specific authority under domestic law is necessary to authorize and define the scope of permissible detention during a non-international armed conflict. Another view might be that the rules applicable to international armed conflict, as customary international law, apply to non-international armed conflicts that meet the threshold for a belligerency under the international law of war, while any sort of contention that does not rise to such a level falls outside the law of war and is governed by domestic law only (in compliance with the state's obligations under international human rights law). In any event, the survey of U.S. practice presented below appears to establish that statutory authority in addition to a declaration of war has been seen as necessary to permit wartime detention within the United States, at least insofar as the preventive detention of civilians or unprivileged belligerents are concerned.",
"The following sections give a brief treatment of the history of the internment of individuals who are deemed \"enemies\" or determined to be too dangerous to remain at liberty during a war or national emergency. A survey of the history reveals that persons who are considered likely to act as an enemy agent on U.S. territory traditionally have been treated as alien enemies rather than prisoners of war or \"enemy combatants\" by the military, even when the individuals were members of the armed forces of enemy nations, although in the latter case they might also be tried by military commission or court-martial, if accused of a crime. Persons acting within the territory of the United States on behalf of an enemy government who were not part of its armed forces, including American citizens accused of spying or sabotage, have been tried in federal court. Individuals captured on the battlefield abroad have been handled in accordance with government regulations interpreting the law of war.\nFor the most part, it appears that U.S. practice has followed a traditional understanding of international law, in which the formal relationship between states, or perhaps between a state and a breakaway portion of its territory controlled by a government that no longer recognizes its authority, plays a seemingly crucial role. During war, a person's formal association with the opposing government or armed forces was seen to have bearing on how the law applied. While alien enemies and invading armies were seen to enjoy no (or at least very little) protection under domestic law, those with merely personal sympathy toward the enemy or animosity toward the government continued to enjoy such protection. For that reason, persons falling into the first category could be interned as a wartime measure without any demonstration of personal hostility on their part, while the validity of restrictive measures taken against other persons were assessed in terms of necessity and adequacy of due process. At the same time, the first category of persons enjoyed some protection under international law, including, for example, privileged belligerents could not be tried as criminals for belligerent acts that did not violate the law of war.",
"During the summer of 1798, spurred by tensions involving the French Republic, Congress enacted a series of national security measures known collectively as the Alien and Sedition Acts, which included the Alien Act and the Sedition Act, as well as the Alien Enemy Act. Of these laws, only the Alien Enemy Act has survived into modern times.\nThe Alien Act empowered the President to order out of the country any noncitizen whom he judged to be \"dangerous to the peace and safety of the United States\" or suspected to be concerned in any \"treasonable or secret machinations\" against the government. Expelled aliens convicted of having returned to the United States without obtaining a license to do so were subject to imprisonment for such time as the President deemed necessary for the public safety. Outside of such a conviction, the act did not permit summary detention, but the law was nonetheless controversial.\nPart of the debate surrounding the Alien Act questioned the extent to which the Bill of Rights covers \"alien friends\" on U.S. territory. Opponents argued that such aliens within the United States are entitled to due process of law and the same protection from the government as citizens, and that therefore, aliens suspected of being disposed to engage in Jacobin plots to overthrow the social order or take part in other insurrectionist activities should be tried in court rather than summarily deported. Proponents argued that aliens within the United States owe merely temporary allegiance to the United States and are therefore not entitled to the same rights as citizens, and that all governments have the right to deport aliens who pose a danger. The bill passed along regional lines, but was never enforced, although some aliens left the country under their own volition. Virginia and Kentucky passed resolutions declaring the Alien Act and the Sedition Act to be unconstitutional, and it is widely believed that Thomas Jefferson's opposition to these Acts helped him win the presidency.\nThe Alien Enemy Act was the last of the laws enacted to confront the crisis. It began:\nWhenever there shall be a declared war between the United States and any foreign nation or government, or any invasion or predatory incursion shall be perpetrated, attempted or threatened against the territory of the United States by any foreign nation or government, and the President of the United States shall make public proclamation of the event, all natives, citizens, denizens, or subjects of the hostile nation or government, being males of the age of fourteen years and upward, who shall be within the United States and not actually naturalized, shall be liable to be apprehended, restrained, secured, and removed as alien enemies.\nUnlike the Alien Act or the Sedition Act, the Alien Enemy Act was written to apply only during declared wars or invasions by the armies of foreign governments. There was never a requirement that an alien be suspected of engaging in any sort of hostile activities in order to be liable to treatment under the act, although aliens \"not chargeable with actual hostility ... or other crime against the public safety\" are afforded a grace period during which to arrange for \"the recovery, disposal, and removal of [their] goods and effects, and for [their] departure.\" Also unlike its sister Acts, the Alien Enemy Act engendered practically no controversy. Neither James Madison nor Thomas Jefferson, who drafted the Virginia and Kentucky Resolutions, raised any objections; and even the most vociferous opponents of the Alien Act in Congress were careful to clarify that they had no qualms with respect to the Alien Enemy Act. The absence of objection to the Alien Enemy Act by the same generation that drafted the Constitution has been held to provide evidence both of the act's constitutionality and the prevailing understanding of the legal principle underlying it, that is, the fundamentally different position held by aliens on the basis of their formal allegiance to a government with which the United States is at war.\nOf the enactments, only the Sedition Act addressed the activities of U.S. citizens in possible aid of insurrection or foreign invaders. The act, which was also the only one of the three that was ever enforced, was criticized as destructive of the newly established freedom of speech and of the press, but it did not authorize detention without trial for citizens or aliens.\nThe first presidential proclamation under the Enemy Alien Act did not occur until the War of 1812, when President Madison ordered that alien enemies who resided within forty miles of tide water must report to local marshals for assigned residency or other measures. Aliens subject to the measures were entitled to seek habeas corpus relief to challenge the measures, and at least one British subject prevailed, despite the familiar canon that enemy aliens have no access to the courts. One American citizen who was detained militarily on suspicion of having aided the British in preparation for their attack on Sackett's Harbor was held to be entitled to habeas corpus because there was no authority for the military to try such persons for treason. It does not appear to have been asserted that U.S. citizens who aided the enemy could be detained without trial as enemy belligerents or prisoners of war, and even claims that the military could detain a citizen temporarily for investigation pending transfer to civilian authorities for trial were unavailing. The Supreme Court held that enemy property within the United States could not be confiscated by the military without express statutory authority, even though the law of war permits it, based on the fact that Congress had legislated with respect to enemy aliens and prisoners of war:\nWar gives an equal right over persons and property: and if its declaration is not considered as prescribing a law respecting the person of an enemy found in our country, neither does it prescribe a law for his property. The act concerning alien enemies, which confers on the president very great discretionary powers respecting their persons, affords a strong implication that he did not possess those powers by virtue of the declaration of war.",
"The Civil War raised a host of novel issues regarding the application of the laws and usages of war to enemies who were also U.S. citizens. Some who found themselves subject to wartime measures argued that one could be either a citizen, entitled to all the constitutional protections that applied in peacetime, or an enemy, entitled to no constitutional protections but under no obligation to obey domestic laws; but not both. The courts rejected this contention, establishing that the United States could, under the circumstances of de facto war, assert both belligerent rights against the seceded states and sovereign rights to hold citizens of those states accountable for treason and other crimes. Key to this determination was the fact that the civil war amounted to a war within the meaning of international law (a \"belligerency\") rather than a mere insurrection to be dealt with using only the law enforcement capacity of the government. Once it was established that the rebellion amounted to a belligerency, all citizens of seceded states were technically public enemies and their property deemed hostile, even if they were not traitors in thought or deed.\nAt the same time, it appears that citizens of states that did not secede were not to be considered public enemies unless they actually took up residence in the South or joined the Confederate army, even if they favored the Confederacy or advocated dissolution of the Union. In the border states where anti-Union sentiments were especially high and violence was prevalent enough to make ordinary law enforcement measures insufficient or impossible, military forces governed by martial law, but only for such time as strictly necessary. Although President Lincoln authorized the suspension of habeas corpus in the North, initially in order to protect troop transport lines but later more broadly to enable the Secretary of State (later the War Department) to order the arrests of civilians as \"prisoners of state,\" it is not clear that any such persons were considered enemies or combatants under a law of war rubric. On the other hand, it was asserted by authorities in military law that certain acts in aid of the enemy violated the law of war.\nTo address the war and the growing internal security problem, the Lincoln Administration in September of 1862 proclaimed habeas corpus suspended as to all persons in military custody, and further proclaimed that all \"rebels and insurgents, their aiders and abettors within the United States, and all persons discouraging volunteer enlistments ... or guilty of any disloyal practice, affording aid and comfort to rebels against the authority of the United States, shall be subject to martial law and liable to trial and punishment by courts-martial or military commission.\" After Congress authorized the suspension of habeas corpus wherever the President judged it necessary to public safety, President Lincoln reiterated that habeas corpus was suspended as to \"prisoners of war, spies, or aiders or abettors of the enemy\" in military custody throughout the United States. The Lincoln Administration's approach to internal security, however, was cast in considerable doubt by the Supreme Court's decision in Ex parte Milligan.",
"In 1866 , the Supreme Court addressed the question whether a citizen of Indiana who was allegedly a senior commanding general of the Sons of Liberty, an allegedly armed and organized group of conspirators with links to the Confederate States that planned to commit acts of sabotage against the North in order to foment rebellion in northwestern states (today's Mid-West), could constitutionally be tried by military commission. The Court recognized military commission jurisdiction over violations of the \"laws and usages of war,\" but stated those laws and usages \"... can never be applied to citizens in states which have upheld the authority of the government, and where the courts are open and their process unobstructed.\" The Supreme Court explained its reasoning:\nIt will be borne in mind that this is not a question of the power to proclaim martial law, when war exists in a community and the courts and civil authorities are overthrown. Nor is it a question what rule a military commander, at the head of his army, can impose on states in rebellion to cripple their resources and quell the insurrection .... Martial law cannot arise from a threatened invasion. The necessity must be actual and present; the invasion real, such as effectively closes the courts and deposes the civil administration.\nThe government had argued in the alternative that Milligan could be held as a prisoner of war \"as if he had been taken in action with arms in his hands,\" and thus excluded from the privileges of a proviso to the act authorizing the suspension of habeas corpus, which required courts to free other persons detained without charge. The government argued:\nFinally, if the military tribunal has no jurisdiction, the petitioner may be held as a prisoner of war, aiding with arms the enemies of the United States, and held, under the authority of the United States, until the war terminates, then to be handed over by the military to the civil authorities, to be tried for his crimes under the acts of Congress, and before the courts which he has selected.\nMilligan, however, argued \"that it had been 'wholly out of his power to have acquired belligerent rights, or to have placed himself in such relation to the government as to have enabled him to violate the laws of war,'\" as he was charged. The Court appears to have agreed with Milligan, replying:\nIt is not easy to see how he can be treated as a prisoner of war, when he lived in Indiana for the past twenty years, was arrested there, and had not been, during the late troubles, a resident of any of the states in rebellion. If in Indiana he conspired with bad men to assist the enemy, he is punishable for it in the courts of Indiana; but, when tried for the offence, he cannot plead the rights of war; for he was not engaged in legal acts of hostility against the government, and only such persons, when captured, are prisoners of war. If he cannot enjoy the immunities attaching to the character of a prisoner of war, how can he be subject to their pains and penalties?\nMilligan was interpreted by some state courts to preclude the trial by military commission of persons accused of participating in guerrilla activities in Union territory, and despite Congress's efforts to immunize executive officials for actions done under military authority during the Civil War, the Supreme Court of Illinois upheld damages awarded to Madison Y. Johnson, who, accused of being \"a belligerent\" but never charged with any offense, had been confined under orders issued by the Secretary of War. Milligan himself was awarded nominal damages for his treatment.",
"The Supreme Court addressed executive detention of a temporary nature to address less serious insurrections in 1909 in Moyer v. Peabody . The Supreme Court in that case declined to grant relief to the plaintiff in a civil suit against the governor of Colorado based on the former's detention without charge during a miners' strike (deemed by the governor to be an insurrection), stating: So long as such arrests are made in good faith and in the honest belief that they are needed in order to head the insurrection off, the governor is the final judge and cannot be subjected to an action after he is out of office, on the ground that he had not reasonable ground for his belief.\"\nThe Court based its views in part on the laws and constitution of the State of Colorado, which empowered the governor to repel or suppress insurrections by calling out the militia, which the Court noted, envisioned the \"ordinary use of soldiers to that end; that he may kill persons who resist, and, of course, that he may use the milder measure of seizing the bodies of those whom he considers to stand in the way of restoring peace. Such arrests are not necessarily for punishment, but are by way of precaution, to prevent the exercise of hostile power.\"\nThe Court further clarified:\nIf we suppose a governor with a very long term of office, it may be that a case could be imagined in which the length of the imprisonment would raise a different question. But there is nothing in the duration of the plaintiff's detention or in the allegations of the complaint that would warrant submitting the judgment of the governor to revision by a jury. It is not alleged that his judgment was not honest, if that be material, or that the plaintiff was detained after fears of the insurrection were at an end.\nBased on the context of the case, the holding may be limited to actual battles and situations of martial law where troops are authorized to use deadly force as necessary. While the Court notes that \"[p]ublic danger warrants the substitution of executive process for judicial process,\" it also noted that\n[t]his was admitted with regard to killing men in the actual clash of arms; and we think it obvious, although it was disputed, that the same is true of temporary detention to prevent apprehended harm. As no one would deny that there was immunity for ordering a company to fire upon a mob in insurrection, and that a state law authorizing the governor to deprive citizens of life under such circumstances was consistent with the 14 th Amendment, we are of opinion that the same is true of a law authorizing by implication what was done in this case.\nIt may also be argued that, as a claim for civil damages rather than a direct challenge in the form of a petition for habeas corpus, the Moyer case does not stand for a general executive authority to detain indefinitely individuals deemed to be dangerous, but may support temporary detention during a public emergency. It may be pertinent that the decision interpreted Colorado's constitution rather than that of the United States. While some courts have concluded that those wrongfully detained by order of the President may recover damages from their captors, the modern trend seems to be that damages are not available.",
"The Alien Enemy Act saw greater use during World War I than in previous wars. The statute grants the President broad authority, during a declared war or presidentially proclaimed \"predatory invasion,\" to institute restrictions affecting alien enemies, including possible detention and deportation. On April 6, 1917, the date Congress declared war against Germany, President Wilson issued a Proclamation under the Alien Enemy Act warning alien enemies against violations of the law or hostilities against the United States. Offenders would be subject not only to the applicable penalties prescribed by the domestic laws they violated, but would also be subject to restraint, required to give security, or subject to removal from the United States under regulations promulgated by the President.\nThe government urged the courts to uphold the constitutionality of the act as a proper exercise of Congress's power over the persons and property of alien enemies found on U.S. territory during war, a power it argued derives from the power of Congress to declare war and make rules concerning captures on land and water, and which was also consistent with the powers residing in sovereign nations under international law. The law was vital to national security because \"[a]n army of spies, incendiaries, and propagandists may be more dangerous than an army of soldiers.\" The President reported to Congress a list of 21 instances of \"improper activities of German officials, agents, and sympathizers in the United States\" prior to the declaration of war. The government further argued that the statute did not require a hearing prior to internment, because the power and duty of the President was to act to prevent harm in the context of war, which required the ability to act based on suspicion rather than only on proven facts.\nWhile the act would permit regulations affecting all persons within the statutory definition of alien enemy, it was the practice of the United States to apply restrictions only to alien enemies who were found to constitute an active danger to the state. Aliens affected by orders promulgated under the act did not have recourse to the courts to object to the orders on the grounds that the determination was not made in accordance with due process of law, but could bring habeas corpus petitions to challenge their status as enemy aliens.\nIn at least two instances, enemy spies or saboteurs entered the territory of the United States and were subsequently arrested. Pablo Waberski admitted to U.S. secret agents to being a spy sent by the Germans to \"blow things up in the United States.\" Waberski, who was posing as a Russian national, was arrested upon crossing the border from Mexico into the United States and charged with \"lurking as a spy\" under article 82 of the Articles of War. Attorney General T. W. Gregory opined in a letter to the President that the jurisdiction of the military to try Waberski by military tribunal was improper, noting that the prisoner had not entered any camp or fortification, did not appear to have been in Europe during the war, and thus could not have come through the fighting lines or field of military operations. An ensuing disagreement between the Departments of War and Justice over the respective jurisdictions of the FBI and military counterintelligence to conduct domestic surveillance was resolved by compromise.\nWaberski, an officer of the German armed forces whose real name turned out to be Lothar Witzke, was sentenced to death by a military commission. Subsequently, the new Attorney General, A. Mitchell Palmer, reversed the earlier AG opinion based on a new understanding of the facts of the case, including proof that the prisoner was a German citizen and that there were military encampments close to the area where he was arrested. President Wilson commuted Witzke's sentence to life imprisonment at hard labor in Fort Leavenworth and later pardoned him, possibly due to lingering doubts about the propriety of the military tribunal's jurisdiction to try the accused spy, even though Congress had defined the crime of spying and provided by statute that it was an offense triable by military commission.\nThe question of military jurisdiction over accused enemy spies arose again in the case of United States ex rel. Wessels v. McDonald , a habeas corpus proceeding brought by Herman Wessels to challenge his detention by military authorities while he was awaiting court-martial for spying. The accused was an officer in the German Imperial Navy who used a forged Swiss passport to enter the United States and operated as an enemy agent in New York City. He was initially detained as an alien enemy pursuant to a warrant issued in accordance with statute. He contested his detention on the basis that the port of New York was not in the theater of battle and courts in New York were open and functioning, arguing Milligan required that he be tried by an Article III court. The court found that its inquiry was confined to determining whether jurisdiction by court martial was valid, which it answered affirmatively after examining relevant statutes and finding that, under international law, the act of spying was not technically a crime. The court concluded that the constitutional safeguards available to criminal defendants did not apply, noting that whoever \"joins the forces of an enemy alien surrenders th[e] right to constitutional protections.\" The Supreme Court did not have the opportunity to address the merits of the case, having dismissed the appeal per stipulation of the parties. However, two American citizens who were alleged to have conspired to commit espionage with Wessels were tried and acquitted of treason in federal court, and subsequently released.\nIn 1918, a bill was introduced in the Senate to provide for trial by court-martial of persons not in the military who were accused of espionage, sabotage, or other conduct that could hurt the war effort. The bill had been drafted by Assistant Attorney General Charles Warren, but was apparently submitted without the approval of the Justice Department. The bill asserted that changes in modern warfare, including use of \"civilian and other agents and supporters behind the lines spreading false statements and propaganda, injuring and destroying the things and utilities\" needed by the Armed Forces, meant that \"the United States [now constitutes] a part of the zone of operations ...\"\nIn a letter to Representative John E. Raker explaining his opposition to the idea, Attorney General T.W. Gregory provided statistics about war-related arrests and prosecutions. According to the letter, of 508 espionage cases that had reached a disposition, 335 had resulted in convictions, 31 persons were acquitted, and 125 cases were dismissed. Sedition and disloyalty charges had yielded 110 convictions and 90 dismissals or acquittals. Acknowledging that the statistics were incomplete, the Attorney General concluded that the statistics did not show a cause for concern. He also reiterated his position that trial of civilians for offenses committed outside of military territory by court-martial would be unconstitutional, and attributed the complaints about the inadequacies of the laws or their enforcement to \"the fact that people, under the emotional stress of the war, easily magnify rumor into fact, or treat an accusation of disloyalty as though it were equal to proof of disloyalty. No reason, however, has as yet developed which would justify punishing men for crime without trying them in accordance with the time-honored American method of arriving at the truth.\"\nThe record does not disclose any mention of the option of deeming suspects to be unlawful combatants based on their alleged association with the enemy, detaining them without any kind of trial.",
"",
"After eight Nazi saboteurs were caught by the Federal Bureau of Investigation (FBI), the President issued a proclamation declaring that \"the safety of the United States demands that all enemies who have entered upon the territory of the United States as part of an invasion or predatory incursion, or who have entered in order to commit sabotage, espionage or other hostile or warlike acts, should be promptly tried in accordance with the law of war.\" The eight German saboteurs (one of whom claimed U.S. citizenship) were tried by military commission for entering the United States by submarine, shedding their military uniforms, and conspiring to use explosives on certain war industries and war utilities. In the case of Ex parte Quirin , the Supreme Court denied their writs of habeas corpus (although upholding their right to petition for the writ, despite language in the Presidential proclamation purporting to bar judicial review), holding that trial by such a commission did not offend the Constitution and was authorized by statute. It also found the citizenship of the saboteurs irrelevant to the determination of whether the saboteurs were \"enemy belligerents\" within the meaning of the Hague Convention and the law of war.\nTo reach its decision, the Court applied the international common law of war, as Congress had incorporated it by reference through Article 15 of the Articles of War, and the President's proclamation that\n[A]ll persons who are subjects, citizens or residents of any nation at war with the United States or who give obedience to or act under the direction of any such nation, and who during time of war enter or attempt to enter the United States ... through coastal or boundary defenses, and are charged with committing or attempting or preparing to commit sabotage, espionage, hostile or warlike acts, or violations of the law of war, shall be subject to the law of war and to the jurisdiction of military tribunals.\nWhether the accused could have been detained as \"enemy combatants\" without any intent to try them before a military tribunal was not a question before the Court, but the Court suggested the possibility. It stated:\nBy universal agreement and practice, the law of war draws a distinction between the armed forces and the peaceful populations of belligerent nations and also between those who are lawful and unlawful combatants. Lawful combatants are subject to capture and detention as prisoners of war by opposing military forces. Unlawful combatants are likewise subject to capture and detention , but in addition they are subject to trial and punishment by military tribunals for acts which render their belligerency unlawful.\nIn its discussion of the status of \"unlawful combatant,\" the Court did not distinguish between enemy soldiers who forfeit the right to be treated as prisoners of war by failing to distinguish themselves as belligerents, as the petitioners had done, and civilians who commit hostile acts during war without having the right to participate in combat. Both types of individuals have been called \"unlawful combatants,\" yet the circumstances that give rise to their status differ in ways that may be legally significant. However, the Court did recognize that the petitioners fit into the first category, and expressly limited its opinion to the facts of the case:\nWe have no occasion now to define with meticulous care the ultimate boundaries of the jurisdiction of military tribunals to try persons according to the law of war. It is enough that petitioners here, upon the conceded facts, were plainly within those boundaries, and were held in good faith for trial by military commission, charged with being enemies who, with the purpose of destroying war materials and utilities, entered or after entry remained in our territory without uniform—an offense against the law of war. We hold only that those particular acts constitute an offense against the law of war which the Constitution authorizes to be tried by military commission.\nThe Supreme Court distinguished its holding from Milligan, finding that the Quirin petitioners were enemy belligerents and that the charge made out a valid allegation of an offense against the law of war for which the President was authorized to order trial by a military commission.\nIt seems clear that the Quirin Court did not intend to overrule Milligan , but the distinction between the two cases may seem puzzling to those familiar with Civil War history. The Quirin Court characterized Milligan in a way that seemed to minimize the nature of the allegations involved, calling Milligan a civilian who \"was not engaged in legal acts of hostility against the government.\" Yet Milligan was in fact alleged to have engaged in hostile and warlike acts. The Quirin Court also noted the distinction that Milligan, \"not being a part of or associated with armed forces of the enemy,\" was a civilian rather than an enemy combatant, without mentioning that the government had argued that Milligan was allegedly part of a group that was associated with the Confederate Army.\nReconciling the facts of Milligan with the Quirin Court's description of them is possible by applying a formal understanding of the concept of war as distinguished from a lesser insurrection. Under this view, the key distinction appears to be that Milligan's activity could not be characterized as legal acts of hostility because Milligan was not a lawful combatant belonging to Confederate forces. Any contention between the Sons of Liberty and the Union apparently did not amount to \"hostilities\" in the legal sense. The Quirin opinion, read together with Milligan , appears to regard the \"legal\" nature of the acts to be based on the petitioner's association with a legitimate belligerent party rather than the nature of the acts. Milligan's membership in the Sons of Liberty did not secure his legitimacy as a belligerent, but neither did it give the government the right to detain him as a prisoner of war. The Sons of Liberty, it seems, did not qualify as a belligerent for the purposes of the law of war, even though it was alleged to be plotting hostile acts on behalf of the Confederacy and it communicated with Confederate agents. The Quirin Court noted with apparent approval several Civil War cases in which enemy belligerents were tried by military commission for hostile acts conducted in the North, but the Court was careful to mention in each case that the defendant held a Confederate commission or was otherwise enrolled in or employed by Confederate forces. Omitted from the Court's survey of cases were those suggested by the government in its brief that involved nonmembers of Confederate forces, including Milligan and his co-defendants as well as the persons tried for Lincoln's assassination in 1865.\nAlthough the opinion is cryptic on this point, the important distinction in Quirin seems to be the nature and status of the enemy forces of which Milligan was allegedly a member, rather than whether he was associated with any hostile force at all. The petitioners in Quirin were all conceded to be engaging in hostilities under the direction of the armed forces of an enemy State in a declared war (although perhaps not formally enrolled in its military). What association with the enemy short of this might have brought the saboteurs under military jurisdiction is unclear. The fact that Milligan's membership in an organization with ties to the Confederate government (although not claimed to be operating under Confederate direction) was ruled insufficient to make him a belligerent within the meaning of the law of war might have some bearing on the interpretation of the term \"associated forces\" in the NDAA definition of persons susceptible to detention without trial under the law of war.\nAnother point of distinction was that Milligan had not traveled from enemy territory into friendly territory, while the Quirin petitioners were described as having crossed military lines of defense to enter the country surreptitiously. This apparently stems from the long-standing concept under the law of war that permits the armed forces of a belligerent to punish those who cross defensive lines and act as spies, whereas the same activity conducted in contested territory would not deprive the accused of prisoner of war status.\nThe continuing validity of Milligan has been questioned by some scholars, even though the Quirin Court declined to overrule it, while others assert that the essential meaning of the case has only to do with situations of martial law or, perhaps, civil wars. Furthermore, it has been noted that the portion of the plurality in Milligan asserting that Congress could not constitutionally authorize the President to use the military to detain and try civilians may be considered dicta with correspondingly less precedential value, inasmuch as Congress had implicitly denied such authority. However, the Hamdi Court, in distinguishing Milligan from Hamdi , placed emphasis on the fact that Milligan was not considered a prisoner of war, suggesting that it may recognize the distinction between Milligan and Quirin as a function of combatant status.\nThe Hamdi Court found that Milligan did not apply to a U.S. citizen captured in Afghanistan. Justice O'Connor wrote that Milligan :\ndoes not undermine our holding about the Government's authority to seize enemy combatants, as we define that term today. In that case, the Court made repeated reference to the fact that its inquiry into whether the military tribunal had jurisdiction to try and punish Milligan turned in large part on the fact that Milligan was not a prisoner of war, but a resident of Indiana arrested while at home there. That fact was central to its conclusion. Had Milligan been captured while he was assisting Confederate soldiers by carrying a rifle against Union troops on a Confederate battlefield, the holding of the Court might well have been different. The Court's repeated explanations that Milligan was not a prisoner of war suggest that had these different circumstances been present he could have been detained under military authority for the duration of the conflict, whether or not he was a citizen.",
"In the case In re Territo , an American citizen who had been inducted into the Italian army was captured during battle in Italy and transferred to a detention center for prisoners of war in the United States. He petitioned for a writ of habeas corpus, arguing that his U.S. citizenship foreclosed his being held as a POW. The court disagreed, finding that citizenship does not necessarily \"affect[] the status of one captured on the field of battle.\" The court stated: \"Those who have written texts upon the subject of prisoners of war agree that all persons who are active in opposing an army in war may be captured and except for spies and other non-uniformed plotters and actors for the enemy are prisoners of war.\"\nThe petitioner argued that the Geneva Convention did not apply in cases such as his. The court found no authority in support of that contention, noting that \"[i]n war, all residents of the enemy country are enemies.\" The court also cited approvingly the following passage: \"A neutral, or a citizen of the United States, domiciled in the enemy country, not only in respect to his property but also as to his capacity to sue, is deemed as much an alien enemy as a person actually born under the allegiance and residing within the dominions of the hostile nation.\"\nWhile recognizing that Quirin was not directly in point, it found the discussion of U.S. citizenship to be \"indicative of the proper conclusion\": \"Citizens who associate themselves with the military arm of the enemy government, and with its aid, guidance and direction enter this country bent on hostile acts are enemy belligerents within the meaning of the Hague Convention and the law of war.\"\nThe court had no occasion to consider whether a citizen who becomes associated with an armed group not affiliated with an enemy government and not otherwise covered under the terms of the Hague Convention could be detained without charge pursuant to the law of war, particularly those not captured by the military during battle.\nConfining the Territo and Quirin opinions to their facts, they may not provide a solid foundation for the detention of U.S. citizens captured within the United States as enemy combatants. It may be argued that the language referring to the capture and detention of unlawful combatants—seemingly without indictment on criminal charges—is dicta ; the petitioners in those cases did not challenge the contention that they served in the armed forces of an enemy state with which the United States was engaged in a declared war. We are unaware of any U.S. precedent confirming the constitutional power of the President to detain indefinitely a person accused of being an unlawful combatant due to mere membership in or association with a group that does not qualify as a legitimate belligerent, with or without the authorization of Congress. The Supreme Court rejected a similar contention in Milligan , where Congress had limited the authority to detain persons in military custody.\nAt most, arguably, the two cases above may be read to demonstrate that, at least in the context of a declared war against a recognized state, U.S. citizenship is not constitutionally relevant to the treatment of members of enemy forces under the law of war. Given that the Hague convention applies only to conflicts where belligerents meet the same qualifications that were later incorporated into Article 4 of the Third Geneva Convention for prisoner of war status, it seems clear that the Hague Convention would not apply to the conflict with Al Qaeda or perhaps the Taliban for the same reasons that were given to preclude their treatment as prisoners of war. Because the status of the relevant armed conflict under international law appears to have been important to the resolution of the Civil War and World War II detainee cases, it is perhaps unwarranted to presume that Territo and Quirin are apposite to a conflict that does not amount to an international armed conflict.",
"During the Second World War, President Roosevelt made numerous proclamations under the Alien Enemy Act for the purpose of interning aliens from enemy countries deemed dangerous or likely to engage in espionage or sabotage. At the outset of the war, the internments were effected under civil authority of the Attorney General, who established \"prohibited areas\" in which no aliens of Japanese, Italian, or German descent were permitted to enter or remain, as well as a host of other restraints on affected aliens. The President, acting under statutory authority, delegated to the Attorney General the authority to prescribe regulations for the execution of the program. Attorney General Francis Biddle created the Alien Enemy Control Unit to review the recommendations of hearing boards handling the cases of the more than 2,500 enemy aliens in the temporary custody of the Immigration and Naturalization Service (INS).\nIn February of 1942, the President extended the program to cover certain citizens as well as enemy aliens, and turned over the authority to prescribe \"military areas\" to the Secretary of War, who further delegated the responsibilities under the order with respect to the west coast to the Commanding General of the Western Defense Command. The new order, Executive Order 9066, clearly amended the policy established under the earlier proclamations regarding aliens and restricted areas, but did not rely on the authority of Alien Enemy Act, as the previous proclamations had done. Although the Department of Justice denied that the transfer of authority to the Department of War was motivated by a desire to avoid constitutional issues with regard to the restriction or detention of citizens, the House Select Committee Investigating National Defense Migration found the shift in authority significant, as it appeared to rely on the nation's war powers directly, and could find no support in the Alien Enemy Act with respect to citizens. The summary exercise of authority under that act to restrain aliens was thought by the Committee to be untenable in the case of U.S. citizens, and the War Department felt congressional authorization was necessary to provide authority for its enforcement.\nCongress granted the War Department's request, enacting with only minor changes the proposed legislation providing for punishment for the knowing violation of any exclusion order issued pursuant to Executive Order 9066 or similar executive order. A policy of mass evacuation from the West Coast of persons of Japanese descent—citizens as well as aliens—followed, which soon transformed into a system of compulsive internment at \"relocation centers.\" Persons of German and Italian descent (and others) were treated more selectively, receiving prompt (though probably not full and fair) loyalty hearings to determine whether they should be interned, paroled, or released. The disparity of treatment was explained by the theory that it would be impossible or too time-consuming to attempt to distinguish the loyal from the disloyal among persons of Japanese descent.\nIn a series of cases, the Supreme Court limited, but did not explicitly strike down the internment program. In the Hirabayashi case, the Supreme Court found the curfew imposed upon persons of Japanese ancestry to be constitutional as a valid war-time security measure, even as implemented against U.S. citizens, emphasizing the importance of congressional ratification of the Executive Order. Hirabayashi was also indicted for violating an order excluding him from virtually the entire west coast, but the Court did not review the constitutionality of the exclusion measure because the sentences for the two charges were to run concurrently. Because the restrictions affected citizens solely because of their Japanese descent, the Court framed the relevant inquiry as a question of equal protection, asking\nwhether in the light of all the facts and circumstances there was any substantial basis for the conclusion, in which Congress and the military commander united, that the curfew as applied was a protective measure necessary to meet the threat of sabotage and espionage which would substantially affect the war effort and which might reasonably be expected to aid a threatened enemy invasion.\nIn a concurring opinion, Justice Douglas added that in effect, due process considerations did not apply to ensure that only individuals who were actually disloyal were affected by the restrictions, even if it were to turn out that only a small percentage of Japanese-Americans were actually disloyal. However, he noted that a more serious question would arise if a citizen did not have an opportunity at some point to demonstrate his loyalty in order to be reclassified and no longer subject to the restrictions.\nIn Korematsu , the Supreme Court upheld the conviction of an American citizen for remaining in his home despite the fact that it was located on a newly declared \"Military Area\" and was thus off-limits to persons of Japanese descent. Fred Korematsu also challenged the detention of Japanese-Americans in internment camps, but the Court declined to consider the constitutionality of the detention itself, as Korematsu's conviction was for violating the exclusion order only. The Court, in effect, validated the treatment of citizens in a manner similar to that of enemy aliens by reading Executive Order 9066 together with the act of Congress ratifying it as sufficient authority under the combined war powers of the President and Congress, thus avoiding having to address the statutory scope of the Alien Enemy Act.\nIn Ex parte Endo , however, decided the same day as Korematsu , the Supreme Court did not find adequate statutory underpinnings to support the internment of loyal citizens. The Court ruled that the authority to exclude persons of Japanese ancestry from declared military areas did not encompass the authority to detain concededly loyal Americans. Such authority, it found, could not be implied from the power to protect against espionage and sabotage during wartime. The Court declined to decide the constitutional issue presented by the evacuation and internment program, instead interpreting the executive order, along with the Act of March 27, 1942 (congressional ratification of the order), narrowly to give it the greatest chance of surviving constitutional review. Accordingly, the Court noted that detention in Relocation Centers was not mentioned in the statute or executive order, but was developed during the implementation of the program. As such, the authority to detain citizens could only be found by implication in the act, and must therefore be found to serve the ends Congress and the President had intended to reach. The Court declared its obligation to interpret the wartime measure to allow for the \"greatest possible accommodation between ... liberties and the exigencies of war,\" which in turn required an assumption that Congress \"intended to place no greater restraint on the citizen than was clearly and unmistakably indicated by the language they used.\"\nThe Court avoided the question of whether internment of citizens would be constitutionally permissible where loyalty was at issue or where Congress explicitly authorized it, but the Court's use of the term \"concededly loyal\" to limit the scope of the finding may be read to suggest that there is a Fifth Amendment guarantee of due process applicable to a determination of loyalty or dangerousness. While the Fifth Amendment would not require the same process that is due in a criminal case, it would likely require at least reasonable notice of the allegations and an opportunity for the detainee to be heard.\nAt least one American with no ethnic ties to or association with an enemy country was subjected to an exclusion order issued pursuant to Executive Order 9066. Homer Wilcox, a native of Ohio, was excluded from his home in San Diego and removed by military force to Nevada, although the exclusion board had determined that he had no association with any enemy and was more aptly described as a \"harmless crackpot.\" He was the manager of a religious publication that preached pacifism, and was indicted along with several others for fraud in connection with the publication. The district court awarded damages in favor of Wilcox, but the circuit court reversed, finding the exclusion within the authority of the military command under Executive Order 9066 and 18 U.S.C. Section 1383, and holding that\nthe evidence concerning plaintiff's activities and associations provided a reasonable ground for the belief by defendant ... that plaintiff had committed acts of disloyalty and was engaged in a type of subversive activity and leadership which might instigate others to carry out activities which would facilitate the commission of espionage and sabotage and encourage them to oppose measures taken for the military security of Military Areas Nos. 1 and 2, and that plaintiff's presence in the said areas from which he had been excluded would increase the likelihood of espionage and sabotage and would constitute a danger to military security of those areas.\nThe court also found that the act of Congress penalizing violations of military orders under Executive Order 9066 did not preclude General De Witt from using military personnel to forcibly eject Wilcox from his home.\nThe Japanese internment program has since been widely discredited, the convictions of some persons for violating the orders have been vacated, and the victims have received compensation, but the constitutionality of detention of citizens during war who are deemed dangerous has never expressly been ruled per se unconstitutional. In the cases of citizens of other ethnic backgrounds who were interned or otherwise subject to restrictions under Executive Order 9066, courts played a role in determining whether the restrictions were justified, sometimes resulting in the removal of restrictions. Because these persons were afforded a limited hearing to determine their dangerousness, a court later ruled that the Equal Protection Clause of the Constitution did not require that they receive compensation equal to that which Congress granted in 1988 to Japanese-American internees.\nIt may be argued that Hirabayashi and the other cases validating Executive Order 9066 (up to a point) support the constitutionality of preventive detention of citizens during war, at least insofar as the determination of dangerousness of the individual interned is supported by some evidence and some semblance of due process is accorded the internee. However, it may bear emphasis that a congressional declaration of war alone was not enough to support the President's actions. Instead, it was emphasized in these cases that Congress had specifically ratified Executive Order 9066 by enacting 18 U.S.C. Section 1383, providing a penalty for violation of military orders issued under the Executive Order. Thus, even though the restrictions and internments occurred in the midst of a declared war, a presidential order coupled with specific legislation appears to have been required to validate the measures. The internment of Japanese-American citizens without individualized determination of dangerousness was found not to be authorized by the Executive Order and ratifying legislation (the Court thereby avoiding the constitutional issue), although the President had issued a separate Executive Order to set up the War Relocation Authority and Congress had given its tacit support for the internments by appropriating funds for the effort.\nThe only persons who were treated as enemy combatants pursuant to Proclamation No. 2561 were members of the German military who had been captured after landing on U.S. beaches from German submarines. Collaborators and persons who harbored such saboteurs were tried in federal courts for treason or violations of other statutes. Hans Haupt, the father of one of the saboteurs, was sentenced to death for treason, but this sentence was overturned on the ground that procedures used during the trial violated the defendant's rights. On retrial, Haupt was sentenced to life imprisonment, but his sentence was later commuted on the condition that he leave the country. Another person charged with treason for his part in the saboteurs' conspiracy, Helmut Leiner, was acquitted of treason but then interned as an enemy alien. Anthony Cramer, an American citizen convicted of treason for assisting one of the saboteurs to carry out financial transactions, had his conviction overturned by the Supreme Court on the grounds that the overt acts on which the charge was based were insufficient to prove treason. Emil Krepper, a pastor living in New Jersey, came under suspicion because his name was found printed in secret ink on the saboteur's handkerchief, although he never met with any of the saboteurs. He was indicted for violating TWEA and receiving a salary from the German government without reporting his activity as a foreign agent.\nThese cases involving collaborators with the Quirin eight, as well as other unrelated cases of sabotage or collaboration with the enemy during World War II, did not result in any military determinations that those accused were enemy combatants or could be subjected to military detention until the end of hostilities. It is thus not clear what kind of association with Germany or with other enemy saboteurs, short of actually belonging to the German armed forces, might have enabled the military to detain any of them as enemy combatants under the law of war. It appears that Quirin was not interpreted at the time as having established executive authority to detain persons based solely on their alleged hostile intent, particularly without any kind of a trial.\nAfter the Quirin decision, the Attorney General asked Congress to pass legislation to strengthen criminal law relating to internal security during wartime. Attorney General Biddle wrote that new law was necessary to cover serious gaps and inadequacies in criminal law, which he argued did not provide sufficient punishment for hostile enemy acts perpetrated on the territory of the United States. The House Committee on the Judiciary endorsed the proposed War Security Act, pointing to the fact that it had been necessary to try the eight Nazi saboteurs by military commission due to the inadequacy of the penal code to punish the accused for acts that had not yet been carried out. It also suggested that military jurisdiction might be unavailable to try enemy saboteurs who had not \"landed as part of a small invasion bent upon acts of illegal hostilities.\" The bill passed in the House of Representatives, but was not subsequently taken up in the Senate.",
"After the close of World War II, Congress turned its attention to the threat of communism. Recognizing that the Communist Party presented a different kind of threat from that of a strictly military attack, Members of Congress sought to address the internal threat with innovative legislation.",
"Introduced in the wake of the North Korean attack on South Korea, the Internal Security Act (ISA) of 1950 was the culmination of many legislative efforts to provide means to fight what was viewed as a foreign conspiracy to infiltrate the United States and overthrow the government by means of a combination of propaganda, espionage, sabotage, and terrorist acts. The Attorney General presented to the Congress a draft bill that would strengthen the espionage statutes, amend the Foreign Agents Registration Act, and provide authority for U.S. intelligence agencies to intercept communications. According to the Attorney General, the legislation was necessary because \"[t]he swift and more devastating weapons of modern warfare coupled with the treacherous operations of those who would weaken our country internally, preliminary to and in conjunction with external attack, have made it imperative that we strengthen and maintain an alert and effective peacetime vigilance.\"\nS. 4037 combined the proposed legislation with other bills related to national security, including measures to exclude and expel subversive aliens, detain or supervise aliens awaiting deportation, and deny members of communist organizations the right to travel on a U.S. passport. The bill also contained a requirement for Communist-controlled organizations and Communist-front organizations to register as such. President Truman and opponents of the so-called McCarran Act thought the registration requirements and other provisions likely to be either unconstitutional or ineffective, and expressed concern about possible far-reaching civil liberties implications.\nOpponents of the McCarran Act sought to substitute a new bill designed to address the security concerns in what they viewed as a more tailored manner. Senator Kilgore introduced the Emergency Detention Act (Kilgore bill) to authorize the President to declare a national emergency under certain conditions, during which the Attorney General could adopt regulations for the preventive incarceration of persons suspected of subversive ties. At the time of the debate, 18 U.S.C. Section 1383 was still on the books and would have ostensibly supported the declaration of military areas and the enforcement of certain restrictions against aliens or citizens deemed dangerous. Proponents of the Kilgore bill argued that the proposed legislation would create a program for internment of enemies that would contain sufficient procedural safeguards to render it invulnerable to court invalidation based on Ex parte Endo .\nThe final version of the ISA contained both the McCarran Act and the Emergency Detention Act. President Truman vetoed the bill, voicing his continued opposition to the McCarran Act. The President did not take a firm position with regard to the Emergency Detention Act, stating that\nit may be that legislation of this type should be on the statute books. But the provisions in [the ISA] would very probably prove ineffective to achieve the objective sought, since they would not suspend the writ of habeas corpus, and under our legal system to detain a man not charged with a crime would raise serious constitutional questions unless the writ of habeas corpus were suspended.\nThe President recommended further study on the matter of preventive detention for national security purposes. Congress passed the ISA over the President's veto.\nThe Emergency Detention Act, Title II of the ISA, authorized the President to declare an \"Internal Security Emergency\" in the event of an invasion of the territory of the United States or its possessions, a declaration of war by Congress, or insurrection within the United States in aid of a foreign enemy, where the President deemed implementation of the measures \"essential to the preservation, protection and defense of the Constitution.\" The act authorized the maintenance of the internment and prisoner-of-war camps used during World War II for use during subsequent crises, and authorized the Attorney General, during national emergencies under the act, to issue warrants for the apprehension of \"those persons as to whom there is a reasonable ground to believe that such persons probably will engage in, or conspire to engage in acts of sabotage or espionage.\" Detainees were to be taken before a preliminary hearing officer within 48 hours of their arrest, where each detainee would be informed of the grounds for his detention and of his rights, which included the right to counsel, the privilege against self-incrimination, the right to introduce evidence and cross-examine witnesses. The Attorney General was required to present evidence to the detainee and to the hearing officer or board \"to the fullest extent possible consistent with national security.\" Evidence that could be used to determine whether a person could be detained as dangerous included evidence that a person received training from or had ever committed or conspired to commit espionage or sabotage on behalf of an entity of a foreign Communist party or the Communist Party of the United States, or any other group that seeks the overthrow of the government of the United States by force.",
"No internal emergencies were declared pursuant to the Emergency Detention Act, despite the United States' involvement in active hostilities against Communist forces in Korea and Vietnam and the continued suspicion regarding the existence of revolutionary and subversive elements within the United States. Nevertheless, the continued existence of the act aroused concern among many citizens, who believed the act could be used as an \"instrumentality for apprehending and detaining citizens who hold unpopular beliefs and views.\" Several bills were introduced to amend or repeal the act. The Justice Department supported the repeal of the act, opining that the potential advantage offered by the statute in times of emergency was outweighed by the benefits that repealing the detention statute would have by allaying the fears and suspicions (however unfounded they might have been) of concerned citizens.\nCongress decided to repeal the Emergency Detention Act in 1971, and enacted in its place a prohibition on the detention of American citizens except pursuant to an act of Congress. Now commonly called the Non-Detention Act, the legislation was intended to prevent a return to the pre-1950 state of affairs, in which \"citizens [might be] subject to arbitrary executive authority\" without prior congressional action. Executive Order 9066 was formally rescinded in 1976. Congress repealed 18 U.S.C. Section 1383 later that year.\nIt may be argued that Congress, in passing the Emergency Detention Act in 1950, was legislating based on its constitutional war powers, to provide for the preventive detention during national security emergencies of those who might be expected to act as enemy agents, though not technically within the definition of \"alien enemies.\" It does not, therefore, appear that Congress contemplated that the President already had the constitutional power to declare such individuals to be enemy combatants subject to detention under the law of war on the basis of an authorization to use force or declaration of war, except perhaps under very narrow circumstances. The much earlier legislative history accompanying the passage of the Alien Enemy Act may also be interpreted to suggest that the internment of enemy spies and saboteurs in war was not ordinarily a military power that could be exercised without express congressional authority. Moreover, the repeal of the Emergency Detention Act and the enactment of the Non-Detention Act, 18 U.S.C. Section 4001(a), may be interpreted to preclude the detention of American citizens without charge or trial as enemy agents or traitors, as was contemplated in the Emergency Detention Act.",
"Hamdi establishes that the AUMF authorizes the detention of persons captured during the course of hostilities, including those who are U.S. citizens, but left to lower courts to decide the scope of detention authority. The Supreme Court has not since the Hamdi decision elaborated on the scope of detention authority. After the Supreme Court declined to resolve the case of Jose Padilla on the merits and denied certiorari with respect to Ali Saleh al-Marri, an alien whose case had been rejected by the Seventh Circuit, both cases headed to the Fourth Circuit to begin litigation anew.",
"The district judge there initially granted Padilla's motion for summary judgment and ordered the government to release Padilla, a U.S. citizen, from military detention, while suggesting Padilla could be kept in civilian custody if charged with a crime or determined to be a material witness. Padilla's attorneys had based their argument on the dissenting opinion of four Supreme Court Justices, who would have found Padilla's detention barred by the Non-Detention Act, and the language in Hamdi seemingly limiting the scope of authorization to combatants captured in Afghanistan. The government argued that Padilla's detention was covered under the Hamdi decision's interpretation of the AUMF because he allegedly attended an Al Qaeda training camp in Afghanistan before traveling to Pakistan and then to the United States, apparently based on information obtained from interrogations of Padilla and other persons detained as \"enemy combatants.\" The allegation differed from the original justification offered in the Second Circuit, in which it was alleged that Padilla had planned to detonate a radioactive \"dirty bomb\" somewhere in the United States. Even based on the new rationale, the judge disagreed, finding that express authority from Congress would be necessary and that the AUMF contains no such authority: \"[S]ince Petitioner's alleged terrorist plans were thwarted when he was arrested on the material witness warrant, the Court finds that the President's subsequent decision to detain Petitioner as an enemy combatant was neither necessary nor appropriate.\"\nAccordingly, the district court found that Padilla's detention was barred by 18 U.S.C. Section 4001(a).\nThe government then appealed the case to the United States Court of Appeals for the Fourth Circuit, where Padilla's attorneys argued that the case bears closer resemblance to the Civil War case Ex parte Milligan than to either the Quirin or Territo cases. The government argued that Milligan is inapposite to the petition of Padilla on the grounds that Padilla, like petitioners in Quirin , is \"a belligerent associated with the enemy who sought to enter the United States during wartime in an effort to aid the enemy's commission of hostile acts, and who therefore is subject to the laws of war.\"\nThe Fourth Circuit Court of Appeals reversed, finding that Padilla, although captured in the United States, could be detained pursuant to the AUMF because he had been, prior to returning to the United States, \"'armed and present in a combat zone' in Afghanistan as part of Taliban forces during the conflict there with the United States.\" As the Supreme Court again considered whether to grant review, the government charged Padilla with conspiracy based on evidence unrelated to the original \"dirty bomb\" plot allegations and asked the Fourth Circuit to approve Padilla's transfer, suggesting its earlier opinion should be vacated. The appellate judges preferred to defer to the Supreme Court to make that determination. In rejecting the government's application, Circuit Judge Luttig issued a harsh opinion expressing disappointment at the government's decision abruptly to abandon its position that national security imperatives demanded Padilla's continued military detention:\n[A]s the government surely must understand, although the various facts it has asserted are not necessarily inconsistent or without basis, its actions have left not only the impression that Padilla may have been held for these years, even if justifiably, by mistake—an impression we would have thought the government could ill afford to leave extant. They have left the impression that the government may even have come to the belief that the principle in reliance upon which it has detained Padilla for this time, that the President possesses the authority to detain enemy combatants who enter into this country for the purpose of attacking America and its citizens from within, can, in the end, yield to expediency with little or no cost to its conduct of the war against terror—an impression we would have thought the government likewise could ill afford to leave extant.\nThe government then petitioned the Supreme Court for leave to transfer him from military custody to a federal prison for civilian trial. The Court granted the government permission to transfer Padilla and later denied certiorari. Concurring with the denial of certiorari, Justice Kennedy cited prudential reasons for declining to hear the case despite the assertion that the government could reverse course and again place Padilla in military custody. In his view, the danger of repetition would be mitigated by the fact that the district court in Florida would be in a position to act quickly to respond in the event the government sought to change Padilla's status or conditions of detention. He also pointed out that Padilla could petition directly to the Supreme Court for habeas review.\nJustice Ginsburg dissented from the denial of certiorari, pointing out that the government had not retracted the assertion of executive power to which Padilla was objecting and was not prevented from returning to its previous course. She wrote that \"[a] party's voluntary cessation does not make a case less capable of repetition or less evasive of review.\"\nAfter a trial, Padilla was found guilty and sentenced to 17 years and three months' imprisonment, the trial court having rejected his motion to dismiss charges against him due to his alleged mistreatment at the hands of the military. The government subsequently won an appeal on the basis that Padilla's sentence was too lenient, but he has not as of yet been resentenced.",
"In March 2005, Judge Floyd agreed with the government that al-Marri's detention was authorized by the AUMF and transferred the case to a federal magistrate to examine the factual allegations supporting the government's detention of the petitioner as an enemy combatant. The government provided a declaration asserting that al-Marri, a Qatari student in Illinois, is closely associated with Al Qaeda and had been sent to the United States prior to September 11, 2001, to serve as a \"sleeper agent\" for Al Qaeda in order to \"facilitate terrorist activities and explore disrupting this country's financial system through computer hacking.\" The magistrate judge recommended the dismissal of the petition on the basis of information the government provided, which al-Marri did not attempt to rebut and which the magistrate judge concluded was sufficient for due process purposes in line with the Hamdi decision. The district judge adopted the magistrate judge's report and recommendations in full, rejecting the petitioner's argument that his capture away from a foreign battlefield precluded his designation as an \"enemy combatant.\"\nAl-Marri appealed, and the government moved to dismiss on the basis that Section 7 of the 2006 MCA stripped the court of jurisdiction. The petitioner asserted that Congress did not intend to deprive him of his right to habeas or that, alternatively, the MCA is unconstitutional. The majority of the appellate panel avoided the constitutional question by finding that al-Marri did not meet the statutory definition as an alien who \"has been determined by the United States to have been properly detained as an enemy combatant or is awaiting such determination,\" and was thus not barred from seeking habeas relief.\nTurning to the merits, the panel majority found that al-Marri does not fall within the legal category of \"enemy combatant\" within the meaning of Hamdi , and that the government could continue to hold him only if it charged him with a crime, commenced deportation proceedings, obtained a material witness warrant in connection with grand jury proceedings, or detained him for a limited time pursuant to the USA PATRIOT Act. In so holding, the majority rejected the government's contention that the AUMF authorizes the President to order the military to seize and detain persons within the United States under the facts asserted by the government, or that, alternatively, the President has inherent constitutional authority to order the detention.\nThe government cited the Hamdi decision and the Fourth Circuit's decision in Padilla v. Hanft to support its contention that al-Marri is an enemy combatant within the meaning of the AUMF and the law of war. The court, however, interpreted Hamdi as confirming only that \"the AUMF is explicit congressional authorization for the detention of individuals in the narrow category ... [of] individuals who were 'part of or supporting forces hostile to the United States or coalition partners in Afghanistan and who engaged in an armed conflict against the United States there.'\" Likewise, Padilla, although captured in the United States, could be detained pursuant to the AUMF only because he had been, prior to returning to the United States, \"'armed and present in a combat zone' in Afghanistan as part of Taliban forces during the conflict there with the United States.\" The court explained that the two cases cited by the government, Hamdi and Padilla , involved situations similar to the World War II case Ex parte Quirin , in which the Supreme Court agreed that eight German saboteurs could be tried by military commission because they were enemy belligerents within the meaning of the law of war. In contrast, al-Marri's situation was to be likened to Ex parte Milligan , the Civil War case in which the Supreme Court held that a citizen of Indiana accused of conspiring to commit hostile acts against the Union was nevertheless a civilian who was not amenable to military jurisdiction. The court concluded that enemy combatant status rests, in accordance with the law of war, on affiliation with the military arm of an enemy government in an international armed conflict.\nJudge Hudson dissented, arguing that the broad language of the AUMF, which authorized the President \"to use all necessary and appropriate force against those nations, organizations, or persons he determines\" were involved in the terrorist attacks of September 11, 2001, \"would certainly seem to embrace surreptitious al Qaeda agents operating within the continental United States.\" He would have found no meaningful distinction between the present case and Padilla .\nThe government petitioned for and was granted a rehearing en banc . On rehearing, the narrowly divided Fourth Circuit full bench rejected the earlier panel's decision in favor of the government's position that al-Marri fit the legal definition of \"enemy combatant,\" but also reversed the district court's decision that al-Marri was not entitled to present any more evidence to refute the government's case against him. Four of the judges on the panel would have retained the earlier decision, arguing that it was not within the court's power to expand the definition of \"enemy combatant\" beyond the law-of-war principles at the heart of the Supreme Court's Hamdi decision. However, these four judges joined in Judge Traxler's opinion to remand for evidentiary proceedings in order \"at least [to] place the burden on the Government to make an initial showing that normal due process protections are unduly burdensome and that the Rapp declaration is 'the most reliable available evidence,' supporting the Government's allegations before it may order al-Marri's military detention.\"\nJudge Traxler, whose opinion was controlling for the case although not joined in full by any of the other judges, agreed with the four dissenting judges that the AUMF \"grants the President the power to detain enemy combatants in the war against al Qaeda, including belligerents who enter our country for the purpose of committing hostile and war-like acts such as those carried out by the al Qaeda operatives on 9/11.\" Accordingly, he would define \"enemy combatant\" in the present terrorism-related hostilities to include persons who \"associate themselves with al Qaeda\" and travel to the United States \"for the avowed purpose of further prosecuting that war on American soil, ... even though the government cannot establish that the combatant also 'took up arms on behalf of that enemy and against our country in a foreign combat zone of that war.'\" Under this definition, American citizens arrested in the United States could also be treated as enemy combatants under similar allegations, at least if they had traveled abroad and returned for the purpose of engaging in activity related to terrorism on behalf of Al Qaeda.\nHowever, Judge Traxler did not agree that al-Marri had been afforded due process by the district court to challenge the factual basis for his designation as an enemy combatant. While recognizing that the Hamdi plurality had suggested that hearsay evidence might be adequate to satisfy due process requirements for proving enemy combatant status, Judge Traxler did not agree that such relaxed evidentiary standards are necessarily appropriate when dealing with a person arrested in the United States:\nBecause al-Marri was seized and detained in this country,... he is entitled to habeas review by a civilian judicial court and to the due process protections granted by our Constitution, interpreted and applied in the context of the facts, interests, and burdens at hand. To determine what constitutional process al-Marri is due, the court must weigh the competing interests, and the burden-shifting scheme and relaxed evidentiary standards discussed in Hamdi serve as important guides in this endeavor. Hamdi does not, however, provide a cookie-cutter procedure appropriate for every alleged enemy-combatant, regardless of the circumstances of the alleged combatant's seizure or the actual burdens the government might face in defending the habeas petition in the normal way.\nIn December 2008, the Supreme Court agreed to hear an appeal of the al-Marri ruling, potentially setting the stage for the Court to make a definitive pronouncement regarding the President's authority to militarily detain terrorist suspects apprehended away from the Afghan battlefield. However, on January 22, 2009, President Obama instructed the Attorney General, Secretary of Defense, and other designated officials to review the factual and legal basis for al-Marri's continued detention as an enemy combatant, and \"identify and thoroughly evaluate alternative dispositions.\" This review culminated in criminal charges being brought against al-Marri in the U.S. District Court for the Central District of Illinois, alleging that al-Marri provided material support to Al Qaeda and had conspired with others to provide material support to Al Qaeda. The United States thereafter moved for the Supreme Court to dismiss al-Marri's appeal as moot and authorize his transfer from military to civilian custody pending his criminal trial. On March 6, 2009, the Court granted the government's application concerning the transfer of al-Marri to civilian custody. It vacated the Fourth Circuit's judgment and remanded the case to the appellate court with instructions to dismiss the case as moot. Accordingly, the appellate court's earlier decision regarding the President's authority to detain terrorist suspects captured within the United States is no longer binding precedent in the Fourth Circuit. Al-Marri thereafter pled guilty in federal court to one count of conspiracy to provide material support to Al Qaeda, and was sentenced to eight and a half years in prison.\nThe dismissal of al-Marri's habeas case means that the President's legal authority to militarily detain terrorist suspects apprehended in the United States has not been definitively settled. The transfer of both Padilla and al-Marri to civilian custody to face trial in federal court means that the United States no longer holds any terrorist suspect in military detention who was apprehended in the United States.",
"Although there are currently no persons detained in the United States under AUMF authority, plaintiffs in Hedges v. Obama were able to persuade a federal judge to issue an injunction enjoining enforcement of Section 1021(b)(2) of the 2012 NDAA, which includes among \"covered persons\" subject to detention under the authority of the AUMF: \"A person who was a part of or substantially supported al-Qaeda, the Taliban, or associated forces that are engaged in hostilities against the United States or its coalition partners, including any person who has committed a belligerent act or has directly supported such hostilities in aid of such enemy forces.\"\nThe Hedges plaintiffs are a group of activists and journalists who sued the government arguing that the provision caused them to alter their lawful conduct in order to avoid being subject to military detention without trial under the provision. Plaintiff Christopher Hedges, a reporter who has published articles in the New York Times and Harper , among other publications, stated that his work in the past involved coverage of Al Qaeda and the Taliban and other groups that might be considered to be engaged in hostilities against the United States or its coalition partners. For instance, he told the court that he was traveling with members of the PKK when they were attacked by Turkish war planes, that he had had occasion to meet with members of Hamas's leadership, and that his work was sometimes posted on jihadist websites. Another journalist, Alexa O'Brien, testified that she feared that her work reporting in particular on Guantanamo detainees and WikiLeaks disclosures of U.S. government documents could lead to her detention under Section 1021, suggesting that the detention of Al Jazeera cameraman Sami Al-Hajj at Guantanamo led her to believe that journalistic pursuits might constitute \"substantial support\" within the meaning of the statute. Two foreign plaintiffs also provided testimony, both basing their concerns in part on their past activities in support of WikiLeaks. One of them, Icelandic parliament member Birgitta Jonsdottir, noted her participation in the release by WikiLeaks of a leaked video depicting a U.S. Apache helicopter attack on a group of men who turned out to be civilians, pointing out that the accused leaker, Bradley Manning, is being tried by court-martial for having aided terrorists.\nThe Obama Administration sought to deflect the lawsuit on the basis that Section 1021 of the NDAA does \"nothing new,\" but merely reaffirms detention authority conferred by the AUMF as it has been practiced by the executive branch and affirmed by the U.S. Court of Appeals for the D.C. Circuit. Read in this light, the government argued in essence, Section 1021 cannot give rise to reasonable fears of imminent detention for the conduct the plaintiffs cited because these activities did not result in detention during the time that passed between enactment of the AUMF and the 2012 NDAA, and the plaintiffs did not report similar fears under the AUMF standing alone. Accordingly, the government urged the court to declare the plaintiffs to be without standing and to dismiss the action.\nDistrict Judge Katherine B. Forrest rejected the argument that Section 1021 is merely an affirmation of the AUMF that does not change the law regarding detention. To hold otherwise, she wrote, \"would be contrary to basic principles of legislative interpretation that require Congressional enactments to be given independent meaning.\" She also noted differences in language describing the scope of application in the two statutes that make the NDAA language seem broader, including the addition of \"substantial support\" of Al Qaeda and the Taliban and the inclusion of \"associated forces\" (who might not have had direct involvement in the 2001 terrorist attacks), as well as mention of \"direct support of hostilities\" engaged in by any such groups against the United States or its coalition partners. While the court noted that the NDAA language was consistent with a government filing in the D.C. Circuit describing detention authority under the AUMF, it also agreed that the government filing did not itself have the force of law, and that cases from the D.C. Circuit upholding the standard have not yet construed the meaning of substantial support. The court also took note of the fact that the Obama Administration has stated that it will not indefinitely detain U.S. citizens under the authority conferred by either the AUMF or the NDAA, but found the promise insufficient to cure the vagueness of the statutory language.\nEach of the plaintiffs gave testimony demonstrating how Section 1021 had produced a chilling effect over their professional activities. The government, however, told the court in each case that it was unprepared to state whether the activities in question constitute \"substantial support\" to Al Qaeda or associated forces of the type that could subject the plaintiffs to military detention. Largely in light of the government's responses, the court credited the plaintiffs' fears as reasonable and concluded that the statute must also be too vague to satisfy the Fifth Amendment's requirement that a statute provide adequate notice regarding the nature of conduct to be avoided. Given the government's representations that Section 1021 does not add anything to previous law, the court presumed that a preliminary injunction would not cause the government undue burdens.\nThe government moved for reconsideration of the court's opinion with respect to the plaintiffs' standing, stating that \"law of war detention\" does not apply to persons solely on the basis of independent journalistic activities or independent public advocacy as described by the plaintiffs. The court issued an order clarifying that the injunction was not limited to the detention of the plaintiffs named in the case, but, rather, because the judge treated the lawsuit as a facial challenge and found the provision constitutionally infirm on the basis of the First Amendment and the Due Process Clause of the Fifth Amendment, the injunction was to apply nationwide. The court made the injunction permanent in September 2012.\nThe government immediately appealed. The Court of Appeals for the Second Circuit granted the government's motion for a stay of the injunction pending appeal, and, in July 2013, reversed the decision due to lack of standing on the part of citizen and noncitizen plaintiffs for different reasons. The appellate court set forth its interpretation of Section 1021 and concluded that the provision has no bearing on whether U.S. citizens may lawfully be detained pursuant to the AUMF. While the provision was found to have an effect with respect to noncitizens outside the United States, the court held that the noncitizen plaintiffs had failed to establish a sufficient reason to fear that the government would in fact apprehend them and subject them to detention.\nThe court first gave a historical overview of the relevant case law interpreting the AUMF and then examined the legislative history of Section 1021. In particular, the court explained how paragraph (e), which states that nothing in Section 1021 is to be construed as affecting existing laws with respect to U.S. citizens, lawful permanent residents, and other persons within the United States, came into being. The measure was adopted as a floor amendment and represented a truce between Members who believed that the AUMF permits such persons to be detained and those who believed it does not. The court did not attempt to resolve the issue on the merits.\nIn interpreting Section 1021, the court noted its duty to construe it \"[to give effect] to all its provisions, so that no part will be inoperative, superfluous, void or insignificant.\" It noted, however, that its first duty was to presume that \"a legislature says in a statute what it means and means in a statute what it says there. When the words of a statute are unambiguous, then, this first canon is also the last: judicial inquiry is complete.\" The court viewed the provision at hand as entirely unambiguous. The apparent contradiction in the fact that the provision purports to reaffirm the AUMF while adding new criteria not found in the original was deemed to be a clarification as to how the AUMF applies to organizations and not just persons deemed responsible for 9/11.\nThe court did not agree that its interpretation meant that Section 1021 did nothing at all. Rather, it explained that:\nthere are perfectly sensible and legitimate reasons for Congress to have affirmed the nature of AUMF authority in this way. To the extent that reasonable minds might have differed—and in fact very much did differ—over whether the administration could detain those who were part of or substantially supported al-Qaeda, the Taliban, and associated forces under the AUMF authority to use force against the \"organizations\" responsible for 9/11, Section 1021(b)(2) eliminates any confusion on that particular point. At the same time, Section 1021(d) ensures that Congress' clarification may not properly be read to suggest that the President did not have this authority previously—a suggestion that might have called into question prior detentions. This does not necessarily make the section a \"'legislative attempt at an ex post facto \"fix\" ... to try to ratify past detentions which may have occurred under an overly-broad interpretation of the AUMF,'\" as plaintiffs contend. Rather, it is simply the 112 th Congress' express resolution of a previously debated question about the scope of AUMF authority.\nThe court further clarified why Sections 1021(d) and 1021(e) are not duplicative. Section 1021(d) states that the provision does not expand or limit the President's authority to detain under the AUMF, and accordingly is meant to clarify that the authority to detain those who were part of or who substantially supported the enumerated forces already existed under the AUMF. By contrast, Section 1021(e) \"disclaims any statement about existing authority,\" whatever that may be. The court concluded that:\nSection 1021 means this: With respect to individuals who are not citizens, are not lawful resident aliens, and are not captured or arrested within the United States, the President's AUMF authority includes the authority to detain those responsible for 9/11 as well as those who were a part of, or substantially supported, al-Qaeda, the Taliban, or associated forces that are engaged in hostilities against the United States or its coalition partners—a detention authority that Section 1021 concludes was granted by the original AUMF. But with respect to citizens, lawful resident aliens, or individuals captured or arrested in the United States, Section 1021 simply says nothing at all.\nWith this understanding of Section 1021, the court found that the American citizen plaintiffs had no standing to challenge Section 1021 because if they were to find themselves detained, that would be due to \"existing laws and authorities,\" which the plaintiffs had not challenged.\nSection 1021(b), however, did have meaning for noncitizens captured abroad; it codified what previously had been implicit and subject to reasonable dispute. The court assumed without deciding that the noncitizen plaintiffs may assert First and Fifth Amendment rights. To obtain standing to challenge a law that has not actually been enforced against the plaintiffs, they must be able to demonstrate that there is a sufficiently imminent chance it will be enforced. The government in this case disputed that the plaintiffs are subject to the statute, while the plaintiffs feared their work for WikiLeaks might indirectly provide support to Al Qaeda. The court declined to decide whether the plaintiffs could lawfully be detained, but held that even assuming their detention would be permitted, they must show more. Neither of the noncitizen plaintiffs adduced any evidence that the government had threatened to place them in military detention or intends to do so, nor had they shown that persons similarly situated to them had been subjected to military detention. The court vacated the injunction. The plaintiffs have asked the Supreme Court to review the decision.",
"",
"Congress has ample authority under Article I of the Constitution to regulate the capture and detention of enemy combatants. While it appears that the existence of a state of war has generally sufficed to authorize the executive branch to capture and detain prisoners of war, history shows that even during declared wars, additional statutory authority has been seen as necessary to validate the domestic detention of persons who were not members of any armed forces, at least in the absence of a suspension of the writ of habeas corpus.\nIn Ex parte Milligan , the Supreme Court invalidated a military detention and sentence of a civilian for violations of the law of war, despite accusations that Milligan conspired and committed hostile acts against the United States, in part on the basis that it found the law of war inapplicable to persons who were not part of the armed forces of a belligerent in what constituted an international armed conflict for the purposes of the law of war. A majority of the Milligan Court agreed that Congress was not empowered to authorize the President to assert military jurisdiction in areas not subject to martial law, but scholars disagree as to whether that portion of the opinion is binding as law or is merely dicta . Still, the Court did not object to the part of the statute that authorized temporary military detention of persons until a grand jury had met. It is not clear that the Milligan Court would have rejected a statute that authorized the suspension of habeas corpus with respect to \"aiders and abettors\" of the enemy, which might well have included the Sons of Liberty, although five of the justices thought their trial by military commission with or without congressional authority would be unconstitutional.\nThe Korematsu decision is frequently cited as upholding the internment of Japanese-Americans during World War II, but the Supreme Court expressly limited its decision to the legality of excluding these citizens from declared military areas. Ex parte Endo invalidated the detention of a U.S. citizen who was \"concededly loyal\" to the United States, possibly implying that the detention of disloyal citizens may be permissible, at least if \"clearly and unmistakably\" authorized by Congress, but leaving open the question of what constitutional due process is required to determine the loyalty of persons the government sought to intern. In 1950, Congress passed the Emergency Detention Act (EDA), which authorized the President to declare an \"Internal Security Emergency,\" during which the President could authorize the apprehension and detention of any person deemed reasonably likely to engage in acts of espionage or sabotage. However, this authority was never exercised, and the EDA was repealed without any court having had the opportunity to evaluate its constitutionality.\nIt has been argued that Ex parte Quirin stands for the proposition that citizens and other persons caught aiding the enemy within the United States are effectively part of the enemy and may be treated as enemy combatants under the law of war. It may be that the law of war has evolved so that it applies in the same way to armed conflicts that do not meet the traditional requirements for a belligerency as it applies in wars between states (while traditional distinctions that now seem anachronistic may be discarded or embraced as deemed appropriate), but there seems to be little evidence that a majority of states have adopted this view. Supreme Court cases through Quirin seem to be based on a traditional view of international law, in which an individual's belligerent status was a function of his employment in the armed forces of an opposing government. Milligan appears to have rejected the contention that a person who was part of a militant group that did not qualify as a belligerent party under international law gained belligerent status. Under this view, military force (and military jurisdiction) might have been permissible with respect to a group like the Sons of Liberty only if military force or martial law became absolutely necessary. The Quirin opinion did not overturn this understanding, but may be understood to have clarified that it did not apply in the case of persons who had belligerent status (although not entitled to prisoner of war protections). The Hamdi Court does not appear to have marked a clear departure from the traditional practices in this regard, either, although the circumstances of the case did not require an analysis of the domestic impact of the AUMF. On the other hand, it may be argued that Milligan does not mean what it apparently says with respect to belligerent status, or has since been limited to the facts as later described in Quirin to stand merely for the proposition that civilians not accused of engaging in belligerent activity at all may not be tried by military commission, or that it is no longer good law in light of changes in the law of war or enactment of the AUMF.\nCongressional activity since the Quirin decision suggests that Congress did not previously interpret Quirin as a significant departure from prior practice with regard to restriction of civil liberties during war, and would not likely have presumed that an authorization to use military force implies the authority to detain without trial persons in the United States who were neither captured on an active battlefield nor arrested while participating in an enemy invasion. If that is the case, it may be that Congress, in enacting the AUMF, intended to authorize the capture and detention of persons captured on the battlefield during actual hostilities, as the Hamdi Court confirmed, while withholding the authority to detain accused enemy agents or aiders and abettors operating domestically.\nUntil enactment of the detainee provisions in the 2012, Congress did not expressly clarify the scope of detention authority under the AUMF. In affirming the detention authority under the AUMF in the 2012 NDAA, Congress declined to clarify whether the detention authority extends to U.S. citizens and other persons within the United States, providing instead that the law and authority with respect to such persons remains unchanged. The statute does not require that any citizens be detained in military custody, but if such a detention occurs, it will be up to a court to determine Congress's intent when it enacted the AUMF, or alternatively, to decide whether the law as it was subsequently developed by the courts and executive branch sufficiently established that authority for such detention already exists. The issue could also arise in the event a noncitizen is detained pursuant to the mandatory detention requirement in Section 1022.\nWhile the Supreme Court has never expressly upheld the administrative detention or internment of U.S. citizens and non-alien enemies during war as a preventive measure, the Hirabayashi and Korematsu line of cases suggests that courts may show deference to a congressional finding that restrictions on civil liberties are necessary to counter the threat of sabotage and espionage during war. On the other hand, if it is established that the authority to detain citizens must be conferred by Congress in clear and unmistakable terms, the NDAA detention provisions may, by leaving the question to the courts, demonstrate a lack of clear intent that would be necessary to support such a detention.\nAny U.S. citizens who may be held in military custody in the future can be expected to argue that the Non-Detention Act,18 U.S.C. Section 4001(a), continues to control and that the AUMF, even as affirmed by the 2012 NDAA, provides an exception only in the narrow circumstances addressed in the Hamdi case.",
"A number of bills were introduced in the 112 th Congress that would have amended the detainee provisions in the 2012 NDAA or otherwise clarify detention authority under the AUMF. On February 29, 2012, the Senate Judiciary Committee held a hearing entitled \"The Due Process Guarantee Act: Banning Indefinite Detention of Americans,\" in relation to S. 2003 , 112 th Congress. No Obama Administration officials testified on either of the two panels.\nThe House version of the National Defense Authorization Act for FY2013 (2013 NDAA; H.R. 4310 ) was passed in May 2012. The Senate passed its version, S. 3254 , as a substitute for the House bill on December 4, 2012. The bills addressed the issue of detention of U.S. persons inside the United States in different ways. The detainee measures from the House version were largely adopted in conference. P.L. 112-239 was enacted into law on January 2, 2013.\nThe Senate had adopted a measure that would have modified 18 U.S.C. Section 4001 to clarify that authorizations to use force are not to be construed to permit detention of U.S. citizens or lawful permanent residents in the United States unless Congress passes a law expressly authorizing such detention. This measure was eliminated from the bill reported out of conference. An amendment to remove military detention as an optional \"disposition under the law of war\" for persons in the United States was proposed during floor debates in the House, but failed to garner sufficient votes for adoption.\nInstead, Section 1029 of P.L. 112-239 adopted a modified version of the House provision on habeas corpus rights. It provides that nothing in the AUMF or 2012 NDAA is to be construed as denying \"the availability of the writ of habeas corpus\" or denying \"any Constitutional rights in a court ordained or established by or under Article III of the Constitution\" with respect to persons who are inside the United States who would be \"entitled to the availability of such writ or to such rights in the absence of such laws.\" The original provision from the House-passed bill, as amended on the floor, would have covered only persons who are lawfully present in the United States when detained pursuant to the AUMF. Under the floor amendment, the provision would also have required the President to notify Congress within 48 hours of the detention of such a person, and established a requirement that such persons be permitted to file for habeas corpus \"not later than 30 days after the person is placed in military custody.\"\nThe 2013 NDAA does not contain substantive clarification of which U.S. persons are lawfully subject to detention under the AUMF. Sections from the House bill setting forth congressional findings with respect to detention authority under the AUMF and 2012 NDAA and with respect to habeas corpus were omitted from the final version. Consequently, ambiguity with respect to who can be lawfully detained in the United States appears to have been preserved, but the 2013 NDAA provides reassurance that access to a court to petition for habeas corpus will remain available to those who are detained in the United States pursuant to the AUMF.",
"The House passed its original version of the National Defense Authorization Act for FY2014, H.R. 1960 , on June 14, 2013. It contained a provision similar to that in the 2013 NDAA providing reassurance that those apprehended pursuant to the AUMF in the United States may seek habeas relief, except that this provision would apply only to U.S. citizens (§1040B(a)). The section further provided that in cases in which such citizens petition for habeas corpus, the \"government shall have the burden of proving by clear and convincing evidence that such citizen is an unprivileged enemy belligerent and there shall be no presumption that any evidence presented by the government as justification for the apprehension and subsequent detention is accurate and authentic\" (§1040B(b)). This evidentiary standard appears to be higher than that which the courts of the D.C. Circuit have applied to cases involving Guantanamo detainees. In those cases, the government need only prove detention is lawful by a preponderance of the evidence, and there is a presumption that official government records submitted as evidence are authentic. The provision was not included in the final version of the 2014 NDAA, H.R. 3304 ( P.L. 113-66 ).\nH.R. 2325 and a companion bill, S. 1147 , both captioned the Due Process and Military Detention Amendments Act, would add a new subsection to Section 1021 of the 2012 NDAA to provide that, with respect to covered persons detained within the United States pursuant to AUMF authority, disposition under the law of war must take place immediately, and means only transfer for \"trial and proceedings\" by a federal or state court in accordance with constitutional due process. The bills would also prohibit the transfer of any person detained, captured, or arrested in the United States, or a territory or possession of the United States, into military custody. The amendment would apply to all persons detained within the United States irrespective of citizenship, immigration status, or place of capture.",
"In signing the 2012 NDAA into law, President Obama stated that his Administration does not intend to detain indefinitely U.S. citizens pursuant to the detention authority in Section 1021. However, given that the conflict may last beyond his term and that the 2012 NDAA appears to mandate at least temporary military detention for some non-U.S. citizens, it is possible that the Supreme Court has not issued its last word on \"enemy combatants\" and preventive detention as a means to prosecute hostilities authorized by the AUMF. Lower courts that have addressed questions the Supreme Court left unanswered have not achieved a consensus on the extent to which Congress has authorized the detention without trial of U.S. persons as \"enemy combatants,\" and Congress has not so far clarified its intent. If Hamdi stands for the proposition that U.S. citizens may be detained under the same circumstances that make noncitizens amenable to law-of-war detention, regardless of location, then the Guantanamo cases may provide sufficient legal precedent for detaining similarly situated persons within the United States. If, on the other hand, historical precedent has any bearing on the interpretation of the state of the law and authorities regarding detention of U.S. persons under the law of war, as preserved by Section 1021(e) of the 2012 NDAA, it seems difficult to conclude that the AUMF should be read to imply the authority to detain such persons unless they are part of the armed forces of a belligerent party to an armed conflict. Congress has on occasion exercised the authority to permit the detention of civilians without trial based on the risk they are deemed to pose to national security, but if a declaration of war alone has not sufficed to trigger that authority, it seems unlikely that an authorization to use force would be presumed to confer it."
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"question": [
"What did the Supreme Court affirm in 2004?",
"What court cases explored the power of the president to detain \"enemy combatants\"?",
"What conclusions have lower courts made regarding the issue of wartime detention?",
"What was the response of a federal judge regarding this issue?",
"What is the focus of this report?",
"What is presented in this report?",
"How does this report conclude?"
],
"summary": [
"The Supreme Court in 2004 affirmed the President's power to detain \"enemy combatants,\" including those who are U.S. citizens, as part of the necessary force authorized by Congress after the terrorist attacks of September 11, 2001.",
"In Hamdi v. Rumsfeld, a plurality held that a U.S. citizen allegedly captured during combat in Afghanistan and incarcerated at a Navy brig in South Carolina is entitled to notice and an opportunity to be heard by a neutral decision maker regarding the government's reasons for detaining him. On the same day, the Court in Rumsfeld v. Padilla overturned a lower court's grant of habeas corpus to another U.S. citizen in military custody in South Carolina on jurisdictional grounds, leaving undecided whether the authority to detain also applies to U.S. citizens arrested in the United States by civilian authorities.",
"Lower courts that have addressed the issue of wartime detention within the United States have reached conflicting conclusions. While the U.S. Court of Appeals for the Fourth Circuit ultimately confirmed the detention authority in principle in two separate cases (one of which was subsequently vacated), the government avoided taking the argument to the Supreme Court by indicting the accused detainees for federal crimes, making their habeas appeals moot and leaving the law generally unsettled.",
"A federal judge enjoined the detention of persons on the basis of providing support to or associating with belligerent parties under one prong of the definition enacted as Section 1021 of the National Defense Authorization Act for FY2012, P.L. 112-81 (Hedges v. Obama), but the decision has been reversed on appeal on the basis of standing.",
"This report provides a background to the legal issues presented, followed by a brief introduction to the law of war pertinent to the detention of different categories of individuals.",
"An overview of U.S. practice during wartime to detain persons deemed dangerous to the national security is presented.",
"The report concludes by discussing Congress's role in prescribing rules for wartime detention, subsequent legislation in the 112th Congress that addresses the detention of U.S. persons, and legislative proposals in the 113th Congress to further address the issue (H.R. 1960, S. 1147, H.R. 2325, and H.R. 3304."
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GAO_GAO-13-689
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{
"title": [
"Background",
"History of the DRC: Conflict and Instability",
"U.S. Government Response to Situation in the DRC",
"SEC’s Final Conflict Minerals Rule",
"Conflict Minerals Description and Supply Chain",
"Stakeholder- Developed Initiatives May Facilitate Compliance with Conflict Minerals Rule, but Other Factors May Affect the Rule’s Impact on Reducing Benefits to Armed Groups",
"Adoption of the Final Rule Has Raised Companies’ Awareness Regarding Sourcing of Conflict Minerals",
"Stakeholder-Developed Initiatives May Increase Companies’ Assurance That Conflict Minerals They Use Are Not Benefiting DRC Armed Groups",
"Stakeholder-Developed Initiatives May Aid Companies’ Due Diligence Efforts",
"Lack of Security, Inadequate Infrastructure, and Capacity Constraints in the DRC Could Affect Companies’ Ability to Ensure Conflict-Free Sourcing of Minerals",
"Many Companies Not Required to Report to SEC under the Conflict Minerals Rule Will Likely Be Affected; Limited Aggregated Information about Them Exists",
"Companies Not Required to Report to SEC under the Rule May Provide Information on the Origin of Conflict Minerals in Their Products to Companies That Will Report to SEC under the Rule",
"Companies Not Required to Report to SEC under the Rule May Supply Products That May Contain Conflict Minerals to SEC-Reporting Companies under the Rule",
"Little Additional Information on the Rate of Sexual Violence in Eastern DRC and Neighboring Countries Has Become Available since GAO’s 2012 Report",
"Since GAO’s 2012 Report, One Population-Based Survey on the Rate of Sexual Violence Has Been Published in Uganda and One Is Planned for DRC",
"Some Additional Case File Data Has Become Available on Sexual Violence since GAO’s 2012 Report",
"Agency Comments and Our Evaluation",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: SEC’s Flowchart Summary of the Disclosure Process for the Final Conflict Minerals Rule",
"Appendix III: Updates of Global and In-Region Sourcing Initiatives",
"Global Sourcing Initiatives",
"OECD Due Diligence Guidance",
"Conflict-Free Smelter Program",
"World Gold Council’s Conflict-Free Gold Standard and Tools",
"In-Region Sourcing Initiatives",
"Conflict-Free Tin Initiative",
"ICGLR’s Regional Certification Mechanism and Other Initiatives",
"Appendix IV: GAO Contacts and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"",
"The mineral-rich DRC, Africa’s second-largest country, has been plagued by cycles of violence and instability. Since 1998, violent conflicts, poverty, and disease have killed more than 5.4 million people in the country, according to estimates by the International Rescue Committee. The DRC was colonized as a personal possession of Belgian King Leopold II in 1885 and administered by the Belgian government starting in 1907. It achieved independence from Belgium in 1960. For almost 30 years of the post-independence period, the DRC, then known as Zaire, was ruled by an authoritarian regime under Mobutu Sese Seko. Following the 1994 genocide in Rwanda and the establishment of a new government there, some perpetrators of the genocide and refugees fled to the neighboring Kivu provinces of eastern DRC. A rebellion began there in 1996, pitting the forces led by Laurent Kabila against the army of President Mobutu Sese Seko. Kabila’s forces, aided by Rwanda and Uganda, took the capital city of Kinshasa in 1997 and renamed the country the Democratic Republic of the Congo. See figure 1 for a map of the DRC’s provinces and neighboring countries.\nA period of civil war among rival rebel groups ensued. In 2001 Laurent Kabila was assassinated and leadership shifted to his son Joseph Kabila, while the civil war continued. Starting in 1999 the UN Security Council authorized peacekeeping operations in the DRC which have been operating as the United Nations Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO). Initially, the operation’s focus was on the ceasefire and disengagement of forces and maintenance of liaison with all parties involved with the civil war but then expanded to include the effective protection of civilians, humanitarian personnel and human rights defenders under imminent threat of physical violence. The presence of illegal armed groups, such as M23, has continued to be an issue that MONUSCO has monitored in recent years. In November 2012, M23 occupied the city of Goma, a provincial capital in eastern DRC in the North Kivu province, and other cities in eastern DRC and clashed with the Congolese national army. During this time, the UN reported cases of sexual violence perpetrated by armed groups and members of the Congolese national army against women and children. While M23 eventually withdrew from the cities, the group’s presence in the region continues. In February 2013, the UN reported that eastern DRC continues to be plagued by recurrent waves of conflict, chronic humanitarian crises, and serious human rights violations, including sexual and gender-based violence. The report added that contributing factors to the cycles of violence have been the continuing presence of Congolese and foreign armed groups taking advantage of security vacuums in the eastern part of the country, the illegal exploitation of resources, interference by neighboring countries, and the weak capacity of the national army and police to effectively protect civilians and the national territory and ensure law and order. In March 2013, the UN Secretary- General appointed a Special Envoy to the Great Lakes Region of Africa to support the implementation of the 11-nation “Peace, Security and Cooperation Framework for the Democratic Republic of the Congo and the Region” adopted in February 2013. According to the UN, the agreement seeks to end the recurring cycle of conflicts and crisis in the eastern DRC and to build peace. Additionally, on March 28, 2013, the UN Security Council authorized the deployment of an intervention brigade within the current peacekeeping operations in DRC to address imminent threats to peace and security. The objectives of the new force based in North Kivu province are to neutralize armed groups, reduce the threat they pose to state authority and civilian security, and make space for stabilization activities.",
"Congress has focused on issues related to the DRC for almost a decade. In 2006, Congress passed the Democratic Republic of Congo Relief, Security, and Democracy Promotion Act of 2006. The act stated that it is the policy of the United States, among other things, to engage with governments working for peace and security throughout the DRC and hold accountable individuals, entities, and countries working to destabilize the government. In July 2010, Congress included several provisions in section 1502 of the Dodd-Frank Act related to conflict minerals in the DRC and adjoining countries. Specifically, section 1502(a) of the Act states that “it is the sense of Congress that the exploitation and trade of conflict minerals originating in the is helping to finance conflict characterized by extreme levels of violence in the eastern Democratic Republic of the Congo, particularly sexual- and gender-based violence, and contributing to an emergency humanitarian situation therein,” warranting the provisions of Section 1502(b) of the Act. Section 1502(b) requires SEC, in consultation with State, to promulgate disclosure and reporting regulations regarding the use of conflict minerals from the DRC and adjoining countries. In November 2011, State and USAID, in collaboration with NGOs, industry, and other governments, launched the Public-Private Alliance for Responsible Minerals Trade (PPA) to support responsible supply chain solutions regarding conflict minerals from the DRC and neighboring countries. The PPA supports pilot programs, with the ultimate goal of producing scalable, self-sustaining systems, to demonstrate a fully traced and validated conflict-mineral supply chain in a way that is credible to companies, civil society, and government. According to USAID, in addition to the PPA, the U.S. government’s contribution to the Responsible Minerals Trade Program in the DRC region has amounted to almost $19 million and includes activities focused on the protection of artisanal mining communities, institutional and human capacity building for responsible minerals trade, and capacity building in mining sector security, among other issues.",
"The SEC Commissioners adopted the final conflict minerals rule on August 22, 2012, after a number of delays during the drafting process. SEC reported that during its rule-making process it received more than 400 letters commenting on the draft rule. As adopted, the final rule applies to any issuer that files reports with SEC under Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (Securities Exchange Act) and uses conflict minerals that are necessary to the functionality or production of a product manufactured or contracted by that issuer to be manufactured. According to SEC, issuers that have a reporting obligation are domestic and foreign companies that offer shares publicly and file forms 10-K, 20-F, or 40-F with SEC. For the purposes of our report, we refer to those issuing companies affected by the rule as “SEC-reporting companies under the rule.” (See app. II for more information on the steps a company needs to take to fulfill its reporting requirements.) Under the rule, such companies must file a disclosure report and conduct a “reasonable country of origin inquiry” to determine Companies that whether they must also file a conflict minerals report.are required to file a conflict minerals report must exercise due diligence on the source and chain of custody of their conflict minerals. The due diligence measures used by companies must conform to a nationally or internationally recognized due diligence framework, such as the due diligence guidance approved by OECD. If a company determines that its products are “DRC conflict-free” because they may have originated from the covered countries but did not finance or benefit armed groups, then the company must obtain an independent private sector audit and provide certification that it conducted an audit. If a company’s products have not been found to be “DRC conflict-free,” then the company must provide additional information in its conflict minerals report. For a temporary period—4 years for smaller reporting companies or 2 years for all other reporting companies—if a company is unable to determine whether the minerals in its products originated in the DRC or the adjoining countries or financed or benefited armed groups in those countries, then those products are considered “DRC conflict undeterminable” and no audit is Under the rule, all companies will need to file their first required.disclosure report to SEC on May 31, 2014, which covers the 2013 calendar year, and on May 31 annually thereafter. Figure 2 shows the reporting time frames for SEC-reporting companies under the rule.\nIn October 2012, the U.S. Chamber of Commerce, the National Association of Manufacturers, and the Business Roundtable filed a lawsuit against SEC regarding the final conflict minerals rule. In their petition, the two industry associations asked that the rule “be modified or set aside in whole or in part.” The petitioners have asked the court to review, among other things, whether SEC’s economic analysis is inadequate and whether SEC’s interpretations of certain key terms in section 1502 of the Act are consistent with congressional intent.",
"The four conflict minerals covered by section 1502(b) of the Dodd-Frank Act are mined in various locations around the world. For example, tin is predominantly mined in China, Indonesia, Peru, and Bolivia, as well as in the DRC, while tantalum is reportedly predominantly mined in areas such as Australia, Brazil, and Canada. From 2006 through 2011, the majority of tungsten production—reportedly 77 to 87 percent of global production— was mined in China. Gold, however, is mined in many different countries, including the DRC. Our review of United States Geological Survey data on tantalum, tin, tungsten, and gold mined in the DRC showed that about 12 percent of the global tantalum supply and less than 1 percent of the global tungsten supply was mined in the DRC in 2011. About 3 percent of the global tin supply, and less than 1 percent of the global gold supply, was mined in the DRC in 2010. As we reported in our 2012 report, various industries, particularly in manufacturing, use these minerals in a wide variety of products and in varying amounts. For example, many industries use tin in the form of tin solder, which is used to join metal pieces together.in food packaging, in steel coatings on automobile parts, and in some plastics. According to industry association and company representatives, the majority of tantalum is used to manufacture tantalum capacitors, which enable energy storage in electronic products such as cell phones According to company representatives, tin is also found and computers.and cutting tools, and other industrial manufacturing tools. It is also the primary component of filaments in light bulbs. In addition to its use as currency and in jewelry, gold is also used by other industries, such as the electronics industry.\nTungsten is used in automobile manufacturing, drill bits A company’s supply chain for products containing tin, tantalum, tungsten, and gold can be complex and can vary considerably in the way it operates, according to industry association and company representatives. Generally, however, the supply chain for companies using conflict minerals begins at the mine site, where tin, tantalum, and tungsten ore are extracted from the ground using mechanized or artisanal mining techniques. supply chain for all four conflict minerals.",
"SEC’s adoption of the final conflict minerals rule on August 22, 2012, has raised companies’ awareness regarding conflict minerals and the due diligence necessary to identify whether conflict minerals may have benefited armed groups. Specifically, officials representing industry associations stated that the final conflict minerals rule has acted as an impetus for some of their members to start thinking about whether the rule impacts them and some have also started collecting information to comply with the rule. Officials stated that stakeholder-developed initiatives, such as in-region and global sourcing initiatives, may increase companies’ assurance that conflict minerals they are using are not benefiting armed groups in the DRC and neighboring countries. However, constraining factors such as the lack of security, lack of infrastructure, and capacity constraints could undermine companies’ ability to ensure conflict-free sourcing from the region.",
"Since SEC issued the final conflict minerals rule pursuant to the Dodd Frank Act, companies have become more aware of the issues surrounding conflict minerals and have started to consider the source of materials used in products, given the requirement in the final rule for a company that uses tin, tantalum, tungsten, or gold to exercise due diligence on the source and chain of custody of its conflict minerals, if there is reason to believe that they may have originated in the DRC or an adjoining country. According to some industry officials we interviewed, the final rule has helped resolve some uncertainties, such as the breadth of the industries covered, that existed before the promulgation of the rule. Numerous industry officials and representatives from international organizations and NGOs we interviewed have indicated that the creation and promulgation of the SEC rule has increased visibility into the issue of conflict minerals and raised awareness of the due diligence process, particularly for those companies that are not required to report under the Specifically, rule but that may still be impacted indirectly by the rule.officials of industry associations representing member companies that use tin, tantalum, tungsten, or gold in their products stated that many companies are aware of the SEC rule, especially the larger companies that may file a disclosure report with SEC, and are working to start complying with the rule. Some smaller companies, which may not be required to report under the rule, may not be as aware of or familiar with the rule but are receiving information from industry associations on how the rule may impact them. For example, some officials from industry associations stated that they were putting together guidance documents that break down the SEC rule and had also sent questions to SEC seeking to clarify points in the rule. Agency officials stated that the SEC rule has raised visibility globally of conflict minerals. For example, State reported in February 2013 that the issuance of the SEC rule was a vital step in establishing a clear and harmonized global framework for responsible minerals trade from the DRC region. Furthermore, State indicated that the SEC rule has also shaped and influenced initiatives to create a conflict-free supply chain by the International Conference of the Great Lakes Region (ICGLR) and the governments of the DRC and Rwanda. We provide a more detailed discussion later in this report on the ways in which companies required to report under the rule, in order to comply, are interacting with companies not required to report under the rule.",
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"Some agency officials we interviewed stated that stakeholder-developed initiatives focused on sourcing of minerals may enhance companies’ ability to achieve the SEC rule’s desired outcome of denying armed groups in the DRC benefits from conflict minerals. As mentioned in our 2012 report, stakeholder-developed initiatives—which include the development of guidance documents, audit protocols, and in-region sourcing—support efforts by companies reporting to SEC under the rule to (1) conduct due diligence of their conflict minerals supply chain, (2) identify the source of conflict minerals within their supply chain, and (3) responsibly source conflict minerals. These initiatives can be classified as in-region or global, and some are now being expanded.\nIn-region sourcing initiatives, as we reported in 2012, may support responsible sourcing of conflict minerals from Central Africa and the identification of specific mines of origin for those minerals. Regional sourcing initiatives in the DRC and neighboring countries focus on tracing minerals from the mine to the mineral smelter or refiner by supporting a bagging and tagging program or some type of traceability scheme. Examples of such initiatives include the ITRI Tin Supply Chain Initiative (iTSCi) and the Conflict-Free Tin Initiative (CFTI). (See app. III for more detailed information on these and selected other in-region sourcing initiatives). The iTSCi initiative was developed by a tin industry association known as ITRI. The initiative supports responsible sourcing of tin, tantalum, and tungsten from Central Africa and was launched in Rwanda in December 2010 and in the Katanga province of the DRC in March 2011. iTSCi expanded its activities in the Maniema province of the DRC in December 2012. We reported in 2012 that iTSCi is a traceability and due diligence program that creates auditable and verifiable chains of custody for tin, tantalum, and tungsten through (1) tagging and bagging of materials and the collection of tagging data and (2) regular incident reporting and continuous monitoring of mines and companies participating in the program. In October 2012, the Dutch government, with industry partners such as iTSCi, started the Conflict-Free Tin Initiative focused on conflict-free tin sourcing from South Kivu in the DRC, a region that is prone to insecurity and violence by illegal armed groups. This initiative is a traceability and due diligence mechanism that brings partners along the supply chain together, from mine to smelter to end- user. This also includes consumers as well as the DRC government and civil society and uses the OECD due diligence guidance. According to an implementer, the progress of the initiative will depend on how the security situation in South Kivu develops.\nWhile the in-region sourcing initiatives have focused on tin, tantalum, and tungsten to date, one of the most recent in-region initiatives in the DRC is through the Public-Private Alliance for Responsible Minerals Trade (PPA) and is focused on a pilot gold traceability scheme. In fall of 2012, Partnership Africa Canada began work on establishing an in-region gold traceability project partially funded by PPA. According to information from PPA, the project aims to create a traceable conflict-free mineral chain for artisanal gold from the eastern DRC, in the Orientale province, thus demonstrating the feasibility of creating artisanal gold chains with full traceability from mine site to gold refiner.\nAccording to industry and agency officials, in-region sourcing programs can provide better economic incentive for miners to sell minerals that do not benefit armed groups. For example, iTSCi reported in February 2013 that the tin initiative in South Kivu had led to a number of immediate benefits for the local population, which depends on mining as its source of income. Specifically, the price paid to the miners for conflict-free minerals mined at the site had more than doubled. iTSCi further reported that the additional income had allowed the mining cooperatives to invest in basic equipment such as electricity generators and to improve productivity and working conditions. Additionally, some agency officials stated that in- region initiatives can help develop capacity in the DRC.\nWe reported in 2012 that global sourcing initiatives may minimize the risk of minerals that have been exploited by illegal armed groups from entering the supply chain and support companies’ efforts to identify the source of the conflict minerals across the supply chain around the world. (See app. III for more detailed information on selected global sourcing initiatives.) One such global initiative is the Conflict-Free Smelter Program, co-developed by the Global e-Sustainability Initiative (GeSI) and the Electronics Industry Citizenship Coalition (EICC). The Conflict- Free Smelter Program is a voluntary initiative in which an independent third party audits smelters’ procurement activities—–among other activities—–and determines if the smelters demonstrated that the minerals they processed originated from conflict-free sources. Companies that can trace their conflict minerals supply chain back to compliant smelters or refiners can claim that the minerals in their products are from a smelter whose processes reasonably assure conflict-free production.\nIndustry experts we interviewed explained that if initiatives such as the Conflict-Free Smelter Program can result in smelters refining minerals that did not benefit armed groups, then companies can comply better with the SEC rule requirements and have more confidence in their supply chain sources. Specifically, one expert stated that companies that are conducting due diligence under the rule would not have to audit the smelter themselves, if the smelter has already been audited under the Conflict-Free Smelter Program. Agency officials, both in Washington, D.C., and in the DRC, reported that the Conflict Free Smelter Program seems to be a positive initiative since the more smelters are certified as conflict-free, the more beneficial this will be for companies reporting under the SEC rule.\nOverall, agency officials we interviewed stated that existing initiatives and traceability schemes on the ground in the DRC and neighboring countries have been yielding benefits of producing conflict-free minerals; however, according to these officials, more progress could be made in the responsible sourcing of conflict minerals from the region. Some industry experts also indicated that while progress has been made and the initiation or expansion of in-region sourcing initiatives is possible, factors such as the ones described below remain a concern.",
"Some agency officials as well as representatives we interviewed from NGOs, industry, and international organizations cited lack of security, inadequate infrastructure, and capacity constraints as factors that could affect the ability to expand on efforts to achieve conflict-free sourcing of minerals from the eastern DRC and thereby potentially contribute to armed groups benefiting from the conflict minerals trade. We also cited these same factors in our 2010 report and pointed out that these factors posed challenges to tracking the mines of origin for minerals artisanally mined in eastern DRC. While officials we spoke to for this report discussed these factors in the context of the SEC rule, these factors are pre-existing regional challenges that pre-date both the Dodd Frank Act and the SEC conflict minerals rule.\nOfficials cited the lack of security, including weak governance, as a factor that could impact responsible sourcing from the DRC. The UN reported that the DRC government has been unable to exercise authority in eastern DRC, which has become more evident as illegal armed groups clashed in the Kivu provinces late in 2012. State also reported that lack of security has prevented the export of conflict-free minerals from certain areas in eastern DRC. Industry and NGO officials who work on the ground in the DRC pointed out that the threat from illegal armed groups poses a challenge to the conflict-free minerals initiatives operating in eastern DRC and the neighboring provinces. Although the mining sites are constantly monitored, the monitoring activities could be suspended at any time as the security situation evolves. For example, an NGO reported that tagging was suspended for days in July 2012 at an iTSCi site in the Katanga province because of the movement of armed groups in the vicinity of the mine sites; however, there were no reported cases of armed groups successfully taking control of the sites or directly exploiting minerals to fund activities.\nIn-region sourcing initiatives have operated in areas that have been vetted by various stakeholders and have the support of government and civil society actors. According to the UN Group of Experts on the Democratic Republic of the Congo (UNGoE), the security situation at tin, tantalum, and tungsten mining sites has improved and the trade of these minerals has become a much less important source of financing for armed groups. However, the UNGoE reported a “genuine risk that military actors would move their rackets to mining activities that were not closely supervised.” They further reported that the gold trade is linked to armed groups and criminal networks in the Congolese armed forces. According to the UNGoE, lack of security at gold mining sites throughout eastern DRC remained widespread. Agency officials emphasized that armed groups still existed in the DRC despite the initiatives in place and would seek control of any significant revenue-producing activity in the region.\nSome industry officials cited concerns about sourcing from the DRC, even through the in-region sourcing initiatives, because of the potential impact on brand reputation and financial risk. For example, a representative of a smelter indicated that if the company purchased minerals from a mine that is part of a traceability scheme that is deemed conflict-free but then illegal armed groups infiltrated and compromised the mine in the future, the company would not be able to say with certainty that the minerals it had purchased were conflict-free.\nOfficials cited limited infrastructure as a factor that could affect the creation or expansion of in-region sourcing initiatives. Officials from UNGoE and industry representatives we interviewed noted a lack of infrastructure in place that would enable companies to set up or expand operations in the DRC. Limited transportation and poor roads in eastern DRC also make it difficult to get to mine sites. For example, an agency official in the DRC commented that mines may be a day’s walk from a main road. Also, an NGO reported that in selecting a potential pilot site for a traceability scheme, accessibility to the site by road was a key criterion and would involve using off-road vehicles due to the significant deterioration of roads leading to the mine. Moreover, according to an NGO representative, the remoteness of mines also makes it difficult for DRC mine officials to validate mines and ensure that the mines have not been compromised by armed groups. Furthermore, State officials indicated that the lack of infrastructure prevents trade initiatives from developing economies of scale and expanding.\nOfficials we interviewed cited the lack of technical, economic, and political capacity as another factor that may affect the creation or expansion of in- region sourcing initiatives focused on responsible sourcing in the DRC and neighboring countries. In 2013, the OECD reported that while the understanding of responsible sourcing is “high for those actors in the DRC and Rwanda who have participated in such initiatives, the same is not true for state agents” in the country. The OECD report also pointed out that Ugandan and Burundian government officials and other entities lack technical understanding of due diligence requirements. Some NGO officials stated that lack of capacity can impact the due diligence process in the supply chain, especially if the numbers of trained mining agents is insufficient. For example, some agency officials and an NGO reported that the DRC does not have enough mine agents to certify the mines, of which there may be over 2,000 in eastern DRC alone, or even to negotiate and manage mining contracts. Moreover, an NGO official stated that mines need to be reinspected every 6 to 12 months in order to ensure proper due diligence in accordance with OECD and ICGLR guidance; however, the NGO official stated that the DRC government does not have the capacity to inspect at such frequency.\nSome agency officials and officials we interviewed from industry, NGOs, and international organizations also commented that the DRC government lacks capacity to mitigate corruption and smuggling. The lack of capacity can impact due diligence and can contribute to illegal minerals trade and cross-border smuggling. For example, the UN reported that illegal trade of minerals undermines the exercise of due diligence in the DRC and affects the credibility of due diligence-based certification and traceability systems. According to some industry experts, mining agents may not be properly compensated, due to the lack of governance in eastern DRC, and may look for other ways to earn money, which could involve colluding with illegal armed groups.\nWith regard to smuggling, the OECD reported that as long as there are no traceability or certification schemes in place that cover the whole region, and most notably, the Kivu provinces, Uganda, and Burundi, smuggling and contamination of clean materials will continue to pose a threat to formalization of the artisanal mining sector and due diligence initiatives. According to a 2012 UNGoE report, several tons of gold worth hundreds of millions of dollars are smuggled from the eastern DRC through neighboring countries, where it is ultimately smelted and sold to jewelers in markets, such as the United Arab Emirates. Representatives from some industry associations that we interviewed stated that armed groups and criminal elements have shifted efforts to gold mines because it is relatively easy to smuggle gold because of its size. Furthermore, gold’s high value in the market makes it more viable for smuggling than tin, tantalum, and tungsten.",
"Even companies that are not required to file disclosures under SEC’s conflict minerals rule will likely be affected by the rule. These companies may supply components or parts that contain conflict minerals to companies reporting to SEC under the rule and may be asked by such companies to provide information specifying the origin of the minerals. Aside from the supply chain relationship, while information is publicly available about some smelters and refiners, there is little aggregated information available about companies that do not report to SEC under the rule but may trade in conflict minerals.",
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"Companies that are not required to report to SEC under the rule may supply products that contain conflict minerals to SEC-reporting companies under the rule. SEC relied on estimates provided by a commentator indicating that 278,000 suppliers—most of which would be companies that would not report to SEC under the rule—could be indirectly impacted by the rule. Moreover, the release contains an estimate that each of the nearly 6,000 companies that could be directly impacted by the rule has roughly 1,000 first-tier suppliers, on average. These suppliers, including first-tier suppliers, could provide products that contain conflict minerals to companies required to report to SEC under the rule. Examples of these products include tin solder for joining metal, tantalum capacitors for storing energy in cellular phones, tungsten carbide for hardened cutting tools, or gold plating for wires to increase durability and resistance to corrosion. The first-tier supplier has a direct commercial relationship with the original equipment manufacturer, meaning the first-tier supplier sells materials or component parts, which have been aggregated by suppliers throughout the supply chain, to the original equipment manufacturer for final assembly. According to an industry official, in general, component parts manufacturers construct individual parts—such as capacitors, engine parts, circuit boards, and other components—and assemble them into more complex components.\nEstimate of the Number of Companies Required to Report to SEC under the Rule SEC estimates that 5,994 reporting issuers (primarily companies that issue stock publicly and are required to report to SEC) will be affected by the rule and will need to determine if their products contain conflict minerals. According to SEC, reporting issuers are domestic and foreign companies that file forms 10-K, 20-F, and 40-F under the Securities Exchange Act. According to SEC and industry officials, these companies vary in size and revenue, but in general, tend to be larger, mature companies that can have a diverse product line; their revenues can range from the millions of dollars to hundreds of billions; they are domestic and foreign companies; and they may have operations in several countries. According to SEC and industry officials, some reporting issuers may sell products to consumers.\nUsing an electronics company as a model, processed metals move through several suppliers that manufacture component parts after the smelter—first to circuit board and computer chip manufacturers, then to cellular phone and other electronics manufacturers, and finally to the brand-name electronics company, which is the original equipment manufacturer that manufactures products recognizable to the consumer, such as cellular phones, tablets, and laptop computers. Beyond the first- tier supplier, there are tier 2-, 3-, 4-, or higher-tiered suppliers that, beginning with the raw materials from the smelter or refiner, manufacture component parts that are assembled into more complex component parts as they move from higher- to lower-tiered suppliers in the supply chain, to the first-tier supplier, and finally to the original equipment manufacturer.See figure 4 for a simplified version of the supply chain, and the tiered structure of suppliers.\nWhile many companies will likely be directly or indirectly impacted by the rule, some companies that use conflict minerals may not be, partly because (1) the companies are not issuers that are required to file with SEC under the Securities Exchange Act, and (2) these same companies potentially do not sell components or parts to a company that will be required to report to SEC under the rule. Industry and consulting firm representatives have differing views on the number of companies that purchase conflict minerals from the DRC and adjoining countries but may not be impacted by the rule.\nSuppliers that provide products that may contain conflict minerals to companies required to report to SEC under the rule may provide information on the minerals’ origins to those reporting companies that request it. The SEC release does not specify the steps and outcomes for the reasonable country of origin inquiry, and indicates that such a determination depends on each issuer’s facts and circumstances. However, in conducting a country of origin inquiry, issuers may inquire of their suppliers the origin of any conflict minerals in the products. According to the release, the issuer’s inquiry must be reasonably designed to determine whether any of its conflict minerals originated in the DRC and adjoining countries, and must be performed in good faith. If, after this inquiry, the issuer has a reason to believe that its conflict minerals may have originated in the DRC and adjoining countries, the issuer proceeds to exercising due diligence. Industry associations such as the EICC and GeSI have created templates for companies to use when contacting suppliers to inquire about the types and origins of conflict minerals in a given product. For example, companies required to report under the rule could submit the inquiries to their first-tier suppliers. Those suppliers could either provide the reporting company with sufficient information or initiate the inquiry process up the supply chain, such as by distributing the inquiries to suppliers at the next tier—tier 2 suppliers. The tier 2 suppliers could inquire up the supply chain to additional suppliers, until the inquiries arrive at the smelter. Smelters then could provide the suppliers with information about the origin of the conflict minerals. Figure 5 illustrates the flow of information up the supply chain.\nAs discussed earlier, smelters have various means to preclude untraced minerals from entering their supply, such as participation in the iTSCi initiative and the Conflict Free Smelters Program. According to smelting industry representatives, these initiatives and certifications have reduced the burden of responding to the multiple amounts of inquiries many smelters have already received from suppliers.\nOfficials from consulting firms and industry associations that we spoke with told us that many companies that will respond under the rule have started contacting their first-tier suppliers and providing them with country of origin inquiries. According to these officials, several of these companies that have submitted inquiries to their suppliers have experienced challenges, which include identifying suppliers beyond the first-tier suppliers, because for original equipment manufacturers, suppliers beyond the first tier are less visible. As discussed earlier, original equipment manufacturers purchase component parts primarily from their first-tier suppliers and do not have direct commercial relationships with suppliers in higher tiers of the supply chain. According to industry representatives and agency officials, these challenges may impact how companies file under the rule. For example, as previously discussed, the SEC rule allows companies to disclose their products as “DRC conflict undeterminable.” This provision allows companies to state that the source of the conflict minerals in their products, and the likelihood that the conflict minerals benefited or financed armed groups from the DRC and adjoining countries, could not be determined after having conducted due diligence to obtain that information from their suppliers. For the reporting period beginning January 1, 2013, companies may use this provision for 4 years for smaller reporting companies or 2 years for all other reporting companies. Although the number of companies required to report under the rule that may utilize the “DRC conflict undeterminable” provision is unknown, SEC officials and representatives of industry associations and consulting firms anticipate that many companies required to report under the rule will utilize the provision based on the results of their due diligence efforts.\nRepresentatives from industry and consulting firms that we interviewed stated that the purchasing power of issuing companies under the rule may influence their suppliers to provide information on the source of any conflict minerals in their products when requested. According to an industry representative, since companies that report to SEC under the rule tend to be large, mature corporations with great purchasing power in their respective industries, it would be difficult for suppliers to ignore their request for information on the origin of conflict minerals in products the suppliers provide to them. For example, jewelry industry representatives told us that they have advised their members, which are primarily small, independent jewelry companies not required to report to SEC under the rule, to respond to any requests from customers seeking information on the origin of conflict minerals in products they supply, because the risk of not responding could result in a loss of business for those companies.\nSome information is publicly available about smelters and refiners, and their involvement in the conflict minerals supply chain. According to SEC officials, while smelters and refiners are not exempted from the SEC rule, most of these suppliers will likely not be required to report to SEC under the rule because of their filing status. Smelter and refiners are considered the choke-point of the conflict minerals supply chain, as previously discussed, and comprise a small portion of the overall number of suppliers in the conflict minerals supply chain that may be impacted by the SEC rule. While it is not possible to determine the universe of suppliers that would not be required to report under the rule, smelters and refiners are a more identifiable population for which there is some aggregated information, such as the types of conflict minerals they use, We found the following information on smelters and and their location.refiners:\nSmelters and refiners constitute a small but important portion of suppliers that likely will not file a conflict minerals report under the SEC rule. Organizations have estimated the number of smelters and refiners around the world to be nearly 500; however, the actual number of smelters and refiners of conflict minerals is unknown. We aggregated publicly available information on smelters and refiners from lists compiled by the EICC and GeSI, the OECD, and the London Bullion Market Association (LBMA), which provided information on 278 smelters and refiners. As we have previously discussed, roughly 278,000 suppliers could be affected by the rule, based on the estimate provided to SEC. Of the 278 smelters of tin, tantalum, tungsten, and refiners of gold that we were able to identify, the majority (271) of these companies would likely not be required to report under the rule.\nOver half of the smelters and refiners of the conflict minerals we identified were located in three countries. Of the 278 smelters and refiners of tin, tantalum, tungsten, and gold that we were able to identify, more than half (156) were located in three countries: China (82), Japan (39), and Indonesia (35). According to industry representatives, participation in due diligence efforts of smelters and refiners from these countries, particularly China and Indonesia, is critical in assisting companies with fulfilling the reporting requirements of the SEC rule. Several organizations, including an NGO, and representatives from government and industry, are conducting outreach to smelters to provide information on the SEC rule in an effort to increase participation from smelters and refiners from these countries. For more information on the location of smelters and refiners we identified in our analysis, see figure 6.\nMany smelters and refiners of conflict minerals in our analysis processed tin. Of the 278 smelters and refiners in our analysis, we were able to identify 113 that processed tin, followed by gold (78), tungsten (54), and tantalum (33). Furthermore, over half (64 of 113) of the tin smelters in our analysis were located in China (30) or Indonesia (34). In addition, over 67 percent of global production comes from mines in China and Indonesia, according to U.S. Geological Survey data. Tin and its derivatives have wide applications and are used in manufacturing a variety of products, including tin soldering for joining pipes, coatings for steel containers, and a wide range of tin chemical applications, according to the U.S. Geological Survey. According to industry and consulting firm representatives, around 12 to 15 smelters process nearly 80 percent of the world’s tin.\nMost smelters and refiners in our analysis did not have a conflict minerals policy publicly available. Of the 278 smelters and refiners we were able to identify, 63 had a conflict minerals policy publicly available on their website. Of the 63 smelters with a conflict minerals policy publicly available, 26 smelters had successfully completed a Conflict Free Smelter Program audit and were designated as “conflict- free” by the EICC and GeSI, while several had reportedly followed some sort of due diligence, such as the OECD Due Diligence Guidance or the LMBA Responsible Gold Guidance. Other smelters in our analysis had posted policies on their website stating that the company only sources conflict minerals outside of the conflict areas of the DRC and adjoining countries. We were unable to identify a website for 86 of the 278 smelters in our analysis, and 129 of the 278 smelters had no conflict minerals policy publicly available on their website.\nSome information is publicly available on companies that use conflict minerals but are not required to report under the rule, as in the case of many smelters and refiners we were able to identify. However, data for the universe of these companies are limited. Specifically, based on our analysis, aggregated data on the types of conflict minerals in the products manufactured by these companies as well as information on how such companies source their conflict minerals are not available, except for a few companies. For example, several of these companies provide information publicly about their continued participation in initiatives that source conflict minerals from the DRC, and have agreed to purchase conflict minerals, such as tin and tantalum, from closely monitored sources through initiatives such as iTSCi and the Solutions for Hope, as However, according to agency and international previously mentioned. organization officials, in some instances buyers from small firms, mainly from East Asia, are on the ground in the DRC and adjoining countries, and continue to purchase untraced minerals as well as minerals that have been smuggled out of the DRC into adjoining countries. In addition, according to an industry representative, it may be difficult to identify information on these companies because they tend to be small and serve very specific markets.\nSolutions for Hope is a “closed-pipeline” initiative to trace the flow of tantalum from the mine to the end-use company.",
"Since our 2012 report, one population-based survey providing data on the rate of sexual violence has been published in Uganda, and one is under way in the DRC; during the same period, no similar surveys have been conducted in Rwanda or Burundi. We also found some additional case file data available on sexual violence for all four countries. However, as we reported in 2011, case file data on sexual violence are not suitable for estimating a rate of sexual violence.",
"We found that one new population-based survey on the rate of sexual violence has been conducted since our 2012 report—the 2011 Uganda Demographic and Health Survey (DHS), published in August 2012. According to the survey, “28 percent of women and 9 percent of men age 15-49 report that they have experienced sexual violence at least once in their lifetime.” These national estimates are based on a random sample. Since we first reported on sexual violence in our 2011 report, we have identified six other population-based surveys that provided data on the rate of sexual violence in these countries.\nSurveys Are More Appropriate for Estimating a Rate of Sexual Violence In our 2011 report on sexual violence, we discussed two sources of data on sexual violence in eastern DRC and neighboring countries—population-based surveys and case files—and concluded that population- based surveys are more appropriate for estimating a rate of sexual violence. Case file data have shortcomings and biases that significantly limit their utility for estimating the rate of sexual violence. For example, case file data are not generated from a random sample; are reliant on victims seeking services to be counted, although some victims may lack access to service; and allow for the potential double counting of the same sexual violence incident in the case file data collected.\nIn reviewing whether there had been updates to any of the previous surveys conducted, we found that the authors of the McGill study, a population-based survey conducted in eastern DRC that was highlighted in our 2011 report, had no plans to conduct a follow-up survey. We found that fieldwork for a DHS for the DRC is expected to launch in August 2013, with data expected around September 2014.\nWe also found a team of two organizations that released estimates in 2010 based on survey data of sexual violence in Rwanda. Sonke Gender Justice Network and Promundo-US conducted a probability cluster sample in 2010 as part of its IMAGES survey and found that “57 percent of women reported having experienced gender-based violence committed by a partner” and “17 percent of men experienced sexual violence when they were a child.” However, this survey was not weighted to reflect unequal probabilities of selection, and it does not contain confidence intervals. Therefore, we are not able to assess the accuracy or precision of the estimates.",
"Following up on our 2011 and 2012 reports, we asked U.S. and UN agencies as well as researchers and NGOs if they had any updated case file data. In April 2013, State submitted its annual country reports on human rights practices to Congress, which provided case file information pertaining to sexual violence in the DRC and neighboring countries. The 2012 Department of State Human Rights Reports reported the following: In DRC, the Ministry of Gender reported 10,037 cases of sexual- and gender-based violence in 2011 in eastern DRC. In Rwanda, prosecutors reported that they investigated 351 cases of rape in 2012. Of those 351 cases, 109 were filed in courts, 143 were dropped, and 99 were pending investigation. In Uganda, 520 cases of rape were reported in 2011, of which 269 were tried. In Burundi, Centre Seruka, a clinic for rape victims averaged 121 rape cases per month between January and September 2012.\nVarious UN entities reported other case file data. In March 2013, the UN Secretary-General reported that 764 people had become victims of sexual violence in eastern DRC from December 2011 and through November 2012. In May 2013, the UN Joint Human Rights Office reported that an armed group committed 135 cases of sexual violence from November 20, 2012 through November 30, 2012. Furthermore, in December 2012, the UN Office for the Coordination of Humanitarian Affairs reported 70 rapes in Minova, a town in eastern DRC, from November 30 through December 4, 2012. Because case file data are not aggregated across various sources and the extent to which various reports overlap is unclear, it is difficult to obtain complete data on case files or even a sense of magnitude. One shortcoming of both case file data and surveys is that time frames, locales, and definitions of sexual violence are not consistent across data collection operations. As we reported in 2011, case file data on sexual violence are not suitable for estimating a rate of sexual violence because case file data are not based on a random sample and the results of analyzing these data are not generalizable.",
"We provided a draft of this report to SEC, State, and USAID, for their review and comment. SEC, State, and USAID provided technical comments, which we incorporated in this report as appropriate. We also provided relevant portions of the draft of this report to relevant external stakeholders for their technical comment. We received technical comments from some of these stakeholders, which we incorporated throughout this report as appropriate.\nWe are sending copies of this report to appropriate congressional committees. The report is also available at no charge on the GAO website at http://www.gao.gov/.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-4802 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV.",
"To describe factors that may impact whether the Securities and Exchange Commission’s (SEC) conflict minerals rule denies armed groups in the Democratic Republic of the Congo (DRC) and adjoining countries benefits from conflict minerals, we interviewed officials from SEC, the Department of State (State), and the United States Agency for International Development (USAID), as well as representatives from international organizations, nongovernmental organizations (NGO), industry associations, consulting firms, and smelters and refiners of tin, tantalum, tungsten, and gold to get their views on the final SEC rule as well as any impacting factors. We chose the experts and stakeholders we interviewed to capture a range of perspectives about the types of minerals traded and because we had established contacts with these entities on our last review. In addition, some of the stakeholders we talked to have been working on the ground in the DRC. These experts and stakeholders constitute a nongeneralizable sample. The information gathered cannot be generalized and cannot be used to infer views of other experts or stakeholders cognizant of conflict minerals issues. We reviewed Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. No. 111-203); reports and other documents from relevant U.S. agencies, such as SEC’s final conflict minerals rule, press releases, and statements; reports issued by the UN Group of Experts on the Democratic Republic of the Congo (UNGoE) and the Organisation for Economic Co- operation and Development (OECD); as well as documents and reports from industry associations and NGOs. We did not travel to the DRC or speak with government officials in the DRC but obtained perspectives on issues from some stakeholders who operate in the DRC.\nTo identify and describe available information about entities that use conflict minerals and do not report to SEC under the rule, we interviewed officials from SEC, State, and USAID, as well as representatives from international organizations, NGOs, industry associations, consulting firms, and smelters and refiners of tin, tantalum, tungsten, and gold to get their views on the extent to which information is publicly available on companies that are not required to report under the rule that may use conflict minerals in their products, and the source of the conflict minerals. We reviewed and analyzed reports and other documents from organizations such as the OECD, London Bullion Market Association (LBMA), and the Electronics Industry Citizenship Coalition and the Global e-Sustainability Initiative (EICC and GeSI), as well as documents and reports from industry associations and NGOs. In addition, we conducted searches in the Nexis database using selected Standard Industrial Classification (SIC) codes listed under the Manufacturing division. Overall, there were 20 subcategories under the Manufacturing division of SIC codes, which include subcategories such as Tobacco Products; Paper and Allied Products; and Electronic and Other Electrical Equipment and Components, Except Computer Equipment. We selected SIC codes under the Manufacturing division for industries that have a higher likelihood of using conflict minerals in their product, such as Electronic and Other Electrical Equipment and Components, Except Computer Equipment. Through the database analysis, we were able to determine the filing status, location, revenue, and industry classification of the companies. We were unable to determine the types of products the companies produced, and the types of conflict minerals potentially used in the manufacturing process of their products. Because SIC codes do not indicate specific products, we were unable to use the Nexis data to develop an aggregate description of entities that use conflict minerals but do not report to SEC under the rule.\nWe compiled a list of smelters and refiners—which are a smaller universe of companies that are primarily not required to report under the rule— from the EICC and GeSI’s Conflict Minerals Reporting Template and Dashboard, OECD’s Final Downstream Report On One-Year Pilot Implementation of the Supplement on Tin, Tantalum, and Tungsten, and the LBMA’s Good Delivery List. The data were current as of March 15, 2013. We selected these smelters and refiners because information is publicly available on the types of minerals these smelters and refiners process; however, we did not conduct an audit to verify how these entities sourced materials for processing. To compile our list of smelters and refiners, we reviewed and compared the lists from each source to identify and delete duplicate smelters and refiners. Additional duplicates were identified and deleted as a result of Internet searches using the names of the smelters and refiners. While we made efforts to eliminate duplicate information where possible, smelters and refiners may be listed under different names, and therefore, some duplicate information may exist in the data. Information included in the list of smelters from the EICC and GeSI, OECD, and LMBA included (1) the location of the smelter or refiner, (2) the types of minerals smelted or refined, and (3) the due diligence guidance reportedly followed, in some cases. We identified 278 smelters and refiners of tin, tantalum, tungsten, and gold, and analyzed any publicly available information—mainly information posted on the companies’ websites or information provided on the websites of organizations such as the EICC and GeSI or the LBMA—on their practices and policies for sourcing conflict minerals. This analysis included examining websites of 192 of 278 smelters and refiners to identify the types of due diligence guidance they reported to use to determine the country of origin of their conflict minerals sources. We were unable to identify the websites for 86 smelters or refiners on our list, which could have been the result of a smelter not possessing a website, or differing translations of company names from foreign characters—such as Chinese script or the Cyrillic alphabet—to the Roman alphabet. Additional limitations included our sample of 278 smelters and refiners, as organizations have estimated that the number of smelters and refiners is nearly 500, particularly if smaller smelters and refiners that process ores into metals at the mine site are included. These smelters and refiners, or secondary smelters, often have small operations and may not have a website, according to an industry representative. Furthermore, the number of gold refiners could potentially be much larger, considering that little equipment and space is required to refine gold, depending on the quality; and gold can be refined at the mine site. The 278 smelters and refiners we were able to identify may not be representative of others, and the information we report about these 278 cannot be generalized to other smelters and refiners of tin, tantalum, tungsten, and gold.\nIn response to a mandate in the Dodd-Frank Wall Street Reform and Consumer Protection Act that GAO submit an annual report that assesses the rate of sexual violence in war-torn areas of the DRC and adjoining countries, we identified and assessed any additional published information available on sexual violence in war-torn eastern DRC, as well as three neighboring countries that border eastern DRC—Rwanda, Uganda, and Burundi—since our 2012 report on sexual violence in these areas. During the course of our review, we interviewed officials from State and USAID and interviewed NGO representatives and researchers to discuss the collection of sexual violence-related data—including population-based surveys and case file data—in the DRC and adjoining countries. Specifically, we followed up with researchers and representatives from those groups we interviewed for our prior review on sexual violence rates in eastern DRC and neighboring countries, including officials from the United Nations Population Fund, United Nations High Commissioner for Refugees, United Nations Special Representative to the Secretary-General on Sexual Violence in Conflict; and representatives from the Harvard Humanitarian Initiative and others. We also conducted Internet literature searches to identify new academic articles containing any additional data on sexual violence.\nWe conducted this performance audit from November 2012 to July 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"The Securities and Exchange Commission (SEC) issued a flowchart summary of the final rule to guide SEC-reporting companies affected by the rule through the disclosure process (see figure 8). In general, the process shows that an SEC-reporting company needs to (1) determine whether its manufactured products contain conflict minerals; (2) determine whether conflict minerals are necessary to the product and, if so, whether the conflict minerals originated in the DRC or an adjoining country; and (3) possibly conduct due diligence and potentially provide a Conflict Minerals Report.",
"In our 2012 report, we discussed a number of initiatives that various stakeholders developed and implemented that may help companies reporting to the Securities and Exchange Commission (SEC) and their suppliers comply with SEC’s conflict minerals disclosure rule. For this report, we updated information pertaining to some of these global and in- region sourcing initiatives.",
"",
"The Organisation for Economic Co-operation and Development (OECD) adopted the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (hereafter referred to as OECD Due Diligence Guidance) to promote accountability and transparency in conflict minerals supply chains.Diligence Guidance and the corresponding supplements provide detailed guidance for companies operating in and sourcing minerals from conflict areas. In addition to the basic framework, OECD developed two supplements—one on tin, tantalum, and tungsten and the other on gold— to provide companies with specific guidance relevant to the conflict minerals supply chains. To increase awareness of and to develop emerging practices for implementing the OECD Due Diligence Guidance and the supplement on tin, tantalum, and tungsten, OECD conducted implementation pilot projects. In January 2013, OECD issued the final downstream report, which focuses on how companies implement due diligence in the supply chains of tin, tantalum, and tungsten, and the final upstream report, which provides an overall assessment of the progress The OECD Due and initial impact of due diligence in the tin, tantalum, and tungsten upstream supply chain.",
"The Conflict-Free Smelter Program is a voluntary program in which smelters undergo an independent third party audit, in accordance with the OECD Due Diligence Guidance, to verify the origin of minerals processed at their facilities. The EICC and GeSI have also developed audit protocols for the program in consultation with a number of stakeholders—including NGOs, smelters, component manufacturers, original equipment manufacturers, and industry associations within and outside the electronics industry—to ensure wide-spread support for the program. In December 2010, the first tantalum smelter was certified conflict-free through the program after successfully undergoing an audit, and as of May 1, 2013, 18 of approximately 23 tantalum smelting companies had been certified as conflict-free. As of May 1, 2013, 5 tin smelting companies had been certified as conflict-free, 7 tungsten smelting companies had begun discussions with representatives of the program, and 12 gold refining companies had been certified as conflict-free through the program.",
"The World Gold Council developed and issued the Conflict-Free Gold Standard, an industry-led approach to combat the potential misuse of mined gold to fund armed conflict, in October 2012. The standard was developed with council member companies, which constituted the world’s leading gold producers, and with extensive input from stakeholders to establish a common approach by which gold producers can assess and provide assurance that their gold has been extracted in a manner that does not cause, support, or benefit unlawful armed conflict or contribute to serious human rights abuses or breaches of international humanitarian law. According to a World Gold Council official, the participating companies’ conformance to the Standard will be externally audited and assured and will operationalize the requirements of OECD guidance. The results of the audit using the standard will be recognized across other stakeholder initiatives such as the London Bullion Market Association’s Responsible Gold Guidance. The Standard should also support refiners in meeting their due diligence requirements.",
"",
"The Conflict-Free Tin Initiative (CFTI) is a pilot that was launched in September 2012 and aims to create demand for conflict-free tin from eastern DRC. The traceability and due diligence mechanism through the ITRI Tin Supply Chain Initiative is operated by Pact, an independent NGO, and is operated out of the Kalimbi mine in South Kivu. According to an NGO, the Netherlands Ministry of Foreign Affairs is a neutral broker that brought the partners along the supply chain together, from mine to smelter to end user. The DRC government and local civil society are closely involved in the initiative, which is structured within the framework of the International Conference of the Great Lakes Region (ICGLR) and will be consistent with the due diligence guidance of OECD. CFTI reported that between October 2012 and January 2013, 210 tons of materials were produced in the Kalimbi mine and the first container of conflict-free tin was transported to the trader in the DRC in December 2012. In January 2013, the first two containers of conflict-free tin were shipped to the smelter in Malaysia. The CFTI reports that next steps will involve the conflict-free tin making its way from the smelter to soldering companies and eventually to end users as finished product.",
"The ICGLR started working with an NGO in 2010 to develop a regional certification mechanism to ensure that conflict minerals are fully traceable. ICGLR’s regional certification mechanism may enable member countries and their mining companies to demonstrate where and under what conditions minerals were produced; through the regional certification mechanism, individual member governments are to issue ICGLR regional certificates for those mineral shipments that are in compliance with the standards of the mechanism. According to an official at a partnering NGO, the first two certificates out of the region were scheduled to come from sites in Rwanda and DRC in the late spring and from Uganda by December 2013. However, State indicated that the certificates from Rwanda and DRC have been delayed and will likely not be issued until late summer 2013. Regional certificates from other ICGLR countries will take some time because of capacity issues.\nAccording to USAID, in addition to the regional certification mechanism, ICGLR’s other initiatives focused on eliminating the illegal exploitation of natural resources include harmonization of national legislation, formalization of the artisanal mining sector, formalization of the extractives industries transparency initiative, a whistleblowing mechanism, and a regional database on the flow of minerals.",
"",
"",
"In addition to the individual named above, Godwin Agbara, Assistant Director; Andrea Riba Miller; Kyerion Printup; Justin Fisher; Debbie Chung; Ernie Jackson; Russ Burnett; Etana Finkler; Brian Hackney; and Leah DeWolf made key contributions to this report."
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{
"question": [
"What role might Stakeholder-developed initiatives play in regards to the Securities and Exchange Commission's (SEC) final conflict minerals rule?",
"What did Agency and industry officials as well as representatives from international organizations and nongovernmental organizations (NGO) state regarding how to support companies' efforts?",
"What is an example of how NGOs can support companies' efforts to conduct due diligence and to identify and responsibly source conflict minerals?",
"What issues arise in the pursuit of these companies' efforts?",
"What are some examples specifying these concerns?",
"What might still affect Companies that are not required to file disclosures?",
"What aspects of these companies' work could fall under this rule?",
"What do estimates reveal about suppliers' products?",
"To what extent was GAO able to quantify information about companies that do not report to the SEC?",
"How did smelters and refiners differ regarding the availability of information?",
"In what continent were most smelters and refiners of conflict minerals located?",
"What area of the DRC has experienced recurring conflicts involving armed groups?",
"From what have these armed groups benefit?",
"What does the Dodd-Frank Wall Street Reform and Consumer Protection Act address?",
"What does the SEC require of companies and GAO due to Section 1502(b) require?"
],
"summary": [
"Stakeholder-developed initiatives may facilitate companies' compliance with the Securities and Exchange Commission's (SEC) final conflict minerals rule, but other factors may affect the rule's impact on reducing benefits to armed groups in the Democratic Republic of the Congo (DRC) and neighboring countries.",
"Agency and industry officials as well as representatives from international organizations and nongovernmental organizations (NGO) stated that adoption of the rule as well as stakeholder-developed initiatives--which include the development of guidance documents, audit protocols, and in-region sourcing of conflict minerals--can support companies' efforts to conduct due diligence and to identify and responsibly source conflict minerals.",
"For example, officials GAO interviewed explained that the Conflict-Free Smelter Program enables suppliers to source conflict minerals from smelters (companies that refine the ore of the conflict minerals into metals) that have been certified by an independent third-party auditor as obtaining their minerals from sources that did not benefit armed groups.",
"However, officials GAO interviewed cited constraining factors such as lack of security, lack of infrastructure, and lack of capacity in the DRC that could affect the ability to expand on efforts to achieve conflict-free sourcing of minerals from eastern DRC and thereby potentially contribute to armed groups' benefiting from the conflict minerals trade.",
"For example, officials GAO interviewed noted that there is a lack of infrastructure in place that would enable companies to set up or expand operations in the DRC. Limited transportation and poor roads in eastern DRC also make it difficult to get to mine sites. Moreover, according to officials, the remoteness of mines also makes it difficult for DRC officials to validate mines and ensure that the mines have not been compromised by illegal armed groups.",
"Companies that are not required to file disclosures under SEC's conflict minerals rule may be affected by the rule.",
"These companies may supply components or parts that contain conflict minerals to companies that report to SEC under the rule, many of which could be original equipment manufacturers and component parts manufacturers.",
"Estimates provided by public commentators responding to the rule indicate that roughly 280,000 suppliers could provide products to roughly 6,000 companies that report to the SEC under the rule and may be asked to provide information on their use of conflict minerals and the origin of the minerals as part of the rule's due diligence requirements.",
"GAO found little available aggregated information about companies that do not report to SEC under the rule.",
"However, GAO found that for smelters and refiners there is some aggregated information, such as the types of conflict minerals they use and their location.",
"For example, GAO found that over half of the 278 smelters and refiners of conflict minerals it identified were located in Asia, many processed tin, and most did not have a conflict minerals policy publicly available.",
"The eastern part of the DRC has experienced recurring conflicts involving armed groups that have resulted in severe human rights abuses.",
"In addition, armed groups have profited from the exploitation of minerals.",
"In 2010, Congress enacted Section 1502(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act to address the exploitation of conflict minerals, which include tin, tantalum, tungsten, and gold, and the extreme levels of violence in the DRC.",
"As required by Section 1502(b), the SEC issued a rule in August 2012 that requires companies to disclose their use of conflict minerals and the origin of those minerals. The act requires GAO to report on the rule’s effectiveness, among other issues, beginning in 2012 and annually thereafter."
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CRS_R42918
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{
"title": [
"",
"Introduction",
"Overview of Statute and Regulation",
"Implementation",
"Staffing and Funding",
"Number of Regulated Facilities",
"Facility Inspections and Plan Approval",
"Program Reviews",
"Internal Review of CFATS Program",
"Office of the Inspector General Review",
"Government Accountability Office Review",
"Executive Order 13650",
"Policy Issues",
"Funding and Infrastructure and Workforce Capabilities",
"Inspection Rate",
"Federal Preemption of State Activities",
"Transparency",
"Definition of Chemical Facility",
"Identification of Non-Responsive Facilities",
"Inherently Safer Technologies",
"Personnel Surety",
"Policy Options",
"Continue Congressional Oversight",
"Maintain the Existing Regulatory Framework",
"Extend the Sunset Date",
"Codify the Existing Regulations",
"Alter the Existing Statutory Authority",
"Accelerate or Decelerate Compliance Activities",
"Incorporate Excluded Facilities",
"Harmonize Regulations",
"Increase Interagency Coordination",
"Consider Inherently Safer Technologies",
"Modify Information Security Provisions",
"Preempt State Regulations",
"Congressional Action",
"Modify the Existing Authority",
"H.R. 4007",
"Senate-Passed",
"House-Passed",
"H.R. 68",
"S. 67",
"S. 68",
"S. 814",
"Extend the Existing Authority",
"H.J.Res. 130",
"P.L. 113-164",
"H.R. 4903",
"H.Rept. 113-481",
"S. 2534",
"S.Rept. 113-198",
"P.L. 113-76",
"Joint Explanatory Statement",
"H.Rept. 113-91",
"S.Rept. 113-77",
"P.L. 113-73",
"P.L. 113-46",
"P.L. 113-6"
],
"paragraphs": [
"",
"Recognizing the potential harm that a large, sudden release of hazardous chemicals poses to nearby people, state and federal governments have long regulated safety practices at chemical facilities. Historically, chemical facilities have engaged in security activities on a voluntary basis. Even before the terrorist attacks of 2001, congressional policy makers expressed concern over the security vulnerabilities of these facilities. After the 2001 attacks and the decision by several states to begin regulating security at chemical facilities, Congress again considered requiring federal security regulations to mitigate these risks.\nIn 2006, the 109 th Congress passed legislation providing the Department of Homeland Security (DHS) with statutory authority to regulate chemical facilities for security purposes. Subsequent Congresses have extended this authority, which currently expires on December 13, 2014. Advocacy groups, stakeholders, and policy makers have called for Congress to reauthorize this authority, though they disagree about the preferred approach. The 113 th Congress has passed H.R. 4007 , which provides new statutory authority through the Homeland Security Act and extends the termination date of this authority for four years.\nThe explosion on April 17, 2013, at the West Fertilizer Company fertilizer distribution facility in West, TX, has led to additional focus on DHS's ability to identify noncompliant facilities. The West Fertilizer Company had not reported to DHS under the CFATS program, though it appeared to have possessed more than screening threshold quantities of chemicals of interest. While DHS had engaged in previous activity to identify facilities that had not complied with CFATS reporting requirements, DHS did not identify the West Fertilizer Company. Congressional policy makers have questioned the sufficiency of DHS efforts to identify these noncompliant \"outlier\" facilities.\nThis report provides a brief overview of the existing statutory authority and implementing regulation. It describes several policy issues raised in previous debates regarding chemical facility security and identifies policy options for congressional consideration. For additional analysis of CFATS implementation, see CRS Report R43346, Implementation of Chemical Facility Anti-Terrorism Standards (CFATS): Issues for Congress .",
"The 109 th Congress provided DHS with statutory authority to regulate chemical facilities for security purposes. The statute explicitly identified some DHS authorities and left other aspects to the discretion of the Secretary of Homeland Security. The statute contains a \"sunset provision\" that causes the statutory authority to expire on December 13, 2014. This section reviews the chemical facility security statute and regulation, focusing on the regulatory compliance process.\nThe 113 th Congress has passed H.R. 4007 , which will provide new statutory authority through the Homeland Security Act to regulate chemical facilities for security purposes. The regulations issued by DHS under the authority of previous statutory authority may be used to implement the new authority, and DHS may issue additional regulation to implement the new authorities.\nOn April 9, 2007, DHS issued an interim final rule regarding the chemical facility anti-terrorism standards (CFATS). This interim final rule entered into force on June 8, 2007. The interim final rule implements statutory authority explicit in P.L. 109-295 , Section 550, and authorities DHS found that Congress implicitly granted. In promulgating the interim final rule, DHS interpreted the language of the statute to determine what DHS asserts was the intent of Congress. Consequently, much of the rule arises from the Secretary's discretion and interpretation of legislative intent rather than explicit statutory language.\nUnder the interim final rule, the Secretary of Homeland Security determines which chemical facilities must meet regulatory security requirements, based on the degree of risk posed by each facility. The DHS lists 322 \"chemicals of interest\" for the purposes of compliance with CFATS. The DHS considers each chemical in the context of three threats: release; theft or diversion; and sabotage and contamination. Chemical facilities with greater than specified quantities, called screening threshold quantities, of chemicals of interest must submit information to DHS to determine the facility's risk status. See Figure 1 . The statute exempts several types of facilities from this requirement: facilities defined as a water system or wastewater treatment works; facilities owned or operated by the Department of Defense or Department of Energy; facilities regulated by the Nuclear Regulatory Commission (NRC); and those facilities regulated under the Maritime Transportation Security Act of 2002 ( P.L. 107-295 ).\nBased on the information received from the facility, DHS determines whether a facility is or is not high-risk. Facilities that DHS deems high risk must meet CFATS requirements. The DHS assigns high-risk facilities into one of four tiers based on the magnitude of the facility's risk. Facilities in higher risk tiers must meet more stringent requirements. The statute mandated the use of performance-based security requirements. The DHS created graduated performance-based requirements for facilities assigned to each risk-based tier.\nAll high-risk facilities must perform a security vulnerability assessment, develop an effective site security plan, submit these documents to DHS, and implement their security plan. The security vulnerability assessment serves two purposes under the interim final rule. One is to determine or confirm the placement of the facility in a risk-based tier. The other is to provide a baseline against which to evaluate the site security plan activities.\nThe site security plans must address the security vulnerability assessment by describing how activities in the plan correspond to securing facility vulnerabilities. Additionally, the site security plan must address preparations for and deterrents against specific modes of potential terrorist attack, as applicable and identified by DHS. The site security plans must also describe how the activities taken by the facility meet the risk-based performance standards provided by DHS.\nThe DHS must review and approve the submitted documents, audit and inspect chemical facilities, and determine regulatory compliance. The DHS may disapprove submitted security vulnerability assessments or site security plans that fail to meet DHS performance-based standards, but not because of the presence or absence of a specific security measure. In the case of disapproval, DHS must identify in writing those areas of the assessment and/or plan that need improvement. Owners or operators of chemical facilities may appeal disapproval of site security plans to DHS.\nSimilarly, if, after inspecting a chemical facility, DHS finds the facility not in compliance, the Secretary must write to the facility explaining the deficiencies found, provide an opportunity for the facility to consult with DHS, and issue an order to the facility to comply by a specified date. If the facility continues to be out of compliance, DHS may fine and, eventually, order the facility to cease operation. The interim final rule establishes the process by which chemical facilities can appeal such DHS decisions and rulings, but the statute prohibits third-party suits for enforcement purposes.\nThe statute requires certain protections for information developed in compliance with this act. The interim final rule creates a category of information exempted from disclosure under the Freedom of Information Act (FOIA) and comparable state and local laws. The DHS named this category of information \"Chemical-terrorism Vulnerability Information\" (CVI). Information generated under the interim final rule, as well as any information developed for chemical facility security purposes identified by the Secretary, comprise this category. Judicial and administrative proceedings shall treat CVI as classified information. The DHS asserts sole discretion regarding who will be eligible to receive CVI. Disclosure of CVI may be punishable by fine.\nThe interim final rule states it preempts state and local regulation that \"conflicts with, hinders, poses an obstacle to, or frustrates the purposes of\" the federal regulation. States, localities, or affected companies may request a decision from DHS regarding potential conflict between the regulations. Since DHS promulgated the interim final rule, Congress amended P.L. 109-295 , Section 550, to state that such preemption will occur only in the case of an \"actual conflict.\" The DHS has not issued revised regulations addressing this change in statute.",
"The National Protection and Programs Directorate (NPPD) within DHS is responsible for chemical facility security regulations. In turn, the Office of Infrastructure Protection, through its Infrastructure Security Compliance Division (ISCD), oversees the CFATS program within NPPD. This section reviews implementation of the chemical facility security regulations, focusing on funding, the number of regulated facilities, rate of facility inspection, and reviews of DHS implementation efforts.",
"The availability of staff, infrastructure, and funds is a key factor in implementing the CFATS program. Congress has not authorized specific appropriations for the CFATS program. As seen in Table 1 , the staffing and funding for this program generally increased since its creation, but decreased since FY2011. The full-time-equivalent (FTE) staffing peaked in FY2011 at 257 FTE. Appropriations for this program peaked in FY2010 at $103 million.\nWhen DHS received statutory authority to regulate chemical facilities in 2006, it did not possess a chemical facility security office or inspector cadre. The general increase in FTE over time reflects the creation and staffing of the office and the development of an inspector cadre. In February 2012, DHS testified that it had hired most of the inspector cadre. In March 2013, the DHS Inspector General reported that a working group within ISCD requested an additional 64 inspectors for FY2014 and FY2015 to increase the rate of facility inspection. According to the DHS Inspector General, this request was not approved.\nFor FY2014, Congress appropriated $81 million for ISCD, an increase in funding from FY2013. The joint explanatory statement accompanying FY2014 appropriations also directed DHS to provide reports to Congress on CFATS implementation, coordination of chemical security responsibilities, how ISCD will improve its review process, and how NPPD is avoiding program duplication and is ensuring facility security in its personnel surety efforts. It also requires DHS provide a comprehensive update on efforts to address facilities not reporting under CFATS.",
"The DHS has received more than 48,000 Top-Screen submissions from over 36,000 chemical facilities (step 4 in Figure 1 ). Of these facilities, DHS required more than 7,800 to submit a security vulnerability assessment to determine whether they were high-risk. From the submitted security vulnerability assessments, DHS currently identifies approximately 3,700 facilities as high-risk. The DHS considers the other facilities as low-risk, and they need meet no further CFATS requirements at this time. The DHS assigned each high-risk facility, in some cases preliminarily, to one of four risk tiers (step 7 in Figure 1 ). Table 2 shows the number of high-risk facilities in each tier, with Tier 1 those facilities of highest risk.\nIn May 2010, DHS identified an anomaly in one of the risk-assessment tools it used to determine a facility's risk tier. At that time, DHS believed that it had resolved the anomaly. In June 2011, a new acting ISCD Director \"rediscovered\" this issue, identified its potential effect on facility tiering, brought the issue to the attention of NPPD leadership, and notified facilities of their change in risk tier. Subsequent review of this risk-assessment tool resulted in DHS reviewing the tier determination of approximately 500 facilities. The DHS lowered the number of facilities allocated at that time to the highest-risk tier from 219 to 102, a greater than 50% reduction. In some cases, DHS determined that facilities no longer qualified as a high-risk facility and thus were not subject to the CFATS regulations.\nOverall, the total number of chemical facilities assigned a risk tier by DHS has declined since the CFATS program began. The DHS asserts that the observed reduction in regulated chemical facilities indicates that the CFATS program and its statutory authority are increasing security by inducing regulated entities to voluntarily reduce the chemical holdings to levels below the regulatory threshold. Several other factors may have contributed to this decline, including erroneous filing by regulated entities, process changes on the part of regulated entities, and business operations and decisions.\nThe reported total number of facilities may not fully reflect the actual number of facilities possessing chemicals of interest above screening threshold quantities. Since the CFATS program relies on facilities possessing such chemicals to report their holdings, it is possible that additional facilities exist that have not reported possessing chemicals of interest. For example, DHS did not receive any submissions from the West Fertilizer Company. Reportedly DHS was not aware of the chemical holdings at the facility prior to its explosion.\nIf such facilities did not report their holdings, DHS would not assess whether they were high-risk and thus regulated. A potential mitigating factor might be if other federal agencies that receive information about facility chemical holdings through different regulatory programs shared such information with DHS. Such information sharing might allow DHS to identify facilities that had not reported to it but had reported to other federal agencies.",
"The DHS originally planned to begin inspections of Tier 1 facilities as soon as 14 months after it issued regulations implementing CFATS (step 11 of Figure 1 ). Several factors have delayed inspections, including the release of additional regulatory requirements in the form of an appendix and the need to build an inspector cadre, establish a regional infrastructure, and assist facilities in complying with the regulation. Chemical inspectors must be able to assess the security measures at a chemical facility using the performance-based criteria developed by DHS. Performance-based security measures are likely more difficult to assess than prescriptive measures and thus inspectors may require greater training and experience. To overcome this challenge, DHS established a Chemical Security Academy, a 10-week training course for inspectors. Such training, while likely improving the quality of inspection, also introduces additional time between the hiring of new inspectors and their deployment in the field.\nSince 2007, DHS officials have provided numerous dates for beginning inspections. The DHS began inspections of Tier 1 facilities in February 2010. At that time, DHS testified that it planned to inspect all Tier 1 facilities by the end of calendar year 2010, but by the end of calendar year 2011, DHS had only authorized 10 site security plans (step 10 of Figure 1 ) and had approved no implementation of any site security plan. Since then, DHS has implemented an interim site security plan review process that it asserts is more effective and timely. The DHS has used this interim review process to authorize additional site security plans. As of December 2014, DHS had authorized or conditionally authorized 2,456 site security plans. The DHS also reported that it had successfully inspected and approved the site security plan at 1,366 facilities. The DHS has not identified the tier assignment of these facilities. In April 2014, DHS identified the tier assignments of facilities with authorized and approved site security plans. This data showed that DHS has focused on authorizing and approving site security plans for facilities assigned to the higher risk tiers. See Table 3 .\nAccording to DHS, ISCD inspected and approved more facilities than it had expected to in FY2013, but some of these approvals were for facilities in tiers lower than planned. In March 2013, DHS testified that it planned to have all Tier 1 facilities approved by October 2013 and all Tier 1 and Tier 2 facilities approved by May 2014. The DHS did not meet this milestone and now estimates that, by the end of FY2014, it will have approved over 90% of all Tier 1 and Tier 2 facilities that have authorized site security plans. The DHS notes that regulated facilities may move between tiers, and new regulated facilities may be assigned any tier. As a consequence, DHS asserts it is likely that a small percentage of facilities in each tier will not have approved site security plans at any given time.\nThe DHS has identified an additional factor in the delay of the inspection schedule: iteration between DHS and regulated entities regarding their site security plans. The DHS has issued at least 66 administrative orders to compel facilities to complete their site security plans. In addition, DHS established a pre-authorization inspection process to gain additional information from facilities to fully assess the submitted site security plan and potentially reduce the number of requests for additional information from DHS to regulated facilities. Once DHS completes a pre-authorization inspection at a facility, the facility may amend its site security plan to reflect the results of the pre-authorization inspection. The DHS had performed approximately 180 pre-authorization inspections as of February 2012. The DHS has since included this type of inspection in its more general compliance assistance visit program. As of December 2014, DHS had conducted 1,691 compliance assistance visits.",
"The CFATS program has undergone three reviews of its processes and progress. The first was an internal review conducted by program management to identify programmatic challenges. Since that review, both the DHS Office of the Inspector General (OIG) and the Government Accountability Office (GAO) have released reports addressing the CFATS program.",
"In December 2010, NPPD initiated a management review of ISCD through the NPPD Office of Compliance and Security. In July 2011, new leadership took charge of ISCD and, at the direction of Under Secretary Beers, began a review of the goals, challenges, and potential corrective actions to improve program performance. In November 2011, ISCD leadership presented Under Secretary Beers with a report containing the results of both reviews. According to DHS, the report was intended as a candid, internal assessment that focused predominantly on the challenges faced by ISCD rather than on the program's successes and opportunities.\nAt the time of the report, DHS had received approximately 4,200 site security plans but had not approved any. The review report identified several factors that contributed to the absence of approvals. These factors included the inability to perform compliance inspections and the lack of an established records management system to document key decisions. Other difficulties facing ISCD reportedly included human resource issues, such as having employees with insufficient qualifications and work training, erroneous impressions of inspector roles and responsibilities, and the use of contractors to perform inherently governmental work. Additional reported challenges included difficulty in quickly altering workplace requirements, resolving personnel security requirements, detailing site security compliance inspections, managing workplace behavior and perceptions, and dealing with a unionized workforce. Additionally, ISCD lacked a system for tracking the usage of consumable supplies, potentially allowing for waste, fraud, and abuse; faced challenges in hiring new qualified individuals; and suffered from a lack of morale.\nThe report identified three top priorities to address the challenges addressing ISCD:\nclearing the backlog of site security plans; developing a chemical inspection process; and addressing ISCD statutory responsibilities for regulating ammonium nitrate and managing personnel surety as part of the CFATS program.\nThe ISCD developed an action plan with discrete action items to address identified challenges. In addition to the action plan, NPPD requested ISCD leadership to provide milestones and a schedule for completion of the action plan tasks. The ISCD implemented this plan with the oversight of NPPD leadership. According to GAO, ISCD developed at least eight sequential versions of the action plan, updating each additional version, and in some cases adding additional detail, milestones, or timelines.\nAs of July 2013, DHS had completed 90 of the 95 action items included in the action plan. Completed action items include updated internal policy and guidance materials for inspections, a monthly ISCD newsletter, increased staff engagement and dialogue, and additional supervisory training and guidance.\nThe GAO reviewed the DHS action plan and stated that \"ISCD appears to be heading in the right direction, but it is too early to tell if individual items are having their desired effect because ISCD is in the early stages of implementing corrective actions and has not established performance measures to assess results.\" The GAO provided several caveats to its assessment, including that it did not have available documentary evidence about the causes of the issues identified in the ISCD memorandum. For example, GAO stated, \"Program officials did not maintain records of key decisions and the basis for those decisions during the early years of the program.\"",
"In March 2013, the DHS OIG released a report on its review of the CFATS program through the end of FY2012. The DHS OIG review addressed whether:\nmanagement controls were in place and operational to ensure that CFATS is not mismanaged; NPPD and ISCD leadership misrepresented program progress; and nonconforming opinions of program personnel were suppressed or met with retaliation.\nThe DHS OIG report was critical of the prior performance of the CFATS program, stating:\nProgram progress has been slowed by inadequate tools, poorly executed processes, and insufficient feedback on facility submissions. In addition, program oversight had been limited, and confusing terminology and absence of appropriate metrics led to misunderstandings of program progress. The Infrastructure Security Compliance Division still struggles with a reliance on contractors and the inability to provide employees with appropriate training. Overall efforts to implement the program have resulted in systematic noncompliance with sound Federal Government internal controls and fiscal stewardship, and employees perceive that their opinions have been suppressed or met with retaliation. Although we were unable to substantiate any claims of retaliation or suppression of nonconforming opinions, the Infrastructure Security Compliance Division work environment and culture cultivates this perception. Despite the Infrastructure Security Compliance Division's challenges, the regulated community views the Chemical Facility Anti-Terrorism Standards Program as necessary in establishing a level playing field across a diverse industry.\nThe DHS OIG issued 24 recommendations to assist ISCD to correct identified program deficiencies and attain intended program results and outcomes. The ISCD concurred fully or partially with 20 recommendations and did not concur with 4 recommendations. The DHS OIG recommendations included improving internal processes to achieve a more timely response to information submissions and requests from regulated entities; defining, developing, and implementing improved processes and procedures for inspections; refining and improving the existing CFATS tiering methodology and tiering process; and reducing reliance on contractors and improving managerial oversight within ISCD.\nIn response to these recommendations, ISCD provided the DHS OIG with a corrective action plan. As of February 2014, ISCD has addressed 12 of the DHS OIG recommendations. Nine recommendations were administrative and include selecting permanent ISCD leadership; reducing reliance on contract personnel; developing policy for appointing acting management; ensuring that all employees serving in an acting supervisory capacity have a supervisory position description; ensuring that all employees receive performance reviews; disseminating ISCD organizational and reporting structure to staff; reiterating to all employees the process for reporting misconduct allegations; implementing a plan to ensure the long‐term authorization of the CFATS Program; and establishing internal controls for the accountability of appropriated funds. Three recommendations were programmatic and pertained to: revising the long‐term review process to reduce the Site Security Plan backlog; implementing a process to improve the timeliness of facility submission determinations; and program metrics that measure CFATS program value accurately and demonstrate the extent to which risk has been reduced at regulated facilities.\nThe ISCD is still addressing 12 DHS OIG recommendations. Ten recommendations are programmatic and include improving CFATS Program tools and processes; engaging regulated industry and government partners; and finalizing program requirements. The two administrative recommendations include providing training and guidance; and eliminating inappropriate Administratively Uncontrollable Overtime pay.",
"In April 2013, GAO issued a report on the CFATS program. The GAO assessed how DHS assigned chemical facilities to tiers and the extent to which it did so, how DHS revised its process to review facility security plans, and whether DHS communicated and worked with owners and operators to improve security. The GAO found that the approach DHS used to assess risk and make decisions to place facilities in final tiers does not consider all of the elements of consequence, threat, and vulnerability. For example, the risk assessment approach is based primarily on consequences arising from human casualties, but does not consider economic consequences. The GAO review of the risk assessment approach revealed that ISCD was inconsistent in how it assessed threat. According to GAO, ISCD considered threat for the 10% of facilities tiered because of the risk of release or sabotage, but not for the approximately 90% of facilities that are tiered because of the risk of theft or diversion. Also, GAO identified that when it did use threat data, the data was not current. In addition, GAO found that DHS had not been tracking data on reviews of site security plans and thus could not quantify improvements to that process. The GAO estimated that it could take another seven to nine years before DHS completed reviews on submitted site security plans. Input GAO solicited from 11 trade associations also indicated that DHS does not obtain systematic feedback on outreach activities. The GAO recommended that DHS:\ndevelop a plan, with timeframes and milestones, that incorporates the results of the various efforts to fully address each of the components of risk and take associated actions where appropriate to enhance ISCD's risk assessment approach and conduct an independent peer review, after ISCD completes enhancements to its risk assessment approach that fully validates and verifies ISCD's risk assessment approach consistent with the recommendations of the National Research Council of the National Academies.\nThe ISCD has taken steps to address the GAO recommendations. For example, ISCD engaged the Homeland Security Studies and Analysis Institute to coordinate an examination of the CFATS risk assessment model. According to GAO, HSSAI recommended that ISCD revise the current risk-tiering model and create a standing advisory committee—with membership drawn from government, expert communities, and stakeholder groups—to advise DHS on significant changes to the methodology. In addition, ISCD plans to modify the risk assessment approach to better include all elements of risk.",
"On August 1, 2013, President Obama signed an executive order on improving chemical facility safety and security. The executive order directs multiple federal agencies, including DHS, to take certain actions in the areas of chemical facility safety and security. It also establishes a Chemical Facility Safety and Security Working Group co-led by DHS, EPA, and the Department of Labor.\nAmong other topics, it contains several provisions related to information sharing and coordination in the CFATS program. The executive order directs the working group to develop a plan that will, among other goals, identify ways to improve coordination among the federal government, first responders, and state, local, and tribal entities. It specifically directs the Secretary of Homeland Security to assess the feasibility of sharing CFATS data with State Emergency Response Commissions (SERCs), Tribal Emergency Planning Committees (TEPCs), and Local Emergency Planning Committees (LEPCs).\nThe executive order directs the working group to analyze the potential to improve information collection by and sharing between agencies to help identify chemical facilities which may not have provided all required information or may be noncompliant with federal requirements to ensure chemical facility safety. It also directs the working group to produce a proposal for a coordinated, flexible data-sharing process that can be used to track submitted data. The proposal is to allow for the sharing of information with and by state, local, and tribal entities. The executive order also directs the working group to convene an array of stakeholders to identify and share successes to date and best practices to reduce safety and security risks. The executive order specifically includes consideration of \"the use of safer alternatives.\"\nThe executive order directs the working group to deploy a pilot program to validate best practices and test innovative methods for federal interagency collaboration regarding chemical facility safety and security. The pilot program, which DHS has implemented, is to include innovative and effective methods of collecting, storing, and using facility information, stakeholder outreach, inspection planning, and, as appropriate, joint inspection efforts. The results of this pilot program are to inform comprehensive and integrated standard operating procedures for a unified federal approach for identifying and responding to risks in chemical facilities, incident reporting and response procedures, enforcement, and collection, storage, and use of facility information. These best practices are to reflect best practices and are to include agency-to-agency referrals and joint inspection procedures where possible and appropriate.\nAdditionally, the executive order directs the Secretary of Homeland Security to identify a list of chemicals that should be considered for addition to the CFATS chemical of interest list. Expanding the list of chemicals of interest, while not changing the mechanism by which DHS defines a chemical facility, would likely lead to additional facilities regulated under CFATS.\nIn May 2014, the working group issued a report to the President on progress to date. The report includes descriptions of various efforts to modify the CFATS program in order to improve its performance individually and in conjunction with other programs. These efforts include improved information sharing among federal agencies regarding regulated facilities with chemical holdings; outreach to state homeland security advisors, first responders, and other state and local agencies; comparison of federal chemical facility information with that held by states; and continued coordination and harmonization activities among chemical facility security regulatory programs.\nThe report also described a planned CFATS Advance Notice of Proposed Rulemaking (ANPRM) on potential modification of the CFATS regulations to address ammonium nitrate as a chemical of interest, updates to the list of chemicals of interest, and other aspects of the program. On May 30, 2014, the Office of Management and Budget indicated its Office of Information and Regulatory Affairs had received the proposed ANPRM language from DHS.\nFinally, the report identifies three specific areas where the working group calls for congressional action with regard to CFATS. These are:\nproviding permanent authorization for the CFATS program; streamlining the CFATS enforcement process; and removing the water and wastewater treatment facilities exemption from CFATS.",
"Previous congressional discussion on chemical facility security raised several contentious policy issues. Some issues will exist even if Congress extends the existing statutory authority without changes. These include whether DHS has sufficient funding and capabilities to adequately oversee chemical facility security; whether federal chemical facility security regulations should preempt state regulations; and how much chemical security information individuals may share outside of the facility and the federal government. Other issues, such as what facilities DHS should regulate as a chemical facility and whether DHS should require chemical facilities to adopt or consider adopting inherently safer technologies, may be more likely addressed if Congress chooses to revise or expand existing authority.",
"The 2007 CFATS regulations establish an oversight structure that relies on DHS personnel inspecting chemical facilities and ascertaining whether regulated entities have implemented their authorized site security plans. Although the use of performance-based measures, where chemical facilities have flexibility in how to achieve the required security performance, may reduce some demands on the regulated entities, it may also require greater training and judgment on the part of DHS inspectors. Congressional oversight has raised the question of whether DHS has requested and received appropriated funds sufficient to hire and retain the staff necessary to perform the required compliance inspections and whether DHS has properly managed the appropriated funds received.\nThe DHS has faced challenges when creating the necessary infrastructure to perform nationwide inspections. As stated by DHS, initial expectations for inspector responsibilities and infrastructure needs did not match the final needs.\nFor example, at the program's outset, certain roles and responsibilities were envisioned for the program staff that, in the end, did not apply. This resulted in the hiring of some employees whose skills did not match their ultimate job responsibilities and the purchase of some equipment that in hindsight appear to be unnecessary for chemical inspectors. Additionally, we envisioned a greater number of field offices than we eventually decided to employ.\nThe degree to which funding meets agency infrastructural needs likely depends on factors both external and internal to DHS. External factors include the number of regulated facilities and the sufficiency of security plan implementation. Challenges experienced by DHS in overseeing facility site security plan implementation will likely increase the workforce necessary to meet the planned inspection cycle. In contrast, reduction in the number of regulated facilities will likely decrease the number of needed inspectors. Internal factors include the ratio between headquarters staff and field inspectors; the assigned risk tiers of the regulated facilities; and the timetable for implementation of inspections. Once DHS has more fully engaged in inspection of regulated facilities, it may be able to more comprehensively determine its long-term resource needs and estimate both funding and staff requirements. A key factor for achieving program efficacy and efficiency may be the success in training inspectors to perform CFATS inspections, given the reported difficulties in developing inspector training combined with the requirements of a new regulatory program.",
"As of December 2014, 1,366 chemical facilities had been approved in the CFATS process, which starts with information submission by chemical facilities and finishes with approval of inspected security measures by DHS. The DHS states that the first authorization inspection was conducted in 2010; as of December 2014, DHS had conducted 1,851 authorization inspections. In 2013, GAO projected that DHS may require between seven and nine years to complete review of site security plans and that to inspect and approve all regulated facilities will require additional time. This estimate is premised on an approval rate of 30 to 40 facilities per month. As DHS has increased its rate of inspection and approval, it is likely that it will take DHS less time to approve all regulated facilities. Some policy makers have expressed surprise at the pace of inspection and questioned whether DHS should continue at the current pace or accelerate the compliance process. Several factors likely complicate and slow the inspection process. One factor appears to be the internal operations of the DHS implementing office and the skills and capabilities of the ISCD inspector cadre. Another factor appears to be that the information facilities submit in site security plans may not provide what DHS views as sufficient detail to evaluate compliance. Rather than reject such site security plans, DHS attempts to gather iteratively the necessary information from the facilities, including through compliance assistance visits.\nCompliance assistance visits may lead to higher quality site security plan submissions, even though the visits appear to be a significant drain on DHS resources. In principle, such visits may lower the future authorization inspection burden, as CFATS inspectors will be familiar with security measures at the chemical facility. Such familiarity may hasten the actual authorization inspection.\nThe DHS has also suggested that higher risk-tier facilities benefit more from these types of assistance visits due to the complexity of the facility, the potential presence of multiple chemicals of interest, and the more stringent risk-based performance standards that apply. Lower risk-tier facilities may not need such visits because these facilities may be less complex and inspectors may develop best practices through the compliance assistance visits of higher-tiered facilities. However, the converse might be true instead. Smaller facilities with less security experience may benefit more from such visits.\nSome policy makers have questioned whether the low inspection rate is due to constraints in the number of chemical facility security inspectors hired by DHS or the availability of appropriated funding. The CFATS regulations state that DHS will inspect the implementation of site security plans at all facilities and require that facilities resubmit their Top-Screen and, if so directed by DHS, their security vulnerability assessment and site security plan every two years for Tier 1 and Tier 2 facilities or three years for Tier 3 and Tier 4 facilities. This would require DHS to perform over 1,400 inspections annually to inspect every facility's implementation of its site security plan. The DHS has asserted that each inspection would require two or more inspectors and approximately one week to perform.\nThe DHS appears to have requested sufficient inspectors to manage the workload associated with a reinspection cycle of every two years for top tier facilities and every three years for lower tier facilities, but such a staffing level may be insufficient to address the large number of initial regulatory submissions or a more frequent reinspection cycle or the use of inspectors to perform compliance assistance visits. This level of staffing would appear to require at least several years of inspections to reduce the backlog created from the initial site security plan submissions, even if DHS performed only authorization inspections. A June 2012 DHS analysis estimated that DHS might perform 813 inspections annually. At this rate, DHS would require approximately five years to complete the initial inspections. If DHS were to hire additional inspectors, it might reduce the backlog of site security plans but also run the risk of having additional unnecessary staff in future years. The DHS might hire temporary or short-term staff to augment the inspector cadre, but the need to train such employees for CFATS-specific inspections may pose challenges.\nFinally, because DHS has focused on inspecting those facilities in the highest risk tier, it potentially faces the most complicated inspection environments. Inspections of lower risk tier facilities may pose fewer complications, take less time, and involve fewer inspectors. If so, DHS might quickly and substantially increase the number of facilities inspected by focusing efforts on lower tier facilities. Through this approach, DHS might gain insight and experience among the inspector cadre while reducing some national risk.",
"The original statute did not expressly address the issue of federal preemption of state and local chemical facility security statute or regulation. When DHS issued regulations establishing the CFATS program, DHS asserted that the CFATS regulations would preempt state and local chemical facility security statute or regulation that \"conflicts with, hinders, poses an obstacle to or frustrates the purposes of\" the federal regulation. After the regulation's release, Congress amended DHS's statutory authority to state that only in the case of an \"actual conflict\" would the federal regulation preempt state authority. Few states have established independent chemical facility security regulatory programs, and conflict between the federal and state activities has not yet occurred. The DHS did not identify any state programs that conflict with the CFATS regulations. The DHS has also not altered its regulatory language in response to the statutory amendment.\nAdvocates for federal preemption call for a uniform security framework across the nation. They assert that a \"patchwork\" of regulations might develop if states independently develop additional chemical facility security regulations. Variation in security requirements might lead to differing regulatory compliance costs, and companies might suffer competitive disadvantage based on their geographic location.\nSupporters of a state's right to regulate chemical facility security claim that the federal regulation should be a minimum standard with which all regulated entities must comply. They assert that DHS should allow states to develop more stringent regulations than the federal regulations. They claim such regulations would increase security. Some supporters of state regulation suggest that more stringent, conflicting state regulations should preempt the federal regulations. Such a case might occur if a state regulation mandated the use of a particular security approach at chemical facilities, conflicting with the federal regulation that adopts a performance-based, rather than prescriptive, approach. The desire to retain industries that might relocate if faced with increased regulation arguably would temper state inclinations to require overly stringent or incompatible regulations.\nSome policy makers may assert that chemical facility security should be left to the states rather than be implemented by the federal government. If Congress allows the statutory authority to expire and does not appropriate funds for the further implementation of CFATS, the federal authority would lapse, and state and local jurisdictions would be solely responsible for regulating chemical facility security.",
"The CFATS process involves determining chemical facility vulnerabilities and developing security plans to address them. Information developed in this process is not openly disseminated. The CFATS program categorizes this information as Chemical-terrorism Vulnerability Information (CVI) and provides penalties for its disclosure. Some advocates have argued for greater transparency in the CFATS process, even if the program does not provide detailed information regarding potential vulnerabilities and specific security measures. They assert that those individuals living in surrounding communities require such information to effectively plan and make choices in an emergency.\nThe current statute and regulation prohibit public disclosure of CVI. Only specific \"covered persons\" may access CVI. While acknowledging a legitimate homeland security need to limit dissemination of security information, some policy makers have questioned whether such limitations hinder other efforts. For example, first responders and community representatives have highlighted how such information protection regimes may impede emergency response and the ability of those in the surrounding community to react to emergency situations at the chemical facility. Additionally, worker representatives have raised concerns that these limitations and the lack of mandated inclusion of worker representatives may impede worker input into security plans.\nThe current information protection regimes for chemical facility security information, CVI under CFATS and Sensitive Security Information (SSI) under the Maritime Transportation Security Act (MTSA), do not contain penalties for incorrectly marking information as protected. Only disclosure of correctly marked information is penalized. Additionally, the chemical facility is responsible for identifying and appropriately marking protected information. These information markings only would be assessed in the case of dispute. As was asserted during congressional oversight, this disparity may lead to a tendency by regulated entities, in order to protect themselves against potential liability or scrutiny, to erroneously limit dissemination of information that should be made available to the public.\nAdditionally, the existing statute contains no provisions explicitly protecting or allowing for concerned covered persons to divulge CVI or to challenge the categorization of information as protected in an attempt to inform authorities about security vulnerabilities or other weaknesses. Depending on the circumstances, those individuals might be penalized for their disclosure of protected information. The CFATS regulations, reflecting this inherent tension, provide for a DHS point of contact to which such information might be revealed, but also state \"Section 550 did not give DHS authority to provide whistleblower protection, and so DHS has not incorporated specific whistleblower protections into this regulation.\"",
"The DHS regulates an assortment of entities that possess and manufacture chemicals of interest. Thus, the term chemical facility encompasses many types of facilities, including agricultural facilities, universities, and others. With DHS defining chemical facilities according to possession of a chemical of interest, it regulates facilities not part of the chemical manufacturing and distributing chain. Stakeholders have expressed concern that the number of entities so regulated might be unwieldy and that the regulatory program might focus on many chemical facilities that pose little risk rather than on those facilities that pose more substantial risk. For example, during the rulemaking process, DHS received commentary and revised its regulatory threshold for possession of propane, stating:\nDHS, however, set the [screening threshold quantities] for propane in this final rule at 60,000 pounds. Sixty thousand pounds is the estimated maximum amount of propane that non-industrial propane customers, such as restaurants and farmers, typically use. The Department believes that non-industrial users, especially those in rural areas, do not have the potential to create a significant risk to human life or health as would industrial users. The Department has elected, at this time, to focus efforts on large commercial propane establishments but may, after providing the public with an opportunity for notice and comment, extend its [CFATS] screening efforts to smaller facilities in the future. This higher [screening threshold quantity] will focus DHS's security screening effort on industrial and major consumers, regional suppliers, bulk retail, and storage sites and away from non-industrial propane customers.\nIn 2007, when developing its interim final rule, DHS estimated the expected number of regulated facilities and identified them by primary risk category: release due to loss of containment or potential for theft and diversion. In 2012, DHS analyzed the number of facilities with final tier assignments and identified their primary risk category. As seen in Table 4 , initial expectations of the distribution of facilities by primary risk did not match the risk types of the actual regulated facilities.\nAcademic institutions have asserted that DHS should not apply CFATS regulations to them because of the dispersed nature of chemical holdings at colleges and universities. These institutions claim that regulatory compliance costs would not be commensurate with the risk reduction. The DHS has identified that a college or university with a high-risk facility on campus might choose to implement security measures at the specific location rather than across the entire campus. The DHS has already implemented select regulatory extensions for agricultural chemical users, though not distributors. While the regulatory compliance costs likely decrease at lower risk tiers compared to higher risk tiers, all regulated entities bear compliance costs as continued annual expenses.\nAs mentioned above, the statutory authority underlying CFATS exempts several types of facilities, including water and wastewater treatment facilities. The federal government does not regulate water and wastewater treatment facilities for chemical security purposes. Instead, current chemical security efforts at water and wastewater treatment facilities are voluntary in nature. Some advocacy groups have called for inclusion of currently exempt facilities, such as water and wastewater treatment facilities. Some drinking water and wastewater treatment facilities possess amounts of chemicals of interest and would lead to regulation if located at a different type of facility. Advocates for their inclusion in security regulations cite the presence of such potentially hazardous chemicals and their relative proximity to population centers as reasons to mandate security measures for such facilities. In contrast, representatives of the water sector point to the critical role that water and wastewater treatment facilities have in daily life. They caution against including these facilities in the existing regulatory framework because of the potential for undue public impacts. They cite, for example, loss of basic fire protection and sanitation services if the federal government were to order a water or wastewater utility to cease operations for security reasons or failure to comply with regulation.\nIf Congress were to remove the drinking water and wastewater treatment facility exemption, the number of regulated facilities might substantially increase, placing additional burdens on the CFATS program. The United States contains approximately 52,000 community water systems and 16,500 wastewater treatment facilities. These facilities vary substantially in size and service. The number of regulated facilities would depend on the criteria used to determine inclusion, such as chemical possession or number of individuals served. It is likely that only a subset of these facilities would meet a regulatory threshold. In 2011, a DHS official testified that approximately 6,000 such facilities would likely meet the CFATS threshold.",
"Although facilities with greater than screening threshold quantities of chemicals of interest must submit information to DHS under the Top-Screen process, an unknown number of facilities do not provide such information. One limited survey of community hospitals reported that 56% of respondents were aware of CFATS reporting requirements. Another example appears to be the West Fertilizer Company, which reported more than a threshold amount of chemical of interest to the EPA under the Risk Management Plan (RMP) program but did not file with DHS under CFATS. The DHS refers to these non-compliant facilities as \"outliers.\" Congressional policy makers have raised the concern that many facilities may still not have properly reported to DHS.\nThe number of facilities not complying with CFATS reporting requirements is unknown. If DHS lacks information about a facility's chemical holdings, it is unlikely to be able to identify it as an outlier. As noted above, DHS has regulatory authority to direct specific facilities to comply with CFATS, but DHS might not issue such orders without information indicating that a facility is out of compliance.\nIn 2009, DHS listed some identification mechanisms in use at that time. These mechanisms included receiving information from the public through the DHS CFATS Tip Line; cross-referencing with information from other federal regulatory programs, such as the Environmental Protection Agency's (EPA's) Risk Management Planning (RMP) program (see text box below); and a pilot program with the state of New York and the state of New Jersey to identify non-responsive facilities in those states. Since then, DHS has also created the CFATS Share tool through which state Homeland Security Advisors, appropriate DHS components, and other stakeholders have access to data on the CFATS-regulated facilities within their jurisdictions. In addition, DHS participates \"in engagements with various State Homeland Security Advisors (HSA) and other state and local security partners. The Department also has participated in numerous meetings with Local Emergency Planning Committees, Area Maritime Security Committees, Sector Coordinating Councils, and Fusion Centers.\" The DHS terminated some of these activities but continues others.\nIntegration of this information with the CFATS program may pose challenges due to different data formats, resource availability, and limited utility. The DHS has requested $3 million in funding for FY2015 to develop an automated process to collect and analyze data provided by other federal, state, and local partners. As part of this process, DHS plans to compare information from EPA Risk Management Program and the Superfund Amendments and Reauthorization Act Title III data from all 50 states annually to identify potentially non-compliant facilities.",
"Previous debate on chemical facility security has included whether to mandate the adoption or consideration of changes in chemical processes to reduce the potential consequences following a successful attack on a chemical facility. Suggestions for such changes have included reducing the amount of chemical stored onsite and changing the chemicals used. In previous congressional debate, these approaches have been referred to as inherently safer technologies or methods to reduce the consequences of a terrorist attack.\nA fundamental challenge for inherently safer technologies is how to compare one technology with its potential replacement. It is challenging to unequivocally state that one technology is inherently safer than the other without adequate metrics. Risk factors may exist outside of the comparison framework. Some experts have asserted that the metrics for comparing industrial processes are not yet fully established and need additional research and study. A committee of the National Research Council of the National Academies has recommended that DHS support research and development to foster cost-effective, inherently safer chemistries and chemical processes. The National Academies has identified as a potential concern that inherently safer process analyses may become narrowly focused and its outcomes inappropriately weighted. A facility might consider many additional factors beyond homeland security implications when weighing the applicability and benefit of switching from one process to another. These factors include cost, technical challenges regarding implementation in specific situations, supply chain impacts, quality and availability of end products, and indirect effects on workers.\nSupporters of adopting these approaches as a way to improve chemical facility security argue that reducing or removing these chemicals from a facility will reduce the incentive to attack the facility. They suggest that reducing the consequences of a release also lowers the threat from terrorist attack and mitigates the risk to the surrounding populace. They point to facilities that have voluntarily changed amounts of chemicals on hand or chemical processes in use as examples that facilities can implement such an approach in a cost-effective, practical fashion.\nOpponents of mandating what proponents call inherently safer technologies question the validity of the approach as a security tool and the government's ability to effectively oversee its implementation. Industrial entities assert that process safety engineers within the regulated industry already employ such approaches and that these are safety, not security, methods. They assert that process safety experts and business executives should determine the applicability and financial practicality of changing existing processes at specific chemical facilities. A 2011 industry survey stated that, of those respondents that assessed using alternative chemicals or processes, 66.4% determined such alternatives were not technically feasible. Opponents of an inherently safer technology mandate also question whether the federal government contains the required technical expertise to adjudicate the practicality and benefit of alternative technological approaches. A third opposing view states concern that few existing alternative approaches are well understood with regard to their unanticipated side effects. They claim that researchers should continue to study these alternative approaches rather than immediately apply them, since unanticipated side effects could injure business and other interests.\nThe DHS has engaged in research and development activities within its Science and Technology (S&T) Directorate to develop a better understanding of inherently safer technology, including efforts to define inherently safer technology. The NPPD has not adopted the results from these research and development efforts within its regulatory context. Congress has directed DHS to detail and report to Congress the Department's definition of inherently safer technology as it relates to chemical facilities under the purview of CFATS.\nSome industry representatives have asserted that an inherently safer technology mandate might have a potentially significant negative financial impact. Regulated entities incur a cost when meeting existing CFATS requirements, and small businesses may be challenged to make additional necessary capital investments. In its interim final rule, DHS estimated that even without an inherently safer technology requirement CFATS \"may have a significant economic impact on a substantial number of small entities.\" Because of the performance-based nature of the regulatory requirement, it is difficult to detail the exact impact on small businesses. Adding an inherently safer technology requirement might increase the cost of CFATS compliance and might disproportionately affect small entities not already incorporating such activities in their business processes. Policy makers in previous Congresses highlighted the issue of small business impact, especially in the context of requiring additional measures that might hurt productivity.",
"A recurring issue in chemical facility security is ensuring that individuals with known terrorist affiliations do not gain access to high-risk facilities. The CFATS program addresses this concern by establishing a personnel surety risk-based performance standard in regulation. This performance standard requires facilities to conduct background checks on employees and unescorted visitors and provide identifying information to DHS for use in screening employees against the Terrorist Screening Database (TSDB).\nThe DHS has not fully established the process by which CFATS-regulated facilities can meet this standard. The DHS issued a series of information collection requests from 2009 to 2011 that described how DHS would gather and use information on employees at CFATS-regulated facilities and requested public comment. Stakeholders and policy makers raised concerns that the DHS approach seemed to duplicate existing requirements underpinning the Transportation Worker Identification Credential (TWIC). In addition, DHS did not plan to accept existing TWIC cards as meeting the CFATS screening requirement. In July 2012, DHS withdrew this proposed personnel surety program from Office of Management and Budget review.\nThe DHS asserts that its position on how to comply with the personnel surety standard has \"evolved\" in response to industry-provided information. The DHS engaged in industry outreach activities through conference calls with industry associations and meetings with Chemical Sector Coordinating Council leadership and members.\nIn March 2013 and February 2014, DHS released notices of a new information collection request for compliance with the CFATS personnel surety program. The proposed personnel surety program contains provisions similar to those in the earlier information collection requests. The DHS proposes that regulated entities would provide certain identifying information to DHS before giving individuals access to restricted areas within a chemical facility. The DHS would use that information to screen employees and unescorted visitors against the TSDB. As with the prior personnel surety proposals, DHS would still require facilities to provide identifying information even for employees or visitors who have a TWIC card or another credential that is issued only following screening against the TSDB. The DHS asserts the purpose of this requirement is to allow DHS to verify that the credential is still valid, not to perform an additional background check. The DHS would alternatively allow facilities to use approved electronic reader devices to verify the validity of TWIC cards, but not other credentials. While DHS plans eventually to require implementation of the personnel surety program at facilities in each risk tier, it would limit the initial program to only Tier 1 and Tier 2 facilities.\nThe DHS has indicated that this new information collection request clarifies that DHS will implement the personnel surety program in phases; that DHS will accept third-party submission of information on behalf of regulated entities; that facilities will not need to submit information each time an affected individual seeks access; and that entities with multiple regulated facilities may submit information on a company-wide basis, rather than separately for each facility. Additionally, the DHS requests comment on mechanisms to use electronic verification and validation of TWIC cards rather than requiring submission of information to DHS.\nThe extent to which this new information collection request addresses industry concerns is not yet resolved. Industry stakeholders, in comments on the information collection requests, highlight the importance of recognizing other credentials, question whether the information regarding visitors could be obtained in the requisite time, and suggest that the number of individuals who would require screening may be larger than DHS estimates.",
"The existing statutory authority for CFATS expires on December 13, 2014. The 113 th Congress has passed H.R. 4007 , which authorizes DHS to regulate chemical facilities for security purposes through the Homeland Security Act. This bill will repeal the existing statutory authority on the effective date of the act (30 days after enactment). Many of the existing authorities are present in H.R. 4007 , but it also provides DHS with new authorities, such as the ability for certain covered chemical facilities to self-certify the sufficiency of their security plans. The DHS may use the existing regulations and issue new regulations as necessary to implement the new authority.\nThe 113 th Congress may address chemical facility security through several options. Congress may continue its oversight of DHS's efforts to implement this program. Congress might also take legislative action to extend further the existing statutory authority by revising or repealing its sunset provision; codifying the existing regulations; amending the existing statutory authority; addressing existing programmatic activities; or restricting or expanding the scope of chemical facility security regulation.\nIf Congress does not act and allows the statutory authority to expire, regulated entities may question the application and enforcement of the CFATS regulations. In the case where Congress allows the statutory authority to expire, but Congress appropriates funds for enforcing the CFATS program, DHS will likely be able to enforce the CFATS regulations. The GAO has found that in the case where a program's statutory authority expires, but Congress explicitly appropriates funding for it, the program may continue to operate without interruption. If Congress allows the statutory authority to expire and also does not appropriate funding for implementing the CFATS program, the CFATS regulations will likely also lapse. In this case, the states would likely become the primary source of any chemical facility security regulation.",
"Under one possible policy option, interested Members of Congress or congressional committees might continue their oversight of the CFATS program. Historically, much of the congressional debate has considered legislative options to reauthorize the existing statute or authorize the CFATS program through a different statutory vehicle. Congressional committees have accepted the assurances of DHS officials regarding CFATS activities even as DHS failed to meet its self-established deadlines. The program's critical self-assessment and DHS's lack of identifying the West Fertilizer Company as a CFATS-regulated facility may lead congressional oversight to increase focus on program performance, use of appropriations, and internal oversight. Congressional oversight of the program's implementation, enforcement, and efficacy may play a key role in determining the sufficiency of the existing authority and regulations.",
"The existing statutory authority places much of the CFATS regulatory framework at the discretion of the Secretary of Homeland Security. The DHS is still in the process of implementing these regulations and has not yet determined their effectiveness. Congress might choose to maintain the existing regulations by extending the statutory authority's sunset date or codifying the existing regulations. Also, as noted above, allowing the statutory authority to expire could maintain, in effect, the existing regulatory framework if Congress continues to fund implementation, although this might lead to legal challenge.",
"Congressional policy makers might choose to extend the current statutory authority for a fixed or indefinite time. Congress has enacted a series of limited extensions of the statutory authority since its inception. H.J.Res. 130 extends the existing statutory authority through December 13, 2014. Extending the existing statutory authority may provide regulated entities continuity, protect them from losing those resources already expended in regulatory compliance, and avoid providing a competitive advantage to those regulated entities that remained out of regulatory compliance. An extension may allow assessment of the efficacy of the existing regulations and inclusion of this information in any future attempts to revise or extend DHS's statutory authority. Moreover, since DHS is in the process of implementing current regulations, some policy makers argue for a simple extension without changing statutory requirements.\nThe Obama Administration FY2015 budget requests an extension of the statutory authority until October 4, 2015, but the Obama Administration also supports enacting a longer duration or permanent statutory authority. The Administration's Chemical Facility Safety and Security Working Group's report to the President called for action from Congress to provide permanent statutory authorization for the CFATS program. Congress might make the existing program permanent by removing the statutory authority's sunset date. Some regulated entities support converting the existing program into a program with permanent or long-term authorization. The removal of the sunset date would make the statutory authority permanent, maintain the current discretion granted to the Secretary of Homeland Security to develop regulations, and might allow long-term assessment of the efficacy of the existing regulations. Making the existing statute permanent would provide consistency in authority and remove the statutory pressure to reauthorize the program. In contrast, the presence of a sunset date for the statutory authority arguably increases the likelihood of congressional attention to chemical facility security as a legislative topic. Some advocates who wish for more regular congressional review of the statutory authority might oppose removing its sunset date.",
"Congressional policy makers might choose to affirm the existing regulations by codifying them or their principles in statute. Such codification could reduce the discretion of the Secretary of Homeland Security to alter the CFATS regulations in the future. The existing statutory authority grants broad discretion to the Secretary to develop many elements of the CFATS regulations. Future Secretaries may choose to alter its structure or approach and still comply with the existing statute. Policy makers might identify specific components of the existing regulation that they wish any future regulation to retain and codify those portions. Specifying these components might limit the ability of the Secretary to react to changing circumstance, gained experience, and new knowledge. On the other hand, the codified portions might enhance the regulated community's ability to plan for future expenses and requirements.",
"Congressional policy makers might choose to alter the existing statutory authority to modify the existing regulations, address stakeholder concerns, or broadly change the regulatory program.",
"The DHS bases its schedule for facility CFATS compliance on the chemical facility's assigned risk tier. Those chemical facilities assigned to higher risk tiers have a more accelerated compliance and resubmission schedule than those assigned to lower risk tiers. Congressional policy makers might attempt to accelerate the compliance schedule by increasing funding available to DHS for CFATS, thereby increasing the ability of DHS to provide feedback to regulated entities, review submissions, and inspect facilities filing site security plans. Additional funding might reduce or mitigate inefficiencies or delays related to DHS processing of submissions.\nAlternatively, policy makers might provide DHS with the authority to use third parties as CFATS inspectors. The DHS could then augment the number of CFATS inspectors to meet increased demand or delegate inspection authority to state and local governments. Third-party inspectors might allow DHS to draw on expertise outside of the federal government in assessing the efficacy of the implemented site security activities. The DHS may need to define the roles and responsibilities of these inspectors and how DHS will assess and accredit their qualifications. The DHS has stated its intent to issue a rulemaking regarding the use of third-party inspectors but has not yet done so. The use of third-party inspectors might lead to concerns about equal treatment of chemical facilities by different third-party inspectors, and questions about whether homeland security inspections of this type are an inherently governmental responsibility that only federal employees should perform.\nCongress might direct DHS to increase its activities on identifying noncompliant facilities. Following an explosion in West, TX, DHS identified that the facility had not complied with CFATS, though it reportedly possessed more than a screening threshold quantity of chemicals of interest. Congressional policy makers may prioritize identifying those facilities that have not yet reported over other parts of the CFATS process, depending on their view of the relative risk reduction of these activities.\nFinally, Congress might determine that DHS has sufficient resources to accelerate compliance activities but is restrained by some other procedural factor. Some congressional policy makers assert that the internal and external reviews of the CFATS program indicate internal challenges and claim \"the basic programmatic building blocks of CFATS are missing.\" Congressional policy makers might direct DHS to refine its internal procedures, streamline its review process, reduce the timeframe for response and interaction with regulated entities, or otherwise enact process improvements.\nConversely, congressional policy makers might choose to slow the implementation schedule of the chemical facility security regulations. Concern about the impact of the regulation on small businesses or other entities might lead to a decelerated compliance schedule. The DHS has already implemented select regulatory extensions for certain agricultural operations. Congressional policy makers might direct DHS to provide longer submission, implementation, and resubmission timelines for those regulated entities that might suffer disproportionate economic burdens from compliance.",
"Policy makers might remove some or all of the statutory exclusions from the CFATS program. The Administration has supported revising the existing exclusions to provide a more comprehensive chemical facility security approach. The DHS supports modifying the existing exemption for (1) facilities regulated under the Maritime Transportation Security Act (MTSA) to increase security at these facilities to the CFATS standard and (2) facilities regulated by the Nuclear Regulatory Commission to clarify the scope of the exemption.\nIn addition, DHS and the Environmental Protection Agency (EPA) have called for additional authorities to regulate water and wastewater treatment facilities:\nThe Department of Homeland Security and the Environmental Protection Agency believe that there is an important gap in the framework for regulating the security of chemicals at water and wastewater treatment facilities in the United States. The authority for regulating the chemical industry purposefully excludes from its coverage water and wastewater treatment facilities. We need to work with the Congress to close this gap in the chemical security authorities in order to secure chemicals of interest at these facilities and protect the communities they serve. Water and wastewater treatment facilities that are determined to be high-risk due to the presence of chemicals of interest should be regulated for security in a manner that is consistent with the CFATS risk and performance-based framework while also recognizing the unique public health and environmental requirements and responsibilities of such facilities.\nThe EPA has testified that the Obama Administration believes that EPA should be the lead agency for chemical security for both drinking water and wastewater systems, with DHS supporting EPA's efforts. The EPA also supports providing states with an important role in regulating chemical security at water systems, including determinations, auditing, and inspecting.\nIn contrast, the Administration's Chemical Facility Safety and Security Working Group's report to the President called for action from Congress to remove the exemption for water and wastewater treatment facilities. According to the report, DHS could then regulate security at these facilities in collaboration with the EPA.\nIf Congress provides the executive branch with statutory authority to regulate water and wastewater treatment facilities for chemical security purposes, it may weigh several policy decisions. Among these choices are which facilities should be regulated; how stringent such security measures should be; what federal agency should oversee them; and whether compliance with these security measures is practicable given the public nature of many water and wastewater treatment facilities.\nOne option for congressional policy makers might be to include water and wastewater treatment facilities under the existing CFATS regulations, effectively removing the exemption currently in statute. This would place water and wastewater treatment facilities on par with other possessors of chemicals of interest. The DHS would provide oversight of all regulated chemical facilities. Opponents might claim that activities under CFATS, such as vulnerability assessment, duplicate existing requirements under the Safe Drinking Water Act. Also, opponents of such an approach cite the essential role that water and wastewater treatment facilities play in daily life and assert that several authorities available to DHS under CFATS, such as the ability to require a facility to cease operations, are inappropriate if applied to a municipal utility. Congressional policy makers might mitigate some of these concerns by requiring DHS to consult with EPA regarding its regulation of water and wastewater treatment facilities and harmonizing existing vulnerability assessment requirements.\nAnother option might be to grant statutory authority to regulate water and wastewater treatment facilities for security purposes to EPA. Some water-sector stakeholders suggest that EPA retaining the lead for water and wastewater treatment facilities would be more efficient. Providing EPA the authority to oversee security as well as public health and safety operations may reduce the potential for redundancy and other inefficiencies.\nIf policy makers assign responsibility for chemical facility security at different facilities to different agencies, each agency will promulgate separate rules. These rules may be similar or different depending on the agencies' statutory authority, interpretation of that authority, and ability of the regulated entities to comply as well as any interagency coordination that might occur. Some industry representatives have expressed concern regarding the effects of multiple agencies regulating security at drinking water and wastewater treatment facilities. They assert that municipalities that operate both types of facilities might face conflicting regulations and guidance if different agencies regulate drinking water and wastewater treatment facilities. Congress may wish to assess the areas where such facilities are similar and different in order to provide authorities that meet any unique characteristics.\nAny new regulation of drinking water and wastewater treatment facilities is likely to cause the regulated entities, and potentially the federal government, to incur some costs. Representatives of the water and wastewater sectors argue that local ratepayers will eventually bear the capital and ongoing costs incurred due to increased security measures. Congressional policy makers may wish to consider whether the regulated entities and the customers they serve should bear these costs, as is done for other regulated chemical facilities, or whether they should be borne by the taxpayers in general through federal financial assistance to the regulated entities. Additionally, if inclusion of other facility types significantly increases the number of regulated entities, the regulating agency may require additional funds to process regulatory submissions and perform required inspections.",
"Other security statutes, such as MTSA, apply to some facilities exempt from the existing chemical facility security regulations. The DHS supports modifying the existing exemption for MTSA-regulated facilities to increase security at these facilities to the CFATS standard and modifying the existing exemption for facilities regulated by the Nuclear Regulatory Commission to clarify the scope of the exemption for NRC-regulated facilities. The EPA has testified that the Obama Administration believes that DHS should be responsible for ensuring consistency of high-risk chemical facility security across all critical infrastructure sectors.\nIf Congress modifies these exemptions, conflicts might arise between requirements under chemical facility security regulations and these other provisions. One approach to resolving these conflicts is to identify which statute would supersede the others. Critics of such an approach might assert that the superseding statute does not contain all of the protections present in the other statutes. Another approach might be to require agencies to generally harmonize the regulations implementing each statute. Regulatory agencies might identify and determine the best ways to meet statutory requirements while also limiting regulatory duplication or contradiction.\nSuch harmonization might reduce the regulatory burden on companies possessing facilities regulated under two frameworks, such as MTSA and CFATS, by allowing a single security approach to the regulations. For example, equivalent credentialing of workers under both regulatory frameworks might limit the regulatory cost of compliance, in contrast to requiring two distinct security credentials. The DHS has established a joint NPPD/U.S. Coast Guard (USCG) working group to evaluate and, where appropriate, implement methods to harmonize the CFATS and MTSA regulations. In contrast, if the process of harmonization leads to a significant increase in security requirements, the regulatory burden faced by industry might also increase. The USCG and NPPD have signed a memorandum of agreement regarding collaborative use of security risk management information developed by each entity. Congress previously expressed its expectation that DHS would execute a memorandum of agreement between NPPD and USCG regarding harmonization of chemical security responsibilities under CFATS and MTSA no later than March 30, 2012. The DHS did not meet this expectation, and Congress reaffirmed this direction in March 2013.",
"Congress may also focus on the interaction between different federal agencies, or between federal and state agencies, regulating facilities possessing chemicals of interest. States and the EPA, for example, receive information on certain chemical facilities through compliance with environmental regulations. The extent to which these agencies coordinate and exchange information with each other may affect overall regulatory compliance. The White House is coordinating a review of chemical safety and security regulations across departments and agencies for potential gaps in coverage and explore ways to mitigate those gaps through existing authorities.\nAs early as 2009, DHS identified reconciling CFATS submissions with EPA RMP facility information as a way to reveal outliers. The West Fertilizer Company, for example, was compliant with the EPA RMP program and had provided a five-year update in 2011, but it was not identified by DHS as noncompliant under CFATS. Comparing federally held information on regulated facilities may be effective in identifying outliers. Such a process likely would occur through data analysis rather than through outreach activities, a potentially less costly procedure. The success of this approach would depend on the quality of self-reporting by regulated entities. In the case of the West Fertilizer Company, its report to EPA might have indicated to DHS that it should also have reported to DHS, but this approach would not allow DHS to identify a facility that fails to self-report to any agency. In order to identify such facilities, DHS has reengaged with EPA regarding RMP data and has identified some outlier facilities.\nSimilarly, DHS might attempt to collect chemical holdings data from other governmental entities, including state and local regulatory agencies. State and local regulatory agencies may possess more diverse information about chemical holdings at particular facilities than federal agencies. For example, under Title III of the Superfund Amendments and Reauthorization Act (SARA; P.L. 99-499 ), the Emergency Planning and Community Right-to-Know Act (EPCRA) requires certain facilities to submit chemical inventories to state and local planning authorities and the local fire department, so-called \"Tier II\" reporting. Reporting to states under EPCRA results in chemical inventories while reporting to EPA under the RMP program is required only for select chemicals. For example, EPCRA-based reporting to the state of Texas showed the presence of ammonium nitrate at the West Fertilizer Company. Ammonium nitrate does not require reporting under the RMP program but is a CFATS chemical of interest. The DHS might request such information from state or local authorities and use it to verify facility compliance with CFATS reporting requirements. The DHS is in the process of contacting certain state officials regarding facilities containing chemicals within their jurisdictions. The DHS requests specific funding for FY2015 to establish a capacity for such analysis on an annual basis.\nBecause of the range of information possessed by various federal, state, and local regulatory agencies, this approach may provide a greater insight into the identities of non-compliant facilities but also be resource intensive, as different state and local agencies store such data in various, potentially incompatible formats. In addition, industry stakeholders may have concerns about the identification and subsequent protection of proprietary or competitive information arising from the aggregation of different regulatory filings.",
"Congressional policy makers may choose to address the issue of inherently safer technologies, sometimes called methods to reduce the consequences of terrorist attack. The current statute bars DHS from mandating the presence or absence of a particular security measure. Therefore, DHS cannot require a regulated facility to adopt or consider inherently safer technologies. Congress could choose to continue the current policy or provide DHS with statutory authority regarding inherently safer technologies at regulated chemical facilities or require efforts regarding inherently safer technologies.\nOne policy approach might be to mandate the implementation of inherently safer technologies for a set of processes. Another policy approach might be to mandate the consideration of implementation of inherently safer technologies with certain criteria controlling whether implementation is required. A third policy approach might be to mandate the development of a federal repository of inherently safer technology approaches and consideration of chemical processes against those options listed in the repository. Stakeholders might assess and review the viability of applying these inherently safer approaches at lower cost if such information were centralized and freely available. Alternatively, policy makers might establish an incentive-based structure outside of the chemical facility security mandate to encourage the adoption of inherently safer technologies by regulated entities.\nThe Obama Administration supports use of inherently safer technologies to enhance security at high-risk chemical facilities in some circumstances. It has established a series of principles directing its policy:\nThe Administration supports consistency of inherently safer technology approaches for facilities regardless of sector. The Administration believes that all high-risk chemical facilities, Tiers 1-4, should assess [inherently safer technology] methods and report the assessment in the facilities' site security plans. Further, the appropriate regulatory entity should have the authority to require facilities posing the highest degree of risk (Tiers 1 and 2) to implement inherently safer technology methods if such methods demonstrably enhance overall security, are determined to be feasible, and, in the case of water sector facilities, consider public health and environmental requirements. The Administration believes that the appropriate regulatory entity should review the inherently safer technology assessment contained in the site security plan for all Tier 3 and Tier 4 facilities. The entity should be authorized to provide recommendations on implementing inherently safer technologies, but it would not have the authority to require facilities to implement the inherently safer technology methods. The Administration believes that flexibility and staggered implementation would be required in implementing this new inherently safer technology policy.\nA congressional mandate for regulated entities to adopt or consider adopting inherently safer technologies may have benefits and drawbacks. It may lead regulated entities to consider factors such as homeland security impact in their chemical process assessments. Some experts assert that existing chemical process safety activities consider and assess inherently safer technology approaches though not necessarily in a homeland security context. These assessments may lead to changes in chemical process when deemed safer, more reliable, and cost-effective. The extent to which homeland security impact has factored into these industry decisions is unknown, but DHS has identified cases where chemical facilities have voluntarily modified chemical processes to lower their CFATS tier. An additional complication to assessing inherently safer technology is the varying amounts and quality of information available regarding industrial implementation of inherently safer technologies. While some facilities have converted to processes generally deemed as inherently safer, other facilities may not have sufficient information available to effectively assess the impacts from changing existing processes to ones considered inherently safer. The differences that exist among chemical facilities, in terms of chemical process, facility layout, and ability to finance implementation, may challenge mandatory implementation of inherently safer technologies at regulated entities. Finally, the National Academies have identified that the chemical industry lacks a common understanding and set of practice protocols for identifying safer processes. Therefore, it seems likely that any such mandate will also require accompanying outreach and educational activities for regulated entities. Even the mandatory consideration of inherently safer technologies may place a financial burden on some small regulated entities. Congress might limit mandatory measures to those facilities considered by DHS to pose the most risk or might provide such financial assistance to regulated facilities.\nPolicy makers might choose to try to further incentivize regulated entities to adopt inherently safer technologies. Under the CFATS regulations, facilities that adopt inherently safer technologies might change their assigned risk tier by reducing the amount of chemicals of interest they store. As of December 2014, more than 3,000 facilities had removed or reduced the amount of chemicals of interest stored onsite and no longer qualify as a high-risk facility. Policy makers might provide regulated entities that adopt inherently safer technologies with additional financial or regulatory incentives. Alternatively, policy makers might direct DHS or another agency to perform inherently safer technology assessments for regulated entities, transferring the cost of such assessment from the facility to the federal government. The regulated entity or the overseeing agency might use the results of these assessments to guide adoption of inherently safer technologies.",
"Congressional policy makers might choose to increase transparency in the CFATS process by altering the information security provisions of the program. Such an approach might include increasing the number and type of individuals granted access to CVI, improving information exchange with first responders, and adjusting the manner by which courts and administrative proceedings handle CVI. The Obama Administration has testified that CVI is a distinct information protection regime and expressed support for maintaining CVI in its current form.\nCongress might choose to amend the existing statutory authority to address policy concerns. Policy makers might direct DHS to make specific types of information, such as the results of enforcement activities or the approval of successful implementation of a site security plan, more generally available. As more information about the vulnerability assessment and the security process becomes available, the potential that adversaries might combine this disparate information to obtain insight into a security weakness may increase. Congressional policy makers might require that the executive branch or another entity identify the threats or vulnerabilities that might accrue from release of a greater amount of chemical facility security information prior to implementing such a policy change.\nCongressional policy makers might choose to alter the information protection regime afforded to chemical facility security information by specifically expanding access to first responders. The existing regulation explicitly states that it does not protect from disclosure information developed in response to other laws or regulations, such as the Emergency Planning and Community Right-to-Know Act (EPCRA). Enhancing first responder access to such information might minimize perceived barriers to disclosing information during an accident. For example, Congress might mandate that each jurisdiction with a regulated chemical facility contain a first responder designated as a covered individual.\nConversely, congressional policy makers might choose to further limit dissemination of CVI so as to increase barriers to its release. Congress might prohibit DHS from sharing such information outside of the federal government or further limit CVI access to state and local officials by establishing additional eligibility criteria. Limiting the number of individuals with access to CVI may make it more difficult for those wishing to do harm to obtain technical or operational security information. Conversely, state and local officials may not support such an approach, as limitations on distribution may also adversely affect emergency response at a regulated facility or inhibit the ability of state and local law enforcement officials to provide targeted protection of particular chemical facility assets.\nPolicy makers might also choose to address the issue of identifying and marking protected information by mandating review of marked documents. Congressional policy makers might assign this responsibility to review and certify marked information to the chemical facility. Alternatively, the federal government might review and certify documents marked CVI on a regular basis. Industry representatives may not support such a requirement due to the additional regulatory burden caused by the review. While such review might potentially limit incorrect marking, it may inhibit information reporting by regulated entities to the federal government. Additionally, absent a penalty for incorrect marking, it is unclear how to discourage incorrect marking of non-security materials in order to avoid public release.\nCongressional policy makers may also address concerns raised regarding the ability of concerned individuals to report misdeeds by creating a \"whistleblower\" reporting mechanism. One approach might be to codify the current mechanism of reporting such concerns to DHS or a similar federal entity, such as an agency Inspector General. Alternatively, Congress can create a more general exemption to the penalties arising from disclosure of protected information for those individuals who report such concerns to federal officials if that is needed to protect whistleblowers. As part of a whistleblower mechanism, policy makers might choose to extend protections against retaliation or other job-related actions to those individuals availing themselves of current or newly established reporting mechanisms.",
"The 110 th Congress addressed the issue of federal preemption of state chemical facility security statutes and regulations by placing in statute the requirement that federal regulation preempt the state regulation only when an \"actual conflict\" occurs between them. Congressional policy makers may choose to further limit the cases where federal regulation would preempt state regulation by affirming the right of states to make chemical facility security regulations that are more stringent than federal regulation even if they conflict. Alternatively, policy makers may choose to increase the number of cases where federal regulations preempt those of a state by expanding the types of conflict, beyond \"actual,\" that will lead to preemption.",
"The annual appropriations process provides funding for implementation of chemical facility security regulation. The 113 th Congress, through H.J.Res. 130 , extended the statutory authority through December 13, 2014, and provided appropriations for CFATS implementation. The 113 th Congress has passed H.R. 4007 , which authorizes DHS to regulate chemical facilities for security purposes through the Homeland Security Act. This bill will repeal the existing statutory authority on the effective date of the act (30 days after enactment). Many of the existing authorities are present in H.R. 4007 , but it also provides DHS with new authorities, such as the ability for certain covered chemical facilities to self-certify the sufficiency of their security plans. The DHS may use the existing regulations and issue new regulations as necessary to implement the new authority. Other chemical facility security legislation has also been introduced in the 113 th Congress.",
"Legislation in the 113 th Congress has been introduced in the House that would modify the existing authority. Of this legislation, the 113 th Congress has passed H.R. 4007 .",
"H.R. 4007 , as passed the Senate, passed the House on December 11, 2014. This bill will repeal Section 550 of P.L. 109-295 on the effective date of the act (30 days after enactment), but DHS may use the existing regulations and issue new regulations as necessary to implement the new authority.",
"H.R. 4007 , the Protecting and Securing Chemical Facilities from Terrorist Attacks Act of 2014, as amended, passed the Senate on December 10, 2014. The Senate Committee on Homeland Security and Governmental Affairs reported the bill on September 18, 2014.\nThe act would establish a Chemical Facility Anti-Terrorism Standards Program within DHS. It would require the Secretary of Homeland Security to establish risk-based performance standards through the program and mandate that the Secretary identify chemical facilities of interest and covered chemical facilities. Chemical facilities of interest would be those chemical facilities possessing certain chemicals in greater than threshold quantities. Covered chemical facilities would be chemical facilities of interest designated by the Secretary as meeting certain security risk criteria. Facilities regulated under MTSA; public water systems; wastewater treatment works; facilities owned or operated by the Department of Defense and Department of Energy; and facilities regulated by the Nuclear Regulatory Commission would be excluded from the definitions of chemical facility of interest and covered chemical facility. Chemical facilities of interest would submit Top-Screen information to DHS, while covered chemical facilities would also submit a security vulnerability assessment, and develop, submit, and implement a site security plan.\nThe act would require the Secretary to review and approve or disapprove such security vulnerability assessments and site security plans, though not on the basis of the presence or absence of a particular security measure. It would allow the Secretary to approve alternative security programs if the programs meet DHS requirements. The act would allow the Secretary to recommend additional security measures so that an alternative security program would meet DHS requirements.\nThe act would also provide a mechanism for Tier 3 and Tier 4 chemical facilities to self-certify the sufficiency of their site security plans to DHS. The act would prohibit DHS from disapproving the site security plans of such \"expedited approval facilities.\" It would allow DHS to assess facility compliance with the risk-based performance standards and the self-certified site security plans. The act would allow the Secretary to recommend additional security measures so that a self-certified site security plan would meet DHS requirements and allow the Secretary to develop templates for use in developing self-certified site security plans. The Secretary would be required to evaluate this aspect of the chemical facility security program and report the results to the Senate Committee on Homeland Security and Governmental Affairs and the House Committee on Homeland Security.\nH.R. 4007 , as passed the Senate, would require the Secretary to audit and inspect covered facilities. It would explicitly allow the Secretary to permit non-departmental and nongovernmental entities to perform such activities and would allow nongovernmental personnel to provide administrative and logistical services to DHS in support of audits and inspections. It would limit approval of site security plans and determination of compliance with an approved site security plan to the Secretary and the Secretary's designees within DHS. It would also require the Secretary to set standards for departmental and nongovernmental inspectors. Also, the act would allow a covered facility to satisfy a personnel surety performance standard by using any federal screening program that periodically vets individuals against the terrorist screening database, including the DHS personnel surety program.\nThe act would provide a mechanism for addressing covered facility noncompliance including the issuance of penalties. The Secretary would also have the authority to issue certain emergency orders that would take effect immediately. Owners or operators of chemical facilities of interest that fail to comply with or knowingly submit false information under the CFATS regulations would be liable for a civil penalty.\nThe act, as passed the Senate, would require the Secretary to consult with other federal agencies, relevant business associations, and public and private labor organizations to identify potentially noncompliant facilities. The act would provide protections to information developed pursuant to the act and would explicitly exempt such information from the Freedom of Information Act. It would allow the Secretary to share information with covered facilities, state and local government officials, as well as first responders through state and local fusion centers.\nThe act would also require the Secretary to establish a reporting procedure for employees of a chemical facility to confidentially submit information to DHS. In addition, the Secretary would be required to acknowledge receipt of such information, review it, and take appropriate actions to address any substantiated problems or deficiencies. The act would expressly prohibit retaliation against employees using this process.\nThe Secretary would be granted the discretion to use existing and new regulations to implement these authorities. In addition, it would direct DHS and GAO to provide various reports on the program.\nH.R. 4007 , as passed the Senate, also would allow the Secretary to provide guidance on recordkeeping, reporting, physical security, and cybersecurity compliance to regulated small chemical facilities. Finally, the bill would require the Secretary to commission a third-party study on vulnerabilities associated with the existing CFATS program.\nH.R. 4007 , as passed the Senate, would repeal Section 550 of P.L. 109-295 on the effective date of the act (30 days after enactment). It contains a sunset date, and the statute would expire four years after the effective date of the act. It does not contain an authorization of appropriations.",
"H.R. 4007 , the Chemical Facility Anti-Terrorism Standards Program Authorization and Accountability Act of 2014, was passed by the House of Representatives on July 8, 2014. On June 23, 2014, the House Committee on Homeland Security amended the bill as forwarded by the Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies and reported it, as amended, to the House of Representatives. On April 3, 2014, the Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies, of the House Committee on Homeland Security, amended the bill as introduced and ordered it forwarded to the full committee with a favorable recommendation, as amended.\nThe act would establish a Chemical Facility Anti-Terrorism Standards Program within DHS. It would require the Secretary of Homeland Security to establish risk-based performance standards through the program and mandate that chemical facilities of interest and covered facilities submit security vulnerability assessments and develop and implement site security plans. Chemical facilities of interest would be those chemical facilities possessing certain chemicals in greater than threshold quantities. Covered chemical facilities would be chemical facilities of interest designated by the Secretary as meeting certain security risk criteria, excluding facilities regulated under MTSA; public water systems; wastewater treatment works; facilities owned or operated by the Department of Defense and Department of Energy; facilities regulated by the Nuclear Regulatory Commission; and certain rail facilities regulated by the Transportation Security Administration.\nThe act would require the Secretary to review and approve or disapprove such security vulnerability assessments and site security plans, though not on the basis of the presence or absence of a particular security measure. It would allow the Secretary to approve alternative security programs if the programs meet DHS requirements. Also, the act would allow a covered facility to satisfy a personnel surety performance standard by using any federal screening program that periodically vets individuals against the terrorist screening database, including the DHS personnel surety program. It also would prohibit the Secretary from requiring a covered facility to submit information about individuals with access to the facility unless the individual was vetted under the DHS personnel surety program or had been identified as presenting a terrorism security risk.\nH.R. 4007 , as passed the House, would require the Secretary to audit and inspect covered facilities and explicitly allows the Secretary to permit non-departmental and nongovernmental entities to perform such activities. It would also require the Secretary to set standards for departmental and nongovernmental inspectors. The act would provide a mechanism for addressing covered facility noncompliance including the issuance of penalties. Also, it would require the Secretary to consult with other federal agencies and relevant business associations to identify potentially noncompliant facilities.\nThe act would provide protections to information developed pursuant to the act. It would allow the Secretary to share information with covered facilities, state and local government officials, as well as first responders through state and local fusion centers. The Secretary would be granted the discretion to use existing and new regulations to implement these authorities. In addition, it would direct DHS and GAO to provide various reports on the program.\nH.R. 4007 , as passed the House, also would require the Secretary to make available information about protections for providing information to DHS, allow the Secretary to provide guidance on physical security compliance to regulated small chemical facilities, and provide authorization of appropriations from FY2015 through FY2018 at $87.436 million. Finally, the bill would require the Secretary to establish an outreach implementation plan, submit a plan to Congress on CFATS metrics, and commission a third-party study on vulnerabilities associated with the existing CFATS program.\nH.R. 4007 , as passed the House, does not contain a sunset date.\nIn February 2014, Secretary of Homeland Security, Jeh Johnson, testified that he was in support of H.R. 4007 , as introduced, stating:\nI have reviewed H.R. 4007 . I think it is a good bill. I'm very supportive of it. Indeed, my folks tell me, \"We wish we could extend the period longer.\" We have a regulatory scheme that we have put in place. I agree with you, that over the last year, it's gotten better. That all stems from an appropriations measure, not an authorizations measure. I've read this bill. I think it's a good bill. Our critical infrastructure folks think it's a good bill. And I support it.\nIn addition, several industry organizations have expressed support for H.R. 4007 . In contrast, a labor representative asserted that the bill fails to address several weaknesses present in the current CFATS program.",
"H.R. 68 was referred to the House Committee on Energy and Commerce and the House Committee on Homeland Security. The act would prohibit the Secretary of Homeland Security from approving a chemical facility site security plan if the plan did not meet or exceed existing state or local security requirements. It would allow the Secretary of Homeland Security to mandate the use of specific security measures in site security plans. The bill would also cause CVI to be treated as sensitive security information in both general and legal proceedings. Finally, the act would no longer prohibit third-party individuals from bringing suit in court to require the Secretary of Homeland Security to enforce chemical facility security regulations against a chemical facility.",
"S. 67 , the Secure Water Facilities Act, was referred to the Senate Committee on Environment and Public Works. The act would authorize the EPA Administrator to regulate community water systems and wastewater treatment facilities for security purposes. S. 67 also would authorize implementation of methods to reduce the consequences of a chemical release from an intentional act. Among other provisions, the Administrator would be directed to promulgate regulations as necessary to prohibit the unauthorized disclosure of controlled information. S. 67 would authorize the Administrator to provide grants or enter into cooperative agreements with states or regulated entities to assist in regulatory compliance.",
"S. 68 , the Secure Chemical Facilities Act, was referred to the Senate Committee on Homeland Security and Governmental Affairs. The act would codify aspects of the CFATS regulation. It would require facilities to evaluate whether the facility could reduce the consequences of an attack by using a safer chemical or process. The act would authorize DHS to require implementation of those safer measures if a facility has been classified as one of the highest-risk facilities, implementation of safer measures is feasible, and implementation would not increase risk overall by shifting risk to another location. Among other provisions, S. 68 also would increase the participation of employees and employee representatives in developing security plans. S. 68 would alter the current information control regime, aligning it with that for sensitive security information. Finally, S. 68 would allow third-party individuals to file suit against the Secretary of Homeland Security or submit a petition to the Secretary to enforce compliance with statute.",
"S. 814 , the Protecting Communities from Chemical Explosions Act of 2013, was referred to the Senate Committee on Homeland Security and Governmental Affairs. The act would levy a civil penalty on owners or operators of a facility that does not file Top-Screen information when possessing a chemical of interest at above the screening threshold quantity. It would also establish a criminal penalty if a facility owner, a facility operator, or an officer of an entity that owns or operates a facility intentionally fails to file Top-Screen information when the facility possesses a chemical of interest at above the screening threshold quantity.",
"The current statutory authority to regulate security at chemical facilities expires on December 13, 2014. Historically, Congress has extended this authority through appropriations acts. The Administration's budget requests that the statutory authority be extended to October 4, 2015.",
"H.J.Res. 130 extends the current statutory authority to December 13, 2014.",
"P.L. 113-164 , Continuing Appropriations Resolution, 2015, extended the current statutory authority to December 11, 2014.",
"H.R. 4903 , Department of Homeland Security Appropriations Act, 2015, would extend the current statutory authority to October 4, 2015. In addition, the act would prohibit DHS from using any funds appropriated by the act for certain personnel surety activities at chemical facilities. The DHS would not be able to require a chemical facility to employ or not employ a particular security measure for personnel surety if the facility has adopted certain personnel measures. These personnel measures must be designed to verify and validate an individual's identification; check an individual's criminal history; verify and validate an individual's legal authorization to work; and identify individuals with terrorist ties. The act would expressly allow a facility to use any federal screening program \"that periodically vets individuals against the terrorist screening database, or any successor to such database, including the Personnel Surety Program of the Department of Homeland Security\" to satisfy the requirement to identify individuals with terrorist ties.",
"H.Rept. 113-481 , the report accompanying H.R. 4903 , would recommend $83 million for Infrastructure Security Compliance, $3.7 million less than the Administration's request. According to the House Committee on Appropriations, this recommended funding would \"enhance critical efforts related to compliance with CFATS, including developing an automated process for identification of CFATS outliers, addressing concerns raised by GAO regarding the risk-tiering methodology, and fulfilling other requirements.\"\nThe report also expresses the committee's determination that \"DHS should not mandate how a covered chemical facility meets the personnel surety standard if the facility has already adopted a rigorous process to verify and validate identity, check criminal history, verify and validate legal authorization to work, and identify individuals with terrorist ties by using a federal vetting program, such as one that periodically vets individuals.\" The report would also direct the Under Secretary of NPPD to report to the appropriations committees within 120 days and semiannually thereafter on the implementation of the CFATS program. Finally, the report would encourage DHS to work with the Chemical Sector Coordinating Council to disseminate information to the chemical sector, about proven next-generation sealing technologies.",
"S. 2534 , Department of Homeland Security Appropriations Act, 2015, would extend the current statutory authority to October 4, 2015.",
"S.Rept. 113-198 , the report accompanying S. 2534 , would recommend $87 million for Infrastructure Security Compliance, $249 thousand less than the Administration's request. The report would also direct the Under Secretary of NPPD to report within 90 days and semiannually thereafter on the implementation of the CFATS program. The report would be delineated by risk tier and include the number of facilities covered, inspectors, completed inspections, inspections completed by region, pending inspections, days inspections are overdue, enforcements resulting from inspections, and enforcements overdue for resolution.\nThe report also would direct NPPD to brief the Senate Committee on Appropriations within 90 days on the progress made on improving chemical facility security coordination among federal agencies and fulfilling the recommendations made in the report of the Chemical Facility Safety and Security Working Group established by Executive Order 13650.\nIn addition, the report urges NPPD to \"find the best possible path to ensure safety while not overburdening the industry with excessive regulatory requirements. In particular it is imperative that NPPD work with industry on a viable solution to personnel surety.\" It also encourages NPPD to consider chemical neutralization technologies when creating comprehensive and integrated standard operating procedures for a unified federal approach for identifying and responding to risks in chemical facilities.\nFinally, the report would direct NPPD to consider the eligibility of chemical security inspectors for administratively uncontrollable overtime and keep the Senate Committee on Appropriations apprised of developments in this area.",
"P.L. 113-76 , the Consolidated Appropriations Act, 2014, became law on January 17, 2014. It extended the statutory authority through October 4, 2014, and provided appropriations for the federal government for FY2014. A joint explanatory statement for P.L. 113-76 contained specific directions for the CFATS program, as did the House and Senate reports accompanying their respective passed and reported homeland security appropriations bills.",
"The joint explanatory statement for P.L. 113-76 provided $81.0 million for Infrastructure Security Compliance, $4.8 million less than the Administration's request. The joint explanatory statement clarified that\nThe language and allocations contained in the House and Senate reports should be complied with and carry the same weight as the language included in this explanatory statement, unless specifically addressed to the contrary in the final bill or this explanatory statement.\nThe joint explanatory statement contained certain requirements for DHS with respect to chemical facility security and the CFATS program. It directed NPPD to, as detailed in the House report, provide a report within 90 days of enactment to the appropriations and authorizing committees explaining how ISCD will further improve the review process for regulated facilities. The joint explanatory statement directed NPPD to report to the appropriations and authorizing committees not later than April 15, 2014, on the steps NPPD is taking to avoid costly duplication of programs, as detailed in the House report. The report is also to describe how NPPD is helping to ensure the safety of facilities and whether DHS intends to mandate how a covered chemical facility meets the personnel surety standard, particularly in cases where the facility has already adopted strong and identifiable personnel measures designed to verify identity, check criminal history, validate legal authorization to work, and identify individuals with terrorist ties.\nThe statement further directed the Under Secretary of NPPD to provide a report within 90 days of enactment to the appropriations committees on the implementation of the CFATS program, as detailed in the Senate report. This report shall be in lieu of language in the House report directing NPPD to provide a detailed expenditure plan.\nIn lieu of the requirement in the Senate report for the Chemical Sector Coordination Council to develop recommendations to improve coordination on chemical security and safety, the joint explanatory statement directed NPPD to continue implementing the requirements designated in Executive Order 13650. The joint explanatory statement stated its expectation that NPPD provide regular updates on the progress of implementing improvements, the status of corrective measures being taken to ensure awareness of facilities that fall under the purview of the CFATS program, and the need for any additional funding requirements that emerge to address coordination needs. In lieu of language in the House report, the joint explanatory statement directed NPPD to report semiannually to the appropriations committees on progress in complying with all the DHS Office of Inspector General recommendations made on ISCD's management practices related to CFATS. The joint explanatory statement also directed ISCD to improve the compliance of current Top-Screen registrants, such as through ongoing, proactive risk monitoring, data management, and the verification of business information in lieu of language in the House report.",
"H.Rept. 113-91 , the House Committee on Appropriations report accompanying H.R. 2217 , would have recommended $77.1 million for Infrastructure Security Compliance, $8.7 million less than the Administration's request. The report cites \"the continued delays in the implementation of the Chemical Facility Anti-terrorism Standards (CFATS) program\" and \"the Infrastructure Security Compliance Division's (ISCD) inability to mitigate real risks\" as the reason for the decrease.\nThe House committee report would direct DHS to perform certain activities and to provide several reports to congressional policy makers. It would direct NPPD to report on how it will further accelerate the site security plan review process and detail actions DHS is taking to better manage the CFATS program. The committee report also expresses the committee's expectation that NPPD will comply with the recommendations of the DHS Inspector General regarding the CFATS program and would direct NPPD to report to the committee on its compliance with those recommendations. It would direct the Under Secretary for NPPD to report on steps NPPD is taking to leverage existing personnel surety infrastructure within DHS and industry and to ensure that DHS does not inadvertently compromise facility safety due to overzealous protection of criminal investigations. It would direct DHS to review CFATS program implementation and collaboration and communication within ISCD and with the regulated community. The review also would address improvement of facility identification methodology used by ISCD, information sharing with state entities by ISCD, and efforts to address stakeholder concerns. The report also states the committee's expectation that NPPD will provide it with a comprehensive update on measures being taken to ensure that facilities with chemicals of interest are notified by ISCD when they fall within the purview of the CFATS program, an estimate of the potential number of outlier facilities, and a detailed performance evaluation of CFATS inspectors.",
"S.Rept. 113-77 , the Senate Committee on Appropriations report accompanying H.R. 2217 , would have recommended $85.5 million for the Infrastructure Security Compliance, $0.2 million less than the Administration's request. The Senate committee report would direct DHS to perform certain activities and to provide several reports to congressional policy makers. It would require DHS to report semiannually on the coordination of chemical security efforts within DHS and across departments and agencies and direct DHS to work in conjunction with the Office of Management and Budget to review and synchronize federal entities involved in chemical security activities. In addition, the report would direct NPPD to support the Chemical Sector Coordination Council in an effort to develop and provide to the committee recommendations to improve the coordination among federal agencies, streamline reporting requirements, and improve the CFATS program. The report would direct NPPD to report semiannually on the implementation of the CFATS program including the number of facilities covered, inspectors, completed inspections, inspections completed by region, pending inspections, days inspections are overdue, enforcements resulting from inspections, and enforcements overdue for resolution, with the data delineated by tier.",
"P.L. 113-73 , which made further continuing appropriations for FY2014, became law on January 15, 2014. It extended the statutory authority through January 18, 2014.",
"P.L. 113-46 , the Continuing Appropriations Act, 2014, became law on October 17, 2013. It extended the statutory authority through January 15, 2014.",
"P.L. 113-6 , the Consolidated and Further Continuing Appropriations Act, 2013, became law on March 26, 2013. It extended the statutory authority through October 4, 2013."
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{
"question": [
"What does the Department of Homeland Security (DHS) have statutory authority to regulate?",
"What extended the 113th Congress' authority?",
"What has been a point of debate within Congressional policy makers?",
"What debates are discussed within this issue?",
"What exacerbates the tension between continuing current policies and changing the statutory authority?",
"What have Congressional policy makers questioned?",
"In what year did DHS finalize CFATS regulations?",
"What has happened since the finalization of the regulations?",
"What factors complicate the inspection process?",
"What have policy makers questions regarding the compliance rate?",
"How can individuals find out more about CFATS implementation?"
],
"summary": [
"The Department of Homeland Security (DHS) has had statutory authority to regulate chemical facilities for security purposes since the 109th Congress.",
"The 113th Congress extended this authority through December 13, 2014, and has passed H.R. 4007, which provides new statutory authority.",
"Congressional policy makers have debated the scope and details of reauthorization and continue to consider establishing an authority with longer duration.",
"Some Members of Congress support an extension, either short- or long-term, of the existing authority. Other Members call for revision and more extensive codification of chemical facility security regulatory provisions.",
"Questions regarding the current law's effectiveness in reducing chemical facility risk and the sufficiency of federal chemical facility security efforts exacerbate the tension between continuing current policies and changing the statutory authority.",
"Congressional policy makers have questioned DHS's effectiveness in implementing the authorized regulations, called chemical facility anti-terrorism standards (CFATS).",
"The DHS finalized CFATS regulations in 2007.",
"Since then, the site security plans for 900 chemical facilities have been approved in the CFATS process, which starts with information submission by chemical facilities and finishes with inspection and approval of facility security measures by DHS. Additionally, DHS has inspected some facilities for subsequent compliance activities.",
"Several factors, including the amount of detailed information provided to DHS, the effectiveness of DHS program management, and the availability of CFATS inspectors, likely complicate the inspection process and lead to delays in inspection.",
"Policy makers have questioned whether the compliance rate with CFATS is sufficient to mitigate this homeland security risk.",
"For additional analysis of CFATS implementation, see CRS Report R43346, Implementation of Chemical Facility Anti-Terrorism Standards (CFATS): Issues for Congress."
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CRS_R43005
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{
"title": [
"",
"Introduction",
"Decided During the Supreme Court's 2009-2010 Term",
"Stop the Beach Renourishment, Inc. v. Florida Dep't of Environmental Protection: \"Judicial Takings\"",
"Decided During the Supreme Court's 2011-2012 Term",
"PPL Montana LLC v. Montana: Title Navigability",
"Sackett v. Environmental Protection Agency: Pre-Enforcement Review of Administrative Orders23",
"Decided During the Supreme Court's 2012-2013 Term",
"Arkansas Game & Fish Comm'n v. United States: Temporary Government-Induced Flooding",
"Horne v. Department of Agriculture: Availability of a Takings Defense to an Enforcement Action",
"Koontz v. St. Johns River Water Management District: Exaction Conditions on Land Development Permits",
"Overall Comments"
],
"paragraphs": [
"",
"In the late 1970s, the Supreme Court launched an effort to construct a coherent jurisprudence under the Fifth Amendment Takings Clause. This Clause contains the Constitution's principal safeguard of private property rights against the actions of government, mandating \"just compensation\" when property is \"taken\" by the government. From the late 1970s until 2005, the Court's output in this area was prolific, with one or more decisions on Takings Clause issues handed down almost every year. In mid-2005, however, the decisions came to a halt, and the Court decided no more takings cases until mid-2010. Beginning then, the Court seemed intent on making up for lost time. In June 2010, the Court decided one taking case, followed by two non-taking but property-rights-related decisions in the Court's 2011-2012 term, followed by no less than three takings decisions in the just-concluded 2012-2013 term. This recent turn-about in the Court's case-acceptance pattern raises the prospect that it is becoming interested anew in property rights. The fact that the Court ruled in favor of the property owner and against the government in five out of six of these cases buttresses that impression.\nThe taking case decided in 2010 is Stop the Beach Renourishment, Inc. v. Florida Dep't of Environmental Protection . There, a four-Justice plurality concluded that courts, just as other branches of government, could be subject to taking liability, as when they change the law in a manner that divests existing property rights.\nThe two property-rights-related cases decided in the Court's 2011-2012 term did not involve the Takings Clause. One is PPL Montana LLC v. Montana , making clear that the Court's test for \"title navigability\" requires a court to entertain claims of nonnavigability in a generally navigable river for all but the shortest river segments. The consequence of nonnavigability when a state was admitted to the Union is that title to that river segment did not pass to the state. The other decision is Sackett v. Environmental Protection Agency , holding that when property owners receive an administrative order from the Environmental Protection Agency (EPA) under the Clean Water Act, they may challenge at least the jurisdictional basis of that order, and likely any other legal inadequacies therein, right away—before EPA seeks to enforce the order in court, requesting the court to impose potentially large penalties.\nThe three property-rights-related decisions during the Court's 2012-2013 term, all takings cases, began with Arkansas Game & Fish Comm'n v. United States . There, the Court jettisoned its long-standing rule that when a government project induces flooding of private property, only flooding that is continual or at least \"intermittent but inevitably recurring\" can result in takings liability. Temporary flooding, the Court now says, may also in appropriate cases subject the government to takings liability. Next, the Court decided Horne v. Department of Agriculture , ruling that a takings defense may be raised in federal district court—rather than the usual Court of Federal Claims—to federal administrative penalties imposed under a Depression-era commodity-price-support statute. The narrow decision raises broader questions about when a property owner subject to a directive it regards as a taking can elect not to comply and then defend any subsequent enforcement action by asserting a taking defense. Last, the Court decided Koontz v. St. Johns River Water Management District , holding that its previously announced test for when exaction conditions on land development approvals constitute takings applies even when a permit is denied because the landowner refused to accede to the conditions, and to monetary exactions as well as land-dedication conditions.\nAll six decisions confine themselves to general legal issues. For property-owner-petitioners in five of the six cases, this meant that the Supreme Court had to remand the case to the lower courts to determine, based on the Court's ruling, the merits of the property owner's particular claims. As a result, while each of these five petitioners won in the Supreme Court, they may or may not obtain ultimate redress.\nThis report discusses each of these decisions in turn, noting their importance for federal programs. It then comments on their aggregate significance.",
"",
"Facts : Stop the Beach Renourishment, Inc. consists of a handful of beachfront property owners on the Gulf Coast of Florida. They objected to a state \"beach renourishment\" project (the mechanical addition of sand to widen an eroded beach) that bordered their properties. In particular, they claimed a Fifth Amendment taking of two common law rights they held as littoral (ocean or bay abutting) property owners. First, wherever beach renourishment is carried out in Florida, the governing state statute freezes at the current mean high water mark (MHWM) the property line between privately owned beach above the MHWM and state-owned beach and submerged land below the MHWM. This freezing of the property line negates the common law right of accretion, under which a gradual seaward shift in the MHWM results in the beachfront owner gaining additional land (or losing it if the MHWM shifts landward). Second, under the state statute the added strip of beach is state-owned, trenching on the common law right of littoral owners to have their land be in direct contact with the water.\nDecision s below : The lower Florida court found that the beach renourishment project eliminated two of the beachfront property owners' littoral rights: the right to receive accretions to their property and the right to have their land in direct contact with the water. On certified questions, however, the Florida Supreme Court found neither right adequate to ground a taking. The common law right of littoral owners to accreted land was not involved here, the court said, because its historic justification was irrelevant to the eroded beach situations addressed by the Florida beach renourishment statute. The right to direct contact with the water, the court continued, is merely ancillary to the beachfront property owner's right of access to the water, a right that the state statute expressly preserved.\nSupreme Court decision : Unsuccessful in the state high court, the plaintiff made a new argument in the U.S. Supreme Court. It asserted that the state supreme court had itself caused a taking—a \"judicial taking\"—by rewriting Florida common law to subordinate the property rights of accretion and direct contact with the water to the renourishment project.\nOwing to Justice Stevens's recusal, only eight of the Justices ruled on this novel question of whether courts, like other branches of government, can bring about takings. They split 4-4. An opinion by Justice Scalia for himself and three other Justices concluded that nothing in the text of the Takings Clause justifies exempting courts from its reach. If a court declares \"that what was once an established right of private property no longer exists, it has taken that property,\" he wrote. By contrast, the four other Justices noted in two opinions that since the Court was unanimous that the Florida Supreme Court's characterization of the common law rights at issue was well grounded in precedent, there was simply no need in the present case to resolve whether there can be judicial takings. Based on this unanimity, the state supreme court was affirmed.\nComments: The notion of judicial takings was first broached by the Supreme Court in a 1967 concurring opinion by Justice Stewart, then noted in a 1994 dissent from denial of certiorari. The concept was not squarely presented to the Supreme Court, however, until Stop the Beach Renourishment . One difficulty with the idea of judicial takings is that the common law has always evolved in the courts, sometimes (as with the public trust doctrine) in a way that narrows property rights, yet few until recently have discerned a constitutional issue in that evolution. There is also the highly nuanced question whether a court articulating a common law principle not previously stated is merely clarifying what the law has always been, or stating a wholly new principle. Only the latter seems to qualify as a possible judicial taking.\nFollowing Stop the Beach Renourishment , lower court reaction to the plurality's recognition of judicial takings has been mixed, though no court since the decision, or before for that matter, has found a judicial taking in a final opinion. The possibility cannot be dismissed, however, that some future court may discern a judicial taking should another court announce an abrupt and unforeseeable change in a common law principle with the effect of divesting property rights.",
"",
"Facts and background: PPL Montana, LLC owns hydroelectric dams in Montana. The State of Montana, however, argued that 10 of these dams sit on riverbeds owned by the state, invoking the constitutional \"equal footing doctrine.\" This doctrine holds that the 13 original states were admitted to the Union on the basis that they held title to the beds under waters then commercially navigable, and that later-admitted states like Montana are admitted on an \"equal footing\" with the original states and thus have the same ownership right to such beds. Claiming that the riverbeds under PPL's dams lay under waters commercially navigable in 1889 when Montana was admitted, the state asserted ownership of those riverbeds and sought to collect rent from PPL.\nDecision s below: The Montana trial court ruled for the state, ordering PPL Montana to pay the state $41 million for its use of state-owned riverbeds from 2000 to 2007 at its hydropower sites. The Montana Supreme Court affirmed.\nSupreme Court decision: The U.S. Supreme Court unanimously reversed. It held that the state supreme court erred in finding the riverbeds in question navigable, for two key reasons. First, the state court had rejected the applicability here of the rule that for purposes of title, the navigability of a waterway must be determined on a segment-by-segment basis, reasoning that it does not apply to short interruptions of navigability. Contrary to the state court, the U.S. Supreme Court held that even if, in general, some nonnavigable river segments might be so short as to warrant treatment as part of a longer, navigable river, \"it is doubtful that any of the segments in this case would meet that standard.\" Second, the state supreme court was wrong, in the U.S. Supreme Court's view, because it rejected land route portaging on the rivers in question as evidence of nonnavigability. Finally, the federal Supreme Court found the state high court's analysis deficient in its acceptance of present-day, primarily recreational use of a river as evidence of commercial navigability at the time the state was admitted to the United States.\nThe U.S. Supreme Court therefore sent the case back to the Montana high court for further proceedings based on this corrected view of the title navigability test.\nComments: On remand, the Montana courts may or may not find some or all of the river segments at issue to be nonnavigable, hence not in state ownership. In any event, the U.S. Supreme Court's decision likely means that hydroelectric power suppliers will encounter fewer state demands for streambed rent as the result of the location of their dams. The rent payments avoided are potentially large—as noted, the Montana courts had awarded that state $41 million in the current case. The federal government, though not a party, also has an interest in this case. For one thing, hydroelectric dams are licensed under a federal scheme in the Federal Power Act. For another, the United States has asserted ownership of various riverbeds throughout the nation, including by issuing permits, licenses, and patents.",
"Facts: Michael and Chantelle Sackett filled in their subdivision lot in Idaho to prepare it for house construction. EPA then issued an \"administrative compliance order\" (ACO) alleging that the lot contained a \"jurisdictional wetland\"—that is, was covered by Clean Water Act (CWA) section 404, which requires a permit to fill in such wetlands. The Sacketts had not obtained such a permit. The ACO, an enforcement tool frequently used by EPA, required the Sacketts to remove the fill material and restore the lot to its pre-fill condition. It also invited them to discuss the order with EPA and indicated that the order could be amended to provide for alternative methods of complying with the CWA. Finally, it stated that failure to comply with the order could trigger severe civil penalties in federal court .\nThe Sacketts sought an EPA hearing to challenge the jurisdictional finding, which the agency denied, saying that pre-enforcement review of ACOs is not available under the CWA (as many lower courts have held). So the Sacketts faced a dilemma. They could comply with the ACO at considerable expense, despite disagreeing with the underlying jurisdictional determination. Alternatively, they could do nothing and wait to challenge the jurisdictional determination when EPA eventually brought a court action against them. This course risked, if they lost in court, large civil penalties for the period of noncompliance with the ACO and, separately, for the period of noncompliance with the CWA. The Sacketts sued.\nDecisions below: Agreeing with EPA, the district court held that the CWA precludes judicial review of ACOs before EPA has filed an enforcement action in court, and so dismissed the case. On appeal, the Ninth Circuit affirmed, holding both that the CWA prohibits pre-enforcement review of ACOs, and that the Due Process Clause is not offended thereby.\nSupreme Court decision: The Supreme Court reversed, ruling unanimously for the Sacketts. It found that the ACO against the Sacketts \"is final agency action for which there is no adequate remedy other than [Administrative Procedure Act] review, and that the Clean Water Act does not preclude that review.\" Therefore, it held that pre-enforcement review of CWA ACOs is available in district courts under the Administrative Procedure Act. Finding such review available on statutory grounds, the Court had no need to address the constitutional due process issue.\nComments : This decision is not explicitly concerned with property rights, as are the others in this report, yet the large impact of EPA (and Corps of Engineers) CWA jurisdictional determinations on property use and value warrants its inclusion here.\nGiven the Supreme Court ruling, the Sacketts now may seek judicial review of EPA's jurisdictional determination underlying the ACO and need not await the agency's enforcing the order in a court, risking large civil penalties. The larger significance of Sackett will turn on how far beyond CWA section 404 it is applied. The number of section 404 ACOs issued by EPA during any given year is but a small fraction of the total number of ACOs issued by EPA, and other agencies issue ACOs, too.\nIn response to Sackett , EPA could forego compliance orders in some instances and proceed directly to civil enforcement actions in court seeking money penalties. This would reduce opportunities for negotiating with the recipient, who, under ACOs, typically does not wind up paying penalties. Another option might be increased EPA use of noncompliance letters, sometimes called notices of violation. These inform recipients of a suspected violation, instruct on how to come into compliance, and invite negotiations. In sharp contrast with ACOs, however, they have no direct legal consequences. In particular, no penalties attach to failing to heed the letter, only to violating the underlying statute. Not being the consummation of the agency's decision-making process nor determining any rights or obligations, a noncompliance letter of this kind would not likely be deemed \"final agency action\" under the APA and so entitled to review.\nEPA has embraced a third option, not necessarily to the exclusion of the two above. Following Sackett , EPA began adding language to unilateral CWA compliance orders informing recipients of their right to seek pre-enforcement review of the order. More dramatically, the agency in March 2013 instructed its regional staff to add language to 10 additional types of agency orders informing recipients of their right to judicial review. Besides the CWA ACOs at issue in Sackett itself, regional staff is to insert this language in specified orders under the Resource Conservation and Recovery Act, Clean Air Act, Safe Drinking Water Act, Emergency Planning and Community Right to Know Act, and Federal Insecticide, Fungicide, and Rodenticide Act. (For at least some of these types of orders, the courts already have ruled or assumed that pre-enforcement review is available.) The headquarters directive is confined to \"typical orders issued under typical circumstances,\" making clear that it states only a presumption in favor of inserting the review clause and that regional staff \"should analyze each administrative enforcement order individually.\"\nThe Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is the only EPA statute with express language barring pre-enforcement judicial review of challenges to agency orders, and thus is unaffected by Sackett and not covered by the memorandum.\nSackett should be contrasted with current lower-court case law denying judicial reviewability for Corps of Engineers formal jurisdictional determinations. Such determinations may be made by Corps district offices at the request of those contemplating a project on their land and unclear as to whether a Corps permitting authority such as CWA section 404 applies. They are separate from and prior to the permit application process. It seems unlikely, though not unthinkable, that Sackett would be deemed to undermine this line of case authority denying review.",
"",
"Facts: The Commission owns a wildlife management area 115 miles downstream from a Corps of Engineers flood control dam. In 1993 through 2000, the Corps adopted a series of interim deviations from its approved water release plan for the dam, at the request of downstream farmers. The effect of the adjusted water releases was to lengthen the flooding period to which the wildlife management area was subjected in six of the eight years in question, relative to either before or after the dam was built. These lengthened flooding periods, occurring as they did during the growing season, resulted in the death of numerous bottomland hardwood trees in the management area, amounting to a loss of 18 million board feet of timber.\nDecisions below : The Commission sued, claiming that the deviations from the Corps' approved plan took a temporary flowage easement for the six years of lengthened flooding. The court agreed, finding the flooding to be \"inevitably recurring.\" Under long-standing case law cited by the court, government-caused flooding that is either continual or \"intermittent but inevitably recurring\" is an automatic physical taking. On appeal, however, the Federal Circuit reversed 2-1, finding no taking based on a complementary and equally long-standing case law rule—that intermittent government-caused flooding that is not inevitably recurring is a categorical non-taking . Each of the Corps' deviations from its approved release plan, the circuit found, was adopted on a separate, interim basis and so was not inevitably recurring.\nSupreme Court decision: On December 4, 2012, the Supreme Court unanimously reversed. In its view, the absolute rule underlying the Federal Circuit's decision—that takings can occur only when the government flooding is continual or inevitably recurring—was unsupportable. To the extent that a single statement in a 1924 decision of the Supreme Court supported that rule, the Court explained, it was only dictum. As important, that early decision came at a time when the Court had only ruled in permanent flooding cases and had yet to establish, as it did decades later, that temporary physical invasions by government can be takings just as permanent ones are. The reigning rule since 1924 that flooding was somehow different from other physical invasions—was categorically exempt from takings liability when temporary—was inconsistent with the Court's modern takings jurisprudence.\nAccordingly, the Court explained, temporary flooding, like temporary physical invasions generally, is to be assessed as a possible taking under a diffuse, multifactor balancing test—one that necessarily is less plaintiff-friendly than the per se taking rule for permanent flooding and other permanent physical occupations. Factors listed by the Court as relevant to the taking determination for a temporary government-caused flood are its duration, its foreseeability, the character of the flooded land, the landowner's \"reasonable investment-backed expectations,\" and the severity of the interference. The Supreme Court sent the case back to the Federal Circuit to address these factors in the case; it did not resolve the taking issue itself.\nComments : The United States has long had the benefit of legal principles largely shielding the federal Treasury from liability for flooding caused by federal water projects. As for tort claims, the Flood Control Act of 1928 asserts an absolute bar to liability stemming from flood control activity of the United States, and the \"discretionary function exemption\" in the Federal Tort Claims Act exempts all federal decisions with a policy/discretionary element. As for Fifth Amendment takings liability, the rule that temporary flooding cannot be a taking has been the reigning law for over 80 years.\nNow Arkansas Game & Fish Comm'n has jettisoned the takings bar for temporary flooding, and because takings liability is constitutionally based, Congress, should it wish to shield federal dams and other water facilities from this new liability, will not be able to legislate immunity as it did for tort claims. How often such facilities cause temporary as opposed to permanent flooding of private property, and thus how much new takings liability is potentially involved, is beyond the scope of this report. It should be noted, however, that a major determinant of the amount of new liability will be whether Arkansas Game & Fish Comm'n is construed by lower courts to be limited to repeated , though temporary, government-caused floods, leaving single floods under the old automatic-non-taking rule.\nMoreover, it is unknown how the lower courts will construe the takings factors listed by the Arkansas Game & Fish Comm'n Court. It seems likely, at a minimum, that the listed factors are not exhaustive, and that as with the multifactor \" Penn Central balancing test\" for regulatory takings generally, almost any circumstance surrounding an instance of flooding may be relevant to the taking analysis. Beyond this, the cues point in opposite directions. On the one hand, if the courts follow the pattern with the Penn Central cases, very few temporary government-induced floods will lead to payments from the Treasury. Justice Ginsburg, the author of the opinion, seemed to predict this result, asserting that \"[t]o reject a categorical bar to temporary-flooding takings claims ... is scarcely to credit all, or even many , such claims.\" On the other hand, multifactor analysis under the Penn Central test has almost always been applied to purely regulatory (non-physical) interferences with property. The decision itself instructs that \"[a] 'taking' may more readily be found when the interference with property can be characterized as a physical invasion by government,\" such as floods.\nFinally, the United States still retains several defenses in flooding-taking cases—first, that the property injury is noncompensable \"consequential damages\" (the United States argued before the Supreme Court in this case that all downstream damage from dam operation is merely consequential, but the Court's decision expressly did not reach the issue); second, that the flooding was no worse than if the dam had not been built; and third, that the flooding was not caused by the dam.\nDepending on how broadly the lower courts construe Arkansas Game & Fish Comm'n , the decision might increase the cost to water-project agencies of accommodating special, short-lived circumstances brought on by extreme weather events widely thought to be associated with climate change.",
"Facts: Marvin and Laura Horne produce raisins in California. Being \"handlers\" of such raisins as well as producers, they are subject to a raisin marketing order issued by the Secretary of Agriculture under the Agricultural Marketing Agreement Act of 1937 (AMAA). The declared purpose of this Depression-era statute is to help farmers maintain price parity for their goods and to protect farmers and consumers alike from unreasonable fluctuations in supplies and prices. To achieve these goals, the raisin marketing order establishes annual reserve pools, which remove surplus raisins from the market and thus control prices. Upon delivery of raisins to a handler, however, a producer is not paid for the portion of the raisins that go into the reserve pool, unless, after the handler sells the reserve raisins in noncompetitive markets and pays the costs of the program, there are funds left over.\nDisillusioned with the entire price-support program, the Hornes reorganized their operations around 2000 in the belief that, as reorganized, they were no longer within the AMAA's definition of handler and thus were not obligated to place raisins into the reserve pool. Based on that belief, they failed to set aside the prescribed percentage of reserve raisins in two crop years. The Department of Agriculture, however, saw things differently. In an administrative enforcement action against the Hornes, the Department found them still to be handlers subject to the reserve-pool contribution requirement, assessing them $484,000, the value of the raisins they should have set aside, plus $204,000 in civil penalties.\nDecisions below: The Hornes sought review of the penalty order in a federal district court in California, arguing among other things that the requirement of transferring title to the reserve raisins was a per se physical taking. The district court disagreed, but on appeal the Ninth Circuit held that the district court lacked jurisdiction to hear the taking claim in the case. The reason: exclusive jurisdiction over takings claims against the United States is vested by the Tucker Act in the U.S. Court of Federal Claims (CFC). Contrary to the Hornes' argument, the Ninth Circuit concluded, the AMAA did not impliedly withdraw their Tucker Act remedy, since the Hornes' taking claim was based on their status as producers, not handlers, and the former are not covered by the AMAA. Since the Hornes had not gone to the Court of Federal Claims, their taking claim in federal district court was premature.\nSupreme Court decision: On June 10, 2013, the Supreme Court unanimously reversed. Its overall holding was succinctly stated: \"Petitioners' takings claim, raised as an affirmative defense to the [Department of Agriculture's] enforcement action, was properly before the [district] court because the AMAA provides a comprehensive remedial scheme that withdraws Tucker Act jurisdiction over takings claim by handlers.\" This overall ruling was based on several sub-rulings—that the Hornes' taking claim was brought in their capacity as handlers, not producers, since the penalty was imposed on them in that role; that the taking claim in the federal district court was ripe in that the AMAA had withdrawn the Hornes' Tucker Act remedy in the Court of Federal Claims; and that nothing in the AMAA barred the Hornes from raising constitutional defenses in administrative enforcement actions, and hence during judicial review of such actions. The case was remanded to the Ninth Circuit to adjudicate the Hornes' taking defense.\nComments: As phrased by the Court, its decision was quite narrow, confined to review of administrative orders under a single statute, and it is possible that lower courts will keep it so confined. But there are so many ambiguities and arguable implications to the decision that one should not be surprised if its reach is ultimately found to extend well beyond the AMAA. At the outset, the taking claim seems to have transmuted twice. Initially, the courts construed it as a claim for a taking of raisins, but this claim runs into a brick wall in that the Hornes did not set aside the raisins. Later, it seemed the Hornes were asserting a taking of the money they would have to pay to satisfy the civil penalties the Department of Agriculture had imposed, but takings law has never recognized reasonable penalties for violating a law as a taking. Finally, the taking claim seems to have become a \"takings-based defense\" that one cannot be made to pay penalties for refusing to accede to an unconstitutional taking. This version of the taking claim presumably has in mind the AMAA's asserted withdrawal of Tucker Act jurisdiction in the CFC, but that withdrawal is only for handlers and the Hornes could easily have circumvented it by bringing their taking claim as producers, not covered by the AMAA.\nThe Horne decision's lasting legacy is likely to fall in two areas. One area is the use of a takings defense to enforcement. At least where the compensation remedy for a taking is withdrawn, Ho rne may open up the possibility that a property owner threatened with a government command he regards as a taking can elect not to comply and then assert a takings defense in any subsequent enforcement action. Limited to instances where the Tucker Act compensation remedy is withdrawn by Congress, this possibility leaves intact a fundamental rule of takings law that equitable relief is not available to enjoin a government action believed to be a taking; rather, one may sue only after the fact for compensation. In short, compensation, if it is available, is all that the Takings Clause promises; if a forum for seeking such compensation is provided, the taking is perfectly proper.\nThe other lasting consequence of Horne may be to lower the threshold for inferring from a federal statute that Congress intended to withdraw the Tucker Act compensation remedy. It is well-established that Congress need not state the availability of Tucker Act suits in the CFC every time it enacts a statute. Rather, prior to Horne , the Court held that the Tucker Act remedy is presumed to be available, and that there must be \"clear and unmistakable congressional intent ... to withdraw Tucker Act coverage.\" In contrast, Horne asserts what is arguably a laxer standard: that the statute at issue establishes a \"comprehensive remedial scheme,\" including a \"ready avenue to bring takings claim [sic].... \" The decision fails to even mention the Court's earlier \"clear and unmistakable congressional intent\" standard. If lower courts construe Horne to have relaxed the standard for withdrawal of the Tucker Act remedy, it will heighten the importance of the first \"lasting legacy,\" described above. More federal takings law will be made outside the CFC, in the district courts, and possibly limited to an invalidation, rather than compensation, remedy.",
"Facts and background : Coy Koontz owns a 14.9-acre parcel in Florida. He proposed to develop the 3.7 acres closest to the abutting highway, of which 3.4 acres were at the time designated wetlands. The issue in the case concerns the \"exaction conditions\" imposed by the water management district—the land use agency with permitting authority over Koontz's land—in return for granting him the necessary permits. It appears that a District staffer agreed to recommend permit approval if Koontz did two things: deed the remainder of his land (about 11 acres) into a conservation area, and perform \"offsite mitigation\" for the wetlands loss by enhancing wetlands on District-owned land miles away. Koontz was invited, however, to come up with \"equivalent\" alternatives. Alternatively, the District asked Koontz to reduce his development to 1 acre and deed the remainder of his land (about 14 acres) into a conservation area—this time with no off-site mitigation. Koontz refused either set of conditions, viewing the District's conditions as excessive relative to the environmental impacts of his development proposal. As a result, the District denied the permits.\nKoontz then sued in state court, asserting a taking by virtue of the allegedly excessive exaction conditions sought to be imposed by the District. As background, exaction conditions are routinely used by local land use authorities to make development pay its own way, or to otherwise offset its impact. The developer may be asked to dedicate acreage in its subdivision for a new school or roads, so-called land-dedication exaction s . Or it may be asked simply to undertake expenditures or make a payment toward the costs of the added police and fire protection, sewage treatment capacity, schools, road widening, etc., which its proposed development makes necessary, so-called monetary exactions . Here, the monetary exaction came in the form of the District's above-described request that Mr. Koontz, as one option, offset the wetlands loss on his land by paying for off-site enhancement of wetlands on District-owned land.\nAs for Mr. Koontz's takings claim, the Supreme Court has a two-part test for when exaction conditions on land development approvals violate the Takings Clause. This test demands that in order not to be a taking, an exaction condition must, first, further the same purpose as the permit to which it is attached—known as the \"essential nexus\" test and announced in Nollan v. California Coastal Comm'n in 1987. Second, the exaction condition must impose a burden on the landowner no greater than \"roughly proportional\" to the burden that the proposed development would impose on the community—known as the \"rough proportionality\" test and debuted by the Court in D olan v. City of Tigard in 1994. This Nollan/Dolan test is viewed as friendlier to takings plaintiffs than the multifactor balancing test created by the Court for regulatory takings, and thus property owners have long sought to expand its application.\nDecisions below : Both the state trial court and the intermediate appellate court found that the exaction conditions imposed by the District offended Nollan/Dolan . On appeal, however, the Florida Supreme Court reversed, denying the property owner's effort to expand Nollan/Dolan . First, the court held, there can be no Nollan/Dolan taking when, as in this case, the property owner refused to accept the offered conditions and as a result the permit was denied. How, asked the court, can there be a Nollan/Dolan taking when, owing to the owner's refusal, no conditions were ever imposed? Second, the state supreme court declined to expand Nollan/Dolan beyond the factual circumstances in those cases—which involved land-dedication exaction conditions rather than, as here, a requirement that the property owner merely spend money.\nSupreme Court decision: On June 25, 2013, the Supreme reversed, ruling 5-4 for Mr. Koontz. The Florida Supreme Court, it held, was wrong as to permit denials and as to monetary exactions. Nollan/Dolan , the Court concluded, covers both.\nAs to permit denials based on landowner refusal to accept offered conditions, the Court explained that the Nollan/Dolan test is based on the doctrine of unconstitutional conditions. That being so, Nollan/Dolan is violated simply by the government imposing the exaction conditions—that is, whether or not the property owner accepts them. As a consequence, a permit denial based on landowner-refused permit exaction conditions does not relegate the owner to the lax regulatory takings test. The four dissenters agreed that permit denials based on refused conditions do not escape Nollan/Dolan review, making this portion of the Koontz decision unanimous. The ruling, however, leads to the difficult question of remedy given that no exaction transferred; the Court acknowledged that the Takings Clause only requires compensation when there is a taking, which did not occur here. That meant, said the Court, that whether money damages are available depends not on the federal constitution, but on the federal or state cause of action on which the landowner relies. Because Mr. Koontz brought his claim under a state law cause of action, the Court left his remedy to be determined by the Florida courts on remand (if they find a taking).\nAs to monetary exactions, the Court placed them under Nollan/Dolan just as land-dedication exaction conditions. To hold to the contrary, reasoned the Court, would allow land-use agencies to bypass Nollan/Dolan simply by giving the landowner a choice between granting an easement and making a payment equal to the easement's value. By leaving this payment outside Nollan/Dolan , such a choice would comply with that test because it requires only that the permit applicant be given one nonviolative condition. The Court also rejected the argument that putting monetary exactions under Nollan/Dolan leaves no principled way to distinguish impermissible land-use exactions from property taxes and user fees—taxes and reasonable user fees having long been held not to be takings. Finally, the majority concluded that Nollan/Dolan coverage of monetary exactions will not deprive local government of the ability to charge reasonable permitting fees. Numerous lower courts, the majority pointed out, have previously applied Nollan/Dolan to monetary exactions, yet the dissenters' predicted \"significant practical harm\" had not, in the majority's view, come to pass. Also, the majority noted, state laws provide an independent check on land use permitting fees.\nAs in Arkansas and Horne , however, the Supreme Court did not opine on whether there was a taking on the particular facts before it, sending that question back to the Florida courts.\nComments : The reaction to Koontz was predictable. Property rights advocates hail the decision as eliminating technical constraints on the applicability of Nollan/Dolan that threatened to undercut that test, thus more effectively reining in the government temptation to use exaction conditions to pay for public improvements not connected to the proposed development. Government-side spokespersons see the decision as needlessly injecting the federal constitution into the multitude of fee conditions that local governments impose every day on land-use development, and raise the concern that local governments will now increasingly refuse to negotiate conditions with land-use permit applicants and instead deny permits outright.\nOverall, the majority opinion displays a clear ambivalence about the use of exaction conditions on development approvals. On the one hand, the opinion notes the government's legitimate need to offset the public costs of development through exactions from the proponents of development. The opinion explicitly endorsed the state's interest in protecting against wetlands loss, and said that \"[i]nsisting that landowners internalize the negative externalities of their conduct is a hallmark of responsible land-use policy.\" On the other hand, the majority opinion's choice of words suggests a suspicious view of land-use regulators. The words \"extortion\" or \"extortionate\" are used four times to describe exactions that do not display the requisite nexus and proportionality, though the majority offers no empirical evidence to indicate how often this happens in reality. The majority opinion also described the District as believing it had \"circumvented\" Nollan / Dolan . And it said that \"government can pressure an owner into voluntarily giving property,\" wielding its \"substantial power ... in land-use permitting.\"\nCertainly Koontz will prompt much deliberation by local governments as to how best to conform to Nollan/Dolan as expanded by Koontz , or how to avoid its application. Some possibilities, besides more use of outright permit denials (or approvals), are\ngreater use of pre-permit-application negotiation between government and landowner, preferably with assurances it be off the record; greater use of legislatively specified exactions imposed by broad rules, in contrast to case-by-case, adjudicatively imposed exactions, the Court having previously suggested that the former lie outside Nollan/Dolan ; proffers by the landowner based on broadly specified government goals, instead of conditions imposed by the government, possibly with a variance mechanism for cases when proffers needed to meet the government's goals violate Nollan/Dolan ; better explanations by government during negotiations that its conditions satisfy Nollan/Dolan , so that landowners, who generally would rather build than litigate, are content with the conditions; more use of development agreements.\nAll of these options, however, will likely be examined by the courts in light of the Koontz majority's unmistakable concern that Nollan/Dolan not be vitiated by overly technical distinctions and procedural ruses, such as the land dedication versus monetary exaction distinction rejected in Koontz .\nKoontz certainly leaves open many issues:\nDoes the decision undercut the view of some courts that Nollan/Dolan scrutiny is not triggered by legislatively imposed exactions, as opposed to adjudicatively imposed ones (see bulleted list above)? Only the latter were involved in Koontz , and, for that matter, Nollan and Dolan . Precisely what constitutes \"rough proportionality\" under Dolan ? This question preceded Koontz , and Koontz did not address it. In demonstrating \"rough proportionality,\" how should governments account for societal values that can be monetized only with difficulty, such as protection of endangered species or mitigation of climate change? Or are such factors, when going beyond impacts within a local government's territory, not within the cognizance of Nollan/Dolan at all? Can a landowner told it cannot carry out its ideal, most profitable development plan assert a Nollan/Dolan claim for the profit or land value difference between that plan and the one that it ultimately is allowed to build, characterizing the difference as a monetary exaction? As mentioned, Koontz leaves open the remedy question: On showing a violation of Nollan/Dolan , is a property owner limited to money damages allowed by federal or state law, perhaps the Civil Rights Act remedy known as a \"section 1983 action\"? Or must the court instead provide injunctive relief, ordering the locality to grant the requested permit with conditions pared down to Nollan/Dolan -compliant dimensions?\nBecause the overwhelming majority of land-use regulation in the United States occurs at the hands of local government, the importance of Koontz lies largely at that level. However, Koontz could have implications for the few federal programs that impose similar mitigation conditions on land development approvals. The most obviously relevant examples are the off-site mitigation conditions and in-lieu fee requirements often attached to wetlands fill permits under Clean Water Act section 404 (see discussion of Sackett above). Also possibly implicated are mitigation conditions in habitat conservation plans under the Endangered Species Act. Preparation of such plans is required for issuance of \"incidental take permits\" needed when a proposed project is likely to harm incidentally members of a listed species. Further afield, there may be an issue whether certain Clean Air Act preconditions for issuance of emission-source construction permits (such as installation of expensive pollution controls) are now subject to Nollan/Dolan as monetary-expenditure exaction conditions for land development.\nFinally, two parallels between Horne and Koontz should be mentioned. Both decisions recognize that the Takings Clause can constrain government action even in the absence of any taking: Horne , when the compensation remedy for the taking has been withdrawn, and Koontz , when a permit is denied based on a landowner's refusal to accept the exaction conditions offered. Also, both decisions raise the issue of whether government-compelled payments of money can implicate the Takings Clause: in Horne , through payment of civil money penalties, and in Koontz , though monetary expenditures for off-site mitigation of wetlands loss.",
"Why the Supreme Court takes cases is usually speculative. The process by which the Court decides which cases in its discretionary docket it will hear is famously opaque, other than the fact that at least four Justices must approve any grant of certiorari. Few of the cases described in this report even involve a split in the circuit courts, a factor traditionally boosting the likelihood the Justices will take a case. Some have speculated that the period of no property-rights-related decisions began just as Chief Justice Rehnquist and Justice O'Connor left the Court, in 2005. These justices indicated a particular interest in property rights in their opinions, and their departure from the Court, some conjecture, may have left the issue without a strong champion. No one has yet suggested, however, why their replacements on the Court, Chief Justice Roberts and Justice Alito, or others on the Court should at this moment in time be motivated to reenter the area.\nNonetheless, an informed guess can be made as to the Court's motives. In all six of the cases discussed here, the decisions below were against the private property owner. This suggests that the Justices (or at least some Justices) are looking for circumstances where property rights are unfairly burdened. And indeed, in five of its six decisions, the Court reversed, ruling (in four cases unanimously) for the aggrieved property owner. The one decision to go against the property owner was Stop the Beach Renourishment .\nAs to three of the six cases, there are more specific clues as to the Court's intentions. In both Stop the Beach Renourishment and Koontz , one or more of the Justices on the Court when certiorari was granted had previously signed onto a dissent from denial of certiorari expressing concern, or at least interest, in the key issue in the current cases. In Koontz , the Court noted its desire to resolve a split in the lower-court decisions.\nUndoubtedly, the decision with the greatest potential to alter how government relates to property owners, and thus analyzed at greatest length here, is Koontz . Enlarging the reach of the Supreme Court's test for when exactions imposed as conditions on development approval effect takings could, depending on how the decision is read, bring in countless conditions used by local governments to induce land developers to spend money, invest labor, or supply equipment before they can proceed. Because the exactions taking test is viewed as friendlier to landowners than alternative takings tests that would otherwise apply, enlarging its scope may lead local governments to impose more modest exaction conditions or use them less frequently. As noted, Koontz has more limited relevance to federal programs.\nFor most of the Supreme Court decisions included here, major questions exist as to their scope and what they mean. A decade from now, with the benefit of lower-court interpretation, the significance of these decisions will likely be easier to evaluate."
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{
"question": [
"What did the Supreme Court end in 2010?",
"What does this large number of cases suggest?",
"What is the purpose of the Takings Clause?",
"What was the first case?",
"What idea was endorsed in this case?",
"What question often arises when courts articulate new principles of common law that extinguish existing property rights?",
"What were the findings in PPL Montana LLC v. Montana?",
"What was the concern addressed in Sackett v. Environmental Protection Agency?",
"What are the details of the holding?",
"What consequences of this decision are still unclear?",
"What did the Court decide to take during its 2012-2013 term?",
"What was the old perspective on takings liabilities?",
"What is the new Court ruling regarding temporary flooding?",
"What was the determination of the Court in Horne v. Dep't of Agriculture?",
"What has been withdrawn?",
"What were the findings from Koontz v. St. Johns River Water Management District?",
"What did the court clarify during this test?",
"How easy is it to uncover why the Supreme Court takes a case?",
"What trend can be identified regarding the six cases in question?",
"What result did all six cases have in common?",
"What was the result of 5 of the 6 court cases?",
"How may decisions to be rendered on remand be different?"
],
"summary": [
"In 2010, the Supreme Court ended a five-year period when it accepted no property rights cases, granting certiorari in no less than six such cases between 2010 and 2012.",
"This large number of cases suggests a renewed interest by the Court in property rights, and particularly in the Fifth Amendment Takings Clause at issue in four of the cases.",
"The Takings Clause is the Constitution's principal protection of property rights, promising just compensation when property rights are \"taken\" by government for a \"public use.\"",
"The first case, decided in 2010, was Stop the Beach Renourishment, Inc. v. Florida Dep't of Environmental Protection.",
"There, a four-Justice plurality endorsed the idea that courts, just as other branches of government, could be subject to takings liability.",
"This question of \"judicial takings\" often arises when courts articulate new principles of common law that extinguish existing property rights.",
"In PPL Montana LLC v. Montana, the Court fleshed out its test for \"title navigability\"—important because title to only streambeds under \"navigable\" waters passes to a state upon its admission to the Union.",
"In Sackett v. Environmental Protection Agency, enforcement of the wetlands permitting program in the Clean Water Act was at issue.",
"The holding was that when property owners receive an order from the Environmental Protection Agency (EPA) under the act, they have a right to \"pre-enforcement review\"—that is, a right to judicially challenge the order right away, before EPA seeks to enforce it and impose potentially large penalties.",
"The number of other federal programs that, due to this decision, must now afford pre-enforcement review of agency orders is unclear.",
"Finally, the Court decided three takings cases during its 2012-2013 term.",
"In Arkansas Game & Fish Comm'n v. United States, the Court jettisoned its long-standing rule that when a government project induces flooding of private property, only flooding that is continual or at least \"intermittent but inevitably recurring\" can result in takings liability.",
"Temporary flooding, the Court now says, may also subject the government to such liability.",
"In Horne v. Dep't of Agriculture, the Court held that penalties imposed under a Depression-era statute for the support of agricultural commodity prices may be challenged on the ground that they punish a person's refusal to accede to an unconstitutional taking.",
"Broad issues radiate from this narrow ruling—such as the availability of takings defenses in enforcement actions generally when the compensation remedy has been withdrawn.",
"In Koontz v. St. Johns River Water Management District, the Court addressed its previously announced test for when exaction conditions on land-development permits constitute takings.",
"The Court clarified that this test—viewed as more favorable to property owners than the alternative—applies even when the landowner refuses the exaction conditions imposed and, as a result, the permit is denied. It also covers not only land-dedication exactions, the context in which the test was originally articulated, but purely monetary exactions as well.",
"Typically, one can only speculate why the Supreme Court takes a case; the Court's reasons generally are not easily discerned.",
"Still, an informed guess can be made that the six cases discussed in this report point to a reawakened interest by the Court in property rights.",
"In all six cases, the decision below had been against the property owner, suggesting that the Justices (or some of them) are looking anew for circumstances where property rights are unfairly burdened.",
"And indeed, in five of the six decisions rendered by the Court, the private property owners were vindicated.",
"Decisions yet to be rendered on remand, however, may not necessarily go their way."
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CRS_RS20088
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{
"title": [
"",
"Background",
"WTO Dispute Settlement Understanding",
"Steps in a WTO Dispute",
"Consultations (Article 4)",
"Establishing a Dispute Panel (Articles 6, 8)",
"Panel Proceedings (Articles 12, 15, Appendix 3)",
"Adoption of Panel Reports/Appellate Review (Articles 16, 17, 20)",
"Implementation of Panel and Appellate Body Reports (Article 21)",
"Compliance Panels (Article 21.5)",
"Compensation and Suspension of Concessions (Article 22)",
"Use of Multilateral Dispute Settlement Procedures",
"Compliance Issues",
"\"Sequencing\"",
"Removal of Retaliatory Measures",
"WTO Dispute Settlement and U.S. Law",
"Legal Effect of WTO Decisions",
"Section 301 of the Trade Act",
"112th Congress Legislation"
],
"paragraphs": [
"",
"From its inception in 1947, the General Agreement on Tariffs and Trade (GATT), signed by the United States and ultimately by a total of 128 countries, provided for consultations and dispute resolution between GATT parties. A party could invoke Articles XXII and XXIII, the GATT consultation and dispute settlement provisions, if it believed that another party's measure, whether violative of the GATT or not, nullified or impaired benefits accruing to it under the agreement. Because the GATT did not set out specific dispute procedures, GATT Parties developed a more detailed process including ad hoc panels and other practices. Over time, however, the GATT procedure was perceived to have certain deficiencies, among them a lack of deadlines, a consensus decision-making process that allowed a GATT party against whom a dispute was filed to block the establishment of a dispute panel and the adoption of a panel report by the GATT Parties as a whole, and laxity in surveillance and implementation of panel reports even when reports were adopted and had the status of an official GATT decision.\nCongress made reform of the GATT dispute process a principal U.S. negotiating objective in the GATT Uruguay Round of Multilateral Trade Negotiations, begun in 1986 and concluded in 1994 with the signing of the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement). The resulting WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (Dispute Settlement Understanding, or DSU) reflects the U.S. negotiating objective of creating a mechanism that is more judicial in approach (and, it was hoped, fairer and more predictable) than the diplomatically oriented system favored by other trading partners. While the DSU retains diplomatic elements—for example, the goal of the process is to secure a \"mutually agreed solution\" and contains provisions that may foster a negotiated outcome—the DSU sets out a mechanism that is overall more \"rule-bound\" than the process developed under the GATT.\nFurther, the DSU applies to disputes arising under virtually all WTO agreements (referred to in the Understanding as \"covered agreements\") and thus exists in the context of the full Uruguay Round package of multilateral trade agreements, all of which must be accepted by a country as a condition of WTO membership. The Uruguay Round package not only carried forward original GATT obligations—for example, according goods of other parties most-favored-nation (MFN) and national treatment, not placing tariffs on goods in excess of negotiated or \"bound\" rates, generally refraining from imposing quantitative restrictions such as quotas and embargoes on imports and exports, and avoiding injurious subsidies —but also expanded on these obligations in new agreements such as the Agreement on Agriculture, the Agreement on the Application of Sanitary and Phytosanitary Measures, the Agreement on Antidumping, the Agreement on Subsidies and Countervailing Measures, and the General Agreement on Trade in Services (GATS). The application of the DSU to these new agreements thus created the potential not only for trade disputes on matters that had not been subject to adjudication in the past, but also for adjudication of these disputes under a more judicially styled process than had existed in the past.\nCongress approved and implemented the WTO Agreement and the other agreements negotiated in the Uruguay Round in Section 101 of the Uruguay Round Agreement Act. The agreements entered into force on January 1, 1995.",
"While the DSU continues past GATT dispute practice, a variety of new features are aimed at strengthening the prior system. These include a \"reverse consensus\" voting rule at key points in the process, legal review of panel reports by a new Appellate Body, deadlines for various phases of the dispute procedure, and improved multilateral oversight of compliance. Under the integrated system of dispute settlement created by the DSU, the same dispute settlement rules apply to disputes under virtually all WTO agreements, subject to any special or additional rules in an individual agreement.\nThe WTO Dispute Settlement Body (DSB), created in Article 2 of the DSU and consisting of representatives of all WTO Members, administers WTO dispute settlement proceedings. As was the case under the GATT, the DSB ordinarily operates by consensus (i.e., without objection). The DSU reverses past practice, however, in a manner that prevents individual Members from blocking certain DSB decisions that are considered critical to an effective dispute settlement system. Thus, unless it decides by consensus not to do so, the DSB will (1) approve requests to establish panels, (2) adopt panel and Appellate Body reports, and (3) if requested by the prevailing Member in a dispute, authorize the Member to impose a retaliatory measure where the defending Member has not complied. In effect, these decisions are virtually automatic.\nGiven that panel reports would otherwise be adopted under the reverse consensus rule, WTO Members have a right to appeal a panel report on legal issues. The DSU creates a standing Appellate Body to carry out this added appellate function. The Appellate Body has seven members, three of whom serve on any one case.\nNotwithstanding the rule-oriented nature of the DSU, dispute settlement in the WTO is primarily Member-driven. In other words, it is up to the disputing Members (complaining or defending, as the case may be) to decide whether or not to take particular actions available to them. These actions include initiating the dispute; requesting a panel and, in doing so, setting out the scope of dispute; asking the WTO Director-General (DG) to appoint panelists if the disputing Members cannot agree on the WTO Secretariat's proposed slate; seeking authorization to impose countermeasures against a non-complying Member; requesting that the prevailing Member's retaliation proposal be arbitrated; and imposing retaliatory measures even if the DSB has authorized them. As stated in Article 3.7 of the DSU, the preferred outcome of a dispute is \"a solution mutually acceptable to the parties and consistent with the covered agreements.\" Absent this, the primary objective of the process is withdrawal of a violative measure, with compensation and retaliation being avenues of last resort.\nAs of the date of this report, 450 complaints have been filed under the DSU. Not all of these have resulted in panels, however, and in some cases where panel proceedings were initiated, the panel process was discontinued due to a settlement of the dispute or for other reasons. To date, 153 original panel reports have been publicly circulated. Some original panels have also issued compliance panel reports as a result of proceedings initiated by complaining Members under Article 21.5 of the DSU to determine whether defending Members had complied in particular disputes; 29 compliance panel reports have been issued thus far. Well over one-half of all panel reports have been appealed, resulting in 108 Appellate Body reports issued as of this writing.\nNearly one-half of the 450 WTO complaints filed to date involve the United States as complaining party or defendant. The United States Trade Representative (USTR) manages U.S. participation and is the chief representative of the United States in the WTO, including in WTO disputes.\nThe DSU was scrutinized by WTO Members under a Uruguay Round Declaration, which called for completion of a review within four years after the WTO Agreement entered into force (i.e., by January 1999). Members did not agree on any revisions in the initial review and continued to negotiate on dispute settlement issues during the WTO Doha Development Round of multilateral trade negotiations initiated in 2001, doing so on a separate track permitting an agreement to be adopted apart from any overall Doha Round accord. In 2008, the chairman of the dispute settlement negotiations prepared a consolidated draft legal text based mainly on Member proposals, which Members agreed to use in their negotiations; in April and September 2011, the chairman issued reports summarizing subsequent discussions. Although the Doha Round negotiations have stalled, discussions of revisions to the DSU have continued into 2012.\nThe United States has proposed such revisions as greater Member control over the process, guidelines for WTO adjudicative bodies, and increased transparency—for example, open meetings and timely access to submissions and final reports. Other Member proposals include, inter alia, a permanent roster of panelists, enabling the Appellate Body to remand decisions to panels for further proceedings, rules for sequencing and the termination of retaliatory measures (see below), tightened time frames, enhanced third-party rights, and special treatment for developing country disputants.",
"The WTO dispute settlement process consists of three broad stages: (1) consultations; (2) panel and, if requested, Appellate Body review; and (3) if needed, implementation. In conducting their work, WTO panels and the Appellate Body are guided by Article 3.2 of the DSU, which provides that the WTO dispute settlement system \"serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law,\" adding that \"[r]ecommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.\" In an early WTO dispute settlement proceeding, the WTO Appellate Body confirmed that the \"general rule of interpretation\" set out in Article 31 of the Vienna Convention on the Law of Treaties constitutes an interpretative rule under international law for purposes of Article 3.2. Article 31 generally states that a treaty or other international agreement \"shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of its object and purpose.\"\nFollowing are the steps in a WTO dispute settlement proceeding, with the applicable DSU articles for each.",
"Under the DSU, a WTO Member may request consultations with another Member regarding \"measures affecting the operation of any covered agreement taken within the territory\" of the latter. If a WTO Member requests consultations with another Member under a WTO agreement, the latter Member must enter into consultations with the former within 30 days.\nIf the dispute is not resolved within 60 days, the complaining Member may request a panel. A panel may be requested before this period ends if the defending Member has failed to enter into consultations or if the disputants agree that consultations have been unsuccessful.",
"The WTO Member requesting a panel must do so in writing and \"identify the specific measures at issue and provide a brief summary of the legal basis for the complaint sufficient to present the problem clearly.\" Under GATT and now WTO dispute settlement practice, a Member may challenge a measure of another Member \"as such,\" \"as applied,\" or both. An \"as such\" claim challenges the measure independent of its application in a specific situation and, as described by the WTO Appellate Body, seeks to prevent the defending Member from engaging in identified conduct before the fact.\nIf a panel is requested, the DSB must establish it at the second DSB meeting at which the request appears as an agenda item, unless it decides by consensus not to do so. Thus, while a defending Member may block the establishment of a panel the first time the complaining Member makes its request at a DSB meeting, the panel will be established, virtually automatically, the second time such a request is placed on the DSB's agenda. Although the DSB ordinarily meets once a month, the complaining Member may request that the DSB convene for the sole purpose of considering the panel request. Any such meeting must be held within 15 days after the complaining Member requests that the meeting be held.\nThe panel is ordinarily composed of three persons. The WTO Secretariat proposes the names of panelists to the disputing parties, who may not oppose them except for \"compelling reasons\" (Art. 8.6). If the disputing parties fail to agree on panelists within 20 days from the date that the panel is established, either disputing party may request the WTO Director-General to appoint the panel members. Because the Director-General may only act upon request in this situation, it is possible that disputing Members may not make such a request immediately or may not do so at all, thus permitting them to attempt to resolve their dispute before the adjudicatory process begins.",
"Once the panel is constituted, it hears written and oral arguments from the disputing parties. After considering these presentations, it issues the descriptive part of its report (facts and argument) to the disputing parties. Taking into account any comments from the parties, the panel then submits this portion of the report, along with its findings and conclusions, to the disputants as an interim report. Following a review period, a final report is issued to the disputing parties and later circulated to all WTO Members.\nA panel must generally provide its final report to disputants within six months after the panel is composed, but may take longer if needed; extensions are common in complex cases. The period from panel establishment to circulation of a panel report to WTO Members should not exceed nine months. In practice, panels have been found to take more than 13 months on average to publicly circulate reports.",
"Within 60 days after a panel report is circulated to WTO Members, the report is to be adopted at a DSB meeting unless a disputing party appeals it or the DSB decides by consensus not to adopt it. Article 17.6 of the DSU limits appeals to \"issues of law covered in the panel report and legal interpretations developed by the panel.\"\nWithin 60 days of being notified of an appeal (extendable to 90 days), the WTO Appellate Body (AB) must issue a report that upholds, reverses, or modifies the panel report. The AB report is to be adopted by the DSB, and unconditionally accepted by the disputing parties, unless the DSB decides by consensus not to adopt it within 30 days after circulation to Members.\nThe period of time from the date the panel is established to the date the DSB considers the panel report for adoption is not to exceed 9 months (12 months where the report is appealed) unless otherwise agreed by the disputing parties.",
"In the event that the WTO decision finds the defending Member has violated an obligation under a WTO agreement, the Member must inform the DSB of its implementation plans within 30 days after the panel report and any AB report are adopted. If it is \"impracticable\" for the Member to comply immediately, the Member will have a \"reasonable period of time\" to do so. The Member is expected to implement the WTO decision fully by the end of this period and to act consistently with the decision after the period expires. Compliance may be achieved by withdrawing the WTO-inconsistent measure or, alternatively, by modifying or replacing it.\nUnder the DSU, the \"reasonable period of time\" is (1) that proposed by the Member and approved by the DSB; (2) absent approval, the period mutually agreed by the disputants within 45 days after the report or reports are adopted by the DSB; or (3) failing agreement, the period determined through binding arbitration. Arbitration is to be completed within 90 days after adoption of the reports. To aid the arbitrator in determining the length of the compliance period, the DSU provides a non-binding guideline of 15 months from the date of adoption. Arbitrated compliance periods have ranged from six months to 15 months and one week. The DSU envisions that a maximum 18 months will elapse from the date a panel is established until the reasonable period of time is determined.",
"Either disputing Member may request that a compliance panel be convened under Article 21.5 of the DSU in the event the disputants disagree as to whether the defending Member has complied. The disagreement may have do with whether a compliance measure exists, or whether a measure that has been taken to comply is consistent with the WTO decision in the case. The DSU provides that, wherever possible, the original panel should be re-convened to hear the compliance dispute. A compliance panel is expected to issue its report within 90 days after the dispute is referred to it, but it may extend this time period if needed. Compliance panel reports may be appealed to the WTO Appellate Body and both reports are subject to adoption by the DSB.",
"If the defending Member fails to comply with the WTO decision within the established compliance period, Article 22 permits the prevailing Member to request that the defending Member negotiate a compensation agreement. If such a request is made and agreement is not reached within 20 days after the compliance deadline expires, or, more likely, if negotiations have not been requested, the prevailing Member may request authorization from the DSB to retaliate, that is, suspend concessions or obligations owed the non-complying Member under a WTO agreement. Article 22 requires the DSB to authorize the request within 30 days after the compliance deadline expires unless the DSB decides by consensus not to do so, or the defending Member requests that the retaliation proposal be arbitrated.\nGenerally, a Member should first try to suspend concessions or obligations in the same trade sector as the one at issue in the dispute. If this is \"not practicable or effective,\" the Member may then seek to suspend concessions in another sector under the same WTO agreement. If, however, suspending concessions in other sectors under the same agreement is not \"practicable or effective\" and \"the circumstances are serious enough,\" the Member may seek to suspend concessions or obligations under another WTO agreement, or \"cross-retaliate.\"\nRetaliation most often involves the suspension of GATT tariff concessions—that is, the imposition of tariff surcharges—on selected products from the non-complying Member. In some cases, however, that Member may not be a major exporter of goods to the prevailing Member or some or all of the goods that are exported may be critical to the prevailing Member's economy. Thus, if firms of the non-complying Member are active service providers or exercise significant intellectual property rights in the other Member's territory, the prevailing Member may seek to suspend market access obligations under the General Agreement on Trade in Services (GATS) or obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (Agreement on TRIPS).\nAs noted above, the defending Member has a right under the DSU to object to a retaliation proposal. Article 22.6 of the DSU permits the defending Member to object to the level of the proposed retaliation (i.e., that it is not equivalent to the level of trade injury in the dispute), claim that DSU principles and procedures for requesting cross-retaliation have not been followed, or both. Once requested, arbitration is automatic and is to be completed within 60 days after the compliance period ends. An arbitral decision is considered final.\nAfter the arbitral decision is issued, the prevailing party may request that the DSB approve its proposal, subject to any modification by the arbitrator. The prevailing Member is not required to request authorization, nor is the Member required to do so by a given date if it chooses to pursue such a request. Further, even if measures are authorized, the prevailing Member is not required to impose them. If the Member does so, however, the measures may not remain in effect once the offending measure is removed or the disputing parties otherwise resolve the dispute.",
"Article 23 of the DSU requires that WTO Members invoke DSU procedures in disputes involving WTO agreements and that they act in accordance with the DSU—that is, not unilaterally—when taking various dispute-related actions. These are (1) determining if another Member has violated a WTO agreement (Art. 23(a)); (2) determining a date by which the Member must comply with a WTO decision (Art. 23(b)); and (3) taking any retaliatory action against a non-complying Member (Art. 23(c)). Regarding retaliatory action, the prevailing Member must follow DSU procedures in determining the amount of trade retaliation to be imposed and must obtain authorization from the DSB in accordance with DSU procedures before suspending WTO tariff concessions or other WTO obligations in the event the defending Member has failed to comply.",
"",
"Although many WTO rulings have been satisfactorily implemented, difficult cases have tested DSU implementation articles, highlighting deficiencies in the system and prompting suggestions for reform. For example, gaps in the DSU have resulted in the problem of \"sequencing,\" which first manifested itself in 1998-1999 during the compliance phase of the successful U.S. challenge of the European Union's banana import regime. Article 22 allows a prevailing party to request authorization to retaliate within 30 days after a compliance period ends, while Article 21.5 provides that disagreements over the existence or adequacy of compliance measures are to be decided using WTO dispute procedures, including resort to panels. A compliance panel's report is due within 90 days after the dispute is referred to it and may be appealed. The DSU does not integrate the Article 21.5 procedure into the 30-day Article 22 deadline, nor does it expressly state how compliance is to be determined so that a prevailing party may pursue retaliatory action under Article 22.\nAbsent the adoption of multilateral rules on the matter, disputing parties have entered into ad hoc procedural agreements in individual disputes under which compliance panel proceedings and procedures involving retaliation requests, including the arbitration of retaliation proposals, advance in sequence. Generally, Members agree that if a compliance panel finds that a Member has not complied, the prevailing Member may proceed with its retaliation request even though the 30-day DSU deadline has passed.",
"The DSU is also silent on how authorized retaliation is to be terminated in the event a defending Member believes that it has complied in a dispute. This issue was the subject of United States — Continued Suspension of Obligations in the EC—Hormones Dispute (DS320), a dispute initiated by the European Union (EU) against the United States in 2004 for continuing to maintain increased (i.e., 100% ad valorem ) tariffs on EU goods first imposed in 1999 in retaliation for the EU's failure to comply with the adverse WTO ruling on the EU's ban on hormone-treated beef. The EU also initiated a separate case against Canada on the same basis. The Appellate Body and modified panel reports in the underlying beef hormone case, EC—Hormones , found that an EU ban on imports of meat and meat products from cattle produced from six specific growth-promotion hormones violated the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement); the reports were adopted by the WTO in February 1998.\nClaiming that a 2003 European Union Directive rendered it WTO-compliant, the EU argued that the United States and Canada were violating the following WTO obligations in continuing to impose their retaliatory tariffs: (1) the GATT most-favored-nation article; (2) the GATT prohibition on tariff surcharges; and (3) various DSU provisions, including Article 23, which requires WTO Members to invoke WTO dispute settlement for disputes arising under WTO agreements and precludes certain unilateral actions in trade disputes, and Article 22.8, which permits sanctions to be imposed only until the defending Member's WTO-inconsistent measures have been removed or the dispute is mutually resolved.\nIn separate panel reports issued March 31, 2008, the WTO panel found that the EU was maintaining bans on certain hormones without a sufficient scientific basis in violation of the SPS Agreement, and that the United States and Canada had breached Article 23 requirements to resort to WTO dispute settlement and to refrain from unilateral actions by (1) not initiating a WTO proceeding to resolve the EU compliance issue and (2) determining unilaterally that the EU was still in violation of the EC—Hormones decision. The panel also found, however, that to the extent that the challenged EU measure had not been removed, the United States and Canada had not violated Article 22.8, which requires that sanctions be removed once the offending measure is withdrawn. The panel noted that it had functioned similarly to a compliance panel for the sole purpose of determining whether Article 22.8 was violated and, because it did not have jurisdiction to make a definitive determination in this regard, it suggested that the United States and Canada initiate a compliance panel proceeding against the EU under Article 21.5 in order to comply with their DSU obligations and to promptly resolve the dispute.\nThe Appellate Body, in separate reports issued October 16, 2008, reversed the panel's findings that the United States and Canada were in breach of the DSU as well as the panel's findings that the EU was still in violation of the SPS Agreement. Because the Appellate Body could not complete the analysis needed to determine whether the contested EU measure had been withdrawn, however, it recommended that the parties initiate an Article 21.5 compliance panel proceeding to resolve their disagreement as to whether the EU is in compliance with the EC—Hormones decision and thus whether the U.S. and Canadian countermeasures have a legal basis. The AB and modified panel reports were adopted November 14, 2008.\nThe EU requested consultations under Article 21.5 in December 2008, but the proceeding involving the United States has been suspended under a bilateral agreement. In a May 2009 memorandum of understanding (MOU) intended to resolve the underlying beef hormone dispute, the United States and the EU agreed, inter alia, that the EU will expand market access for exports of U.S. beef in three phases. In the first phase, the United States may maintain retaliatory tariffs currently applied to EU products and will not impose the new duties that it announced in January 2009 under its \"carousel\" retaliation provision (see below). The two parties also agreed that they will suspend WTO litigation (i.e., not request a compliance panel) for the first 18 months of the agreement. The USTR delayed the imposition of the additional duties on new items until September 19, 2009, and officially terminated these duties as of this date. As a result of these actions, the duties were never imposed.",
"",
"The adoption by the WTO Dispute Settlement Body of a panel and, if appealed, subsequent Appellate Body report finding that a U.S. law, regulation, or practice violates a WTO agreement does not give the report or reports direct legal effect in the United States. Thus, federal law is not affected until Congress or the executive branch, as the case may be, changes the law or administrative measure at issue. Procedures for executive branch compliance with adverse decisions are set out in Sections 123(g) and 129 of the Uruguay Round Agreements Act. Only the federal government may bring suit against a state or locality to declare a state or local law invalid because of inconsistency with a WTO agreement; private remedies based on WTO obligations are also precluded. Federal courts have held that WTO panel and Appellate Body reports are not binding on the judiciary and have treated determinations involving \"whether, when, and how\" to comply with a WTO decision as falling within the province of the executive rather than the judicial branch.",
"Sections 301-310 of the Trade Act of 1974 (referred to collectively as Section 301) provide a mechanism for private parties to petition the United States Trade Representative (USTR) to take action regarding harmful foreign trade practices. If the USTR decides to initiate an investigation regarding a foreign measure that allegedly violates a WTO agreement, the USTR must invoke the WTO dispute process to seek resolution of the problem. Section 301 authorizes the USTR to impose retaliatory measures to remedy an uncorrected foreign practice, some of which may involve suspending a WTO obligation—for example, imposing a tariff increase on a product in excess of the rate negotiated in the WTO or the \"bound\" rate. The USTR may terminate a Section 301 case if the dispute is settled, but, under Section 306 of the act, the USTR must monitor foreign compliance and may take further retaliatory action if compliance measures are unsatisfactory. While Section 301 also permits the USTR to initiate an investigation on its own motion, it is not necessary for the USTR to invoke Section 301 in order to initiate a WTO dispute. Nevertheless, the authorities in Section 301 are available to the USTR if it decides to impose sanctions in a WTO dispute that it initiated earlier.\nIf the USTR has taken action against the goods of another country for its failure to comply with a WTO decision, Section 306(b)(2)(B)-(F), of the Trade Act directs the USTR periodically to revise the list of imported products subject to retaliation, unless the USTR finds that implementation of WTO obligations is imminent or the USTR and the petitioner agree that revision is unnecessary. This authority to rotate the products subject to retaliatory action is often referred to as \"carousel retaliation.\" The European Union filed a WTO complaint challenging the statutory provision shortly after its enactment in 2000, alleging that the statute mandates unilateral action and the taking of retaliatory action other than that which had been authorized by the WTO in violation of the DSU. Because the United States had not invoked the provision, the EU refrained from seeking a panel in the case.\nIn December 2008, however, the United States exercised \"carousel\" authorities to propose modifications to the list of EU products subject to the WTO-authorized tariff surcharges that it had originally imposed in EC—Hormones , discussed earlier. A final modified list was published in January 2009. Originally applicable to all covered goods entering the United States on or after March 23, 2009, the revisions include removal of some products from the original list of covered products, the addition of new products to the list, modified coverage with regard to certain EU member states, and an increase to 300% ad valorem of duties on one product, Roquefort cheese. The EU announced on January 15, 2009, that it had decided to \"start preparations\" to pursue WTO dispute settlement regarding the carousel statute, stating that it \"breaches the WTO requirement of equivalence between the damage caused by the sanction or ban and the retaliation proposed.\" As noted above, under an MOU with the EU aimed at settling the beef hormone dispute, the United States has agreed not to impose the announced tariff increases on new items and officially terminated these additional duties as of September 19, 2009.\nThe EU filed a broader challenge to Section 301 in 1998 based on various obligations in Article 23 of the DSU, which, as noted earlier, precludes certain unilateral actions in trade disputes involving WTO agreements. Section 301 may generally be used consistently with the DSU, though some U.S. trading partners have complained that the statute allows unilateral action and forces negotiations through its threat of sanctions. In United States—Sections 301-310 of the Trade Act of 1974 (DS152), the WTO panel found that the language of Section 304, which requires the USTR to determine the legality of a foreign practice by a given date, is prima facie inconsistent with Article 23 because in some cases it mandates a USTR determination—and statutorily reserves a right for the USTR to determine that a practice is WTO-inconsistent—before DSU procedures are completed. The panel also found, however, that the serious threat of violative determinations and consequently the prima facie inconsistency was removed because of U.S. undertakings, as set forth in the Uruguay Round Statement of Administrative Action (H.Doc. 103-316), a document submitted to Congress along with the Uruguay Round agreements, and U.S. undertakings made before the panel, that the USTR would use its statutory discretion to implement Section 301 in conformity with WTO obligations. Moreover, the panel could not find that the DSU was violated by Section 306 of the Trade Act of 1974, which directs USTR to make a determination as to imposing retaliatory measures by a given date, given differing good faith interpretations of the \"sequencing\" ambiguities in the DSU. The panel report, which was not appealed, was adopted in January 2000.",
"S. 239 (Klobuchar), the Innovate America Act, would, inter alia, authorize to be appropriated to the USTR $2 million for each of FY2011, FY2012, and FY2013 for the purpose of initiating any proceeding to resolve a dispute relating to market access barriers with WTO member countries. S. 708 (Brown, Ohio), the Trade Enforcement Priorities Act, would establish mechanisms under the Trade Act of 1974 to require the USTR annually to identify particularly harmful foreign trade practices and, where appropriate, to initiate WTO dispute settlement proceedings to remedy these practices. To date, no action has been taken on either of these bills."
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{
"question": [
"What is provided for WTO Members regarding disputes over WTO agreements?",
"What is the first step for WTO members to do in order to settle their disputes?",
"What does the DSU provide for the Appellate Body?",
"What steps are aimed at producing a more expeditious and effective system?",
"What office receives complaints when they are filed?",
"What circumstance has revealed procedural gaps?",
"What are examples of these gaps?",
"What has been done to overcome these gaps?",
"What did Congress do in the Trade Act of 2002?",
"What does Section 301 of the Trade Act of 1974 provide?",
"What were the grounds used to challenge section 301?",
"What was the rationale for the compliance upholding?"
],
"summary": [
"The World Trade Organization (WTO) Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) provides a means for WTO Members to resolve disputes arising under WTO agreements.",
"WTO Members must first attempt to settle their dispute through consultations, but if these fail the Member initiating the dispute may request that a panel examine and report on its complaint.",
"The DSU provides for Appellate Body (AB) review of panel reports, panels to determine if a defending Member has complied with an adverse WTO decision by the established deadline in a case, and possible retaliation if the defending Member has failed to do so.",
"Automatic establishment of panels, adoption of panel and appellate reports, and authorization of a Member's request to retaliate, along with deadlines and improved multilateral oversight of compliance, are aimed at producing a more expeditious and effective system than had existed under the General Agreement on Tariffs and Trade (GATT).",
"To date, 450 complaints have been filed under the DSU, with nearly one-half involving the United States as a complainant or defendant. The Office of the United States Trade Representative (USTR) represents the United States in WTO disputes.",
"Use of the DSU has revealed procedural gaps, particularly in the compliance phase of a dispute.",
"These include a failure to coordinate DSU procedures for requesting retaliation with procedures for requesting a compliance panel and the absence of a specific procedure aimed at the removal of trade sanctions in the event the defending Member believes it has fulfilled its WTO obligations in a case.",
"To overcome these gaps, disputing Members have entered into bilateral agreements permitting retaliation and compliance panel procedures to advance in sequence and have initiated new dispute proceedings seeking the removal of retaliatory measures believed to have outlived their legal foundation.",
"Expressing dissatisfaction with WTO dispute settlement results involving U.S. trade remedies, Congress, in the Trade Act of 2002, directed the executive branch to address dispute settlement in WTO negotiations. WTO Members have been negotiating DSU revisions in the currently stalled Doha Development Round.",
"Section 301 of the Trade Act of 1974 provides a mechanism for the USTR, either by petition of an \"interested party\" or on its own accord, to address restrictive foreign trade practices through the initiation of a WTO dispute and authorizes the USTR to take retaliatory action in the event the defending WTO Member has not complied with the resulting WTO decision.",
"While the European Union challenged Section 301 in the WTO on the ground that it requires the USTR to act unilaterally in WTO-related disputes in violation of DSU requirements, the United States was ultimately found to be in compliance with its DSU obligations.",
"Where a U.S. law or regulation is at issue in a WTO case, the WTO's adoption of a panel and, if appealed, AB report finding that the U.S. measure violates a WTO agreement does not give the WTO decision direct legal effect in this country. Thus, federal law is not affected until Congress or the executive branch, as the case may be, takes action to remove the offending measure."
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GAO_GAO-12-388
|
{
"title": [
"Background",
"Limited Information on Safety Risks and Changing Operational Environments Are Leading PHMSA to Consider Collecting Data",
"Limited Information",
"States Could Benefit from Sharing Safety Practices",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: Summary Results, GAO Pipeline Safety Regulations Survey",
"Appendix III: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"Pipelines transport roughly two-thirds of domestic energy supplies through approximately 2.5 million miles of pipelines throughout the United States. These pipelines carry hazardous liquids and natural gas from producing wells to end users (residences and businesses). Within this nationwide system, there are three main types of pipelines.\nGathering pipelines. Gas gathering pipelines collect natural gas from production areas, while hazardous liquid gathering pipelines collect oil and other petroleum products. These pipelines then typically transport the products to processing facilities, which in turn refine and send the products to transmission pipelines. According to PHMSA officials, traditionally, gathering pipelines range in diameter from about 2 to 12 inches and operate at pressures that range from about 5 to 800 pounds per square inch (psi). These pipelines tend to be located in rural areas but can also be located in urban areas. PHMSA estimates there are 200,000 miles of gas gathering pipelines and 30,000 to 40,000 miles of hazardous liquid gathering pipelines.\nTransmission pipelines. Transmission pipelines carry hazardous liquid or natural gas, sometimes over hundreds of miles, to communities and large-volume users (e.g., factories). For natural gas transmission pipelines, compression stations located periodically along the pipeline maintain product pressure. Similarly, pumping stations along hazardous liquid transmission pipelines maintain product flow. Transmission pipelines tend to have the largest diameters and pressures of any type of pipeline, generally ranging from 12 inches to 42 inches in diameter and operating at pressures ranging from 400 to 1440 psi. PHMSA has estimated there are more than 400,000 miles of gas and hazardous liquid transmission pipelines.\nDistribution pipelines. Gas distribution pipelines continue to transport natural gas to residential, commercial, and industrial customers, splitting off from transmission pipelines. These pipelines tend to be smaller, sometimes less than 1 inch in diameter, and operate at lower pressures—0.25 to 100 psi. PHMSA has estimated there are roughly 2 million miles of distribution pipelines, most of which are intrastate pipelines. There are no hazardous liquid distribution pipelines.\nHowever, some distribution pipelines can be as large as 24 inches in diameter and operate at higher pressures (i.e., over 350 psi).\nPart 191 (Gas Reporting), Part 192 (Gas), Part 193 (Liquid Natural Gas), Part 194 (Liquid Facility Response Plans), and Part 195 (Hazardous Liquid) of Title 49 of the Code of Federal Regulations.\nMost natural gas distribution pipelines would generally be considered to be in high-consequence areas, as defined under the transmission pipelines regulations, since they are typically located in highly populated areas.\nPHMSA regulates hazardous liquid and natural gas gathering pipelines— using uniform, minimum standards—based on their proximity to populated and environmentally sensitive areas. For natural gas gathering pipelines,PHMSA uses class locations—the same classification system used for natural gas transmission and distribution pipelines. (See table 1.) Under this system, PHMSA generally regulates onshore natural gas gathering pipelines in Class 2, 3, or 4 locations. For hazardous liquid gathering pipelines, PHMSA regulates those pipelines in incorporated and unincorporated cities, towns, and villages; pipeline segments that cross a waterway currently used for commercial navigation; and certain rural gathering pipelines within one-quarter mile of environmentally sensitive areas. This includes high-consequence areas, as defined for the hazardous liquid integrity management program. High-consequence areas can also be in Class 1, 2, 3, or 4 locations, which can entail different reporting requirements. For example, gathering pipeline operators in high-consequence areas that are in Class 1 locations are not required to report data on pipeline-related incidents, including fatality, injury, and property damage information.\nUnder the current regulatory system, PHMSA does not regulate most gathering pipelines in the United States based on their location. For example, out of the more than 200,000 estimated miles of natural gas gathering pipelines, PHMSA regulates roughly 20,000 miles. Similarly, of the 30,000 to 40,000 estimated miles of hazardous liquid gathering pipelines, PHMSA regulates about 4,000 miles. However, according to PHMSA officials, the agency has the authority to collect data on all onshore hazardous liquid and gas gathering pipelines, even though it generally does not regulate gas gathering pipelines in Class 1 locations or hazardous liquid gathering pipelines not located in high-consequence areas.\nGenerally, PHMSA retains full responsibility for inspecting and enforcing regulations on interstate pipelines. However, states may be authorized to conduct inspections for interstate pipelines, as well as inspections and associated enforcement for intrastate pipelines. States can also promulgate regulations for intrastate pipelines, including gathering pipelines. PHMSA has arrangements with 48 states, the District of Columbia, and Puerto Rico to assist with overseeing interstate, intrastate, or both interstate and intrastate pipelines. These arrangements, in which states act as “agents” for PHMSA, can cover hazardous liquid pipelines only, gas pipelines only, or both (see fig. 2). State pipeline safety offices are allowed to issue regulations supplementing or extending federal regulations, but these state regulations must be at least as stringent as the minimum federal regulations. If a state wants to issue regulations that apply to pipelines that PHMSA does not regulate, such as unregulated gathering pipelines, it must do so under its own (state) authority.",
"",
"While gathering pipelines generally pose lower safety risks than other types of pipelines, PHMSA does not collect comprehensive data on safety risks associated with gathering pipelines. In response to GAO’s survey, state pipeline safety agencies cited construction quality, maintenance practices, unknown or uncertain locations, and limited or no information on current pipeline integrity as safety risks for federally unregulated gathering pipelines. Operators of unregulated gathering pipelines are not required by federal law to report information on such risk factors. Consequently, federal and state pipeline safety officials do not know the extent to which individual operators collect such information and use it to monitor the safety of their pipelines. In our survey of 52 state agencies, 39 agencies—10 monitoring hazardous liquid and 29 monitoring natural gas—responded that they had onshore gathering pipelines that PHMSA does not regulate located in their state. (See app. II for a summary of our survey results.) For these 39 agencies, four of the five top responses cited the following risk factors for onshore unregulated gathering pipelines as among the highest public safety risks.\nConstruction quality. Eighteen state agencies reported that the quality of installation procedures and construction materials is a moderate or high safety risk for unregulated gathering pipelines. The construction phase of pipeline installation is critical to ensure the long-term integrity of the pipeline because the installation methods and materials used in pipeline construction affect the pipeline’s resistance to deterioration over time. For example, one inspection requirement for regulated pipelines is that they may not be installed unless they have been visually inspected at the site of installation to ensure that they are not damaged in a manner that could impair their strength or reduce their serviceability. This requirement does not currently apply to unregulated gathering pipelines.\nMaintenance practices. Sixteen state agencies reported that the extent to which pipeline operators maintain their pipelines is a moderate or high safety risk for unregulated gathering pipelines. According to agency officials, after a pipeline is installed and operational, periodic maintenance—such as inspecting and testing equipment—is important to prevent leaks and ruptures and could extend the operating life of a pipeline. Furthermore, preventive measures and repairs conducted on unregulated gathering pipelines, as well as a record of such activities, could provide useful information on the safety and history of a given gathering pipeline.\nLocation. Sixteen state agencies reported that the unknown or uncertain location of unregulated gathering pipelines presents a moderate or high safety risk. Although individual operators may know the locations of unregulated pipelines, state and local safety agencies may not know or may be uncertain about the locations and mileage of unregulated pipeline infrastructure in their communities. This information is particularly useful for “Call Before You Dig” programs operated by states and localities. If unregulated gathering pipelines are unmarked and program officials do not know the location of the pipelines, businesses and citizens may damage a pipeline during excavation, which could result in an incident—including fatalities, injuries, or damage to property or the environment—as well as the shutting down of the pipeline for repair.\nPipeline integrity. Sixteen state agencies reported that not knowing or having limited knowledge about the integrity—the current condition— of unregulated gathering pipelines is a moderate or high safety risk. Factors that affect the integrity of all pipelines—such as excavation damage and corrosion—also affect gathering pipelines. For example, excavation damage to a pipeline from nearby digging activities (see fig. 3) is the leading cause of pipeline incidents and, as previously noted, the uncertain location of unregulated gathering pipelines may increase the potential for such damage. Furthermore, corrosion can occur on the inside and outside of metal pipelines and is not easily identified without appropriate pipeline assessments. From 2004 through 2010, corrosion was reported as the cause of about 60 percent—or nine incidents—of regulated gas gathering pipeline incidents. Generally, pipeline experts we spoke with said limited information on the integrity of unregulated gathering pipelines prevents analysis to assess the internal and external condition of these pipelines.\nAccording to responses to our survey and interviews with industry officials and representatives, land-use changes and the increased extraction of oil and natural gas from shale deposits are two changes in the operating environments that could increase the safety risks for unregulated gathering pipelines.\nLand-use changes. The fifth top response reported by state pipeline safety agencies we surveyed was that increased urbanization has caused rural areas to become more densely populated and, in some cases, developments have encroached on existing pipeline rights-of- way. (See fig. 4.) Nineteen state agencies reported land-use changes as a moderate or high risk for federally unregulated gathering pipelines. Federal and state pipeline safety officials we spoke with are concerned about the safety and proximity of people who work and live near pipeline rights-of-way. For example, one state official stated that although a new housing or business development can change a location’s designation from Class 1 to a higher class that would then fall under PHMSA’s jurisdiction, the operator may not be aware of the development and therefore would not monitor and apply more stringent regulations along that pipeline.\nIncreased extraction of oil and gas from shale deposits. According to pipeline industry officials and representatives we interviewed, the increased extraction of oil and natural gas from shale deposits poses an increased risk to the public, partly because of the development of new and larger gathering pipeline infrastructure. Deposits of oil and natural gas have become increasingly important energy sources in the United States over the past decade (see fig. 5). According to the U.S. Energy Information Administration, shale gas accounted for 16 percent of the total domestic natural gas supply in 2009 and is projected to increase to approximately 47 percent by 2035. This extraction has led to drilling and production in regions of the country that have previously seen little or no such activity. As a result of this ongoing activity, as well as future growth projections, state and federal safety officials we interviewed identified new gathering pipelines related to shale development as a potential public safety risk. The risk is primarily due to the characteristics and quantity of pipeline infrastructure required to support this new production. Specifically, some of these new gathering pipelines have larger diameters and operate at higher pressures that are equivalent to traditional transmission pipelines, but without the regulatory requirements. For instance, an October 2010 report on pipeline issues and concerns in Fort Worth stated that some gathering pipelines were as large as 24 inches in diameter with maximum allowable operating pressures similar to those for transmission pipelines. Those gathering pipelines were currently exempt from federal integrity management rules, which require some form of pipeline integrity assessment at least once every 7 years, and clearly define how and when problems found during these assessments are to be reported and repaired.\nPHMSA officials stated that they are considering collecting data on federally unregulated onshore gathering pipelines to better understand and evaluate the safety risks posed by these pipelines. Although PHMSA has the legal authority to collect data on unregulated gathering pipelines, the agency is not required and has not yet exercised its authority to do so. PHMSA officials reported that, instead of collecting such data, the agency was focusing on the development of integrity management requirements and improved data collection for higher-risk transmission and distribution pipelines. However, PHMSA officials reported that there is value in having data for unregulated pipelines similar to what is currently collected on regulated pipelines, such as pipeline characteristics and reportable information on incidents—including the location, cause, and consequences of these incidents.\nIn addition, PHMSA issued Advanced Notices of Proposed Rulemakings (ANPRM) for onshore hazardous liquid and gas pipelines in October 2010 and August 2011, respectively. For these proposed rulemakings, PHMSA has sought comment on, among other things, whether to extend regulation or other requirements to currently federally unregulated gathering pipelines. Concerning potential data collection, the ANPRMs sought comment on whether to require the submission of annual, incident, and safety-related condition reports on federally unregulated gathering pipelines, as well as on whether to establish a new, risk-based regime of safety requirements for large-diameter, high-pressure gas gathering pipelines, including those pipelines in rural locations. While the ANPRMs did not seek comment on exactly what new data to collect, PHMSA officials reported that the information would likely be similar to what is currently collected on regulated gathering pipelines and that they plan to issue final rules in late 2012. In the event that reporting requirements are adopted, PHMSA officials stated that gathering pipeline data would likely be collected on a state-by-state basis, which could later be expanded to the national level. However, PHMSA’s plans for collecting data are preliminary, and the extent to which PHMSA will collect data sufficient to evaluate the potential safety risks associated with these pipelines is uncertain.\nCurrently, PHMSA collects annual, incident, and safety-related condition data on regulated pipelines. The specific types of safety-related data collected for regulated pipelines include the operator, pipeline system description, mileage by class location, diameter size, operating pressure, incident location, number of injuries and fatalities, property damage, and assessments conducted. These data help federal and state safety officials and pipeline operators increase the safety of these pipelines by better identifying and quantifying safety risks, as well as by implementing mitigation strategies, and addressing potential regulatory needs. It is for these same reasons that PHMSA, state, and some industry officials reported that collecting similar data for unregulated gathering pipelines would be beneficial. PHMSA officials also reported that in the event the agency started collecting data on unregulated onshore gathering pipelines, their current data reporting system could accommodate such a collection and not require large changes for regulators or operators. On the other hand, a few operators and industry groups we met with expressed concerns over the burden that new data reporting would represent. Before any potential data collection reporting requirements could be enacted, PHMSA and the Office of Management and Budget would review and evaluate the value of such information and associated burdens on industry. PHMSA officials said that while many operators should already have information on their gathering pipelines readily available, it would still be important to communicate with operators and take steps to minimize burdens in collecting new gathering pipeline data.\nSome benefits of collecting such pipeline data can be seen through additional analysis of currently collected data. For example, PHMSA’s data on regulated pipelines indicate that more onshore reportable incidents, as well as total property damage, occur on transmission and distribution pipelines, than on regulated gathering pipelines (see figs. 6 and 7). Although the number of reportable incidents for regulated gas gathering pipelines is lower than for other regulated pipelines, the value of total property damage increased in the past few years. In 2010, these reportable incidents accounted for, on average, about $1.8 million in property damage per incident.\nAnother benefit of collecting annual, incident, and safety-related condition pipeline data is an increased ability to assess and manage risks. We have previously reported on the importance of assessing and managing risks, including quantifying those risks using data. Data are instrumental in quantifying risks and can reduce uncertainty in assumptions and policy judgments (e.g., safety threats and the likelihood that they will be realized). PHMSA officials reported that collecting data could help to determine the safety risks associated with federally unregulated gathering pipelines, such as tracking injuries, fatalities, and property damage for new gathering pipelines associated with shale development, and whether current safety regulations are appropriate. Related to whether current regulations are appropriate, Congress recently mandated that DOT review the sufficiency of existing federal and state laws and regulations to ensure the safety of hazardous liquid and gas gathering pipelines. Two industry associations reported that such data collection could help better ensure that federal pipeline programs are appropriately targeted at mitigating safety risks, cost-effective, and not unnecessarily broad in scope. Quantitatively assessing risks could also allow for a ranking and prioritizing of safety risks facing gathering pipelines in a manner that is currently not possible.\nBesides PHMSA, states may collect data on unregulated gathering pipelines, but the scope and nature of this data collection can vary. Although the federal government is responsible for setting minimum pipeline safety standards, states can adopt additional or stricter safety standards for intrastate pipeline facilities and transportation—including standards for data collection. For example, Texas’s state regulation further defined that the state’s safety jurisdiction for onshore gas gathering pipelines begins after the first point of measurement—where the product is first measured to determine the volume being extracted from the well—and is based on population, which is stricter than the federal standard. Our survey revealed that only 3 of the 39 state agencies reported that they collect and analyze comprehensive pipeline spill and release data on federally unregulated pipelines. Such information can be used to help reduce future incidents. Additionally, the National Association of Pipeline Safety Representatives (NAPSR) recently conducted a nationwide surveyrequirements match or exceed federal pipeline safety requirements. The survey reported that neither states nor the District of Columbia collected comprehensive data on federally unregulated gathering pipelines, as is required for federally regulated pipelines.",
"State pipeline safety agencies reported using five safety practices most frequently to help ensure the safety of onshore hazardous liquid and gas gathering pipelines not regulated by PHMSA, according to our survey of state agencies (see fig. 8). Several of these practices are designed to counter previously discussed safety risks; for example, implementing damage prevention programs can lower the risks of excavation damage.Although these practices were cited most frequently, one-third or less of the state pipeline safety agencies with unregulated gathering pipelines use any one of these practices. For instance, 13 of the 39 state pipeline safety agencies with unregulated gathering pipelines in their state reported using the most frequently cited safety practice—damage prevention programs. Additionally, some of the state agencies that reported using safety practices also responded that, overall, they had promulgated safety requirements for onshore gathering pipelines that were more stringent than those provided by PHMSA.\nDamage prevention programs. Thirteen state agenciesthey implement and enforce a damage prevention program as a practice to help ensure pipeline safety. Damage prevention programs can help mitigate risks and increase safety through a number of activities. For example, damage prevention programs can help reduce the risk of excavation damage by encouraging citizens and other parties to collect information to help identify pipeline locations before digging begins. Damage prevention programs can also include marking the rights-of-way for pipelines—including gathering pipelines—above ground to further reduce the likelihood of excavation damage (see fig. 9). States have developed or participated in damage prevention programs to help reduce instances of excavation damage, including damage to gathering pipelines. For example, Colorado has participated in the national One-Call program to reduce excavation damage. One-Call programs enable citizens and organizations to call an 811 number to notify utilities, pipeline operators, and others about the location and nature of planned digging. Utility, pipeline, or other organization members can then mark where underground pipelines run before any digging begins. Colorado pipeline safety officials reported that some calls related to the marking of regulated and unregulated gathering pipelines. As to the effectiveness of One-Call programs, the Common Ground Alliance has reported that, in 2010, when an excavator notified a call center before digging, damage occurred less than 1 percent of the time.\nConsidering areas of highest risk. Ten state agencies reported they consider the areas of highest risk to effectively target resources as a safety practice. This approach can help address risks, such as corrosion and a lack of periodic maintenance, by directing oversight to those pipelines that could have the most serious consequences in the event of an incident. In addition, considering the areas of highest risk could help address potential safety risks from new gathering pipeline infrastructure associated with shale development. For example, considering risk factors associated with larger pipelines, operating pressures, and location could help determine the actual risks posed by these new pipelines. Indeed, some of PHMSA’s more recent pipeline safety regulations addressing integrity management and high-consequence areas account for risk factors to help determine which regulations might apply to a particular pipeline. Industry officials reported that it is more effective to target higher-risk areas than to allocate resources across all areas. Officials with the Texas Oil and Gas Association added that the risk of a pipeline incident in a heavily populated area warrants more attention than the risk of a similar incident in a sparsely populated area. This practice also acknowledges that gathering pipelines run through a wide variety of environments with varying risk levels (see fig. 10). Some states are overseeing pipelines based on identified safety risks. For example, safety compliance and enforcement staff at the Texas Railroad Commission reported that inspecting pipeline systems based on identified risks allows the state to inspect some pipelines less frequently, such as pipelines made from newer and safer materials, have advanced monitoring technology, or are located away from populations—like some rural gathering pipelines. Using these risk- based safety evaluations also enables Texas Railroad Commission inspectors to concentrate on higher-risk pipeline systems.\nSafety inspections. Nine state agencies reported they conduct recurring, scheduled, or unscheduled safety inspections of hazardous liquid and gas operators as another safety practice. NAPSR officials reported that safety inspections can be regularly scheduled inspections, during which inspectors check system components, specialized inspections (i.e., integrity management) aimed at higher- risk areas, or random checks. These inspections can also help address risks related to the installation and construction quality of a pipeline by ensuring that the pipeline is structurally sound and shows no evidence of questionable materials or other problems, such as corrosion and excavation damage. PHMSA has recommended that state pipeline safety agencies perform periodic surprise inspections on new pipeline construction to determine whether operators are complying with construction requirements. Inspectors with the Texas Railroad Commission, in addition to sampling on-site pipeline facilities in the field, also review pipeline operators’ records and documentation on selected pipeline systems for compliance with federal and state pipeline safety regulations. These risk-based safety evaluations have included the construction of gathering pipelines related to shale development and pipelines not regulated by PHMSA. Such evaluations also help ensure that operators maintain an up-to-date and consistent document records system for installation, operations, and emergency response (see fig. 11).\nPublic outreach and communication. Seven state agencies reported they engage in outreach or other communication with communities and citizens to boost awareness and knowledge of pipeline safety practices they use. The Common Ground Alliance has reported on the importance of outreach, including the use of structured education programs, targeted mailings, and paid advertising. These and other outreach methods can also underscore the importance of other safety practices, such as damage prevention and One-Call programs. These outreach efforts can involve a number of methods and include educating and engaging the public. In Colorado, Damage Prevention Councils have hosted monthly meetings and participated in local community events—such as educational seminars, parades, and trade shows—to help educate citizens on pipeline safety. Another Colorado entity active in damage prevention is the Colorado Pipeline Association, which comprises pipeline operators dedicated to promoting pipeline safety by providing information for excavators, state residents, businesses, emergency responders, and public officials. In one community, according to a PHMSA official, citizens viewed state safety officials as an objective and neutral party that provided information and perspectives on the planned construction of gathering pipelines. In tandem with private operators, the state officials were able to answer citizen questions and address concerns.\nEnforcement. Six state agencies reported a safety practice of establishing a system of escalated enforcement to enhance and increase regulatory attention on operators that have experienced incidents. A pipeline expert we interviewed said that promoting an effective enforcement program was necessary to help ensure pipeline safety. A system of escalated enforcement can enhance and increase regulatory attention on pipeline operators with safety violations. One state pipeline safety official reported that making such attention public can bring additional pressure on and provide incentives for a company to maintain and operate its infrastructure safely. One PHMSA official reported that although many states do not have an enforcement program as elaborate as PHMSA, states with stronger enforcement programs have more of an impact on the operators to increase safety. Pipeline operators may have procedures and established contacts with local enforcement personnel in order to act appropriately to halt dangerous excavation activities that may damage pipelines and potentially cause an immediate threat to life or property. Regarding federally unregulated gathering pipelines, one Colorado official reported that because gathering pipeline companies operate pipelines and conduct excavation work, they would be subject to any necessary enforcement due to safety violations.\nHowever, sharing of information among states on the safety practices they use for unregulated gathering pipelines appears to be limited. Some state and PHMSA officials we interviewed had limited awareness of what other states were doing to help ensure the safety of gathering pipelines not regulated by PHMSA. For example, pipeline safety officials we interviewed had limited awareness of other state programs—sometimes even for an adjacent state—even if those programs were intended to address common risks, such as reducing excavation damage and corrosion. PHMSA officials were likewise unable to report on the safety practices that many states use or on states’ regulations that were more stringent than federal requirements. PHMSA’s website holds a wealth of information on various pipeline safety topics, including recent pipeline forums and industry research, incident investigations, and other information. However, information targeted at gathering pipelines, including relevant safety practices and state activities, is limited. In addition, all related information could be grouped to decrease time spent searching and scanning. Currently, there is no central PHMSA web page or resource for gathering pipelines, regulated or unregulated—possibly due, in part, to the lower safety risks that regulated gathering pipelines have posed to people and property when compared with other pipelines, like transmission pipelines. PHMSA officials said that its website also focuses on pipelines that PHMSA regulates but excludes most gathering pipelines. PHMSA has considered the development of a website to help facilitate sharing information among states. While this project is still in the planning stages and not targeted at gathering pipelines, it could be a resource to share program and safety practices among states and PHMSA.\nIncreased communication and information sharing about pipeline safety practices could boost the use of those practices in states with unregulated gathering pipelines. As previously discussed, even the safety practice that our survey respondents reported using most frequently—implementing a damage prevention program—was used by just 13 of the 39 responding state pipeline safety agencies with unregulated gathering pipelines in their state. The other four safety practices cited are reportedly used even less. Improved information sharing among states and PHMSA could help spread information on how these safety practices—which are also used for regulated pipelines–-could be applied to unregulated gathering pipelines, thereby benefiting other states with unregulated gathering pipelines. We have previously reported on the value of organizations reporting and sharing safety information as part of encouraging a wider safety culture. Safety culture can include organizational awareness of safety and open communication. The benefits of a strong safety culture have widespread applicability, including in other transportation areas— such as aviation and transit. PHMSA could serve to facilitate feedback and evaluate safety information related to unregulated gathering pipelines in states. By collecting information on safety practices and other information relevant to unregulated gathering pipelines, PHMSA could increase the potential for identifying systemic issues, disseminating lessons learned, and improving pipeline safety across the country. PHMSA officials reported that, in the past, similar online and educational efforts in other areas have resulted in increasing education and information sharing among state pipeline safety officials.",
"While the safety risks of federally unregulated, onshore hazardous liquid and gas gathering pipelines are generally considered to be lower than other types of pipelines, PHMSA is currently not able to determine the performance and safety of these gathering pipelines because it does not collect the necessary pipeline operator data. The agency is considering options to collect such information, which could facilitate quantitatively assessing the safety risks posed by unregulated gathering pipelines. Furthermore, these data would be critical in helping PHMSA to evaluate the sufficiency of safety regulations for gathering pipelines as required by the congressional mandate or that increasing shale development across the country might necessitate. Making data-driven, evidence-based decisions about the risks of federally unregulated gathering pipelines is especially important in a time of limited resources.\nThe absence of an information-sharing resource focused on federally unregulated gathering pipelines means that both states and PHMSA could miss opportunities to share lessons learned and successful practices for helping to ensure pipeline safety. Sharing such lessons and related safety reporting can help support a safety culture and increase state officials’ awareness of possible safety practices or strategies that they can use to enhance pipeline safety. Lessons learned can also help states avoid the mistakes of others. Additionally, increased information sharing through such a resource would help PHMSA become more aware of state pipeline safety practices and initiatives—which in turn would assist PHMSA in sharing and supporting these safety practices, as well as in considering what state efforts may have applicability for federal programs, regulation, and guidance.",
"To enhance the safety of unregulated onshore hazardous liquid and gas gathering pipelines, we recommend that the Secretary of Transportation direct the PHMSA Administrator to take the following two actions:\nCollect data from operators of federally unregulated onshore hazardous liquid and gas gathering pipelines, subsequent to an analysis of the benefits and industry burdens associated with such data collection. Data collected should be comparable to what PHMSA collects annually from operators of regulated gathering pipelines (e.g., fatalities, injuries, property damage, location, mileage, size, operating pressure, maintenance history, and the causes of incidents and consequences).\nEstablish an online clearinghouse or other resource for states to share information on practices that can help ensure the safety of federally unregulated onshore hazardous liquid and gas gathering pipelines. This resource could include updates on related PHMSA and industry initiatives, guidance, related PHMSA rulemakings, and other information collected or shared by states.",
"We provided the Department of Transportation with a draft of this report for review and comment. The department provided technical corrections, which we incorporated as appropriate.\nWe are sending copies of this report to interested congressional committees and the Secretary of Transportation. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-2834 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.",
"The objectives of our review were to determine (1) the safety risks that exist, if any, with onshore hazardous liquid and natural gas gathering pipelines that are not currently under the Pipeline and Hazardous Materials Safety Administration (PHMSA) regulation and (2) the practices states are using to help ensure the safety of unregulated onshore gathering pipelines. To address our objectives, we reviewed PHMSA and other federal agency regulations, as well as available safety data on regulated pipelines. We also interviewed officials at PHMSA, state pipeline safety agencies, pipeline companies and other industry stakeholders, and related associations. We obtained data on pipelines regulated by PHMSA to understand the types of pipeline data currently collected, as well as to compare and analyze accident, injury, fatality, and other trends. We reviewed the data and conducted follow-up work as necessary to determine that the data were complete, reasonable, and sufficiently reliable for the purposes of this report. We also conducted site visits—selecting locations based on geography, pipeline infrastructure, and other factors—to interview pipeline officials and representatives in Denver, Pittsburgh, and Dallas-Fort Worth. We later identified an initial list of safety risks and safety practices through information collection and document review processes.\nTo determine what safety risks may be associated with federally unregulated gathering pipelines—in addition to reviewing federal agency regulations, regulated pipeline safety data, and conducting various interviews—and because of the lack of historical and nationwide data, we developed and administered a web-based survey to state pipeline safety agencies in all 50 states and the District of Columbia. Our survey was intended to collect information otherwise not available from PHMSA, states, industry, or other sources on safety risks associated with onshore, federally unregulated hazardous liquid and gas gathering pipelines and related safety practices to help address those risks and ensure safety. We used the survey to identify which states had unregulated, onshore gathering pipelines and what perceived pipeline safety risks were associated with those pipelines. To identify safety practices states are using, we reviewed industry documents and conducted interviews with public and private experts and officials. Then, as part of our survey of state pipeline safety agencies, we asked officials to identify the practices they used to ensure the safety of onshore, federally unregulated hazardous liquid and gas gathering pipelines. From our survey results, we identified the most frequently cited safety practices, including additional state programs, activities, and other practices.\nTo develop the survey questions, we conducted initial interviews with state officials and other pipeline safety stakeholders to identify safety issues regarding unregulated gathering pipelines. We also reviewed key literature to ascertain pipeline safety practices and other issues. We consulted with PHMSA officials and reviewed PHMSA documentation to identify the proper terminology for use in the survey.\nThe survey was pretested with potential respondents from state pipeline safety agencies, as well as with the Congressional Research Service and National Association of Pipeline Safety Representatives. We did this to ensure that (1) the questions were clear and unambiguous, (2) the terms we used were precise, (3) the survey did not place an undue burden on the agency officials completing it, and (4) the survey was independent and unbiased. In addition, the survey was reviewed by an internal, independent survey expert. We took steps in survey design, data collection, and analysis to minimize nonsampling errors. For example, we worked with PHMSA officials to identify the appropriate survey respondents—state pipeline safety agencies. To minimize measurement error that might occur from respondents interpreting our questions differently from our intended purpose, we extensively pretested the survey and followed up with nonresponding units and with units whose responses violated certain validity checks. We identified only two cases where the respondents had slightly varied responses from our intended question, although the majority understood our questions as intended. Finally, to eliminate data-processing errors, we independently verified the computer program that generated the survey results. Our results are not subject to sampling error because we administered our survey to all 50 state pipeline safety agencies and the District of Columbia.\nThe survey was conducted using self-administered electronic questionnaires posted on the World Wide Web. We sent e-mail notifications to 52 agencies responding to our survey. We also e-mailed each potential respondent a unique password and username to ensure that only members of the target population could participate in the survey. To encourage respondents to complete the survey, we sent an e-mail reminder to each nonrespondent about 2 weeks after our initial e-mail message. The survey data were collected from July through September 2011. We received responses from all 50 states and the District of Columbia, for an overall response rate of 100 percent. This “collective perspective” obtained from each of the agencies helps to mitigate individual respondent bias by aggregating information across the range of different viewpoints. For purposes of characterizing the results of our survey, we identified specific meanings for the words we used to quantify the results, as follows: “a few” means between 1 percent and 24 percent of respondents, “some” means between 25 percent and 44 percent of respondents, “about half” means between 45 percent and 55 percent of respondents, “a majority” means between 56 percent and 74 percent of respondents, “most” means between 75 percent and 94 percent of respondents, and “nearly all” means 95 percent or more of respondents. This report contains the central results from the survey (see app. II).\nWe conducted this performance audit from February 2011 to March 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"Appendix II: Summary Results, GAO Pipeline Safety Regulations Survey General Pipeline Safety Regulation Survey Questions YES RESPONSES Does your state have any onshore gathering pipelines outside of high consequence areas that PHMSA does not regulate?\nDoes your agency collect any data for onshore gathering pipelines that PHMSA does not regulate?\nDoes your state have safety requirements for onshore gathering pipelines that are more stringent than those provided by PHMSA?\nSubpopulation Total How great a safety risk, if at all, are the following factors for onshore hazardous liquid and gas gathering pipelines in your state that PHMSA does not regulate? MODERATE AND HIGH SAFETY RISK RESPONSES A. Limited or no annual reporting data (similar to PHMSA’s) available on these pipelines (e.g., mileage, leaks)\nB. Limited or no incident data available on these pipelines (e.g., spills, releases) C. Limited or no information on the integrity of these pipelines D. Unknown or uncertain locations of pipelines E. Location of these pipelines in high consequence areas F. Limited or no inspections conducted on these pipelines G. Limited or no information on the pipe size H. Limited or no information on operating pressure I. Installation/construction quality J. Periodic maintenance not conducted on these pipelines K. Quality of product (sour or non-sour, corrosive, abrasive, etc.)\nDoes your agency use any of the following practices to ensure onshore hazardous liquid and gas pipeline safety in your state?",
"",
"",
"In addition to the contact named above, other key contributors to this report were Sara Vermillion (Assistant Director), Matt Cail (Analyst-in- Charge), Aisha Cabrer, David Hooper, Stuart Kaufman, Josh Ormond, Jerome Sandau, Jeremy Sebest, Rebecca Shea, Don Watson, and Adam Yu."
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"question": [
"How are the safety risks of onshore gathering pipelines that are not regulated by PHMSA generally considered?",
"What was the response of state pipeline safety agencies to a GAO survey?",
"What is needed in order to assess and manage safety risks associated with these pipelines?",
"What could increase safety risks for federally unregulated gathering pipelines?",
"What is needed in order to assess and manage safety risks associated with these pipelines?",
"What is the result of development encroaching on existing pipelines and the increased extraction of oil and natural gas from shale?",
"What is PHMSA considering collecting data on?",
"What did a small number of state pipeline safety agencies GAO surveyed report?",
"What do these practices include?",
"How widespread is the sharing of information among states on the safety practices used?",
"What could boost the use of such practices for unregulated pipelines?",
"What barriers are there in terms of data?",
"How are pipelines regulated?",
"What is included in the nation’s pipeline network?",
"Why have many of these pipelines not been subject to federal regulation?",
"How do statistics of regulated and unregulated pipelines compare?",
"What does this report identify?",
"What did the GAO do in order to evaluate pipelines and gain data?"
],
"summary": [
"While the safety risks of onshore gathering pipelines that are not regulated by PHMSA are generally considered to be lower than for other types of pipelines, PHMSA does not collect comprehensive data to identify the safety risks of unregulated gathering pipelines.",
"In response to a GAO survey, state pipeline safety agencies cited construction quality, maintenance practices, unknown or uncertain locations, and limited or no information on pipeline integrity as among the highest risks for federally unregulated pipelines.",
"Without data on these risk factors, pipeline safety officials are unable to assess and manage safety risks associated with these pipelines.",
"Furthermore, changes in pipeline operational environments cited in response to GAO’s survey and by industry officials could also increase safety risks for federally unregulated gathering pipelines.",
"Without data on these risk factors, pipeline safety officials are unable to assess and manage safety risks associated with these pipelines.",
"Specifically, land-use changes are resulting in development encroaching on existing pipelines and the increased extraction of oil and natural gas from shale deposits is resulting in the development of new gathering pipelines, some of which are larger in diameter and operate at higher pressure than older pipelines.",
"PHMSA is considering collecting data on federally unregulated gathering pipelines, but the agency’s plans are preliminary, and the extent to which PHMSA will collect data sufficient to evaluate the potential safety risks associated with these pipelines is uncertain.",
"A small number of state pipeline safety agencies GAO surveyed reported using at least one of five practices that were most frequently cited to help ensure the safety of federally unregulated pipelines.",
"These practices include (1) damage prevention programs, (2) considering areas of highest risk to target resources, (3) safety inspections, (4) public outreach and communication, and (5) increased regulatory attention on operators with prior spills or leaks.",
"However, the sharing of information among states on the safety practices used appears to be limited. Some state and PHMSA officials GAO interviewed had limited awareness of safety practices used by other states.",
"Increased communication and information sharing about pipeline safety practices could boost the use of such practices for unregulated pipelines.",
"However, information targeted at gathering pipelines on PHMSA’s website, including relevant safety practices and state activities, is limited.",
"Pipelines are a relatively safe mode of transportation for hazardous liquid and natural gas and are regulated by the Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) and state entities.",
"Included in the nation’s pipeline network are an estimated 200,000 or more miles of onshore “gathering” pipelines, which transport products to processing facilities and larger pipelines.",
"Many of these pipelines have not been subject to federal regulation based on their generally rural location and low operating pressures.",
"While incidents involving gathering pipelines regulated by PHMSA have resulted in millions of dollars in property damage in recent years, comparable statistics for federally unregulated gathering pipelines are unknown.",
"This report identifies (1) the safety risks that exist, if any, with onshore hazardous liquid and natural gas gathering pipelines that are not currently under PHMSA regulation and (2) the practices states use to help ensure the safety of these pipelines.",
"GAO surveyed state pipeline safety agencies in all 50 states and the District of Columbia; interviewed officials at PHMSA, state pipeline safety agencies, pipeline companies, and industry associations; and analyzed data and regulations."
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CRS_R40966
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{
"title": [
"",
"Introduction",
"Crop Insurance Background",
"Federal Program Costs",
"Major Provisions in the Standard Reinsurance Agreement for 2010",
"Reinsurance",
"Assigned Risk Fund",
"Developmental Fund",
"Commercial Fund",
"A&O Reimbursement",
"General Provisions",
"Studies on Rates of Return",
"Issues in the SRA Renegotiation",
"Cost Control and Financial Viability of Crop Insurance Companies",
"A&O Reimbursements",
"Underwriting",
"Crop Insurance Availability and Farmer Participation",
"Uncertainties After Completion of SRA Renegotiation",
"Developing the 2011 SRA",
"USDA's First Draft SRA",
"Industry Response to USDA's First Draft",
"USDA's Second Draft SRA",
"Budget Implications",
"2011 SRA Signed by Companies"
],
"paragraphs": [
"",
"Under the federal crop insurance program, farmers can purchase crop insurance policies to manage financial risks associated with declines in crop yields and/or revenue. The program, which began in 1938 when Congress authorized the Federal Crop Insurance Corporation (FCIC) and now covers more than 100 crops, is administered by the U.S. Department of Agriculture's (USDA's) Risk Management Agency (RMA), which acts as both regulator and reinsurer.\nA Standard Reinsurance Agreement (SRA) between USDA and the private companies spells out expense reimbursements and risk-sharing by the federal government, including the terms under which FCIC provides subsidies and reinsurance (i.e., insurance for insurance companies) on eligible crop insurance contracts sold or reinsured by insurance companies. As a result, the SRA plays a central role in determining program costs.\nIn late 2009, RMA began the process of renegotiating the SRA established in 2004. In the run-up to the negotiations, some had criticized it as being too generous for insurance companies following a significant increase in government costs in recent years, driven in part by rising crop prices. The 2008 farm bill ( P.L. 110-246 ) allows USDA to renegotiate the SRA once every five years starting with the 2011 reinsurance year (which runs from July 1, 2010, through June 30, 2011).\nThe negotiation process involved USDA developing a draft agreement, meeting separately with the insurance companies, and responding to the comments, concerns, and suggestions of the insurance companies and the public. On June 10, 2010, RMA issued what it called the final draft of a new SRA to cover the 2011 reinsurance year and subsequent years. On July 13, 2010, USDA announced that the agreement had been signed by all 16 approved insurance companies, putting it into effect for the 2011 reinsurance year.\nThis report discusses federal crop insurance costs, the SRA that had been in effect for the 2010 reinsurance year, and issues related to the renegotiation of the SRA. Although Congress does not directly approve any new agreement, Congress has been interested in the SRA negotiation in an oversight capacity, particularly with respect to cost-effectiveness and changes that might affect farmer participation, policy coverage, or industry interest in selling crop insurance to farmers. Another congressional concern has been how cuts in crop insurance expenditures stemming from a new SRA might affect baseline spending levels used for determining funding for the next farm bill.",
"Congress first authorized federal crop insurance as an experiment to address the effects of the Great Depression and crop losses in the Dust Bowl. In 1938, the Federal Crop Insurance Corporation (FCIC) was created to carry out the program, which focused on major crops in major producing regions. The federal crop insurance program remained limited until passage of the Federal Crop Insurance Act of 1980 ( P.L. 96-365 ), which expanded crop insurance to many more crops and regions of the country. Congress enhanced the crop insurance program in 1994 and again in 2000 to encourage greater participation. The changes also expanded the role of the private sector in developing new products that would help farmers manage their risks.\nTo encourage farmer participation and reduce the need for ad hoc disaster assistance, the federal government subsidizes the purchase of crop insurance policies, which are sold and completely serviced through 16 approved private insurance companies. Independent insurance agents are paid sales commissions by the companies. Insurance company losses are reinsured by USDA, and their administrative and operating costs are reimbursed by the federal government. These costs include payroll, rent, commissions to agents, and expenses for adjusting claims (e.g., traveling to farmers' fields).\nThe SRA does not affect policy premiums paid by farmers, which are based on RMA's estimates of risk and on subsides set in statute. The premiums depend in part on crop price levels, coverage levels that producers select, and policy type (e.g., yield-based or revenue-based). The expense reimbursement is currently calculated as a share of policy premiums. For more information on crop insurance policies, see CRS Report R40532, Federal Crop Insurance: Background and Issues , by [author name scrubbed].",
"Federal program costs for crop insurance fall into one of four main categories: premium subsidies, administrative and operating (A&O) expense reimbursement, program losses (or gains), and other ( Table 1 ). The SRA essentially defines the parameters that eventually determine A&O expense reimbursements and program losses (or gains). Premium subsidies are specified in the Federal Crop Insurance Act of 1980 ( P.L. 110-365 ), as amended. Periodic legislation can also affect federal outlays (see \" A&O Reimbursement ,\" below).\nThe largest cost category is premium subsidies, which lower the cost to farmers of purchasing insurance policies. When purchasing a policy, a producer growing an insurable crop selects a level of coverage and pays a portion of the premium. The remainder of the premium is covered by the federal government. Nearly 60% of total premium, on average, is paid by the government. As with other insurance, premiums increase with additional coverage, in terms of greater price protection or yield protection (or both).\nThe second-largest cost category is A&O expense reimbursement. Unlike some other insurance products, premiums for crop insurance are not \"expense loaded.\" For crop insurance, the entire premium covers only the liability associated with payment of crop losses and excludes expenses for delivery of the product. Currently, expense reimbursement for insurance companies is directly related to the value of the premiums. Therefore, as premiums rise, so does the A&O expense reimbursement, even if other factors, such as the number of policies sold, remain unchanged.\nThe third category is program losses. As a reinsurer, the federal government is liable for insured losses as agreed to in the current SRA. In a number of recent years, the government has received a gain because of relatively favorable weather.\nThe fourth category is other expenses such as RMA salaries and benefits or costs associated with research and development activities, which typically account for a small portion of total costs.\nIn recent years, government costs for crop insurance have increased substantially ( Figure 1 ). After ranging between $2.1 and $3.6 billion annually during FY2000-FY2006, costs rose to $5.7 billion in FY2008 and more than $7 billion in FY2009 as higher policy premiums from rising crop prices drove up premium subsidies for farmers and expense reimbursements to private insurance companies.",
"The Standard Reinsurance Agreement is a cooperative financial agreement between FCIC and each of the approved crop insurance companies to deliver eligible crop insurance contracts. It becomes effective upon its execution and FCIC's approval of the company's plan of operations for the applicable reinsurance year.\nThe SRA for the 2010 reinsurance year (ending June 30, 2010) contains four sections: definitions (see box, \"Selected Terms Defined in the Standard Reinsurance Agreement\"), reinsurance, A&O expense reimbursement, and general provisions.",
"The 2010 SRA establishes terms for the type of insurance contracts that will be reinsured and subsidized. In general, in order to prevent companies from \"cherry-picking\" the most profitable policies, an insurance company must offer and market all plans of insurance for all crops in any state in which the company writes a crop insurance contract, provided that RMA actuarial documents are available in that state. A company must also accept and approve applications from all eligible producers, and it is prohibited from providing a rebate (money, goods, or any other benefit) in exchange for purchasing a policy. Employees and agents of the company must also be properly licensed by the state in which they are doing business, if required by the state. Only the amount of net book premium—defined as the total premium calculated for all eligible crop insurance contracts, less A&O subsidy and fees—in the company's approved plan of operations may be reinsured and subsidized under the agreement.\nThe 2010 SRA defines risk-sharing between the government and private insurance companies. Under the SRA, insurance companies may transfer some liability associated with riskier policies to the government and retain profits/losses from less risky policies. This transfer of risk is accomplished through a set of reinsurance funds maintained by FCIC. Within 30 days of the sales closing dates for each crop, companies assign each policy they sell to one of three funds—assigned risk, developmental, or commercial—for each state. Each company then decides what proportion of premiums (and potential for losses/gains) to retain within each reinsurance fund, subject to required minimum retention limits of individual funds. The ceded (i.e., not retained) portion goes to the government. Overall, a company must retain at least 35% of its book of business.",
"The assigned risk fund is used for policies believed to be high-risk; it helps ensure that benefits of the federal crop insurance program are extended to all eligible farmers, regardless of risk. Depending on the state where the policy is sold, companies may retain as little as 15% to 25% of their highest-risk business, as specified in the 2010 SRA. Consequently, the federal government assumes a large portion of liability associated with high-risk policies. The SRA also specifies limits on the proportion of a company's business that may be placed in the assigned risk fund.",
"When the assigned risk designation limit is reached, companies allocate policies—particularly medium-risk policies and pilot programs—to the developmental fund. Each company decides what proportion of its business (by plan type and state) to retain, ranging from 35% to 100%.",
"The commercial fund is for policies for which companies expect to have only a small amount of losses. The companies select to retain (by plan type and state) between 50% and 100% of premium and associated liability of policies in the commercial fund. In 2008, about 20% of total premium value was placed in assigned risk, 10% in developmental, and 70% in commercial.\nFollowing the allocation of policies to one of the three funds, the actual gain/loss sharing for a company's retained business is based on loss ratios (indemnities paid divided by premiums collected) as established in the 2010 SRA. As a general rule, for underwriting losses, the higher the loss ratio, the lower the company share of losses (calculated separately for each fund within each state). This provision limits overall losses, with the government paying increasing amounts as losses mount. For example, FCIC assumes 100% of the underwriting loss for portions incurred when a company's loss ratio exceeds 500% (indemnities are five times greater than total premiums). Similarly, when there are underwriting gains, a company's share of gains declines (and the government's share increases) when the loss ratio is relatively low.\nA company's shares of gains and losses also vary by fund. They are greatest in the commercial fund and the least in the assigned risk fund. Company exposure and potential gains are much greater in the commercial fund than in the assigned risk fund.\nThe final risk-sharing component of the 2010 SRA is the \"net book quota share.\" Once a company's net gain or loss is calculated over its entire \"book of business,\" the company must cede a 5% share of its cumulative underwriting gains/losses to the government. As a result, the government receives a portion of underwriting gains from a company's retained business (but will also pay a portion of the losses, if realized). Since the company's total book includes a higher proportion of policies with lower risk, this portion is generally a positive value, which offsets part of the government costs of the program (See Table 1 , above, and \" Cost Control and Financial Viability of Crop Insurance Companies ,\" below).",
"The SRA establishes the reimbursement rate for administrative and operating (A&O) expenses to private insurance companies. During 2006-2008, the reimbursement rate—defined as a percentage of net book premiums—ranged from 18.1% to 24.2%, with higher rates associated with lower levels of insurance coverage. This means that for every $100 in premiums collected, the companies received an administrative payment of $18.10 to $24.20 from the federal government.\nTo generate cost savings, Congress mandated a reduction in reimbursement rates in the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 , the 2008 farm bill, Sec. 12016(E)). Beginning with the 2009 reinsurance year (July 1, 2008), the A&O reimbursement was reduced for most crop insurance policies by 2.3 percentage points, with the resultant rates ranging from 15.8% to 21.9%. For a discussion on trends in the A&O reimbursement, see \" Cost Control and Financial Viability of Crop Insurance Companies ,\" below.",
"An insurance company is required to collect and provide to FCIC data on policyholders, as well as producer premiums and administrative fees collected by the company. Monetary penalties are applied if the required information is not submitted timely or accurately. The company must also provide policyholders with a summary of coverage and a billing statement that prominently displays the policy premium, the FCIC-paid portion, and the administrative and operating (A&O) reimbursement paid by FCIC. The company must also follow FCIC regulations and procedures for a host of activities, including verification of yields and other information used to establish insurance guarantees and indemnity payments.",
"As part of USDA's preparation for renegotiating the SRA, the department hired a firm to calculate rates of return for crop insurers. In a two-part study, Milliman, Inc., estimated historical rates of return on equity for crop insurers and \"reasonable\" rates of return in order to determine if crop insurers are being over- or undercompensated by the government. The reasonable rate of return was defined as the \"cost of capital\" or, in this case, the returns received by property and casualty insurers, which was considered to be an investment of equivalent risk.\nThe study concluded that the historical returns on equity for crop insurers averaged 16.6% during 1989 to 2008, or 3.8% above the average \"reasonable\" rate of return over the same period, which was estimated at 12.8%. In addition, during the 20-year period under examination, the calculated historical rate of return was above the calculated \"reasonable\" rate in all but three years, with historical returns negative in only one year (1993) because of massive flooding. If a second catastrophic year had occurred during the period, the study notes, the average historical rate of return would have declined to 15.6%. The crop insurance industry has criticized the Milliman study for failing to consider reinsurance and actual A&O costs.\nThe crop insurance industry completed its own analysis, which defined profitability relative to premiums or \"sales\" rather than relative to equity. The study, conducted by Grant Thorton LLP, measured profitability as pre-tax net income as a percentage of net retained premium. The ratio for the 1992-2008 period averaged 14.2% for the crop insurance industry, compared with 17.5% for the property and casualty industry. USDA has criticized the Grant Thorton study for ignoring investment income on policyholder surplus when assessing returns on crop insurance.",
"The SRA renegotiation addressed several issues raised by policymakers, the agriculture community, and the crop insurance industry. These include control of government costs and financial viability of the crop insurance industry, crop insurance availability and farmer participation, and uncertainties after completion of the SRA renegotiation.\nAny cost reductions imposed by the new SRA would be in addition to reductions mandated under the 2008 farm bill. These changes resulted in net budget outlay savings of $3.9 billion over five years (FY2008-FY2012), or $5.6 billion over 10 years (FY2008-FY2017), relative to the March 2007 baseline, according to the Congressional Budget Office. Approximately $2.8 billion of this estimated five-year savings was attributable to changes in the timing of premium receipts from farmers, and payments to the participating insurance companies.",
"",
"Since A&O reimbursements are based on a percentage of premiums, the dollar amount of A&O reimbursement has risen sharply in recent years as premiums have risen to reflect higher crop prices. The A&O reimbursement increased from an average of $881 million during FY2004-FY2006 to $1.6 billion in FY2009, after reaching $1.3 billion in FY2007 and $2.0 billion in FY2008. RMA data also indicate that A&O reimbursement per policy more than doubled from $750 during 2004-2006 to $1,748 in 2008.\nSome observers have argued that the reimbursement rate should be pegged to something other than premium value, such as a flat fee per policy sold, to better reflect actual costs and to help reduce federal expenditures. If policies are actuarially sound, critics say, the administrative costs of writing and servicing a policy are generally not proportional to the value of the policy (e.g., whether 10 acres or 1,000 acres, or $3 per bushel or $9 per bushel).\nThe Government Accountability Office (GAO) released a study in April 2009 on costs associated with administering the crop insurance program. GAO concluded that the current structure of A&O reimbursements \"present[s] an opportunity to reduce government spending without compromising the crop insurance program's safety net for farmers.\" The current approach using crop prices, GAO says, has generated a \"kind of windfall\" for many insurance agencies and agents, as the companies, using funds from increased levels of A&O reimbursements, pay higher commissions to compete for each other's \"book of business\" and associated underwriting gains.\nGAO reported that crop insurance companies have spent a large share of their higher A&O reimbursements on commission payments, partly in an effort to compete for business from other insurance agencies. Since the federal government, through RMA and FCIC, sets policy premiums and determines which products can be offered, insurance companies do not compete on product quality or price. Rather, they can offer independent insurance agents, who sell policies through multiple companies, higher commissions to increase the company's market share. Some argue that increases in agent commissions in recent years amount to \"excessive compensation\" that is directly attributable to additional subsidies paid to crop insurance companies, and their absence would not have reduced the level of service provided by the industry.\nThe private crop insurance companies contend that any reductions in the A&O reimbursement will negatively affect the industry and possibly jeopardize the delivery of crop insurance, particularly in high-risk areas. Analysis conducted on behalf of the National Crop Insurance Services, Inc., a not-for-profit organization representing more than 60 crop insurance companies, concluded that, although companies have cut expenses over time through efficiencies, A&O reimbursements have been consistently below actual expenses incurred by private insurers, with a shortfall of 1-2 percentage points in 2008. (Moreover, with crop prices declining from highs in recent years, A&O expense reimbursements declined in FY2009 and are projected to decline again in FY2010.) The analysis states that the inadequacy of the A&O reimbursements is absorbed through a reduction in company profits. To address the volatile nature of A&O reimbursements and policy premiums resulting from fluctuating crop prices, the crop insurance industry proposed \"smoothing\" commodity prices for use in calculating reimbursement expenses.",
"Similarly, company underwriting gains (the amount by which a company's share of retained premiums exceeds its indemnities) have increased substantially in recent years, as weather has been generally favorable for growing crops. During this period, increases in insured acreage and higher crop prices have also increased gross liability. Liability represents total exposure of the program, meaning that if all participating farmers suffer losses to the full extent of coverage, program indemnities would be the total liability.\nTo reduce government costs of the program, some have suggested that the new SRA could alter the amount of underwriting gains that companies return to the government. They say that if the government share of gains is increased in exchange for a larger government share of the losses in loss years, average taxpayer costs would decline. The insurance industry contends that the net book quota share provision of the SRA is equivalent to a tax on underwriting income and crowds out private reinsurance. The industry wants to see it eliminated and wants the general underwriting gain and loss provisions to be revised to reduce the potential for unusually large gains or losses. The industry expects this approach to reduce disincentives for insurers to offer insurance in less profitable (high loss) states.\nInsurance companies point out that since they do not set rates (RMA does), crop insurers cannot respond to underwriting losses by increasing their rates in subsequent years or limiting coverage as is done in the property and casualty insurance industry. Generally higher policyholder surplus requirements also have implications for the level of required reserves and the amount of retained underwriting gains for insurance companies.",
"A major concern for policymakers is maintaining crop insurance availability and farmer participation in the crop insurance program. Crop insurance is an important risk management tool for many of the nation's farmers, and it complements to some extent other federal programs, such as direct and counter-cyclical payments. Policies are offered for major crops in most counties where they are grown, and in 2009, federal crop insurance policies covered 265 million acres.\nThe crop insurance industry warns that in order to preserve both crop insurance availability and farmer participation, the basic structure of the SRA—for example, the number and operation of the existing reinsurance funds and minimum retention percentages—should remain unchanged. Stability in design is also desired, insurance companies say, so they and their reinsurers will remain interested in participating in the program. In contrast, some say that there is room for cuts without risking declines in company and farmer participation, because reimbursements, when adjusted for inflation, are substantially above levels of the recent past.\nIn some states, particularly those with small agricultural sectors such as Utah, Wyoming, and several states in the Northeast, relatively few companies offer policies because overhead costs (per policyholder) are relatively high and the opportunity for growth in sales is limited. To improve availability in these states, the crop insurance industry recommends considering a shift of A&O reimbursements toward underserved states and promotion of additional education programs for farmers.",
"The crop insurance industry contends that several developments not directly related to the SRA could create uncertainties for the industry. One issue is payment timing. In order to score savings in FY2012, the 2008 farm bill pushed back the date for government payments to companies for A&O reimbursements and pulled forward the date for producers' premium bills, which means that companies may need to secure additional short-term financing during the late summer/early fall period.\nAnother issue is general demand for crop insurance and the combined effect of lower commodity prices and reduced crop insurance acreage in 2009, which followed strong prices and increased plantings the previous year. The industry points to these declines and prospects for uncertain demand recovery with concern that expense reimbursement is already headed downward, along with reductions mandated in the 2008 farm bill, even without changes in the SRA.\nFinally, RMA is currently reviewing its methodology for premium rate determination. The industry is concerned that any change from the current method has the potential to alter the industry's profitability under the new SRA. Without knowing the final outcome of rate determinations, the crop insurance industry has been reluctant to embrace changes to the SRA that have the potential to adversely affect their operation and profitability. RMA counters that it strives to ensure that the policies are actuarially sound and in the best interest of the federal crop insurance program.",
"On December 4, 2009, USDA's Risk Management Agency (RMA) released it first draft of the 2011 SRA. It was designed to serve as the starting point for negotiations with the crop insurance companies. Following industry feedback, USDA issued a second draft in mid-February and a \"final draft\" on June 10, 2010. On July 13, 2010, USDA announced that all of the approved crop insurance companies had signed the new SRA, which covers crops with policy closing dates after July 1, 2010 (e.g., 2011-crop corn).",
"USDA's initial draft (December 4, 2009) provided a new method for calculating administrative and operating (A&O) expenses, which RMA expects would save federal money and reduce volatility in the level of reimbursements received by insurance companies. Rather than tying A&O reimbursements to the value of current premiums (and current crop prices), the new method would use 10-year average farm prices (fixed period of 1999-2008) for seven major commodities as published by USDA. According to USDA, the new approach would result in A&O reimbursement levels comparable to those in 2005 and 2006 (i.e., before the major price run-up), which the department contends were adequate for delivering the program.\nThe draft also made significant changes in the underwriting provisions. First, at the operational level, the number of reinsurance funds under the draft would decline. According to the draft agreement, companies would place policies into either the \"residual\" fund for riskier policies (as designated by the insurance companies) or the \"commercial\" fund for less risky policies. The move would eliminate the marginally used developmental fund and three sub-funds in the commercial fund under the 2010 SRA (see \" Major Provisions in the Standard Reinsurance Agreement for 2010 ,\" above). Importantly, the draft made the residual fund a nationwide fund, in contrast with the current assigned risk fund, which is state-based. By consolidating the highest-risk policies into a single national pool shared by all crop insurance companies, USDA would expect the loss performance to be more stable for the residual fund than for the current assigned risk fund. An individual company's share of the fund would depend on its share of total premiums.\nFor the commercial fund under the draft agreement, a significant change in the first draft was to group states with similar levels of risk (e.g., low or high frequency of loss). According to USDA, the alignment as well as new risk-sharing provisions—which vary by state group—would increase opportunities for gains by private insurance companies in high-risk states (e.g., Plains states) while decreasing opportunities for gains in low-risk states (e.g., Corn Belt states). Overall, the changes were intended to increase competition in states that historically have been less profitable and are considered \"underserved.\" Also, RMA said that it would assume a greater share of extreme losses (and gains), which would protect insurance companies from potentially catastrophic losses.\nThe initial draft also changed the \"net book quota share\"—the portion of overall company gain or loss that the government retains. The new amount proposed was 10%, up from 5% in the current SRA. USDA intends to return some of the additional underwriting gains to companies that reach underserved producers and areas. USDA says it does not need additional authority to reallocate underwriting gains.\nAccording to USDA, the first draft would save $4 billion over five years. The Administration's FY2010 budget proposal, which incorporates USDA's first draft of the SRA as an assumption for baseline projections, claimed savings of $8 billion over 10 years.",
"In response to USDA's first draft, the crop insurance industry immediately voiced concerns that the initial proposal \"is way beyond the ability of most insurance companies to stay in business and will force companies to reduce staff and service to farmers.\" Subsequently, on January 20, 2010, National Crop Insurance Services, Inc.(NCIS), issued a lengthy written response to USDA's initial proposal. In commenting on the draft proposal, the industry stated a variety of concerns, primarily about proposed changes to A&O reimbursements and the underwriting provisions. NCIS believes that the overall funding reductions implied by the initial draft SRA are excessive and unacceptable to the industry, and that cuts in delivery expenses and underwriting gains would reduce industry returns well below the long-term average. Moreover, the industry said the proposed changes would sharply reduce the ability of insurance companies to serve all producers, particularly those in \"underserved states,\" and result in job loss in the crop insurance industry.\nAccording to the industry, the proposed \"fixed\" formula for calculating A&O reimbursements does not account for current delivery costs or those incurred under the SRA in the coming years, such as additional computer and data reporting requirements. Aside from the level of A&O cuts, NCIS claimed that USDA does not have discretion to negotiate lower A&O rates because the 2008 farm bill \"fixed\" them. In its formal response, NCIS stated that A&O reimbursements must remain as provided in statute, although the industry indicated elsewhere that they are continuing to work with USDA to arrive at A&O cuts that are acceptable to both parties.\nRegarding changes to provisions for underwriting gains and losses, the industry did not want the government to take on additional risk—specifically by RMA taking a larger portion of the gains and losses for the most profitable states —and \"crowd out\" commercial reinsurance. In addition, the draft proposal, according to the industry, would have only a limited improvement in potential underwriting gains for low-return states. The overall effect of the proposed changes, according to the industry, would be a sharp reduction in potential net underwriting gains by the insurance companies and in incentives to expand in underserved markets, and a potential increase in the cost of reinsurance for crop insurance companies.\nIn its response, the industry proposed two options for changing the underwriting provisions. Both options retain the current assigned risk fund and provide for a commercial fund with gain/loss share provisions that would differ for each of two state groups (group 1 is Illinois, Indiana, Iowa, Minnesota, and Nebraska; group 2 is all other states). Option A would eliminate quota share and alter both the company share of risk (which would increase for group 1 and decrease for group 2) and the company share of gain (which would be reduced for group 1 and increased for group 2). Option B would increase quota share to 10% and increase (relative to Option A) the company share of gains in both groups, particularly group 2. The industry estimated that both proposals would reduce expected underwriting gains by about $100 million annually.\nAnother industry concern is \"regulatory risk.\" According to the industry, the proposal would mandate items such as data reporting and other activities, yet procedures for them are not thoroughly defined in the draft agreement. The concern is that companies could be subject to severe penalties, including loss of A&O reimbursements and/or reinsurance, if procedures are not followed.",
"On February 17, 2010, USDA issued a news release announcing the second draft of the Standard Reinsurance Agreement. USDA said that the second draft, identified with the date of February 23, 2010, contained significant changes that reflected negotiations between RMA and the participating crop insurance companies, particularly with respect to the structure of A&O reimbursements and risk-sharing terms.\nRegarding A&O reimbursements, USDA inserted a two-year phase-in period for the proposed changes for using historical crop prices when calculating reimbursement levels. Rather than shifting immediately to the historical prices series, crop prices would be increased by 10 percentage points in the first year of the SRA and by five percentage points in the second year. Also, companies would receive an additional 5% in A&O reimbursements for operations in lower-served and/or higher-risk states. In an attempt to assert some control over agent commissions and to avoid instability in an insurance company's financial prospects, USDA also proposed a \"soft cap\" on agent commissions equal to no more than 80% of A&O reimbursements. The agreement would, however, allow profit sharing from underwriting gains.\nIn response to industry concerns that the commercial fund should be streamlined, the risk-sharing provisions in the second draft essentially reduced the number of state groups to only two—one for Corn Belt states and another group for all other states. Also, at the request of the crop insurance companies, the second draft provided more profit/loss sharing for policies in the commercial fund. For the residual fund (containing the highest-risk policies), USDA shifted its proposal from a nationwide, all-company pool to individual company pools so that companies would not be exposed to liability associated with policies sold by other companies. Finally, the net book quota share, which had been set at 10% in USDA's first draft, was set at 7.5%, compared with the current level of 5%. Under the second draft, up to 2.5% of any net book quota share would be distributed to companies operating in underserved states.\nTogether, these changes, according to USDA, would move the expected rate of return for insurance companies from 12% in the first draft to 14% in the second draft, but still below the historical level of more than 16%.",
"USDA estimated that the second draft would reduce federal crop insurance expenditures by $6.9 billion over 10 years, or about 20% less than the savings estimated under the first draft. The initial feedback from the industry was mixed, noting that USDA had listened to the industry \"to some extent,\" but arguing that the cost savings and associated impacts on the industry were still too great.\nSome Members of Congress, including the Chairman of the House Committee on Agriculture, remain concerned that cuts would reduce baseline funding levels for crop insurance, which could have a negative effect on overall spending for the next farm bill. If concerns about the federal budget deficit lead to a call for reduction in mandatory spending, including funds for agriculture, cuts made administratively by USDA would not count as savings for agriculture spending that the House and Senate Agriculture Committees would need to make. Following precedence for reflecting a portion of budget savings due to \"rulemaking\" or similar administrative action, some cost savings based on USDA's first draft of the SRA have already been incorporated in the current estimate of baseline spending by the Congressional Budget Office (CBO).\nCBO baseline budget estimates will serve as the official benchmark for scoring the budgetary impacts of the next farm bill. (CBO's March 2007 baseline was used to score the 2008 farm bill.) CBO's baseline projections typically assume continuation of current farm bill policies under expected economic conditions, as well as ongoing rulemaking and administrative changes. In the most recent CBO baseline (March 2010), spending on crop insurance totals $77.2 billion during FY2011-FY2020. This figure includes an estimated $3.9 billion in savings resulting from a new SRA. Subsequent CBO baselines are expected to include updated estimates of the impacts of the SRA.",
"On June 10, 2010, USDA announced the release of what it called the final draft agreement (subject to technical review). On July 13, 2010, USDA announced that all of the approved crop insurance companies had signed the new SRA, making it effective for the reinsurance year beginning July 1, 2010.\nTo control costs, the 2011 SRA places a cap on A&O reimbursements of $1.3 billion per year. The cap is adjusted annually for inflation, reaching $1.37 billion in 2015. The reference price concept proposed in earlier drafts was eliminated, and the A&O reimbursement is calculated using market prices as in the previous SRA. However, a minimum total A&O reimbursement of $1 billion is intended to protect companies against low market prices. To ensure company financial solvency and to control what some consider excessive commissions, particularly in the Midwest, the final SRA limits a company's expenditures on agent commissions to 80% of the A&O reimbursement in each state. Companies can supplement commissions with profit sharing, but total agent compensation will be limited to 100% of A&O reimbursements at the state level. According to USDA, under the previous SRA, average commissions were 108% of A&O reimbursements, a level which USDA said increases financial risk for companies if they encounter significant losses.\nAmong the proposed changes to underwriting provisions, the 2011 SRA is designed to make crop insurance delivery in higher-risk states (generally outside the Corn Belt states) more attractive to insurance companies. The commercial fund state groupings remain the same as in the second draft, but risk-sharing terms for higher-risk states are altered to provide increased profit potential and reduced share of loss. Also, for the highest-risk policies, USDA has shifted back to an assigned risk fund for each state (and company) so companies can maintain stop-loss protection for major disasters in individual states, as provided under the previous SRA. Finally, the net book quota share, which had been set at 10% in USDA's first draft, would be set at 6.5%, compared with the previous level of 5%. Under the final SRA, 1.5 percentage points of any net book quota share would be distributed to companies operating in underserved states.\nUSDA estimates that the new SRA reduces federal crop insurance expenditures by $6 billion over 10 years, using the Administration's February 2010 baseline. The department has stated that $4 billion of the savings would be used for deficit reduction and $2 billion for risk management and conservation programs, including expansion of the Pasture, Rangeland, and Forage crop insurance program and a \"good experience\" discount for producers. USDA states that the new agreement generally maintains the A&O subsidy structure contained in the previous SRA but removes the possibility of \"windfall\" government payments based on commodity price spikes. Although the insurance companies have signed the agreement, the insurance industry remains concerned about the potential impact of reduced funding on overall delivery of the program and quality of service to producers."
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"question": [
"What began to be renegotiated in 2004?",
"What covers crops with policy closing dates after July 1, 2010?",
"Why had some criticized the previous SRA?",
"What has Congress been interested in?",
"Why has the dollar amount risen sharply in recent years?",
"What was the increase of the A&O reimbursement?",
"Why have company underwriting gains increased substantially?",
"What have some argued regarding the government share of gains?",
"What industry has contended that a certain SRA provision is a tax on underwriting income and crowds out private reinsurance?",
"What was the timeline for the release of the drafts?",
"What was the result of the final SRA?",
"What modifications were made to the underwriting provisions?",
"What is the expected savings of the USDA?",
"What has been the response of the industry?"
],
"summary": [
"As provided under the 2008 farm bill, USDA in late 2009 began renegotiating the SRA established in 2004.",
"On July 13, 2010, USDA announced that all of the approved crop insurance companies had signed the new SRA, which covers crops with policy closing dates after July 1, 2010 (e.g., 2011-crop corn).",
"Prior to and during the negotiations, some had criticized the previous SRA as being too generous for insurance companies following a significant increase in government costs in recent years.",
"Although Congress does not directly approve any new agreement, Congress has been interested in its oversight capacity, particularly with respect to cost-effectiveness and effects on farmer participation, the industry's selling and servicing of crop insurance products to farmers, and baseline funding levels for the next farm bill.",
"Since A&O reimbursements under the previous SRA were based on a percentage of premiums, their dollar amount had risen sharply in recent years as premiums rose to reflect higher crop prices.",
"The A&O reimbursement increased from an average of $881 million during FY2004-FY2006 to $1.6 billion in 2009.",
"Similarly, company underwriting gains (the amount by which a company's share of retained premiums exceeds its indemnities) have increased substantially in recent years, as weather has been generally favorable for growing crops.",
"Some have argued that if the government share of gains is increased in exchange for a larger government share of losses, average taxpayer costs would decline.",
"The insurance industry has contended that a certain SRA provision (\"net book quota share\") is a tax on underwriting income and crowds out private reinsurance.",
"RMA released its first draft of the 2011 SRA on December 4, 2009, a second draft in mid-February 2010, and a \"final\" draft on June 10, 2010.",
"The final SRA places a cap on A&O reimbursements to control costs, and limits a company's expenditures on agent commissions.",
"Among the changes to underwriting provisions, the final SRA improves profit potential and reduces company risk in higher-risk and underserved states.",
"Overall, USDA expects the changes to save $6 billion over 10 years.",
"The industry remains concerned that funding reductions are excessive, potentially jeopardizing program delivery to farmers."
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|
CRS_R41104
|
{
"title": [
"",
"Introduction",
"Policy Context",
"Background",
"Visa Issuance Policy",
"§221(g) Disqualification",
"§212(a) Exclusion",
"Permanent Admissions (Immigrant Visas)",
"Procedures",
"Trends",
"Temporary Admissions (Nonimmigrant Visas)",
"Procedures",
"§214(b) Presumption",
"Trends",
"Grounds for Exclusion",
"Brief Legislative History",
"Communicable Diseases §212(a)(1)",
"Criminal History §212(a)(2)",
"Security and Terrorist Concerns §212(a)(3)",
"Public Charge §212(a)(4)",
"Labor Market Protections §212(a)(5)",
"Illegal Entrants and Immigration Law Violations §212(a)(6&7)",
"Ineligible for Citizenship §212(a)(8)",
"Illegal Presence or Previously Removed §212(a)(9)",
"Analysis of Visa Inadmissibility Determinations",
"Inadmissible Immigrants",
"Inadmissible Nonimmigrants",
"Concluding Observations"
],
"paragraphs": [
"",
"",
"The conventional wisdom is that the terrorist attacks on September 11, 2001, prompted a substantive change in U.S. immigration policy on visa issuances and the grounds for excluding foreign nationals. A series of laws enacted in the 1990s, however, may have done as much or more to set current U.S. visa policy and the legal grounds for exclusion. This report's review of the legislative developments in visa policy over the past 20 years and analysis of the statistical trends in visa issuances and denials provide a nuanced study of U.S. visa policy and the grounds for exclusion.\nLegislation aimed at comprehensive immigration reform may take a fresh look at the grounds for excluding foreign nationals that were enacted over the past two decades. While advocacy of sweeping changes to the grounds for inadmissibility has not emerged, proponents of comprehensive immigration reform might seek to ease a few of these provisions as part of the legislative proposals. Waiving the provision that makes an alien who is unlawfully present in the United States for longer than 180 days inadmissible is often raised as an option within a legislative package that includes legalization provisions. Expanding the grounds for inadmissibility, conversely, might be part of the legislative agenda among those who support more restrictive immigration reform policies. Regardless of which legislative path Congress may take, the case of Umar Farouk Abdulmutallab, who allegedly attempted to ignite an explosive device on Northwest Airlines Flight 253 on December 25, 2009, has heightened scrutiny of the visa process and grounds for exclusion.",
"Foreign nationals may be admitted to the United States temporarily or may come to live permanently. Those admitted on a permanent basis are known as immigrants or legal permanent residents (LPRs), while those admitted on a temporary basis are known as nonimmigrants (such as tourists, foreign students, diplomats, temporary agricultural workers, and exchange visitors). Humanitarian admissions, such as asylees, refugees, parolees, and other aliens granted relief from deportation, are handled separately under the Immigration and Nationality Act (INA).\nForeign nationals not already legally residing in the United States who wish to come to the United States generally must obtain a visa to be admitted. They must first meet a set of criteria specified in the INA that determine whether they are eligible for admission. Conversely, foreign nationals also must not be deemed inadmissible according to other specified grounds in the INA.\nUnder current law, three departments—the Department of State (DOS), the Department of Homeland Security (DHS), and the Department of Justice (DOJ)—play key roles in administering the law and policies on the admission of aliens. DOS's Bureau of Consular Affairs (Consular Affairs) is the agency responsible for issuing visas, DHS's Citizenship and Immigration Services (USCIS) is charged with approving immigrant petitions, and DHS's Bureau of Customs and Border Protection (CBP) is tasked with inspecting all people who enter the United States. The Attorney General and DOJ's Executive Office for Immigration Review (EOIR) play a significant policy role through the adjudication of specific immigration cases and ruling on questions of immigration law.",
"The documentary requirements for visas are stated in §§221-222 of the INA, with some discretion for further specifications or exceptions by regulation (as discussed below). Generally, the application requirements are more extensive for aliens who wish to permanently live in the United States than those coming for visits. The amount of paperwork required and the length of adjudication process to obtain a visa to come to the United States are analogous to that of the Internal Revenue Service's (IRS's) tax forms and review procedures. Just as persons with uncomplicated earnings and expenses may file an IRS \"short form\" while those whose financial circumstances are more complex may file a series of IRS forms, so too an alien whose situation is straightforward and whose reason for seeking a visa is easily documented generally has fewer forms and procedural hurdles than an alien whose circumstances are more complex. The visa application files must be stored in an electronic database that is available to immigration adjudicators and immigration officers in DHS. There are over 70 U.S. Citizenship and Immigration Services (USCIS) forms as well as DOS forms that pertain to the visa issuance process.\nThe visa issuance procedures delineated in the statute require the petitioner to submit his or her photograph, as well as full name (and any other name used or by which he or she has been known), age, gender, and the date and place of birth. Depending on the visa category, certain documents must be certified by the proper government authorities (e.g., birth certificates and marriage licenses). All prospective LPRs must submit to physical and mental examinations, and prospective nonimmigrants also may be required to have physical and mental examinations.",
"The statutory provision that gives the consular officer the authority to disqualify a visa applicant is broad and straightforward:\nNo visa or other documentation shall be issued to an alien if (1) it appears to the consular officer, from statements in the application, or in the papers submitted therewith, that such alien is ineligible to receive a visa or such other documentation under section 212 [8 USC §1182], or any other provision of law, (2) the application fails to comply with the provisions of this Act, or the regulations issued there under, or (3) the consular officer knows or has reason to believe that such alien is ineligible to receive a visa or such other documentation under section 212 [8 USC §1182], or any other provision of law....\nThese determinations are based on the eligibility criteria of the various and numerous visa categories. The shorthand reference for these disqualifications is §221(g), which is the subsection of the INA that provides the authority.",
"In addition to the determination that a foreign national is qualified for a visa, a decision must be made as to whether the foreign national is admissible or excludable under the INA. The grounds for inadmissibility are spelled out in §212(a) of the INA. These criteria are health-related grounds; criminal history; security and terrorist concerns; public charge (e.g., indigence); seeking to work without proper labor certification; illegal entrants and immigration law violations; ineligible for citizenship; and aliens previously removed. These grounds for exclusion or inadmissibility are discussed extensively later in the report.\nIn some cases, the foreign national may be successful in overcoming the §212(a) exclusion if new or additional information comes forward. The decision of the consular officer, however, is not subject to judicial appeals.",
"Foreign nationals who wish to live permanently in the United States must meet a set of criteria specified in the INA. To qualify as a family-based LPR, the foreign national must be a spouse or minor child of a U.S. citizen; a parent, adult child, or sibling of an adult U.S. citizen; or a spouse or minor child of a legal permanent resident. To qualify as an employment-based LPR, the foreign national must be an employee for whom a U.S. employer has received approval from the Department of Labor to hire; a person of extraordinary or exceptional ability in specified areas; an investor who will start a business that creates at least 10 new jobs; or someone who meets the narrow definition of the \"special immigrant\" category. The INA also provides LPR visas to aliens who are selected in the diversity lottery for low-immigrant sending countries.",
"Petitions for immigrant (i.e., LPR) status are first filed with USCIS by a sponsoring relative or employer in the United States. If the prospective immigrant already resides in the United States, the USCIS handles the entire process, which is called \"adjustment of status.\" If the prospective LPR does not have legal residence in the United States, the petition is forwarded to Consular Affairs in his or her home country after USCIS has reviewed the petition. The Consular Affairs officer (when the alien is coming from abroad) and USCIS adjudicator (when the alien is adjusting status in the United States) must be satisfied that the alien is entitled to the immigrant status. Many LPRs are adjusting status from within the United States rather than receiving visas issued abroad by Consular Affairs. Although over 1 million aliens became LPRs in FY2008, for example, only 42% of immigrant visas were issued abroad that year.\nA personal interview is required for all prospective LPRs. The burden of proof is on the applicant to establish eligibility for the type of visa for which the application is made. Consular Affairs officers (when the alien is coming from abroad) and USCIS adjudicators (when the alien is adjusting status in the United States) must confirm that the alien is qualified for the visa under the category he or she is applying, as well as is not ineligible for a visa under the grounds for inadmissibility of the INA, which include criminal, terrorist, and public health grounds for exclusion, discussed below.",
"The number of immigrant visas issued each year by consular officers abroad has held steady at about 0.4 to 0.5 million in the past 15 years. The trend analysis of the FY1994-FY2008 period, however, reveals an interesting pattern ( Figure 1 ). FY1998 and FY2003 emerge as the years in which the fewest visas were issued in absolute numbers, 375,684 and 364,768 respectively. In terms of the percentage of visas approved, FY1998 was the lowest year (51.9%).\nDisqualifications on the basis of INA §221(g) as discussed above exhibit a trend line that is somewhat complementary to the trend line of those who were issued a visa from FY1994 through FY2008. FY1998 was one of the peak years with 256,706 disqualifications (35.4%), but fell short of FY2005 and FY2006 with 270,590 disqualifications (37.9%) and 269,608 disqualifications (34.8%) respectively.\nIn terms of INA §212(a) exclusions, FY1998 along with FY1999 had the largest portion of prospective immigrants excluded, 12.3% and 12.4% respectively. In absolute numbers, FY1998 led with 89,848 determinations that were §212(a) exclusions, followed closely by FY1999 with 89,641 exclusions. Although FY1998 and FY1999 were the only years analyzed in which the percentages of §212(a) exclusions were in double digits, exclusions trended upward in FY2008 with 9.6% or 77,080 denials.",
"Aliens seeking to come to the United States temporarily rather than permanently are known as nonimmigrants. These aliens are admitted to the United States for a temporary period of time and an expressed reason. There are 24 major nonimmigrant visa categories, and over 70 specific types of nonimmigrant visas are issued currently. Most of these nonimmigrant visa categories are defined in §101(a)(15) of the INA. These visa categories are commonly referred to by the letter and numeral that denotes their subsection in §101(a)(15); for example, B-2 tourists, E-2 treaty investors, F-1 foreign students, H-1B temporary professional workers, J-1 cultural exchange participants, and S-4 terrorist informants.",
"Nonimmigrants must demonstrate that they are coming for a limited period and for a specific purpose. As with immigrant visas, the burden of proof is on the applicant to establish eligibility for nonimmigrant status and the type of nonimmigrant visa for which the application is made. The Consular Affairs officer, at the time of application for a visa, as well as the Customs and Border Protection Bureau (CBP) inspectors, at the time of application for admission, must be satisfied that the alien is entitled to a nonimmigrant status.\nPersonal interviews are generally required for foreign nationals seeking nonimmigrant visas. Interviews, however, may be waived in certain cases; prior to the September 11, 2001, terrorist attacks, personal interviews for applicants for B visitor visas reportedly were often waived. After September 11, 2001, the number of personal interviews rose significantly as part of broader efforts to meet national security goals. DOS issued interim regulations on July 7, 2003, that officially tightened up the requirements for personal interviews and substantially narrowed the class of nonimmigrants eligible for the waiver of a personal interview. Congress then enacted provisions requiring an in-person consular interview of most applicants for nonimmigrant visas between the ages of 14 and 79 as part of the Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ). Prior to implementation of P.L. 108-458 , personal interview waivers could have been granted only to children under age 16, persons 60 years or older, diplomats and representatives of international organizations, aliens who were renewing a visa they obtained within the prior 12 months, and individual cases for whom a waiver was warranted for national security or unusual circumstances.",
"Specifically, §214(b) of the INA generally presumes that all aliens seeking admission to the United States are coming to live permanently; as a result, most aliens seeking to qualify for a nonimmigrant visa must demonstrate that they are not coming to reside permanently. There are three nonimmigrant visas that might be considered provisional in that the visaholder may simultaneously seek LPR status. As a result, the law exempts nonimmigrants seeking any one of these three visas (i.e., H-1 professional workers, L intracompany transfers, and V accompanying family members) from the requirement that they prove they are not coming to live permanently.\nUSCIS and CBP play a role in determining eligibility for certain nonimmigrant visas, notably H workers and L intracompany transfers. Also, if a nonimmigrant in the United States wishes to change from one nonimmigrant category to another, such as from a tourist visa to a student visa, the alien must file a change of status application with the USCIS. If the alien leaves the United States while the change of status is pending, the alien is presumed to have relinquished the application.",
"DOS typically issues about 5 to 6 million nonimmigrant visas annually. Depending on the visa category and the country the alien is coming from, the nonimmigrant visa may be valid for several years and may permit multiple entries. The 15-year trend analysis for nonimmigrant visa determinations in Figure 2 reveals a different pattern than that in Figure 1 for LPRs. Foremost, FY2001 is noteworthy because more visas were issued in that year (7,588,778) and more applicants were ineligible for a visa in that year (2,276,611) on the basis of §214(b) presumed immigrants than in any other year during the 15-year period. In terms of the percentage of nonimmigrant visas issued, FY1996 was the top year with 80.0%. By FY2008, there were 6,603,073 nonimmigrant visas issued, yielding a percent of 75.8%, which was the first time the percentage surpassed FY1999.\nThe growth in nonimmigrant visas issued in the 1998-2001 period was largely attributable to the issuances of new border crossing cards to residents of Canada and Mexico and a periodic lifting of the ceilings on temporary worker visas. The largest percentages of nonimmigrant visa applicants that were presumed immigrants, excluded or otherwise disqualified were in FY2002 and FY2003, when just under 70% of nonimmigrant visas were approved. Of that increase visa denials, much of it came not from §212(a) exclusions, which some might have expected following the September 11 terrorist attacks, but from disqualifications under §221(g), meaning that the visa applications did not comply with the INA or regulations. Throughout the 15-year span, §214(b) presumption was the most common basis to reject a nonimmigrant visa applicant. Never rising above one-half of one percent over this period, §212(a) exclusions were too few to depict in Figure 2 .\nAlthough the §212(a) exclusions represent a small portion of nonimmigrant visa determinations, their number is not trivial. Because Figure 3 is scaled in thousands in comparison to Figure 2 , which is scaled in millions, the ups and downs in the §212(a) exclusion trends become apparent. In FY2008, §212(a) exclusions of nonimmigrant visas hit 35,403 and surpassed the prior high point of 34,750 in FY1998. For prospective LPRs, §212(a) exclusions peaked in FY1998 and FY1999, reaching over 89,000 in both years. The §212(a) exclusions of prospective LPRs fell from FY2000 through FY2003, then began climbing to reach 77,080 in FY2008.\nThe ebbs and flows depicted in Figure 3 challenge the commonly held assumption that the terrorist attacks of September 11, 2001, were the watershed moment for U.S. visa policy and the exclusion of foreign nationals. These 15-year trends also invite a more detailed study of the grounds for exclusion, as well as a more nuanced analysis of these trends over time.",
"All aliens seeking visas must undergo admissibility reviews performed by DOS consular officers abroad. These reviews are intended to ensure that aliens are not ineligible for visas or admission under the grounds for inadmissibility spelled out in the INA. Consular decisions are not appealable or reviewable; however, some of those seeking visas are able to bring additional information that may be used to overcome an initial refusal. As previously mentioned, these criteria are health-related grounds; criminal history; security and terrorist concerns; public charge (e.g., indigence); seeking to work without proper labor certification; illegal entrants and immigration law violations; ineligible for citizenship; and aliens previously removed. Each of these grounds is explained more fully following a brief legislative history of the provisions.",
"When the various immigration and citizenship laws were unified and codified as the Immigration and Nationality Act of 1952 (INA), there were 31 grounds for exclusion of aliens specified in §212(a) of the Act. The Immigration Amendments Act of 1990 streamlined and modernized all of the grounds for inadmissibility into nine broad categories. These nine categories, as amended, remain the basis for denying visas and excluding the entry of foreign nationals into the United States.\nAs a response to the 1993 World Trade Center bombing, Congress revised the national security grounds for inadmissibility in the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996 (Division C of P.L. 104-208 ) and the Antiterrorism and Effective Death Penalty Act ( P.L. 104-132 ). IIRIRA ramped up the consequences for foreign nationals attempting to return to the United States if they had prior orders of removal or had been illegally present in the United States. IIRIRA also revised the criminal grounds for exclusion. Along with the IIRIRA, Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ) strengthened the enforceability of the inadmissibility provisions aimed at indigent or low-income people.\nAfter the terrorist attacks on September 11, 2001, Congress enacted the Enhanced Border Security and Visa Entry Reform Act of 2002 ( P.L. 107-173 ), which aimed to improve the visa issuance process abroad, as well as immigration inspections at the border. It expressly required that, beginning in October 2004, all newly issued visas have biometric identifiers. In addition to increasing consular officers' access to electronic information needed for alien screening, it expanded the training requirements for consular officers who issue visas. Congress passed the REAL ID Act ( P.L. 109-13 , Division B) in 2005, which expanded the terror-related grounds for inadmissiblity and deportability, and amended the definitions of \"terrorist organization\" and \"engage in terrorist activity\" used by the INA.\nOver the past two years, Congress has incrementally revised the grounds for inadmissibility. Two laws enacted in the 110 th Congress altered longstanding policies on exclusion of aliens due to membership in organizations deemed terrorist. The 110 th Congress also revisited the health-related grounds of inadmissibility for those who were diagnosed with HIV/AIDS. Questions about the public charge ground of inadmissibility arose in the context of Medicaid and the state Children's Health Insurance Program (CHIP) in the 111 th Congress.",
"The statutory language permitting the exclusion of aliens on the basis of health or communicable diseases dates back to the Immigration Act of 1891, when \"persons suffering from a loathsome or a dangerous contagious disease\" were added to the grounds of exclusion. Since the Immigration Amendments of 1990, the INA authorizes the exclusion of any alien \"who is determined (in accordance with regulations prescribed by the Secretary of Health and Human Services) to have a communicable disease of public health significance.\" While the INA does not define \"communicable disease of public health significance\" directly, it does task the Secretary of Health and Human Services (HHS) to define the term by regulation. The relevant regulation's definition expressly lists eight diseases as a \"communicable disease of public health significance\": chancroid, gonorrhea, granuloma inguinale, infectious leprosy, lymphogranuloma venereum, active tuberculosis, and infectious syphilis. However, this list is neither exclusive nor exhaustive, because the regulatory definition also includes other diseases incorporated by reference to a Presidential executive order. The relevant executive order lists cholera; diphtheria; infectious tuberculosis; plague; smallpox; yellow fever; viral hemorrhagic fevers (Lassa, Marburg, Ebola, Crimean-Congo, South American, and others not yet isolated or named); severe acute respiratory syndrome (SARS); and \"[i]nfluenza caused by novel or reemergent influenza viruses that are causing, or have the potential to cause, a pandemic.\"\nFurthermore, the regulatory definition also includes communicable diseases that may pose a \"public health emergency of international concern.\" A disease rises to this level, and thus qualifies as a \"communicable disease of public significance,\" if the Centers for Disease Control (CDC) Director, after evaluating (1) the seriousness of the disease, (2) whether the emergence of the disease was unusual or unexpected, (3) the risk of the spread of the disease in the United States, and (4) the transmissibility and virulence of the disease, determines that \"a threat exists for [the disease's] importation into the United States\" and the disease \"may potentially affect the health of the American public.\"\nForeign nationals who are applying for visas at U.S. consulates are tested by in-country physicians who have been designated by the State Department. The physicians enter into written agreements with the consular posts to perform the examinations according to HHS regulations and guidance. A medical examination is required of all foreign nationals seeking to come as legal permanent residents and refugees, and may be required of any alien seeking a nonimmigrant visa or admission at the port of entry. Foreign nationals are generally tested at their own expense, though the costs for refugees are covered by the U.S. government. If there is reason to suspect an infection, applicants for temporary admission as nonimmigrants (such as tourists, business travelers, temporary workers, and foreign students) are tested at the discretion of the consular officer or admitting CBP inspector. Children under 15 years of age are required to have a general physical examination and provide proof of immunizations, but they are not required to have the chest x-rays, blood tests, or HIV anti-body test.\nThe Secretary of Homeland Security has discretionary authority to waive some of the health-related grounds for inadmissibility under certain circumstances. For example, foreign nationals infected with a communicable disease of public health significance can still be issued a waiver and admitted into the country if they are the spouse, unmarried son, unmarried daughter, minor unmarried lawfully adopted child, father or mother of a U.S. citizen, alien lawfully admitted for permanent residence, or an alien issued an immigrant visa. Waivers are also available, under certain circumstances, for those who are inadmissible because they lack proper vaccination and for those who have a physical or mental disorder. The Secretary may also waive the application of any of the health-related grounds for inadmissibility if she finds it in \"the national interest\" to do so.",
"Criminal offenses in the context of immigration law cover violations of federal, state, and, in some cases, foreign criminal law. Most crimes affecting immigration status fall under a broad category of crimes defined in the INA, notably those involving moral turpitude or aggravated felonies. It does not cover violations of the INA that are not defined as crimes, such as working without employment authorization, overstaying a nonimmigrant visa, or unauthorized presence in the United States.\nCriminal history as a grounds for exclusion under the INA applies to the following foreign nationals:\nThose who have been convicted of, admit having committed, or admit to acts comprising essential elements of a crime involving moral turpitude. Those who have been convicted of or admit having committed a federal, state, or foreign law violation relating to a controlled substance. Based on the knowledge or reasonable belief of a consular officer or immigration officer, either (1) an alien who is or has been an illicit trafficker in a controlled substance, or knowingly is or has been an aider or abettor of a controlled substance, or (2) an alien who is the spouse, son, or daughter of an alien as described above and who received any financial or other benefit from the illicit activity and who reasonably should have known that the financial or other benefit resulted from illicit activity. Those who have been convicted of two or more offenses (other than purely political offenses) for which the aggregate sentence imposed was at least five years. Those who are coming to the United States to engage in (or within 10 years of applying for admission have engaged in) prostitution (including procurement and receipt of proceeds) or are coming to the United States to engage in another form of unlawful commercialized vice. Those who have committed a serious crime for which diplomatic immunity or other form of immunity was claimed. Those who have committed or have conspired to commit a human trafficking offense or who are known or reasonably believed to have aided or otherwise furthered severe forms of human trafficking, or are known or reasonably believed to be the adult child or spouse of such an alien and knowingly benefitted from the proceeds of illicit activity while an adult in the past five years.\nAlso, the INA gives authority to consular officers or immigration officers, based on their knowledge or reasonable belief, to exclude a foreign national who they think is engaging in, or seeks to enter the United States to engage in, a federal offense of money laundering, or who is or has been a knowing aider, abettor, assister, conspirator, or colluder with others in such an offense.\nThere is authority in §212(h) of the INA to waive certain criminal grounds of inadmissibility, if certain criteria are met. No waiver is permitted for aliens who have been convicted of murder or criminal acts involving torture, as well as attempts or conspiracies to commit murder or a criminal act involving torture.",
"A foreign national may be deemed inadmissible if he or she has engaged in or intends to engage in any activity a purpose of which is the opposition to, or the control or overthrow of, the government of the United States by force, violence, or other unlawful means. If the Secretary of State has reasonable grounds to believe an alien's entry, presence, or activities in the United States would have potentially serious adverse foreign policy consequences for the United States, that alien may be deemed inadmissible or deportable. However, an alien generally may not be deported or denied entry into the United States on account of the alien's past, current, or expected beliefs, statements, or associations, if such beliefs, statements, or associations would be lawful within the United States, unless the Secretary of State personally determines that the alien's admission would compromise a compelling United States foreign policy interest. Additionally, aliens who are foreign officials or candidates cannot be denied entry or deported solely because of past, current, or expected beliefs, statements, or associations that would be lawful in the United States.\nEngaging in specified, terror-related activity has direct consequences concerning an alien's ability to lawfully enter or remain in the United States. Since 1990, the INA has expressly provided that aliens who have engaged or intend to engage in terrorist activity either as an individual or as a member of a terrorist organization are inadmissible and deportable. Over the years, the INA has been amended to lower the threshold for how substantial, apparent, and immediate an alien's support for a terrorist activity must be for the alien to be rendered inadmissible, removable, and ineligible for most forms of relief from removal.\nThe Secretary of State or Secretary of Homeland Security, in consultation with the other and the Attorney General, has the general authority to waive INA §212(a)(3)(B) concerning terrorist activity. However, §212(a)(3) of the INA may not be waived for aliens who are engaged or are likely to engage in terrorist activity after entering the United States; voluntarily and knowingly engage or have engaged in terrorist activity on behalf of a designated terrorist organization; voluntarily and knowingly have received military training from a designated organization; are members or representatives of designated terrorist organizations; or voluntarily and knowingly endorse or espouse the terrorist activity of a designated organization, or convince others to support the group's terrorist activities.",
"Opposition to the entry of foreign paupers and aliens \"likely at any time to become a public charge\"—language found in the INA today—dates from colonial times. Over time, a policy developed in which applicants for immigrant status can overcome the public charge ground for exclusion based on their own funds, prearranged or prospective employment, or an affidavit of support from someone in the United States. For most prospective immigrants, this exclusion is implemented by provisions on deeming sponsors' income and binding affidavits of support.\nThe affidavit of support is a legally binding contract that requires the sponsor to ensure that the new immigrant will not become a public charge and makes the sponsor financially responsible for the new immigrant, as codified in INA §213A. Sponsors must demonstrate the ability to maintain an annual income of at least 125% of the federal poverty line (100% for sponsors who are on active duty in U.S. Armed Forces), or share liability with one or more joint sponsors, each of whom must independently meet the income requirement. Current law also directed the federal government to include \"appropriate information\" regarding affidavits of support in the Systematic Alien Verification for Entitlements (SAVE) system. Congress has required the establishment of an automated record of the sponsors' social security numbers (SSN) in order to implement this policy.\nEmployment-based LPRs are rarely required to have an affidavit of support because they meet the public charge ground by means of the job offer. Employment-based LPRs only need an affidavit of support if the prospective employer is a relative. All family-based immigrants must have binding affidavits of support signed by U.S. sponsors in order to show that they will not become public charges. The INA waives the public charge ground for refugees and asylees and for other special cases.",
"The INA bars the admission of any immigrant who seeks to enter the United States to perform skilled or unskilled labor, unless the Secretary of Labor provides a certification to the Secretary of State and the Attorney General. Specifically, the Secretary of Labor must determine that there are not sufficient U.S. workers who are able, willing, qualified, and available at the time of the alien's application for a visa and admission to the United States and at the place where the alien is to perform such skilled or unskilled labor. The Secretary of Labor must further certify that the employment of the alien will not adversely affect the wages and working conditions of similarly employed workers in the United States.\nThe foreign labor certification program in the U.S. Department of Labor (DOL) is responsible for ensuring that foreign workers do not displace or adversely affect working conditions of U.S. workers. Under current law, DOL adjudicates labor certification applications (LCAs) for permanent employment-based immigrants, temporary agricultural workers, and temporary nonagricultural workers, as well as the streamlined LCA known as labor attestations for temporary professional workers.\nThe labor market protections of §212(a)(5) do not apply to most foreign nationals seeking to immigrate to the United States. Only employers of certain employment-based LPRs and certain temporary workers seeking H visas are required to be certified by the DOL. LPRs entering as priority workers who are persons of extraordinary ability in the arts, sciences, education, business, or athletics; outstanding professors and researchers; and certain multinational executives and managers are exempt from labor certification. A waiver is available for those members of the professions holding advanced degrees or persons of exceptional ability who are deemed to be \"in the national interest.\"\nThere are also specific provisions that bar the admission of unqualified physicians and uncertified health care workers.",
"Any foreign national who is present in the United States without being legally admitted or paroled, or who arrives in the United States at any time or place other than as designated, is inadmissible. There are exceptions to this ground for certain battered spouses and children. As currently constructed, this §212(a) basis for exclusion is relatively new and dates back to the IIRIRA of 1996.\nForeign nationals who \"without reasonable cause\" fail to attend their removal proceedings or remain in attendance at a hearing are inadmissible for a period of five years following their subsequent departure. If the alien can establish a reasonable cause for the failure to attend the removal proceedings, he or she might not be deemed inadmissible; however, the burden of proof in demonstrating reasonable cause is on the alien.\nSince the 1952 act, any foreign national who has, by fraud or willful misrepresentation of a material fact, sought to procure or has procured either admission into the United States or a benefit under the INA is inadmissible. An alien who falsely represents himself or herself to be a U.S. citizen for any purpose or benefit under the INA or any other federal or state law is also inadmissible for life, except under narrow circumstances. There is no immigrant waiver available for inadmissibility on the ground of knowingly making false citizenship claims.",
"Although the ground \"ineligible for citizenship\" suggests a range of criteria linked to the naturalization provisions in Title III of the INA, its actual effect is to bar the entry of individuals who deserted their military service or evaded the military draft. It grows out of applications for exemption or discharge from military training or service based on alienage. Since World War I, Congress has enacted various statutes exempting certain aliens within the United States from military service upon the condition that those taking advantage of such relief would thereafter be ineligible for citizenship. If a foreign national takes advantage of this exemption from military service, he or she becomes excludable. There are no waivers from the military-related exclusion grounds.",
"Foreign nationals who have been deported (i.e., removed) from the United States are barred from re-entry for periods of time dependent on the reasons for the removal. The specific instances in which foreign nationals are deported from the United States are found in §237 of the INA. The procedures for removal are detailed in INA §240, and the procedures for expedited removal are found in INA §235. There are also provisions for the \"expedited removal\" of removable aliens serving criminal sentences in INA §238. In removal proceedings an immigration judge from the Department of Justice's Executive Office for Immigration Review (EOIR) determines whether an alien is admissible or removable. A final order of removal is not necessary to make such an inadmissibility determination, though a final removal order is also a specific ground for inadmissibility.\nThe INA specifically states that any alien who has been ordered removed (either under §235(b)(1) pertaining to expedited removal or at the end of general removal proceedings under §240 initiated upon the alien's arrival in the United States) and who again seeks admission within 5 years of the date of such removal (or within 20 years in the case of a second or subsequent removal or at any time in the case of an alien convicted of an aggravated felony) is inadmissible. The INA also specifies that any alien who was ordered removed under §240 or any other provision of law, or departed the United States while an order of removal was outstanding, and who seeks admission within 10 years of the date of such alien's departure or removal (or within 20 years of such date in the case of a second or subsequent removal or at any time in the case of an alien convicted of an aggravated felony) is inadmissible.\nAs a result of the enactment of IIRIRA in 1996, an alien who is unlawfully present in the United States for longer than 180 days but less than a year is inadmissible for three years after the alien's departure. An alien who is unlawfully present for at least a year is inadmissible for 10 years after the alien's departure. Not counted under these rules are periods during which the alien (1) is a minor, (2) has a pending claim for asylum (unless the alien is working without authorization), (3) is a battered wife or child, or (4) qualifies under family unity provisions of the Immigration Act of 1990 as a long-term (generally pre-1989) spouse or unmarried child of an alien who legalized under the Immigration Reform and Control Act of 1986. Also not counted is a period of up to 120 days in the case of a previously paroled or lawfully admitted alien whose authorized stay has expired but who before expiration of authorized status filed a nonfrivolous application for a change or extension of status (unless the alien works without authorization). Additionally, the INA gives the Attorney General authority to waive inadmissibility for a spouse or a son or daughter of a citizen or permanent resident if refusal of admission would result in extreme hardship to the citizen or permanent resident.\nThe INA makes indefinitely inadmissible an alien who (1) has been ordered removed or has been unlawfully present for an aggregate period of longer than a year and (2) enters or attempts to reenter without being formally admitted. There is no express exception under this rule for acts occurring prior to April 1997. The sole exception to this bar is a discretionary waiver by the Attorney General for an alien who has been outside the United States for at least 10 years.\nThe IIRIRA increases from one year to five years the period during which an alien who was previously removed on arrival is inadmissible. The INA sets a 20-year period of inadmissibility for aliens who have been removed on arrival more than once. Separately, the inadmissibility period for aliens ordered removed under other provisions (i.e., ordered removed after arrival other than under expedited removal provisions) is increased to 10 years, with a 20-year period set for aliens removed more than once and an indefinite period of inadmissibility set for aliens who have been convicted of an aggravated felony. The INA gives the Attorney General authority to waive the foregoing provisions.\nThe INA also gives the Attorney General the authority to grants exceptions to the bars on aliens previously removed in certain instances.",
"To better understand these grounds for inadmissibility, CRS has analyzed DOS data on all visa determinations from two perspectives. One approach analyzes all the grounds of inadmissibility for four selected years : FY1996, FY2000, FY2004, and FY2008. The other approach analyzes the top grounds for exclusion over a 15-year period. As in the discussions above, the immigrant determinations are treated separately from the nonimmigrant determinations. All of these analyses are based on the initial decision and do not take into account initial refusals that might have been overcome with subsequent information.",
"As Figure 4 makes clear, most LPR petitioners who were excluded on §212(a) grounds in FY1996 and FY2000 were rejected because the DOS determined that the aliens were inadmissible as likely public charges. In FY2004, the proportion of public charge exclusions had fallen, but remained the top basis for denial. The lack of proper labor certification was another leading ground for exclusion in FY1996, FY2000, FY2004, and FY2008. By FY2008, however, illegal presence and previous orders of removal from the United States had become the leading ground. What Figure 4 does not depict is the considerable shifting of trend lines in the late 1990s as well as the late 2000s.\nThe trends in public charge exclusions dominate the 15-year trend analysis, as Figure 5 illustrates. The importance of public charge as a grounds of inadmissibility is evidenced in the fact that over one-half (53.3%) of all 790,685 exclusions over this 15-year period were on this basis, suggesting an effect of the changes in 1996 to the INA provisions on affidavits of support. Labor market protections and illegal presence and prior removals came in distant second and third, with 18.5% and 14.8% of exclusions, respectively.\nThe proportion of public charge exclusions had fallen by FY2004, but remained the top basis for denial. By FY2008, however, illegal presence and previous orders of removal from the United States was the leading ground, and public charge was less than 10% of the §212(a) exclusions.",
"Refusals of nonimmigrant petitions presented have a somewhat different pattern than that of immigrant petitions. Violations of immigration law was the leading category in FY1996, FY2000, and FY2004, but fell to the second ranking in FY2008. Similar to the analysis of immigrant data, illegal presence and prior removal became the leading ground for nonimmigrant visas in FY2008. Over the four points in time, the criminal grounds grew as a more common ground for refusal, and represented a larger portion of exclusions among nonimmigrant petitioners than it was for immigrant petitioners.\nViolations of immigration law was the leading basis for §212(a) exclusions over the 15-year period, making up 47.7% of all exclusions. It was the top basis from FY1994 through FY2006, but fell to the second ranking by FY2008 (31.0%). Illegal presence and prior removal became the leading ground in FY2007 (38.7%) and FY2008 (33.2%). The criminal grounds have grown as more common basis for §212(a) exclusions, and represented a much larger portion of exclusions among nonimmigrant petitioners (29.8% in FY2008) than among immigrant petitioners (2.8% in FY2008).",
"The rise and fall of the public charge ground is the most striking feature of the 15-year trend analysis. Foremost, many applicants filed affidavits of support that were insufficient in the first few years after IIRIRA went into effect. As the legal community and the prospective LPRs gained a better understanding of the requirement that the affidavit of support must demonstrate the ability to maintain an annual income of at least 125% of the federal poverty line, they may have submitted more complete financial data to support the affidavit. The statutory change in IIRIRA that made the affidavits of support legally binding may have changed behavior over time as well. Potential sponsors may have become less likely to petition for family members if they lacked adequate resources to support them.\nThe steady rise in exclusions based on past illegal presence and prior removal is likewise largely due to the statutory change in IIRIRA. Since 1996, foreign nationals who were unlawfully present in the United States for longer than 180 days but less than a year are inadmissible for three years after their departure. Foreign nationals who were unlawfully present for at least a year are inadmissible for 10 years after their departure. When these changes were coupled with database improvements and access to databases across agencies, consular officers became better able to identify visa applicants who are inadmissible on these grounds. The improvements in immigration-related databases as well as the expansion of access to law enforcement databases offer similar explanations for the uptick in criminal grounds of exclusion.\nFinally, the increase in immigrant exclusions based upon labor market protections may reflect the growth in demand for foreign workers and the competition for these scarce visas. As of November 1, 2009, there were 3,499,964 employment-based LPRs visa applications pending.\nAppendix A. Consular Databases for Screening\nConsular officers use the Consular Consolidated Database (CCD) to screen visa applicants. Records of all visa applications are now automated in the CCD, with some records dating back to the mid-1990s. Since February 2001, the CCD has stored photographs of all visa applicants in electronic form, and more recently the CCD has begun storing 10-finger scans. In addition to indicating the outcome of any prior visa application of the alien in the CCD and comments by consular officers, the system links with other databases to flag problems that may have an impact on the issuance of the visa. These databases linked with CCD include DHS's Automated Biometric Identification System (IDENT) and FBI's Integrated Automated Fingerprint Identification System (IAFIS) results, and supporting documents.\nThe CCD also links to the DHS's Traveler Enforcement Compliance System (TECS) for use by CBP officers at ports of entry. A limited number of consular officers have recently been granted access to DHS'Arrival Departure Information System (ADIS). ADIS tracks foreign nationals' entries into and most exits out of the United States. DOS credits access to ADIS with its ability to identify previously undetected cases of illegal overstays in the United States.\nFor some years, consular officers have been required to check the background of all aliens in the \"lookout\" databases, specifically the Consular Lookout and Support System (CLASS) database, which contained over 26 million records in 2009. According to Janice Jacobs, Assistant Secretary of State for Consular Affairs, the CLASS database grew by approximately 400% after September 11, 2001.\nThis increase in the quantity and quality of CLASS records is largely the result of improved data sharing between the Department of State and the law enforcement and intelligence communities. In 2001, only 25 percent of records in CLASS came from other government agencies. Now, almost 70 percent of CLASS records come from other agencies.\nThe Security Advisory Opinion (SAO) system requires a consular officer abroad to refer selected visa cases for greater review by intelligence and law enforcement agencies. The current interagency procedures for alerting officials about foreign nationals who may be suspected terrorists, referred to in State Department nomenclature as Visa Viper, began after the 1993 World Trade Center bombing and were institutionalized by enactment of the Enhanced Border Security and Visa Entry Reform Act of 2002. If consular officials receive information about a foreign national that causes concern, they send a Visa Viper cable (which is a dedicated and secure communication) to the NCTC. In 2009, consular posts sent approximately 3,000 Visa Viper communications to NCTC.\nIn a similar set of SAO procedures, consular officers send suspect names, identified by law enforcement and intelligence information (originally certain visa applicants from 26 predominantly Muslim countries), to the Federal Bureau of Investigation (FBI) for a name check program called Visa Condor. There is also the \"Terrorist Exclusion List\" (TEL), which lists organizations designated as terrorist-supporting and includes the names of individuals associated with these organizations.\nAppendix B. Exceptions to the Visa Requirements\nNot all aliens are required to have a visa to visit the United States. Indeed, most visitors enter the United States without nonimmigrant visas through the Visa Waiver Program (VWP). This provision of the INA allows the visa documentary requirements to be waived for aliens coming as visitors from 35 countries (e.g., Australia, France, Germany, Italy, Japan, New Zealand, and Switzerland). Thus, visitors from these countries are not required to obtain a visa from a U.S. consulate abroad. Since aliens entering through VWP do not have visas, CBP inspectors at the port of entry are responsible for performing the background checks and making the determination of whether the alien is admissible.\nP.L. 110-53 created a waiver allowing the Secretary of Homeland Security (Secretary) to admit countries with refusal rates under 10% to the VWP. This waiver authority became available in October 2008, when the Secretary certified that (1) an air exit system was in place that verifies the departure of not less than 97% of foreign nationals that exit through U.S. airports, and (2) the electronic system for travel authorization (ESTA) was operational. The ESTA is a system through which each foreign national electronically provides, in advance of travel, the biographical information necessary to check the relevant databases and \"watch lists\" to see whether the foreign national poses a law enforcement or security risk. As in all VWP cases, CBP inspectors at the port of entry perform the initial admissibility screening.\nIn addition to the Visa Waiver Program, a number of exceptions to documentary requirements for a visa have been established by law, treaty, or regulation. The INA also authorizes the Attorney General and the Secretary of State acting jointly to waive the documentary requirements of INA §212(a)(7)(B)(i), including the passport requirement, on the basis of unforeseen emergency in individual cases. In 2003, the Administration scaled back the circumstances in which the visa and passport requirements are waived. In 2004, Congress enacted a provision, now known as the Western Hemisphere Travel Initiative, in 7209 of P.L. 108-458 , that affected all citizens and categories of individuals for whom documentation requirements had previously been waived under 212(d)(4)(B) of INA. The Secretary of Homeland Security, in consultation with the Secretary of State, was required to develop and implement a plan as expeditiously as possible to require a passport or other document, or combination of documents, \"deemed by the Secretary of Homeland Security to be sufficient to denote identity and citizenship,\" for all travelers entering the United States. The law expressly states in 7209(c)(2) that \"the President may not exercise discretion under 215(b) of such Act to waive documentary requirements for U.S. citizens departing from or entering, or attempting to depart from or enter, the United States except—(A) where the Secretary of Homeland Security determines that the alternative documentation that is the basis for the waiver of the documentary requirement is sufficient to denote identity and citizenship; (B) in the case of an unforeseen emergency in individual cases; or (C) in the case of humanitarian or national interest reasons in individual cases.\""
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{
"question": [
"How might foreign nationals who are not already legally residing in the United States be admitted?",
"What are the titles for these various immigration statuses?",
"What steps must they take to determine whether they are eligible for admission?",
"Who is responsible for proving the eligibility for a foreign national to receive a visa?",
"What other criteria might rule out a foreign national from their admission?",
"What examples of there are these grounds for being inadmissible?",
"What was the most common reason for LPR petitioners to be excluded?",
"How did the proportion of public charge exclusions change by FY2004?",
"What was another leading ground for exclusion from FY1994 through FY2004?",
"What was the leading ground by FY2008?",
"What was observed regarding the pattern of immigrant petitions?",
"What was the leading category from FY1994 through FY2006?",
"What became the leading ground in FY2008?",
"What has become a more common ground for refusal?"
],
"summary": [
"Foreign nationals not already legally residing in the United States who wish to come to the United States generally must obtain a visa to be admitted.",
"Those admitted on a permanent basis are known as immigrants or legal permanent residents (LPRs), while those admitted on a temporary basis are known as nonimmigrants (such as tourists, foreign students, diplomats, temporary agricultural workers, and exchange visitors).",
"They must first meet a set of criteria specified in the Immigration and Nationality Act (INA) that determine whether they are eligible for admission.",
"The burden of proof is on the foreign national to establish eligibility for a visa.",
"Conversely, foreign nationals also must not be deemed inadmissible according to other specified grounds in §212(a) of the INA.",
"These §212(a) inadmissibility criteria are health-related grounds; criminal history; security and terrorist concerns; public charge (e.g., indigence); seeking to work without proper labor certification; illegal entrants and immigration law violations; ineligible for citizenship; and aliens illegally present or previously removed.",
"Most LPR petitioners who were excluded on §212(a) grounds from FY1994 through FY2004 were rejected because the Department of State (DOS) determined that the aliens were inadmissible as likely public charges.",
"By FY2004, the proportion of public charge exclusions had fallen but remained the top basis for denial.",
"The lack of proper labor certification was another leading ground for exclusion from FY1994 through FY2004.",
"By FY2008, however, illegal presence and previous orders of removal from the United States was the leading ground.",
"Exclusions of nonimmigrant petitions have a somewhat different pattern than that of immigrant petitions.",
"Violations of immigration law were the leading category from FY1994 through FY2006, but fell to the second ranking by FY2008.",
"Illegal presence and prior removal became the leading ground in FY2008.",
"Over time, criminal activity has become a more common ground for refusal, and has represented a larger portion of exclusions among nonimmigrant petitioners than it was for immigrant petitioners."
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CRS_RL32306
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{
"title": [
"",
"Most Recent Developments",
"Introduction",
"FY2004 Budget and Appropriations",
"FY2005 Budget and Appropriations",
"Current Overview",
"Earlier Action on Appropriations",
"Major Issues",
"Status of Bill",
"Major Funding Trends",
"Title I: Department of the Interior",
"Bureau of Land Management",
"Management of Lands and Resources",
"Wildland Fire Management",
"Construction",
"Land Acquisition",
"Oregon and California Grant Lands",
"Fish and Wildlife Service",
"Endangered Species Funding",
"National Wildlife Refuge System and Law Enforcement",
"Land Acquisition",
"Yukon Flats Land Exchange",
"Wildlife Refuge Fund",
"Multinational Species Conservation Fund (MSCF)",
"State and Tribal Wildlife Grants",
"Non-native Migratory Birds",
"National Park Service",
"Operation of the National Park System",
"United States Park Police (USPP)",
"National Recreation and Preservation",
"Urban Park and Recreation Recovery (UPARR)",
"Construction and Maintenance",
"Land Acquisition and State Assistance",
"Recreation Fee Program",
"Historic Preservation",
"U.S. Geological Survey",
"Enterprise Information",
"National Mapping Program",
"Geologic Hazards, Resources, and Processes",
"Water Resources Investigations",
"Biological Research",
"Science Support and Facilities",
"Minerals Management Service",
"Budget and Appropriations",
"Oil and Gas Leasing Offshore",
"Office of Surface Mining Reclamation and Enforcement",
"Bureau of Indian Affairs",
"BIA Reorganization",
"BIA School System",
"Departmental Offices",
"Insular Affairs",
"Payments in Lieu of Taxes Program (PILT)",
"Office of Special Trustee for American Indians",
"Reorganization",
"Historical Accounting",
"Litigation",
"National Indian Gaming Commission",
"Title II: Related Agencies and Programs",
"Department of Agriculture: Forest Service",
"Legislative Provisions",
"Forest Fires and Forest Health",
"State and Private Forestry",
"Infrastructure",
"Land Acquisition",
"Other Accounts",
"Department of Energy",
"Fossil Energy Research, Development, and Demonstration",
"Strategic Petroleum Reserve",
"Naval Petroleum Reserves",
"Energy Conservation",
"Department of Health and Human Services: Indian Health Service",
"Health Services",
"Facilities",
"Diabetes",
"Office of Navajo and Hopi Indian Relocation",
"Smithsonian Institution",
"FY2005 Budget",
"FY2005 House-Passed Appropriations",
"FY2005 Senate Committee-Reported Appropriations",
"FY2005 Enacted Appropriations",
"Facilities Capital",
"National Museum of the American Indian (NMAI)",
"Smithsonian Institution Center for Materials Research and Education (SCMRE)",
"National Museum of African American History and Culture",
"National Zoo",
"Trust Funds",
"National Endowment for the Arts and National Endowment for the Humanities",
"NEA",
"NEH",
"Office of Museum Services",
"Cross-Cutting Topics",
"The Land and Water Conservation Fund (LWCF)",
"FY2005 Appropriations",
"Conservation Spending Category",
"Everglades Restoration",
"Overview of Appropriations",
"FY2005 Appropriations to DOI",
"Concerns Over Phosphorus Mitigation",
"Competitive Sourcing of Government Jobs",
"Missouri River Management",
"For Additional Reading",
"Title I: Department of the Interior",
"Land Management Agencies Generally",
"Title II: Related Agencies",
"Selected Websites",
"Title I: Department of the Interior16",
"Title II: Related Agencies",
"Departments",
"Agencies"
],
"paragraphs": [
"",
"H.R. 4568 , the Consolidated Appropriations Act for FY2005, became the vehicle for appropriations for Interior and related agencies. The measure was enacted into law on December 8, 2004 ( P.L. 108-447 ). The law contains a total of $20.09 billion for Interior and related agencies, including two across-the-board rescissions in the law.",
"The annual Interior and related agencies appropriations bill includes funding for agencies and programs in four separate federal departments, as well as numerous related agencies and bureaus. The bill includes funding for the Department of the Interior (DOI), except for the Bureau of Reclamation (funded in Energy and Water Development Appropriations laws), and for some agencies or programs in three other departments—Agriculture, Energy, and Health and Human Services. Title I of the bill includes agencies within the Department of the Interior which manage land and other natural resource or regulatory programs, the Bureau of Indian Affairs, and insular areas. Title II of the bill includes the Forest Service of the Department of Agriculture; several activities within the Department of Energy, including research and development programs, the Naval Petroleum and Oil Shale Reserves, and the Strategic Petroleum Reserve; and the Indian Health Service in the Department of Health and Human Services. In addition, Title II includes a variety of related agencies, such as the Smithsonian Institution, National Gallery of Art, John F. Kennedy Center for the Performing Arts, the National Endowment for the Arts, the National Endowment for the Humanities, and the Holocaust Memorial Council.\nIn this report, appropriations levels enacted for FY2005 reflect two across-the-board rescissions contained in P.L. 108-447 . In general, the term appropriations represents total funds available, including regular annual and supplemental appropriations, as well as rescissions, transfers, and deferrals, but excludes permanent budget authorities. Increases and decreases generally are calculated on comparisons between the funding levels appropriated for FY2004, requested by the President for FY2005, and recommended and appropriated by Congress for FY2005. The House Committee on Appropriations is the primary source of the funding figures used throughout the report. Other sources of information include the Senate Committee on Appropriations, agency budget justifications, and the Congressional Record . In the tables throughout this report, some columns of funding figures do not add to the precise totals provided due to rounding. Finally, some of the DOI websites provided throughout the report and listed at the end have not been consistently operational due to a court order regarding Indian trust funds litigation. Nevertheless, they are included herein for reference when the websites are operational.",
"For FY2004, Congress enacted a total appropriation of $20.51 billion. This total was higher than the FY2003 funding level ($20.11 billion). It reflects an across-the-board cut of 0.646% in the FY2004 Interior and Related Agencies Appropriations Act ( P.L. 108-108 ) and an additional across-the-board cut of 0.590% in the Consolidated Appropriations Act of 2004 ( P.L. 108-199 ). It also reflects a supplemental appropriation of $500.0 million for urgent wildland fire suppression.\nMany controversial issues arose during consideration of the FY2004 Interior and related agencies appropriations bill. Key funding issues included the appropriate levels of funding for wildland firefighting and land acquisition. In other controversial areas, the FY2004 law (1) continued the automatic renewal of expiring grazing permits and leases for FY2004—FY2008; (2) extended the Recreational Fee Demonstration Program; (3) modified procedures for seeking judicial review of timber sales in Alaska, primarily in the Tongass National Forest; (4) capped funds for competitive sourcing efforts of agencies and required documentation on the initiative; and (5) led to a stay of a court decision requiring an accounting of Indian trust funds and trust asset transactions since 1887. However, the FY2004 law dropped language on other contentious issues, including barring funds from being used (1) to implement changes to BLM regulations on Recordable Disclaimers of Interest in Land, (2) for the Klamath Fishery Management Council, and (3) for Outer Continental Shelf leasing activities in the North Aleutian Basin planning area, which includes Bristol Bay, Alaska. For further information on these issues and FY2004 funding generally, see CRS Report RL31806, Appropriations for FY2004: Interior and Related Agencies , by [author name scrubbed] and [author name scrubbed].",
"",
"Annual appropriations for Interior and related agencies were included in P.L. 108-447 , the Consolidated Appropriations Act for FY2005. The law contains a total of $20.09 billion for Interior and related agencies, including two across-the-board rescissions in the law, of 0.594% and 0.80%.\nThe law provides $2.97 billion for wildfire protection for FY2005, under the National Fire Plan. That plan comprises the Forest Service wildland fire program and firefighting on DOI lands. The total includes $493.1 million for emergency firefighting if certain conditions are met. The law also provides $255.5 million for the Land and Water Conservation Fund for federal land acquisition ($164.3 million) and grants to states ($91.2 million).",
"The President's FY2005 budget request for Interior and related agencies totaled $19.69 billion. The House and Senate Appropriations Subcommittees on the Interior held a series of hearings on the FY2005 budget requests. Subsequently, on June 3, 2004, the House Subcommittee on Interior appropriations approved the draft Interior appropriations bill and on June 9, 2004, the House Committee on Appropriations marked up and ordered the bill reported with amendments. The Committee bill was reported on June 15, 2004 ( H.Rept. 108-542 ). The bill contained a total of $20.03 billion for FY2005, including $500 million for emergency wildland firefighting. (The bill also contained $500 million for FY2004 for emergency wildland firefighting, which was enacted subsequently in other legislation.) A full committee amendment to the bill removed $227.0 million for the Weatherization Assistance Program with the expectation that the funds would be added to the appropriations bill for Labor, HHS, Education, and Related Agencies. H.R. 4568 , the Interior and Related Agencies Appropriations bill for FY2005, was passed by the House (334-86) on June 17, 2004. The bill also contained $20.03 billion.\nH.R. 4568 was referred to the Senate Committee on Appropriations on June 21, 2004. However, the Senate Appropriations Subcommittee on the Interior approved its own bill on June 23, 2004, reportedly containing $19.76 billion plus $1.0 billion for emergency firefighting for FY2004 and FY2005 if needed. On September 14, 2004, the Senate Committee on Appropriations reported its bill ( S. 2804 , S.Rept. 108-341 ) with $20.26 billion, including $500 million in supplemental fire funds. The Committee rejected a contentious amendment to strike language in the bill to change a trigger that requires the U.S. Army Corps of Engineers to implement drought conservation measures on the Missouri River. The Committee also voted to reauthorize collection of the fee for the Abandoned Mine Land Fund through May 31, 2005.\nBoth the House-passed and Senate Committee-reported bills reflected an increase over the President's FY2005 request ($19.69 billion), but a decrease from the FY2004 enacted level ($20.51 billion). The FY2004 enacted level reflected $500 million in supplemental funding for emergency firefighting. Similarly, both the House-passed and Senate Committee-reported bills included $500 million for emergency firefighting for FY2005; emergency funds would become available if certain conditions are met. (The House bill also contained $500 million for emergency firefighting for FY2004, included prior to the enactment of supplemental funds for this purpose in P.L. 108-287 ).\nThe FY2005 House-passed bill contained higher funding than the Senate Committee-reported bill in areas including\nFossil Energy Research and Development, +59.3 million Bureau of Indian Affairs, +$58.7 million Indian Health Service, +$35.6 million Clean Coal Technology, +20.0 million National Endowment for the Arts, +$10.0 million National Endowment for the Humanities, +6.7 million.\nThe FY2005 House-passed bill contained lower funding as compared to the Senate Committee-reported bill in areas including:\nEnergy Conservation, -$198.2 million Federal Land Acquisition, -$168.6 million National Park Service, -$92.4 million U.S. Fish and Wildlife Service, -$46.3 million Bureau of Land Management, -$29.6 million Forest Service, -$24.8 million Smithsonian Institution, -$7.2 million.\nP.L. 108-447 provides $2.97 billion for the National Fire Plan for FY2005. The House-passed bill contained $3.02 billion, and the Senate committee-reported bill included $2.98 billion. These figures include $500 million for emergency fire fighting for FY2005 that would become available if certain conditions are met ($493.1 million enacted, after rescissions). The President had requested $2.47 billion for the National Fire Plan for FY2005, and Congress had enacted $3.27 billion for FY2004, including supplemental funding.\nFor federal land acquisition and grants to states, under the Land and Water Conservation Fund, $255.5 million was enacted for FY2005. The House-passed bill included $140.0 million. An amendment to increase funding for land acquisition was defeated by the House Committee on Appropriations. The Senate committee-reported bill contained significantly higher funds—$311.1 million. The President had requested $314.0 million for FY2005.\nPrior to enactment of P.L. 108-447 , a series of continuing resolutions were enacted to provide temporary funding for FY2005 for Interior and related agencies. These resolutions were necessary because FY2005 began on October 1, 2004, without enactment of annual appropriations for Interior and related agencies (as well as for other departments and agencies).",
"Controversial policy and funding issues typically have been debated during consideration of the annual Interior and related agencies appropriations bills. Debate on FY2005 funding levels focused on a variety of issues, many of which have been controversial in the past, including the issues listed below.\nAbandoned Mine Lands (AML) Fund , including whether, as part of AML reauthorization, to change the program as sought by the Administration to address state and regional concerns, including a change to return unobligated state share balances in the fund to the states. (For more information, see the \" Office of Surface Mining Reclamation and Enforcement \" section in this report.) Arts and Humanities , including whether funding for the arts and humanities is an appropriate federal responsibility, and if so what should be the proper level of federal support for cultural activities. (For more information, see the \" Smithsonian Institution \" and \" National Endowment for the Arts and National Endowment for the Humanities \" sections in this report.) Competitive Sourcing , namely the extent to which government functions should be privatized, agency funds can and should be used for such \"outsourcing,\" and agencies are communicating appropriately with Congress on their outsourcing activities. (For more information, see the section in this report on \" Competitive Sourcing of Government Jobs .\") Grazing, Categorical Exclusions for , particularly to allow decisions by the Secretary of Agriculture authorizing grazing on Forest Service lands to be categorically excluded from documentation under the National Environmental Policy Act of 1969 (NEPA). (For more information, see the \" Department of Agriculture: Forest Service \" section in this report.) Indian Trust Funds , especially the method by which an historical accounting will be conducted of tribal and Individual Indian Money (IIM) accounts to determine correct balances, and a class-action lawsuit against the government involving tribal and IIM accounts. (For more information, see the section in this report on the \" Office of Special Trustee for American Indians .\") Land Acquisition , including the appropriate level of funding for the Land and Water Conservation Fund for federal land acquisition and the state grant program, and extent to which the fund should be used for activities not involving land acquisition. (For more information, see \" The Land and Water Conservation Fund (LWCF) \" section in this report.) Maintenance Backlogs , primarily the adequacy of agency activities to determine the extent of their maintenance backlogs, the priority of the backlog relative to other agency responsibilities, and the appropriate level of funds to reduce the backlog. (For more information on the backlog of the National Park Service, which has been the focus of the Bush Administration, see the \" National Park Service \" section in this report.) Missouri River Management , essentially over the implementation of drought conservation measures on the Missouri River and water levels for upper and lower Missouri River Basin states. (For more information, see the \" Missouri River Management \" section in this report.) Outer Continental Shelf Leasing , particularly the moratorium on preleasing and leasing activities in the Eastern Gulf of Mexico; oil and gas leases in offshore California; and the possibility of opening to oil and gas development the North Aleutian Basin Planning Area, which includes Bristol Bay, AK. (For more information, see the \" Minerals Management Service \" section in this report.) Roads and Timber Harvesting in the Tongass National Forest , notably (1) whether to allow or prohibit the use of funds for roads for timber harvesting in the Tongass National Forest in Alaska, and (2) whether to extend standards for litigating timber sales in the Tongass. (For more information, see the \" Department of Agriculture: Forest Service \" section in this report.) Snowmobiling in Park Units , particularly whether to allow or prohibit the use of funds for snowmobiling in Yellowstone and Grand Teton National Parks and the John D. Rockefeller, Jr. Memorial Parkway. (For more information, see the \" National Park Service \" section in this report.) Strategic Petroleum Reserve (SPR) , notably whether the SPR should continue to be filled to capacity as ordered by President Bush. (For more information, see the \" Strategic Petroleum Reserve \" section in this report.) Wild Horse and Burro Management , namely new authority for sale of excess wild horses and burros, and removal of provisions of law barring wild horses and burros and their remains from being sold for processing into commercial products. (For more information, see the \" Bureau of Land Management \" section in this report.) Wildland Fire Fighting , involving questions about the appropriate level of funding to fight fires on agency lands; advisability of borrowing funds from other agency programs to fight wildfires; implementation of a new program for wildland fire protection and locations for fire protection treatments; and impact of environmental analysis, public involvement, and challenges to agency decisions on fuel reduction activities. (For more information, see the \" Bureau of Land Management \" and \"Forest Service\" sections in this report.) Yukon Flats Land Exchange , involving funds for the Fish and Wildlife Service to acquire lands in the Yukon Flats National Wildlife Refuge (AK) and a related conveyance of federal lands and interests. (For more information, see the \" Fish and Wildlife Service \" section in this report.)",
"Table 1 below contains information on congressional consideration of the FY2005 Interior appropriations bill.",
"During the 10-year period from FY1996 to FY2005, Interior and related agencies appropriations increased by 60% in current dollars, from $12.54 billion to $20.09 billion. See Table 2 below. During the most recent five years, from FY2001 to FY2005, the rate of increase was much more modest—from $18.89 billion to $20.09 billion, or 6% in current dollars. The single biggest increase during the decade occurred from FY2000 to FY2001, when the total appropriation rose 27% in current dollars, from $14.91 billion to $18.89 billion. Much of the increase was provided to land management agencies for land conservation and wildland fire management. See Table 22 below for a budgetary history of each agency, bureau, and program from FY2001 to FY2005.",
"",
"The Bureau of Land Management (BLM) manages approximately 261 million acres of public land for diverse, and, at times, conflicting uses, such as energy and minerals development, livestock grazing, recreation, and preservation. The agency also is responsible for about 700 million acres of federal subsurface mineral resources throughout the nation, and supervises the mineral operations on an estimated 56 million acres of Indian Trust lands. Another key BLM function is wildland fire management on about 370 million acres of DOI, other federal, and certain non-federal land.\nFor FY2005, Congress enacted $1.82 billion for the BLM, an increase of $57.6 million (3%) over the President's FY2005 request. The enacted level is a decrease of $76.3 million (4%) from the FY2004 enacted level, $59.5 million (3%) from the Senate committee-reported level, and $16.4 million (1%) from the House-passed level. See Table 3 below.",
"For Management of Lands and Resources, Congress enacted $836.8 million for FY2005. This is a decrease from the FY2004 enacted level, and the levels requested by the President, passed by the House, and recommended by the Senate Appropriations Committee for FY2005. This line item funds an array of BLM land programs, including protection, recreational use, improvement, development, disposal, and general BLM administration. Some programs would receive increased funds over FY2004, including management of wild horses and burros and management of wildlife. Others would decrease from FY2004, including range management; recreation; and transportation and facilities maintenance, which includes deferred maintenance. Still other programs would be funded at relatively flat levels, including energy and minerals (including Alaska minerals).\nThe FY2005 law would continue to bar funds from being used for energy leasing activities within the boundaries of national monuments, as they were on January 20, 2001, except where allowed by the presidential proclamations that created the monuments. The law also continues the moratorium on accepting and processing applications for patents for mining and mill site claims on federal lands. However, applications meeting certain requirements that were filed on or before September 30, 1994, would be allowed to proceed, and third party contractors would be authorized to process the mineral examinations on those applications.\nThe FY2005 law includes changes to wild horse and burro management on federal lands. It provides new authority for agencies to sell excess animals or their remains, and removes provisions of law that had barred wild horses and burros and their remains from being sold for processing into commercial products. Also, the law does not expressly prohibit BLM from slaughtering healthy wild horses and burros, as had past appropriations laws apparently starting in FY1988. These changes have been controversial.",
"For Wildland Fire Management for FY2005, Congress enacted $831.3 million, including $98.6 million for emergency firefighting during FY2005 that would become available if certain conditions are met. These contingent funds are intended to preclude borrowing from other BLM programs to fight wildfires; such borrowing has been typical in recent years. The FY2005 enacted level is an increase over the Administration's FY2005 request, but less than enacted for FY2004 and passed by the House and recommended by the Senate Appropriations Committee for FY2005.\nFor FY2005, Congress enacted a $17.5 million (10%) increase over FY2004 for BLM fuels reduction, particularly in the wildland-urban interface. The Administration, House, and Senate Appropriations Committee had all supported an increase in FY2005 to reduce fuel loads. In its report on the bill, the House Appropriations Committee required the BLM to report on the methods used to prioritize fuel projects, which are to be in common with the Forest Service, to ensure that funds are used for the highest priorities. (For additional information on wildland fires, see the \" Department of Agriculture: Forest Service \" section in this report.)\nFor FY2005, Congress enacted a decrease in funds for preparing for fires and for suppressing fires, relative to FY2004 levels. Conferees, in report language, expressed a need to control the cost of suppressing fires. They directed the Secretaries of Agriculture and the Interior to report to Congress by June 30, 2005, on performance measures planned to be used on an interagency basis to improve reporting on fire suppression costs. In earlier action, in its report on the bill, the House Committee on Appropriations expressed concern that fire funding for preparedness and suppression may not maintain the level of readiness needed for public safety that existed in FY2002 and FY2003 ( H.Rept. 108-542 , p. 17). The Committee directed the BLM to analyze current readiness levels, and adjust the level of funds for preparedness and suppression if the agency determines that maintaining preparedness funding at no less than the FY2003 level will result in lower overall firefighting costs.\nThe wildland fire funds appropriated to BLM are used for fire fighting on all Interior Department lands. Interior appropriations laws also provide funds for wildland fire management to the Forest Service (Department of Agriculture) for fire programs primarily on its lands. A focus of both departments is implementation of the Healthy Forests Restoration Act of 2003 ( P.L. 108-148 ) and the National Fire Plan, which emphasize reducing hazardous fuels which can contribute to catastrophic fires, among other provisions.",
"Congress enacted $11.3 million for BLM construction for FY2005. This level is less than enacted for FY2004 and passed by the House for FY2005, but more than requested by the Administration and recommended by the Senate Committee on Appropriations for FY2005. In their report on the bill, conferees expressed concern about the low level of funding for BLM construction relative to other agencies. They urged the Administration to put more emphasis on funding for deferred maintenance construction projects on BLM lands.",
"For Land Acquisition for FY2005, Congress enacted $11.2 million. Ten acquisition projects would be funded through this appropriation and use of $10.0 million of unobligated balances. In earlier action, the House had not supported funding new acquisitions. Similarly, the House Appropriations Committee did not earmark funds for acquisitions, in contrast to past practice, calling new acquisitions a \"low priority\" ( H.Rept. 108-542 , p. 5). By contrast, the Senate Committee on Appropriations had recommended $22.9 million for land acquisition, primarily for 11 earmarked acquisitions. The FY2005 enacted level was a decrease from the President's FY2005 request and the FY2004 enacted level. The FY2004 enacted level of $18.4 million for land acquisition was itself a reduction of the FY2003 level of $33.2 million, due to \"the unfocused direction\" in agency land acquisition, according to the House Appropriations Committee ( H.Rept. 108-195 , p. 10). Money for land acquisition is appropriated from the Land and Water Conservation Fund. (For more information, see \" The Land and Water Conservation Fund (LWCF) \" section in this report.)",
"For the (O&C) Grant Lands, which include highly productive timber lands, Congress enacted $107.5 million, an increase over FY2004, but a decrease from the FY2005 requested, House-passed, and Senate committee-reported levels. This activity funds programs related to revested Oregon and California Railroad grant lands and related areas, including for land improvements and managing, protecting, and developing resources on these lands.\nFor further information on the Department of the Interior , see its website at http://www.doi.gov .\nFor further information on the Bureau of Land Management , see its website at http://www.blm.gov/nhp/index.htm .\nCRS Report RS21402, Federal Lands, R.S. 2477, and \" Disclaimers of Interest \" , by [author name scrubbed].\nCRS Report RL32244, Grazing Regulations: Changes by the Bureau of Land Management , by [author name scrubbed].\nCRS Report RS20902, National Monument Issues , by [author name scrubbed]. CRS Report RL32315, Oil and Gas Exploration and Development on Public Lands , by [author name scrubbed].\nCRS Issue Brief IB10076. Public (BLM) Lands and National Forests , by [author name scrubbed] and [author name scrubbed], coordinators.",
"For FY2005, Congress approved $1.332 billion for the U.S. Fish and Wildlife Service (FWS), slightly more than the Administration requested ($1.326 billion) and more than enacted for FY2004 ($1.308 billion). By far the largest portion of the FWS annual appropriation is for the Resources Management account. The President's FY2005 request was $951.0 million, a slight decrease from the FY2004 level of $956.5 million. Congress enacted $962.9 million for FY2005. Among the programs included in Resources Management are the Endangered Species program, the Refuge System, and Law Enforcement.",
"Funding for the Endangered Species program is one of the perennially controversial portions of the FWS budget. The Administration proposed to reduce the program from $137.0 million in FY2004 to $129.4 million in FY2005. Congress enacted $143.2 million for FY2005. See Table 4 below.\nA number of related programs also benefit conservation of species that are listed, or proposed for listing, under the Endangered Species Act. The Landowner Incentive Program decreased from $29.6 million in FY2004 to $21.7 million for FY2005. Stewardship Grants fell from $7.4 million in FY2004 to $6.9 million for FY2005. The Cooperative Endangered Species Conservation Fund (for grants to states and territories to conserve threatened and endangered species) declined from $81.6 million in FY2004 to $80.5 million for FY2005. (See Table 4 .)\nUnder the President's request, overall FY2005 funding for the endangered species program and related programs would have increased from FY2004 by $23.8 million (9%). As enacted, FY2005 funding for these programs as a group fell $3.4 million (1%).\nWhile certain changes affecting endangered species were supported by some interest groups, they apparently were not offered as amendments during consideration of FY2005 Interior appropriations legislation. These changes reportedly related to species recovery and an exemption for pesticide use, according to the Center for Biological Diversity.",
"On March 14, 2003, the Nation observed the centennial of the creation by President Theodore Roosevelt of the first National Wildlife Refuge on Pelican Island in Florida. Accordingly, Congress appropriated funding in FY2003 and FY2004 for various renovations, improvements, and activities to celebrate the centennial; it included all of this funding under operations and maintenance for the National Wildlife Refuge System (NWRS). For operations and maintenance in FY2005, the President proposed $387.7 million, a decrease from $391.5 million in FY2004. Of this amount, $66.5 million was earmarked for deferred maintenance in FY2004, which the President also proposed for FY2005. Congress enacted $381.0 million for FY2005; the law contained no earmark for deferred maintenance.\nThe President proposed $51.3 million for Law Enforcement—a decrease of $2.4 million from the FY2004 level ($53.7 million). Congress enacted $55.6 million for FY2005.",
"For FY2005, the Administration proposed $45.0 million for Land Acquisition, a 5% increase from the FY2004 level of $43.1 million. The House approved significantly less—$12.5 million. The Senate Committee on Appropriations would have provided a higher level of funds—$49.9 million. In the end, Congress cut the program to $37.0 million for FY2005. This program is funded from appropriations from the Land and Water Conservation Fund. In the past, the bulk of this FWS program has been for acquisition of federal refuge land, but a portion is used for closely-related functions such as acquisition management, land exchanges, emergency acquisitions, purchase of inholdings, general overhead (\"Cost Allocation Methodology\"). Recently, less of the funding has been reserved for traditional land acquisition; the House bill continued this trend by allocating no funds for federal refuge lands. In contrast, the Senate committee-reported bill would have provided equal or greater funding for these programs, as well as allocating $34.7 million for federal refuge lands. The FY2005 law appropriated $22.6 million for the core acquisition program. (See\nTable 5 ; for more information, see \" The Land and Water Conservation Fund (LWCF) \" below.)",
"The appropriation for Land Acquisition provides funds to FWS for acquisition of lands for waterfowl habitat in the Yukon Flats National Wildlife Refuge in Alaska and the related conveyance of federal lands and interests in the Refuge to Doyon, Limited, an Alaska Native Corporation. The FY2005 law also gives the federal government a right to a portion of the proceeds from any resources leased or discovered on land after the exchange has occurred, a feature that is unusual in federal land trades. Revenues to the federal government from any oil and/or gas production from the lands and interests acquired by Doyon, Limited will be deposited in a special Treasury account, and available without further appropriation to FWS for specified purposes. Supporters held that the provision expedites the completion of the Yukon Flats land exchange, facilitates energy production, and provides federal protection for key waterfowl habitat. Opponents argued that the exchange was arranged without public input, will result in a loss to the government of potentially oil rich lands, will allow energy development in areas that provide important wildlife habitat, and might be viewed as setting a precedent for land trades in potentially oil-rich areas of the Arctic National Wildlife Refuge.",
"The National Wildlife Refuge Fund (also called the Refuge Revenue Sharing Fund) compensates counties for the presence of the non-taxable federal lands of the NWRS. A portion of the fund is supported by the permanent appropriation of receipts from various activities carried out on the NWRS. However, these receipts are not sufficient for full funding of authorized amounts, and county governments have long urged additional appropriations to make up the difference. Congress generally provides additional funding. The Administration, House, and Senate Committee supported $14.4 million for FY2005. However, with rescissions, the FY2005 law matched the FY2004 level of $14.2 million. When combined with the estimated receipts, the FY2005 appropriation level would cover 46% of the authorized full payment, down marginally from the FY2004 level of 47%.",
"The MSCF has generated considerable constituent interest despite the small size of the program. It benefits Asian and African elephants, tigers, rhinoceroses, and great apes. The President's budget again proposes to move funding for the Neotropical Migratory Bird Conservation Fund (NMBCF) into the MSCF. Congress rejected the proposed transfer annually from FY2002 to FY2005. For FY2005, the President proposed $9.5 million for the MSCF (including the proposed transfer of the NMBCF to this program). The proposal included cuts in programs for great apes and African and Asian elephants, in contrast to increases in programs for rhinos, tigers, and neotropical migratory birds. The House approved $100,000 in increases over the President's request for each of these subprograms, and Senate Committee levels generally were between these two. The enacted levels for FY2005 represent modest cuts in all of the programs except that for tigers and rhinos. See Table 6 below.",
"The State and Tribal Wildlife Grants program helps fund efforts to conserve species (including non-game species) of concern to states and tribes. The program was created in the FY2001 Interior appropriations law ( P.L. 106-291 ) and further detailed in subsequent Interior appropriations bills. It lacks any other authorizing statute. Funds may be used to develop conservation plans as well as support specific practical conservation projects. A portion of the funding is set aside for competitive grants to tribal governments or tribal wildlife agencies. The remaining state portion is for matching grants to states. A state's allocation is determined on a formula basis. The President proposed $80.0 million, an increase from $69.1 million in FY2004. The House bill would have cut the program to $67.5 million, while the Senate committee approved an increase smaller than that requested by the President. The final FY2005 appropriation is $69.0 billion. See Table 7 below.",
"Mute swans were introduced to Chesapeake Bay decades ago. Their population is now suspected of causing various types of ecological harm to the Bay, its aquatic plants, and other species of birds. Actions to reduce the population have been restricted on the grounds that the species is protected under the Migratory Bird Treaty Act (MBTA), even though it is not native to North America. Attempts were made in the 108 th Congress to enact legislation to exclude non-native species from protections of the MBTA, but were not successful as the second session was drawing to a close. Advocates of control of this species of swan, who also did not wish to see the MBTA's protections afforded to other non-native species, amended the MBTA by adding §143 (Title I) to the FY2005 law, defining the term \"native to the United States,\" directing the FWS to publish a list of those bird species which are not native, and specifying that the MBTA applies only to native species. Since enactment, various animal welfare groups have objected to the provision and asked for its repeal.\nFor further information on the Fish and Wildlife Service , see its website at http://www.fws.gov/ .\nCRS Issue Brief IB10144. Endangered Species Act in the 109 th Congress: Conflicting Values and Difficult Choices , by [author name scrubbed], [author name scrubbed], Pervaze Sheikh, [author name scrubbed], and [author name scrubbed].\nCRS Report RS21157, Multinational Species Conservation Fund , by [author name scrubbed] and [author name scrubbed].",
"The National Park Service (NPS) is responsible for the National Park System, currently comprising 388 separate and diverse units with more than 84 million acres. The NPS protects, interprets, and administers the park system's diversity of natural and historic areas representing the cultural identity of the American people. The park system uses some 20 types of designations, including national park, to classify sites, and visits to these areas total close to 280 million annually. The NPS also supports some land conservation activities outside the park system.\nThe FY2005 NPS appropriations total $2.37 billion, $5.1 million more than the President's budget request ($2.36 billion), and $107.1 million above the FY2004 enacted level ($2.26 billion). The House-passed NPS total was $2.27 billion, while the Senate committee-reported bill matched the President's request ($2.36 billion). See Table 8 below.\nSeveral amendments affecting the NPS, but not tied to specific funding accounts, were considered. The law included a provision directing the NPS to implement recently-issued winter use rules for snowmobiles in Yellowstone and Grand Teton National Parks. The provision applies only to the 2004-2005 winter use season and was designed to prevent lawsuits from blocking snowmobile use this winter. Earlier, the House had rejected an amendment to reinstate a Clinton-era rule that would phase out use of private snowmobiles in Yellowstone and Grand Teton National Parks and on the John D. Rockefeller, Jr. Memorial Parkway which links them. The Bush Administration has sought to overturn the rule.\nAnother enacted provision adjusts the boundaries of the Cumberland Island Wilderness allowing use of an existing road through the wilderness portions of the Cumberland Island National Seashore and authorizing concession tours of the island.",
"The park operations line item accounts for more than two-thirds of the total NPS budget. It covers resource protection, visitors' services, facility operations, facility maintenance, and park support programs. The FY2005 enacted level for NPS operations is $1.68 billion, $5.4 million less than the Senate committee recommended, and $2.5 million less than the House-passed level and the President's request, but $74.0 million (5%) more than was appropriated for FY2004.\nIn its report on the bill, the House Appropriations Committee expressed concerns about the erosion of operating funds for core programs, attributed to \"unbudgeted costs,\" including cost-of-living increases, storm damage, anti-terrorism activities, and management initiatives (e.g., competitive sourcing). The conference report also acknowledged budget shortfalls in recent years in core operating programs and visitor services across the park system, suggesting congressional intent to provide park base programmatic increases. For FY2005, Park advocacy groups estimate that the national parks operate, on average, with two-thirds of needed funding. As a visible symbol of the federal government and environmental protection, the condition, care, and operation of the national parks is considered politically potent.",
"This budget item supports law enforcement programs of the U.S. Park Police, primarily in the urban park areas of New York City, San Francisco, and Washington, DC. Core responsibilities include protecting historic monuments and memorials, maintaining order during special events and demonstrations, and providing presidential security and dignitary escort. The USPP also provides investigative, forensic, and other services to support law-enforcement trained and commissioned rangers working in park units system-wide. The FY2004 conference agreement was critical of USPP's failure to implement 2001 recommendations by the National Academy of Public Administration to address problems of budget accountability, management issues, and overtime. Language in the report on the House-passed FY2005 bill urges the NPS and DOI to resolve ongoing USPP fiscal and management problems before the end of the calendar year 2004. For FY2005, the Administration focused on terrorist threat preparedness, and the budget request included $1.0 million for non-recurring costs associated with the 2005 Presidential Inauguration and $2.0 million for enhanced security and anti-terrorism efforts. The House-passed bill and the Senate committee-reported bill matched the request ($81.2 million), $3.3 million above FY2004. The enacted level is $80.1 million, $2.2 million above FY2004. In a recent dispute, the former USPP Chief was suspended from duty in December 2003, and officially fired in July 2004, for talking to the press about agency funding issues. Rulings on this case by the U.S. Merit System Protection Board (a quasi-judicial agency that protects federal workers from management abuse) are reported to be under appeal.",
"This line item funds a variety of park recreation and resource protection programs, as well as programs connected with state and local community efforts to preserve cultural and national heritage resources. The FY2005 law provides $61.0 million, a decrease of $0.8 million from FY2004 and of $2.0 million from the Senate committee recommendation, and an increase of $7.1 million over the House-passed level and of $23.2 million over the FY2005 request. The Administration had proposed a substantial reduction to (1) discontinue statutory aid programs, and (2) curtail heritage area funding (from $14.3 million in FY2004 to $2.5 million in FY2005). In recent years, the Administration's requests for heritage areas have been significantly lower than the previous year's appropriation, but Congress has consistently restored or increased heritage area funding. The enacted level for the Heritage partnership program is $14.6 million for National Heritage Areas, between the House-passed level ($15.1 million) and the Senate committee recommended level ($14.3 million), and substantially above the $2.5 million requested by the Administration. Provisions in the FY2005 appropriations law created three new heritage areas. For Statutory or Contractual Aid, the enacted level is $11.2 million, $7.4 million more than the House-passed bill ($3.8 million), $0.9 million less than the Senate committee recommendation ($12.1 million), and $1.6 million below the FY2004 enacted level ($12.8 million). The Administration requested no funds for this program for FY2005.",
"This matching grant program, created in 1978, was intended to help low-income inner city neighborhoods rehabilitate existing recreational facilities. Funding for new program grants was problematic (about $2 million annually) until the Conservation Spending Category (CSC) was created in the FY2001 Interior Appropriations Act, with $30.0 million for UPARR. In FY2001 and FY2002, Congress appropriated $30.0 million for UPARR. For FY2003, appropriations were $298,000 for program administrative costs, and the FY2004 appropriation was $301,000 to administer previously awarded grants. For FY2005, as in the preceding three budgets, the President requested no funds for UPARR and asked Congress to eliminate the separate UPARR line item and return program grant administration for previously awarded grants to the National Recreation and Preservation line item. The House-passed bill followed the request, with no funding for UPARR and allowing $316,000 under National Recreation and Preservation for urban park grant administration. The Senate committee also recommended eliminating the UPARR line item and transferring limited UPARR grant administration funding to the National Recreation and Preservation. The FY2005 law provides no funding for UPARR and is silent on grant administration.",
"The construction line item funds new construction, as well as rehabilitation and replacement of park facilities. For FY2005, the enacted level for NPS construction is $353.0 million, including $50.8 million in emergency funding for disaster response. This total is $23.0 million above the Senate committee recommendation ($330.0 million), $55.4 million above the House-passed bill ($297.6 million), and $23.1 million above the request and the FY2004 level ($329.9 million).\nThe FY2005 appropriations law includes $582.7 million for maintenance (in Operation of the National Park System line item, discussed above). This is $3.4 million less than the Administration's request, but is more than the House-passed level ($573.2 million), the Senate committee recommendation ($577.3 million), and the FY2004 appropriation ($559.2 million). In previous years, maintenance under NPS Operations was separated into facility operation and facility maintenance.\nTotal FY2005 NPS construction and maintenance funding is $935.7 million. This is more than the Senate committee recommendation ($907.4 million), the House-passed total ($870.8 million), the Administration's request ($916.0 million), and the FY2004 appropriations ($889.1 million). The Administration asserted that its total request for construction and facility maintenance ($724.7 million) would address the backlog of deferred maintenance, and with $78 million from recreation fees and $310 million from the Highway Trust Fund, total spending to reduce the maintenance backlog in FY2005 would be more than $1.1 billion. However, the estimate of deferred maintenance for the NPS is between $4.52 billion and $9.69 billion, with a mid-range figure of $7.11 billion. Further, other DOI sources estimate the FY2004 appropriation for deferred maintenance at $319.3 million, and the FY2005 request at $332.5 million. These figures may cause some to raise questions about the magnitude and effectiveness of funding for construction and facility maintenance in reducing the backlog.\nThe FY2005 law prohibits NPS funds in the law from being used for partnership construction projects (those undertaken by friends groups or corporate or foundation sponsorship) in excess of $5.0 million without the advance approval of the House and Senate Appropriations Committees. The joint explanatory statement of the conference report expressed concerns about the management of NPS partnership construction projects, and directed the NPS to provide a status report on such projects. Recently, the NPS developed interim guidance to govern such projects. In earlier action, the House-passed bill had sought to impose a temporary moratorium on partnership construction projects in excess of $5 million, unless approved by the Appropriations Committees. These provisions resulted from an effort to control relatively low priority, expensive construction projects outside the regular budget process that increase needs for operations and maintenance funding, thus possibly compounding operational shortfalls and delaying backlog projects and other service priorities. The Senate Appropriations Committee did not impose a blanket moratorium on partnership projects.",
"For FY2005, appropriations under the Land and Water Conservation Fund (LWCF) total $146.3 million, with $55.1 million for federal land acquisition and $91.2 million for state assistance. The state assistance is for park land acquisition and recreation planning and development by the states. The funds provided to the states are allocated through a formula, with states determining their spending priorities. The enacted level is slightly lower than (within 3% of) the House-passed level, the Senate committee-recommended level, the requested level, and the FY2004 appropriation.\nFederal land acquisition—funds to acquire lands, or interests in lands, for inclusion within the National Park System—has been more controversial. FY2005 funding for acquisition management ($10.4 million) is between the House-passed ($10.0 million) and Senate committee-recommended and requested level ($10.5 million), and nearly matches FY2004 funding. However, acquisition funding (for purchases, emergencies, and inholdings) has differed widely. The enacted level is $44.8 million. This is below the Senate committee recommendation ($51.3 million) and the Administration's request ($73.8 million), but above the House-passed level ($6.0 million) and the FY2004 appropriation ($31.4 million).",
"The FY2005 appropriations law established a new 10-year recreation fee program to replace the recreational fee demonstration program. The law authorizes the four major federal land management agencies, plus the Bureau of Reclamation, to retain and spend receipts from entrance and user fees without further appropriation, primarily at the site where the fees are collected. A portion of fee receipts is distributed to other agency sites. The NPS estimates fee receipts of $124.7 million for FY2004 and $122.8 million for FY2005. The former program had been created and extended in appropriations laws, and had been controversial.\nFor further information on the National Park Service , see its website at http://www.nps.gov/ .\nCRS Issue Brief IB10145, National Park Management , coordinated by [author name scrubbed].",
"The Historic Preservation Fund (HPF), administered by the NPS, provides grants-in-aid to states (primarily through State Historic Preservation Offices), certified local governments, and territories and the Federated States of Micronesia for activities specified in the National Historic Preservation Act. These activities include protecting cultural resources and enhancing economic development by restoring historic districts, sites, buildings, and objects significant in American history and culture. Preservation grants are normally funded on a 60% federal/40% state matching share basis. In addition, the Historic Preservation Fund provides funding for cultural heritage projects for Indian tribes, Alaska Natives, and Native Hawaiians.\nFor FY2005, Congress provided $71.7 million for the Historic Preservation Fund, a slight increase from the House-passed ($71.5 million) and Senate committee-reported bills ($71.3 million). However, the enacted level is a decrease of 7% from the Administration's FY2005 request ($77.5 million) and of 3% from the FY2004 level ($73.6 million). See Table 9 below.\nA major issue that often reappears during the appropriations process is whether historic preservation programs should be funded by private money rather than the federal government. Congress eliminated permanent federal funding for the National Trust for Historic Preservation, but has provided appropriations under Save America's Treasures to preserve nationally significant intellectual and cultural artifacts and historic structures. Due to concerns that the program did not reflect geographic diversity, appropriations law now requires that project recommendations be subject to approval by the Appropriations Committees prior to distribution of funds. The FY2005 law allows the National Endowment for the Arts to award Save America's Treasures grants through the Save America's Treasures grants selection panel. The law provides $29.6 million for Save America's Treasures, 1% less than the FY2005 request, the House-passed bill, and the Senate committee-reported bill (all $30.0 million) and a decrease of 9% from the FY2004 level ($32.6 million). The FY2005 appropriation did not include funding for the Administration's initiative for \"Preserve America\" grants. These grants-in-aid, recommended by the President for funding at $10.0 million, would have supplemented Save America's Treasures in supporting community efforts to develop resource management strategies and to encourage heritage tourism. Preserve America grants were to be competitively awarded on a 50/50 matching basis, as one-time seed money grants.\nIn the past, the Historic Preservation Fund included funds for the preservation and restoration of historic buildings and structures on Historically Black Colleges and Universities (HBCU) campuses. An appropriation in FY2001 of $7.2 million represented the unused authorization remaining under law. There was no funding for HBCUs under HPF for FY2002 or FY2003, although in FY2004 funding of $3.0 million was provided with competitive grants administered by the NPS. The FY2005 law provides $3.5 million for HBCUs, slightly less than the House-passed bill ($4.0 million). The Senate committee-reported bill did not include funding for HBCUs.\nThere is no longer federal funding for the National Trust for Historic Preservation, previously funded as part of the Historic Preservation Fund Account. The National Trust was chartered by Congress in 1949 to \"protect and preserve\" historic American sites significant to our cultural heritage. It is technically a private non-profit corporation, but it received permanent federal funding until FY1998. Since that time, the National Trust generally has not received federal funding in keeping with Congress's plan to make it self-supporting. However, relatively small appropriations were provided in FY2003 and FY2004, with $0.5 million in FY2004 for the National Trust's Endowment Fund for the care and maintenance of the most endangered historic places. The final FY2005 appropriation did not include funding for the National Trust's endowment fund.\nFor further information on Historic Preservation , see its website at http://www2.cr.nps.gov/ .\nCRS Report 96-123, Historic Preservation: Background and Funding, by [author name scrubbed].",
"The U.S. Geological Survey (USGS) is the nation's premier science agency in providing physical and biological information related to natural hazards; certain aspects of the environment; and energy, mineral, water, and biological sciences. In addition, it is the federal government's principal civilian mapping agency and a primary source of data on the quality of the Nation's water resources. In 2004, the USGS celebrated the 125 th anniversary of its creation.\nFunds for the USGS are provided under the heading Surveys, Investigations, and Research , with six activities falling under that heading: the National Mapping Program; Geologic Hazards, Resources, and Processes; Water Resources Investigations; Biological Research; Science Support; and Facilities. For FY2005, total USGS appropriations are $936.5 million, $3.0 million less than the Senate committee-reported bill ($939.5 million), $8.0 million less than the House-passed bill ($944.5 million), $1.5 million less than FY2004 ($938.0 million), but $16.7 million more than the Administration's request ($919.8 million). See Table 10 below. The FY2005 appropriations law, following the House-passed and Senate committee-reported bills and the Administration's request, would create a new line item in the USGS budget called Enterprise Information, yet with different funding amounts. (See below for details.) In its report on the FY2005 bill, the Senate Appropriations Committee directed reinstatement for most of the individual projects targeted for elimination in the Administration's request, and stated that there should be a stronger emphasis placed on the core programs of the USGS.\nThe enacted appropriations, as with both the Senate committee-reported and the House-passed bill and the Administration's request for FY2005, provides less funding in five of the six activities traditionally conducted by the USGS compared to the FY2004 enacted levels. The decreases are roughly offset by funding for Enterprise Information.",
"The Administration proposed a new line item for funding within the USGS for FY2005—Enterprise Information—to consolidate funding of all USGS information needs including information technology, security, services, and resources management, as well as capital asset planning. Funding for these functions previously was distributed among several different USGS offices and budget sub-activities. The House-passed bill included this new line item and provide $44.1 million, $1.0 million less than requested. The Senate-reported bill included $45.2 million for this line item. The FY2005 enacted appropriations are $44.4 million, between the House and Senate levels.\nThere are three primary programs within Enterprise Information: (1) Enterprise Information Security and Technology, which supports management and operations of USGS telecommunications (e.g., computing infrastructure and email); (2) Enterprise Information Resources, which provides policy support, information management, and oversight over information services; and (3) Federal Geographic Data Coordination, which provides operational support and management for the Federal Geographic Data Committee (FGDC). The FGDC is an interagency, intergovernmental committee that encourages collaboration to make geospatial data available to state, local and tribal governments, as well as communities.",
"The National Mapping Program aims to provide access to high quality geospatial data and information to the public. The FY2005 appropriations are $118.8 million, $4.0 million less than the House-passed level ($122.8 million) and $1.1 million less than the Senate committee-reported bill ($119.8 million). The largest decrease within this program from FY2004 is for the Cooperative Topographic Mapping Program, with appropriations of $71.4 million—a decrease of $9.5 million from FY2004. The Land Remote Sensing and Geographic Analysis and Monitoring sub-activities would be funded at $32.7 million and $14.6 million, respectively, which are slightly less than the Administration's request and the FY2004 enacted levels.\nIn its report on the FY2005 bill, the House Appropriations Committee stated that no solutions to degraded satellite imagery in the Landsat 7 program have been proposed and that the Committee would not increase or reprogram funding for that program. In its report on the bill, the Senate Appropriations Committee also stated its concern about the program and that the USGS has no clear guidance on how to proceed. Landsat 7 is a satellite that takes remotely-sensed images of the Earth's land surface and surrounding coastal areas primarily for environmental monitoring. Last year, approximately 25% of the data from the Landsat 7 Satellite began showing signs of degradation. Nevertheless, an interagency panel concluded that the Landsat 7 Satellite data \"continues to provide a unique, cost-effective solution to operational and scientific problems.\" The House committee also stated that it supports the acquisition of long-term satellite data and that the USGS should collaborate with other agencies to place the next generation Landsat sensors in orbit. The Senate Appropriations Committee also has stated that the USGS is responsible for satellite operations and data collecting, and that the USGS, DOI, and \"administration officials at a higher policy level\" should work towards a resolution on this issue ( S.Rept. 108-341 , p. 30).",
"For Geologic Hazards, Resources, and Processes activities, FY2005 appropriations are $229.2 million, between the House-passed level ($230.9 million) and the Senate committee-reported level ($228.2 million), and $8.5 million more than the Administration's request ($220.8 million). This line item covers programs in three activities: Hazard Assessments, Landscape and Coastal Assessments, and Resource Assessments.\nThe House-passed bill and the Senate-reported bill would have provided $21.6 million for the mineral resources program, $6.5 million more than the requested $15.1 million. This program conducts inquiries into the conditions affecting mining and materials processing industries. The FY2005 law provides $15.3 million, and the joint explanatory statement states that the funding level for this program will no longer be specified in committee reports.",
"For the Water Resources Investigations heading, FY2005 appropriations are $211.2 million, nearly matching the House-passed bill, $1.7 million less than the Senate committee-reported bill ($212.9 million), $8.5 million above the Administration's request ($202.7 million), and $4.5 million less than the FY2004 enacted level ($215.7 million).\nAll three programs within this line item received less funding for FY2005 than in FY2004. The appropriations for FY2005 are $142.5 million for the Hydrologic Monitoring, Assessments and Research activity; $62.3 million for the Cooperative Water Program; and $6.4 million for Water Resources Research Institutes.\nAs with the Bush Administration's FY2002-FY2004 budget requests, the FY2005 request had sought to discontinue USGS support for Water Resources Research Institutes because, it alleged, most institutes have succeeded in leveraging sufficient funding for program activities from non-USGS sources. Congress has restored funding for the institutes from FY2002 to FY2005.",
"For FY2005, appropriations are $171.7 million for Biological Research, $0.3 million less than the House-passed level ($172.0), $1.1 million less than the Senate Committee-recommended level ($172.8 million), $4.1 million above the Administration's request ($167.6 million), and $2.8 million below the FY2004 enacted level ($174.5 million).\nThe House Appropriations Committee expressed concern in its report on the bill about the growth of the National Biological Information Infrastructure (NBII), citing that the number of planned regional and thematic nodes is too high and not adequately justified. The Committee directed the USGS to locate all new \"thematic\" nodes in the same location as regional nodes to consolidate operational expenses. The NBII is a collaborative program that aims to provide increased access to data and information on the nation's biological resources. The Committee also directed the USGS to develop a long-term plan to address the number and location of new units in the Cooperative Fish and Wildlife Research Program. The Cooperative Fish and Wildlife Research Program is a partnership between federal and state governments and academia to provide research, management, and technical assistance to maintain DOI managed lands and waters.\nFor FY2005, the Administration and the House-passed bill proposed to continue work on reducing harmful invasive species and wildlife diseases. The conference agreement includes language to maintain this work. The USGS expects to complete an assessment of invasive species threats in the National Wildlife Refuge System and to continue to research and map \"hotspots\" of invasive species impacts throughout the United States.",
"Science Support focuses on those costs associated with modernizing the infrastructure for management and dissemination of scientific information. For FY2005, appropriations are $65.6 million, $1.9 million less than the House-passed bill ($67.5 million), $0.1 million more than the Senate committee-reported bill ($65.4 million), $3.1 million less than the Administration's request ($68.7 million). All are significantly less than the $90.8 million enacted in FY2004. The Administration justified its proposed reduction by noting that funds historically provided in this account would be used for the Enterprise Information Program, which is expected to provide information support that previously was done by Science Support. Facilities focuses on the costs for maintenance and repair of facilities. FY2005 appropriations are $94.6 million, $1.3 million less than the House-passed bill and the Administration's request ($95.9 million), $0.4 million less than the Senate committee-reported bill($95.0 million), and $1.6 million more than the FY2004 level ($93.0 million). In addition, USGS was appropriated $1.0 million in emergency funds for disaster recovery in P.L. 108-324 .\nFor further information on the U.S. Geological Survey , see its website at http://www.usgs.gov/ .",
"The Minerals Management Service (MMS) administers two programs: the Offshore Minerals Management (OMM) Program and the Minerals Revenue Management (MRM) Program. OMM administers competitive leasing on outer continental shelf lands and oversees production of offshore oil, gas, and other minerals. MRM collects and disburses bonuses, rents, and royalties paid on federal onshore and Outer Continental Shelf (OCS) leases and Indian mineral leases. Revenues from onshore leases are distributed to states in which they were collected, the General Fund of the U.S. Treasury, and designated programs. Revenues from the offshore leases are allocated among the coastal states, Land and Water Conservation Fund, the Historic Preservation Fund, and the U.S. Treasury.",
"The Administration's FY2005 budget request for MMS was $282.4 million. This included $7.1 million for Oil Spill Research, $275.3 million for Royalty and Offshore Minerals Management (comprised of $146.1 million for OMM, $81.9 million for MRM, and $47.3 million for General Administration). Of this total, $178.7 million would have derived from appropriations and $103.7 million from offsetting collections which MMS has been retaining from collections since 1994. The total FY2005 budget request was 4% over the $270.5 million provided for FY2004, with the appropriation increasing by 5%. For FY2005, Congress enacted overall funding for MMS of $277.6 million. Of that amount, $7.0 million is for oil spill research, $270.6 for Royalty and Offshore Minerals Management. Offsetting collections of $103.7 million are equal to the budget request. Congress enacted a total appropriation of $173.8 million for FY2005.\nThe MMS estimates that it collects and disburses over $6 billion in revenue annually. This amount fluctuates based primarily on the prices of oil and natural gas. Over the past decade, royalties from natural gas production have accounted for 40% to 45% of annual MMS receipts, while oil royalties accounted for not more than 25%.",
"Issues not directly tied to specific funding accounts were considered as part of the FY2005 appropriations process, as they were for FY2004. The FY2004 appropriations law continued the moratorium on preleasing and leasing activities in the Eastern Gulf of Mexico (GOM). Sales in the Eastern GOM have been especially controversial. Industry groups contend that the sales are too limited, given what they say is an enormous resource potential, while environmental groups and some state officials argue that the risks to the environment and local economies are too great. The FY2004 law continued leasing moratoria in other areas, including the Atlantic and Pacific Coasts.\nHowever, in a controversial development, the law ( P.L. 108-108 ) omitted language that would have prohibited funding for preleasing and leasing activity in the North Aleutian Basin Planning Area, currently under a leasing moratorium. There is some interest in eventually opening the area to oil and gas development as an offset to the depressed fishing industry in the Bristol Bay area. Environmentalists and others oppose this effort. The North Aleutian Basin Planning Area, containing Bristol Bay, is not in the MMS current five-year (2002-2007) leasing plan. Under the Outer Continental Shelf Lands Act of 1953 (OCSLA, 43 U.S.C. §1331), the Secretary of the Interior submits five-year leasing programs that specify the time, location, and size of lease sales to be held during that period.\nThe FY2005 law continues to support the moratoria on leasing and preleasing activity in certain sections of the OCS, including the Atlantic and Pacific Coasts and the Eastern GOM. However, like the FY2004 law, it does not prohibit funding for preleasing and leasing activity in the North Aleutian Basin Planning Area.\nControversy over MMS oil and gas leases in offshore California has drawn congressional interest. Under the Coastal Zone Management Act of 1972 (16 U.S.C. §1451), development of federal offshore leases must be consistent with state coastal zone management plans. In 1999, MMS extended 36 out of the 40 leases at issue in offshore California by granting lease suspensions, but the State of California contended that it should have first reviewed the suspensions for consistency with the state's coastal zone management plan. In June 2001 the U.S. Court for the Northern District of California agreed with the State of California and struck down the MMS suspensions.\nThe Bush Administration appealed this decision January 9, 2002, to the U.S. Ninth Circuit Court of Appeals, after the state rejected a more limited lease development plan that involved 20 leases using existing drilling platforms. However, on December 2, 2002, a three-judge panel of the Ninth Circuit upheld the District Court decision. The Department of the Interior did not appeal this decision and is currently working with lessees to resolve the issue. The breach-of-contract lawsuit that was filed against MMS by nine oil companies seeking $1.2 billion in compensation for their undeveloped leases is pending further action.\nSeveral oil and gas lessees submitted a new round of suspension requests. The MMS has prepared six Environmental Assessments and found \"no significant impact\" for processing the applications for Suspension of Production or Operations. Under the Coastal Zone Management Act, a consistency review by the state will occur before a decision is made to grant or deny the requests.\nFor further information on the Minerals Management Service , see its website at http://www.mms.gov .",
"The Surface Mining Control and Reclamation Act of 1977 (SMCRA, P.L. 95-87 ) established the Office of Surface Mining Reclamation and Enforcement (OSM) to ensure that land mined for coal would be returned to a condition capable of supporting its pre-mining land use. SMCRA also established an Abandoned Mine Lands (AML) fund, with fees levied on coal production, to reclaim abandoned sites that pose serious health or safety hazards. Congress's intention was that individual states and Indian tribes would develop their own regulatory programs incorporating minimum standards established by law and regulations. Fee collections have been broken up into \"federal\" and \"state\" shares. Grants are awarded to the states after applying a distribution formula to the annual appropriation and drawing upon both the federal and state shares. In instances where states have no approved program, OSM directs reclamation in the state.\nSeveral states have been pressing in recent years for increases in the AML appropriations, with a particular eye on the unappropriated balances in the state share accounts that now exceed $1 billion. The total unappropriated balance—including both federal and state share accounts in the AML fund—was nearly $1.7 billion by the end of FY2004. Western states are additionally critical of the program because, as coal production has shifted westward, these states are paying more into the fund. They argue that they are shouldering a disproportionate share of the reclamation burden as more of the sites requiring remediation are in the East.\nThe Administration submitted legislation in the 108 th Congress that would have reauthorized fee collections and made a number of changes to the program to address state and regional concerns. Other legislative proposals for reauthorization of AML collections were introduced in the House and Senate. The 108 th Congress was unable to reach a resolution of the issues surrounding the structure of the program. In light of the narrowing prospects that a bill would be enacted, the Senate Committee on Appropriations added a short-term extension to May 31, 2005 during its markup of the Interior appropriations bill. The House version of the bill had no comparable language. Before adjourning, authorization for collection of AML fees was extended nine months to the end of June 2005 by the Consolidated Appropriations Act for 2005 ( P.L. 108-447 ).\nA significant feature in the Administration reauthorization proposal with significant bearing on the budget request was a ten-year plan to return the unobligated state share balances to the states. The Administration asked for $53.0 million to carry out the plan in the first year. Consequently, the Administration's request for AML was $243.9 million, a large increase (28%) above the $190.6 million enacted in FY2004. Neither the House nor Senate Committees on Appropriations embraced the Administration's plan and the requested $53.0 million increase. The House committee recommended an appropriation of $194.1 million for the AML fund—$49.8 million less than the Administration request but $3.5 million above the FY2004 appropriation. The full House concurred with the Committee's recommendation. The Senate Committee on Appropriations recommended $190.9 million for AML grants distributions—a reduction of $3.2 million from the House level, and $53.0 million from the President's request. For FY2005, Congress enacted an appropriation of $188.2 from the AML fund.\n\"Minimum program states\" are states with significant AML problems, but with insufficient levels of current coal production to generate significant fees to the AML fund. Currently, grants to the states from the AML fund are based on states' current and historic coal production. The minimum funding level for each of these states was increased to $2.0 million in 1992. However, over the objection of those states who would have preferred the full authorization, Congress has appropriated $1.5 million to minimum program states since FY1996. As part of its reauthorization plan, the Administration proposed to assure $2.0 million annually to minimum program states, but Congress maintained the $1.5 million level.\nThe other component of the OSM budget is for Regulation and Technology programs. For Regulation and Technology, Congress provided $105.4 million in FY2004, and the Administration requested $108.9 million for FY2005. Included in the FY2005 request was $10.0 million in funding for the Appalachian Clean Streams Initiative (ACSI), the same level as in FY2002-2004, and $10.0 million for the Small Operators Assistance Program (SOAP). The House Appropriations Committee and the full House agreed to these requested levels. The Senate Committee on Appropriations added $1.0 million to the House level for the Regulation and Technology budget, with instruction to OSM to contract with the National Research Council of the National Academy of Sciences to undertake a study of coal reserves and current technologies in mining. For these programs, Congress enacted $108.4 million for FY2005.\nIn total, the Administration requested $352.8 million for OSM, a 19% increase over the FY2004 level of $296.0 million. As detailed above, the House agreed to a total spending level of $303.0 million, and the Senate Committee on Appropriations supported $300.8 million. The FY2005 enacted level is $296.6 million for OSM programs and activities.\nCRS Report RL32373, Abandoned Mine Land Fund Reauthorization: Selected Issues , by [author name scrubbed] (pdf).\nFor further information on the Office of Surface Mining Reclamation and Enforcement , see its website at http://www.osmre.gov/osm.htm .",
"The Bureau of Indian Affairs (BIA) provides a variety of services to federally-recognized American Indian and Alaska Native tribes and their members, and historically has been the lead agency in federal dealings with tribes. Programs provided or funded through the BIA include government operations, courts, law enforcement, fire protection, social programs, education, roads, economic development, employment assistance, housing repair, dams, Indian rights protection, implementation of land and water settlements, management of trust assets (real estate and natural resources), and partial gaming oversight.\nBIA's FY2004 direct appropriations were $2.301 billion. For FY2005, the Administration proposed $2.25 billion, a decrease of $47.0 million (-2%) below FY2004. The House approved $2.33 billion for FY2005, an increase of $34.0 million (1%) over FY2004 and $81.1 million (4%) over the Administration's request. The Senate Appropriations Committee recommended $2.28 billion, or $24.7 million (-1%) below FY2004 and $22.3 million (1%) above the request. The conference recommendation, enacted by Congress for FY2005, is $2.30 billion, or $5.1 million (0.2%) below FY2004 and $41.9 million (2%) above the request. For the BIA, its major budget components, and selected BIA programs (shown in italics), Table 11 below presents FY2004 appropriations; FY2005 figures for the Administration's proposal, the House-passed bill, the Senate Committee recommendations, and the enacted level; and the percentages of change from FY2004 to the enacted FY2005 amounts. Decreases are shown with minuses.\nKey issues for the BIA, discussed below, include the reorganization of the Bureau, especially its trust asset management functions, and problems in the BIA school system.",
"In April 2003, Secretary of the Interior Norton began implementing a reorganization of the BIA, the office of Assistant Secretary-Indian Affairs (AS-IA), and the Office of Special Trustee for American Indians (OST) in the Office of the Interior Secretary (see \"Office of Special Trustee\" section below). The reorganization arises from issues and events related to trust funds and trust assets management, and is integrally related to the reform and improvement of trust management. Historically, the BIA has been responsible for managing Indian tribes' and individuals' trust funds and trust assets. Trust assets include trust lands and the lands' surface and subsurface economic resources (e.g., timber, grazing lands, or minerals), and cover about 45 million acres of tribal trust land and 10 million acres of individual Indian trust land. Trust assets management includes real estate services, processing of transactions (e.g., sales and leases), surveys, appraisals, probate functions, land title records activities, and other functions.\nThe BIA, however, has been frequently charged with mismanaging Indian trust funds and trust assets. Investigations and audits in the 1980s and after supported these criticisms, especially in the areas of accounting, linkage of owners to assets, and retention of records. This led to a trust reform act in 1994 and the filing of an extensive court case in 1996 (see \" Office of Special Trustee for American Indians \" section below). The 1994 act created the OST, assigning it responsibility for oversight of trust management reform. In 1996 trust fund management was transferred to the OST from the BIA, but the BIA retained management of trust assets.\nUnsuccessful efforts at trust management reform in the 1990s led DOI to contract in 2001 with a management-consultant firm. The firm's recommendations included both improvements in trust management and reorganization of the DOI agencies carrying out trust management and improvement. Following nearly a year of DOI consultation on reorganization with Indian tribes and individuals, DOI announced the reorganization in December 2002, even though the department and tribal leaders had not reached agreement on all aspects of reorganization. DOI, however, faced a deadline in the court case to file a plan for overall trust management reform, and reorganization was part of DOI's plan.\nThe current reorganization plan of BIA, AS-IA, and OST chiefly involves trust management structures and functions. Under the plan, the BIA's trust operations at regional and agency levels will remain in those offices but be split off from other BIA services. The OST will add trust officers to BIA regional and agency offices to oversee trust management and provide information to Indian trust beneficiaries. Certain tribes, however, that had been operating trust management reform pilot projects with their regional BIA offices under self-governance compacts were excluded from the reorganization, under the FY2004 appropriations act. The BIA, OST, and AS-IA, together with the Office of Historical Trust Accounting in the Secretary's office, also are implementing a separate trust management improvement project, announced in March 2003, which includes improvements in trust asset systems, policies, and procedures, historical accounting for trust accounts, reduction of backlogs, modernization of computer technology (the court case led in 2001 to a continuing shutdown of BIA's World-Wide-Web connections), and maintenance of the improved system.\nMany Indian tribes and tribal organizations, and the plaintiffs in the court case, have been critical of the new reorganization and have urgently asked that it be suspended. Tribes argue that the reorganization is premature, because new trust procedures and policies are still being developed; that it insufficiently defines new OST duties; and that other major BIA service programs are being limited or cut to pay for the reorganization. For FY2005, Congress responded to tribal concerns by continuing the FY2004 provision (dropped in the Administration's proposal) that excludes from BIA reorganization certain tribes that have been operating trust management reform pilot projects with their regional BIA offices. Congress did not, however, suspend or stop the reorganization.",
"The BIA funds 185 elementary and secondary schools and peripheral dormitories, with over 2,000 structures, educating about 48,000 students in 23 states. Tribes and tribal organizations, under self-determination contracts and other grants, operate 120 of these institutions; the BIA operates the remainder. BIA-funded schools' key problems are low student achievement and, especially, a large number of inadequate school facilities.\nSome observers feel tribal operation of schools will improve student achievement. To encourage tribal boards to take over operation of current BIA-operated schools, for FY2004, Congress created an administrative cost fund of $2.9 million to pay tribal school boards' start-up administrative costs. The Administration proposal deleted this fund for FY2005, arguing that tribes were showing insufficient interest in operating BIA-funded schools. Congress retained the fund but reduced its appropriation to $1 million.\nMany BIA school facilities are old and dilapidated, with health and safety deficiencies. BIA education construction covers both construction of new school facilities to replace facilities that cannot be repaired, and improvement and repair of existing facilities. Schools are replaced or repaired according to priority lists. The BIA has estimated the current backlog in education facility repairs at $942 million, but this figure changes as new repair needs appear each year. Table 11 above shows FY2004 and FY2005 education construction appropriations. The Administration proposed reducing FY2005 appropriations for replacement-school construction by $61.0 million, because a number of school replacement projects funded in previous years are still under construction. The Administration also proposed adding appropriations language authorizing the BIA to reassume management of school construction projects that are under tribal self-determination contracts if the construction does not begin within 18 months of funding availability, arguing that some projects under self-determination contracts have been too slow in commencing. Congress appropriated $263.4 million in total education construction funds for FY2005—$31.6 million (11%) below FY2004 and $34.3 million (15%) over the request—and enacted the language authorizing BIA reassumption of construction projects.\nBecause construction appropriations are, in some tribes' view, not reducing construction needs fast enough, Indian tribes have urged Congress to explore additional sources of construction financing. In the FY2001-FY2004 Interior appropriations acts, Congress authorized a demonstration program that allows tribes to help fund construction of BIA-funded, tribally-controlled schools. The Administration proposed increasing the funding for this program by $4.0 million in FY2005, to a total of $9.9 million. Congress increased the funding even further, to $12.3 million, but earmarked all the funding for three projects.\nFor further information on education programs of the Bureau of Indian Affairs , see its website at http://www.doi.gov/bia/.",
"",
"The Office of Insular Affairs (OIA) provides financial assistance to four insular areas (Guam, American Samoa, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands), as well as three former insular areas (Republic of the Marshall Islands (RMI), Federated States of Micronesia (FSM), and Palau) formerly included in the Trust Territory of the Pacific Islands. OIA staff also manages relations between these jurisdictions and the federal government and works to build the fiscal and government capacity of units of local government. Funding for the OIA consists of two parts: (1) permanent and indefinite appropriations and (2) discretionary and current mandatory funding subject to the appropriations process.\nPermanent and indefinite appropriations historically constitute roughly 70% to 80% of the OIA budget and consist of two parts. For FY2005 the Administration estimated that a total of roughly $305 million would be available, as follows:\n● $196 million to three freely associated states (RMI, FSM, and Palau) under conditions set forth in the respective Compacts of Free Association; and\n● $109 million in fiscal assistance, divided between the U.S. Virgin Islands for estimated rum excise and income tax collections and Guam for income tax collections.\nThese funding levels represent a slight increase over FY2004 levels.\nDiscretionary and current mandatory funds that require annual appropriations constitute the balance (roughly 20% to 30%) of the OIA budget. Two accounts—Assistance to Territories (AT) and the Compact of Free Association (CFA)—comprise discretionary and current mandatory funding. Discretionary funding for FY2004 was set at $82.1 million, with AT funded at $75.7 million and CFA at $6.4 million. This constituted a 15% decrease from the amount appropriated for such payments in FY2003 ($96.8 million). The FY2005 request would have reduced AT funding to $73.0 million, and CFA assistance to $5.9 million, for a total of $78.9 million. The appropriation for AT in FY2005 ($75.6 million) exceeded the Administration proposal by about $2.6 million. The FY2005 appropriation for CFA ($5.5 million) was lower than that requested. In total, OIA discretionary funding for FY2005 is $81.0 million, a 1% decrease from FY2004.\nLittle debate has occurred in recent years on funding for the territories and the OIA. In general, Congress continues to monitor economic development and fiscal management by government officials in the insular areas. For example, the recently negotiated compacts with the FSM and RMI include accountability measures and performance review requirements.\nFor further information on Insular Affairs, see its website at http://www.doi.gov/oia/index.html .",
"For FY2005, Congress enacted $226.8 million for PILT, a $2.1 million (1%) increase over FY2004, and a $0.8 million (0.4%) increase over the Administration's FY2005 request.\nFor FY2005, the Administration had proposed to fund the PILT program at $226.0 million, nearly level funding with the $224.7 million appropriated in FY2004. The House agreed with the President's request. A House floor amendment to add $15.0 million to PILT was defeated. Supporters of the amendment claimed that rural western areas need additional PILT funds to provide the kinds of services that counties with more private land are able to provide. Opposition to the amendment centered on proposed reductions in funding for the Smithsonian Institution and the National Endowment for the Humanities to offset the increase for PILT. The Senate committee-reported bill contained $230.0 million for PILT, an increase of $5.3 million over the FY2004 enacted level and $4.0 million over the Administration's request and House-passed level.\nThe PILT program compensates local governments for federal land within their jurisdictions because federally owned land is not taxed. Since the beginning of the program in 1976, payments of more than $3 billion have been made. However, the program has been controversial because in recent years appropriations have been substantially less than authorized amounts.\nBeginning in FY2004, the Administration proposed, and Congress agreed, to shift the program from the BLM budget to Departmental Management in DOI because PILT payments are made for lands of the Fish and Wildlife Service, National Park Service, and Forest Service, and certain other federal lands, in addition to BLM lands.\nFor further information on the Payments in Lieu of Taxes program, see the BLM website at http://www.blm.gov/pilt/ .",
"The Office of Special Trustee for American Indians, in the Secretary of the Interior's office, was authorized by Title III of the American Indian Trust Fund Management Reform Act of 1994 ( P.L. 103-412 ). The Office of Special Trustee (OST) generally oversees the reform of Interior Department management of Indian trust assets, the direct management of Indian trust funds, establishment of an adequate trust fund management system, and support of department claims settlement activities related to the trust funds. Indian trust funds formerly were managed by the BIA, but in 1996, at Congress's direction and as authorized by P.L. 103-412 , the Secretary of the Interior transferred trust fund management from the BIA to the OST. (See \" Bureau of Indian Affairs \" section above.)\nIndian trust funds managed by the OST comprise two sets of funds: (1) tribal funds owned by about 300 tribes in approximately 1,400 accounts, with a total asset value of about $2.9 billion; and (2) individual Indians' funds, known as Individual Indian Money (IIM) accounts, in about 260,000 accounts with a current total asset value of about $400 million. (Figures are from the OST FY2005 budget justifications.) The funds include monies received from claims awards, land or water rights settlements, and other one-time payments, and from income from land-based trust assets (e.g., land, timber, minerals), as well as from investment income.\nThe FY2005 budget proposal requested $317.7 million for the OST, $108.7 million (52%) over FY2004. The House approved $238.3 million for OST for FY2005, 14% over FY2004 but 25% below the Administration's proposal. The Senate Appropriations Committee recommended $246.3 million, 18% over FY2004 but 22% below the Administration proposal. The conference committee recommendation, enacted by Congress, was $228.1 million, or $19.0 million (9%) over FY2004 and $89.6 million (28%) below the request. Table 12 below presents figures for FY2004 and FY2005 for the OST.\nKey issues for the OST are its current reorganization, an historical accounting for tribal and IIM accounts, and litigation involving tribal and IIM accounts.",
"Both OST and BIA began a reorganization in 2003 (see \" Bureau of Indian Affairs \" section above), one aspect of which is the creation of OST field operations. OST is installing fiduciary trust officers and administrators at the level of BIA agency and regional offices. Many Indian tribes disagree with parts of the OST and BIA reorganization and have asked Congress to put it on hold so that OST and BIA can conduct further consultation with the tribes.",
"The historical accounting effort seeks to assign correct balances to all tribal and IIM accounts, especially because of litigation. Because of the long historical period to be covered (some accounts may date from the 19 th century), the large number of IIM accounts, and the large number of missing account documents, an historical accounting based on actual account transactions is expected to be large and time-consuming. The Interior Department has proposed an extensive, five-year, $335 million project to reconcile IIM accounts. Most of the increase that the Administration proposed for the OST for FY2005 was for historical accounting, which would have increased from $44.4 million in FY2004 to $109.4 million in FY2005. Of the proposed $109.4 million total for historical accounting, $80.0 million was for IIM accounts and $29.4 million for tribal accounts. The House and the Senate Appropriations Committee increased funds for historical accounting but capped the amount at $58.0 million in appropriations language. For FY2005, Congress approved the $58-million cap, which after rescissions in the law is $57.2 million, or $12.7 million (29%) over FY2004 and $52.2 million (48%) below the request. The House Appropriations Committee, in its report on the FY2005 bill, explained that the cap was related to ongoing mediation and settlement discussions in the trust-funds litigation and to the possibility of large future appropriations if these efforts failed.",
"An IIM trust funds class-action lawsuit ( Cobell v. Norton ) was filed in 1996, in the federal district court for the District of Columbia, against the federal government by IIM account holders. Many OST activities are related to the Cobell case, including litigation support activities, but the most significant issue for appropriations concerns the method by which the historical accounting will be conducted to estimate IIM accounts' proper balances. The DOI's proposed method was estimated by the Department to cost $335 million over five years and produce a relatively low total owed to IIM accounts; the plaintiffs' method, whose procedural cost is uncertain, was estimated to produce a figure of $176 billion owed to IIM accounts.\nIn 2003, the court conducted a lengthy trial to decide which historical accounting method to use in estimating the IIM accounts' proper balances. Previously, in the first phase of the Cobell case, in 1999 the court had found that DOI and the Treasury Department had breached trust duties regarding the necessary document retention and data gathering needed for an accounting, and regarding the business systems and staffing to fix trust management. The lawsuit's final phase will determine the amount of money owed to the plaintiffs, based on the historical accounting method chosen.\nCongress has, for several years, been concerned about the current and potential costs of the Cobell lawsuit, although it has eliminated proposed appropriations language directing settlement of the case. The Appropriations Committees have expressed concern that the IIM lawsuit was jeopardizing DOI trust reform implementation and have required reports from DOI on the costs and benefits of historical accounting methods, including statistical sampling.\nThe court's decision on historical accounting was delivered on September 25, 2003. The court rejected both the plaintiffs' and DOI's proposed historical accounting plans and instead ordered DOI to account for all trust fund and asset transactions since 1887, without using statistical sampling. The Interior Department estimated that the court's choice for historical accounting would cost $6-12 billion.\nThe FY2004 Interior appropriations conference report added a controversial new provision aimed at the court's September 25, 2003, decision. The provision directed that no statute or trust law principle should be construed to require the Interior Department to conduct the historical accounting until either Congress had delineated the department's specific historical accounting obligations or December 31, 2004, whichever was earlier. The conferees asserted in the conference committee report that the court-ordered historical accounting was too expensive, beyond the intent of the 1994 Act, and likely to be appealed, and that Congress needed time to resolve the historical accounting question or settle the suit. Opponents in the House and Senate argued that the provision was of doubtful constitutionality, since it directed courts' interpretation of law and effectively suspended a court order in an ongoing case, and further was unjust to the plaintiffs and might undermine the Interior Department's incentives to negotiate a settlement.\nThe FY2004 conference report with this provision passed both the Senate and, narrowly, the House, and was enacted on November 10, 2003. Based on this provision, the DOI on the same day appealed the court's September 25, 2003, order. On November 12, 2003, the U.S. Court of Appeals for the District of Columbia temporarily stayed the September 25 order. During the stay, on April 5, 2004, the IIM plaintiffs and the federal government announced agreement on two mediators in their case. The House Appropriations Committee's report on the FY2005 appropriations bill expressed encouragement at the mediation and at commitments by the House and Senate authorizing committees to develop a legislative solution. On December 10, 2004, the Appeals Court overturned much of the September 25 order, finding among other things that the congressional provision prevented the district court from requiring DOI to follow its directions for a historical accounting. The Appeals Court noted that the provision expired on December 31, 2004, but did not discuss the district court's possible reissue of the order. Meanwhile, no bill was introduced in the 108 th Congress to delineate the government's historical accounting obligation, the mediation discussions continued, and the district court has not reissued an order on historical accounting.\nFor further information on the Office of Special Trustee for American Indians , see its website at http://www.ost.doi.gov/ .\nCRS Report RS21738. The Indian Trust Fund Litigation: An Overview of Cobell v. Norton, by [author name scrubbed].",
"The National Indian Gaming Commission (NIGC) was established by the Indian Gaming Regulatory Act (IGRA) of 1988 ( P.L. 100-497 , as amended) to oversee Indian tribal regulation of tribal bingo and other \"Class II\" operations, as well as aspects of \"Class III\" gaming (e.g., casinos and racing). The chief appropriations issue for NIGC is whether its funding is adequate for its regulatory responsibilities.\nThe NIGC is authorized to receive annual appropriations of $2 million, but its budget authority consists chiefly of annual fees assessed on tribes' Class II and III operations. IGRA currently caps NIGC fees at $8 million per year. The NIGC in recent years has requested additional funding because it has experienced increased demand for its oversight resources, especially audits and field investigations. Congress, in the FY2003-FY2004 appropriations acts, increased the NIGC's fee ceiling to $12 million, but only for FY2004-FY2005.\nIn the FY2005 budget, the Administration proposed language amending IGRA to create an adjustable, formula-based ceiling for fees instead of the current fixed ceiling. The Administration argued that a formula-based fee ceiling would allow NIGC funding to grow as the Indian gaming industry grows. Gaming tribes did not support the increased fee ceiling or the proposed amendment of IGRA's fee ceiling, arguing that NIGC's budget should first be reviewed in the context of extensive tribal and state expenditures on regulation of Indian gaming, and that changes in NIGC's fees should be developed in consultation with tribes. The House bill, the Senate Committee recommendation, and the FY2005 law did not include the Administration's proposed amendment to IGRA and instead extended to FY2006 the increase in the NIGC fee ceiling to $12 million. Language in the Senate Committee report allowed the NIGC to use negotiated rulemaking with tribes in developing regulations.\nDuring FY1999-FY2004, all NIGC activities were funded from fees, with no direct appropriations. The Administration proposed no direct appropriations for the NIGC for FY2005, and the House, the Senate Appropriations Committee, and the FY2005 law did likewise.",
"",
"The FY2005 appropriations for the Forest Service total $4.75 billion—$4.63 billion in the FY2005 Consolidated Appropriations Act (including $394.4 million in emergency FS wildfire funding that would become available if certain conditions are met), plus $113.1 million in P.L. 108-324 for emergency funding to address damages from natural disasters. This amount is $75.0 million (2%) more than recommended by the Senate Appropriations Committee recommended ($4.67 billion, including $400.0 million in emergency wildfire funding), and $99.8 million (2%) more than the House-passed level ($4.65 billion, including $400.0 million in emergency wildfire funding). The FY2005 funding is $508.1 million (12%) more than the President's request of $4.24 billion (with no emergency wildfire funding), and $193.7 million (4%) less than FY2004 appropriations of $4.98 billion (including supplemental funds).",
"Various legislative provisions relating to the FS were discussed during consideration of Interior appropriations legislation, some of which were enacted. One provision included in the FY2005 law could affect timber harvesting in the Tongass National Forest. It extends a provision in the FY2004 Interior and Related Agencies Appropriations Act ( P.L. 108-108 ) providing standards for timber sale litigation for an additional year's timber sale decisions.\nAnother provision in the FY2005 law pertains to categorical exclusions for grazing. For FY2005 through FY2007, decisions by the Secretary of Agriculture authorizing grazing on FS lands would be categorically excluded from documentation under the National Environmental Policy Act of 1969 (NEPA), under certain circumstances. Supporters of the language contend that it makes the environmental review process more efficient by reducing the documentation and expense required for reviewing grazing allotments where the level of complexity of environmental issues is relatively low. Opponents are concerned that the provision could eliminate NEPA-associated opportunities for public comment and continue grazing at levels that damage the environment.\nA third provision included in the law pertains to the forest land enhancement program (FLEP). The program was enacted in the 2002 Farm Bill ( P.L. 107-171 , §8002) with $100.0 million in mandatory spending for financial assistance to private landowners for forestry practices. FY2003 funds of $20.0 million were spent on the program. Then, in the summer of 2003, the Administration borrowed $50.0 million of FLEP funds for firefighting, and $10.0 million was repaid in the FY2004 Interior Appropriations Act. For FY2005, the Administration had proposed cancelling the remaining $40.0 million (after the $20.0 million spent and $40.0 million borrowed and not repaid). The House and Senate Appropriations Committees had included language in their bills as reported to cancel the remaining $40.0 million of FLEP, but the provision was removed on the House floor on a point of order. The FY2005 law includes a provision cancelling $20.0 million of FLEP funding, leaving $20.0 million available for FLEP funding through FY2006.\nOther provisions were considered but not enacted. The House had agreed to the Chabot amendment to prohibit funding for forest development roads to remove timber from the Tongass National Forest (AK). This amendment would have prevented new timber harvesting roads paid by taxpayers, but would not have prevented road building by private timber companies or by the government for other purposes. It would likely have constrained timber harvesting in the Tongass during FY2005, but would not have prevented maintenance of existing roads. The Senate committee-reported bill and the FY2005 law do not include such a provision.\nIn addition, the House rejected a Udall amendment to prevent completion of new NFMA planning regulations. The amendment was supported because the draft regulations would eliminate the NEPA analysis of plans, end population viability standards for native species, and otherwise alter existing planning processes and standards. Opponents contended that the 1982 regulations are outdated and cumbersome and the 2000 Clinton regulations (which have not been implemented) are unworkable. The Bush Administration has since issued new NFMA planning regulations (70 Fed. Reg. 1023, Jan. 5, 2005).",
"Fire funding and fire protection programs have been controversial. The ongoing discussion includes questions about funding levels and locations for various fire protection treatments, such as thinning and prescribed burning to reduce fuel loads and clearing around structures to protect them during fires. Another focus is whether, and to what extent, environmental analysis, public involvement, and challenges to decisions hinder fuel reduction activities. (For historical background and descriptions of funded activities, see CRS Report RL33990, Wildfire Funding , by [author name scrubbed].)\nThe National Fire Plan comprises the FS wildland fire program (including fire programs funded under other line items) and fire fighting on DOI lands; the DOI wildland fire monies are appropriated to the BLM. Congress does not fund the National Fire Plan in any one place in Interior appropriations acts. The total can be derived by combining the several accounts which the agencies identify as National Fire Plan funding. This shows FY2005 appropriations of $2.97 billion, $14.4 million (0.5%) less than recommended by the Senate Appropriations Committee and $51.2 million (2%) less that the House provided. The amount is $500.3 million (20%) above the FY2005 budget request, and $325.3 million (10%) less than FY2004 appropriations. See\nTable 13 below.\nThe BLM appropriations are $831.3 million for FY2005, $11.8 million (1%) less that the Senate committee recommendation and the House-passed level, $88.2 million (12%) more than the request, and $52.3 million (6%) less than the FY2004 appropriation. The FS level is $2.14 billion, $2.6 million (0.1%) less than the Senate Committee recommended, $39.4 million (2%) less than the House-passed level, $412.1 million (24%) more than the request, and $273.0 million (11%) less than FY2004 funding.\nThe FS and BLM wildland fire line items include funds for fire suppression (fighting fires), preparedness (equipment, training, baseline personnel, prevention, and detection), and other operations (rehabilitation, fuel reduction, research, and state and private assistance). For more information on these activities, see CRS Report RL33990, Wildfire Funding , by [author name scrubbed].\nThe FY2005 appropriations for wildfire suppression are $867.3 million, $12.6 million (1%) less than the Senate committee recommended, $12.2 million (1%) less than the House provided, $39.6 million (4%) less than the budget request, and $77.3 million (10%) more than FY2004 appropriations. The increase above FY2004 is slightly greater for the BLM (13%) than for the FS (9%). The request was based on an average fire year, and contained no contingent or emergency funding ($947.3 million enacted for FY2004). If the fire season is worse than average, the agencies have the authority to borrow unobligated funds from any other account to pay for firefighting. Such borrowings typically are repaid in subsequent appropriations (commonly emergency appropriations bills), although to date, FY2003 borrowings have not been fully repaid. Supplemental emergency firefighting funds for FY2004 were enacted in the FY2005 DOD appropriations ( P.L. 108-287 ). In their FY2005 bills, the House had included, and the Senate committee had recommended, $500.0 million in emergency funding ($100.0 million for the BLM and $400.0 million for the FS), if needed, for FY2005, to preclude borrowing from other accounts to fight wildfires. P.L. 108-324 included $1.0 million of emergency FY2005 FS funds for disaster recovery. The FY2005 appropriations law includes $493.1 million in emergency funding ($98.6 million for the BLM and $394.4 million for the FS), if needed.\nThe FY2005 Consolidated Appropriations Act includes $935.4 million for fire preparedness, $13.2 million (1%) less than the Senate Appropriations Committee recommended, $20.9 million (2%) less than the House, $13.8 million (1%) less than the request, and $10.5 million (1%) less than FY2004.\nFY2005 funding for other fire operations totals $671.8 million, $17.4 million (3%) more than the Senate Appropriations Committee recommended, and $12.2 million (2%) less than the House-passed level. Other fire operations include fuel reduction funding under the President's Healthy Forests Initiative and the Healthy Forests Restoration Act of 2003 ( P.L. 108-148 ), and other authorities. FY2005 fuel reduction funding totals $463.9 million, $6.6 million (1%) less than the Senate Committee recommended, $11.6 million (2%) less than the House-passed level and the FY2005 request, and $46.6 million (11%) more than in FY2004. The increase from FY2004 is slightly greater for the FS (12%) than for the BLM (10%). In addition, §8098 of P.L. 108-287 , the FY2005 DOD appropriations act, transferred $30.0 million of DOD funds to the FS for fuel reduction, hazard mitigation, and rehabilitation in the San Bernardino NF (CA) and $10.0 million for a wildfire training facility in San Bernardino County (CA).\nFinally, the House directed $8.0 million from two State and Private Forestry accounts (discussed below)—$5.0 million from state fire assistance and $3.0 million from forest stewardship—to be used to support community wildfire protection planning. The Senate Committee and conference reports are silent on the issue.",
"While funding for wildfires has been the center of debate, many changes have occurred in State and Private Forestry (S&PF)—programs that provide financial and technical assistance to states and to private forest owners. Total S&PF funding enacted in the FY2005 Consolidated Appropriations Act is $292.5 million (excluding $49.1 million enacted for disaster recovery in P.L. 108-324 ). This is $1.3 million (0.5%) more than recommended by the Senate Appropriations Committee, $10.1 million (4%) more than the House passed, $1.8 million (1%) less than the budget request, and $11.8 million (4%) less than FY2004 appropriations (excluding $24.9 million of emergency S&PF funding included under National Fire Plan emergency funding, above). Large shifts in funding within S&PF—in forest health management, in cooperative fire assistance, in cooperative forestry, and in international programs—were proposed and some were included in the FY2005 law.\nThe FY2005 law includes $101.9 million for forest health management (insect and disease control on federal and cooperative [nonfederal] lands), $20.6 million (25%) more than recommended by the Senate committee and requested by the Administration, $1.1 million (1%) less than the House passed, and $3.3 million (3%) more than FY2004 appropriations. The President proposed $10.0 million for a new Emerging Pest and Pathogens Fund to rapidly address invasive species problems, although similar proposals in the previous two budget requests have been rejected by Congress. The House, Senate committee, and FY2005 law again rejected this proposal. In addition, funds for forest health management are included in National Fire Plan Other Operations (see above). For FY2005, these funds total $24.6 million, $12.0 million (95%) more than the Senate Committee recommended and the Administration requested, $0.3 million (1%) less than the House passed, and $39,000 less than FY2004.\nFor S&PF Cooperative Fire Assistance to states and volunteer fire departments, the FY2005 law includes $38.8 million, $2.8 million (8%) more than the Senate Committee recommended, $3.0 million (7%) less than the House passed, $8.7 million (29%) more than the FY2005 request, and $0.4 million (1%) more than FY2004 (excluding the $24.9 million of FY2004 emergency S&PF funding included under National Fire Plan Emergency Funding, above). In addition, funds for cooperative fire assistance are included in National Fire Plan Other Operations (see above). Enacted FY2005 funding for such programs total $48.1 million, $0.7 million (2%) less than the Senate committee recommended, $0.1 million (0.1%) more than the House passed, $5.8 million (14%) more than the FY2005 budget request, and $11.1 million (19%) less than FY2004 funding.\nThe FY2005 law contains $145.4 million for Cooperative Forestry programs (assistance for forestry activities on state and private lands). This is $22.0 million (13%) less than the Senate committee recommended, $14.3 million (11%) more than the House passed, $32.3 million (18%) less than the FY2005 budget request, and $16.0 million (10%) more than FY2004. Most of the differences are in two programs: Forest Legacy, for purchasing title or easements for lands threatened with conversion to nonforest uses, such as for residences; and Economic Action Programs (EAP), for rural community assistance, wood recycling, and Pacific Northwest economic assistance. The enacted level for Forest Legacy is $57.1 million, $14.0 million (33%) more than the House, $19.2 million (25%) less than the Senate Committee recommended, and substantially ($42.9 million, 43%) below the $100.0 million proposed by the Administration for FY2005. The enacted level for EAP is $19.0 million, $0.9 million (5%) less than the Senate Appropriations Committee recommended, nearly double the House-passed level of $10.0 million, and down $6.6 million (26%) from FY2004. The Administration again proposed to terminate funding for this program. Other program changes are more modest.\nFor international programs (technical forestry assistance to other nations), FY2005 appropriations total $6.4 million, slightly ($91,000) less than the Senate committee recommended and the House passed, $1.1 million (20%) more than the FY2005 request, and $0.5 million (8%) more than FY2004 appropriations.\nIn addition, P.L. 108-324 contained $49.1 million in emergency appropriations for FS assistance to private landowners for recovery from natural resource disasters.",
"The FY2005 law includes $514.7 million for FS Capital Improvement and Maintenance, and P.L. 108-324 added $50.8 million in infrastructure funding for disaster recovery. Thus, total FY2005 funding for FS Capital Improvement and Maintenance is $565.5 million. This is $49.3 million (10%) more than the Senate Appropriations Committee recommended, $42.6 million (8%) more than the House passed, $64.5 million (13%) more than requested, and $10.3 million (2%) more than FY2004. The FY2005 funding levels for facilities ($198.8 million), roads ($226.4 million), and trails ($75.7 million) are generally similar to (within 5% of) the requested, House-passed, and Senate committee-recommended levels. The largest differences are for disaster recovery ($50.8 million enacted) and for deferred maintenance and infrastructure improvement. The latter account is to reduce the agency's backlog of deferred maintenance, estimated at $6.54 billion. The FY2005 law includes $13.8 million, $3.8 million (38%) more than recommended by the Senate committee and requested by the Administration, $8.1 million (37%) less than the House-passed level, and $17.8 million (56%) less than FY2004 funding.",
"The FY2005 law includes $61.0 million for FS Land Acquisition from the Land and Water Conservation Fund, with $12.8 million for acquisition management and $48.2 million for land purchases. This is significantly less ($21.5 million, 26%) than the $82.5 million recommended by the Senate Appropriations Committee, but substantially more ($45.5 million, 294%) than the House-passed level of $15.5 million. It is $5.9 million (9%) less than requested and $5.4 million (8%) less than FY2004 appropriations. The differences are almost entirely for land purchases, with modest differences for acquisition management.",
"FY2005 appropriations for FS research are $276.4 million, $3.5 million (1%) less than the Senate committee recommended, $4.3 million (2%) less than the House-passed level and the budget request, and $10.0 million (4%) above FY2004. National Forest System (NFS) appropriations are $1.39 billion (including $12.2 million in P.L. 108-324 for disaster recovery), $5.8 million (0.4%) more than the Senate committee recommended, $6.6 million (0.5%) less than the House-passed level, $3.4 million (0.2%) more than the request—excluding the proposed transfer of fuel reduction from wildfire management to NFS—and $27.1 million (2%) more than FY2004. (Fuel reduction funding is discussed under the National Fire Plan, above.) The House also included $10.0 million for a Centennial of Service Challenge to fund cost-share projects in celebration of the agency's 100 th birthday in February 2005; the FY2005 law provided $9.9 million.\nFor information on the Department of Agriculture, see its website at http://www.usda.gov/ .\nFor further information on the U.S. Forest Service , see its website at http://www.fs.fed.us/ .\nCRS Report RL30755, Forest Fire/Wildfire Protection , by [author name scrubbed].\nCRS Report RL30647, National Forest System Roadless Area Initiatives , by [author name scrubbed] and [author name scrubbed].\nCRS Issue Brief IB10076. Public (BLM) Lands and National Forests , by [author name scrubbed] and [author name scrubbed], coordinators.\nCRS Report RL33990, Wildfire Funding , by [author name scrubbed].\nCRS Report RS22024, Wildfire Protection in the 108 th Congress , by [author name scrubbed].\nCRS Report RS21880, Wildfire Protection in the Wildland-Urban Interface , by [author name scrubbed].",
"",
"The Bush Administration's FY2005 budget request of $635.8 million for fossil energy research and development was 5% less than the amount enacted for FY2004 ($672.8 million) but 2% higher than the enacted amount for FY2003 ($620.8 million). Major funding categories and amounts included Coal and Other Power Systems ($470.0 million), Natural Gas Technologies ($26.0 million), Petroleum Technology ($15.0 million), and Program Direction and Management Support ($106.0 million).\nThe FY2005 appropriations law which funded fossil energy R&D programs at $571.9 million has significant differences with the Administration's request. For example, within the category of Coal and Other Power Systems, the FY2005 law supported FutureGen at $17.8 million versus $237.0 million contained in the budget request. The FY2005 law supported increases in Advanced Systems, Fuels, and Fuel Cells research over the Administration's request. Natural Gas ($44.8 million) and Petroleum Technologies ($33.9 million) also were funded at higher levels than the Administration's request. A key difference for Natural Gas programs was in infrastructure projects. The Administration sought zero funding in FY2005, while the FY2005 law includes $8.4 million in infrastructure funding. In the Petroleum programs, the Administration sought $3.0 million in Petroleum Exploration and Production while the FY2005 law provides $18.7 million. The Administration's request also would have reduced funding for the fuels program by nearly half, providing $16.0 million for transportation fuels and chemicals and zero funding for solid and advanced fuels research. For FY2005, Congress enacted funding of $32.1 million for these programs, higher than FY2004 funding of $31.2 million.\nThe Administration requested $287.0 million for the Clean Coal Power Initiative (CCPI) for FY2005, as part of a $2 billion, 10-year commitment. The program is designed for \"funding advanced research and development and a limited number of joint government-industry-funded demonstrations of new technologies that can enhance the reliability and environmental performance of coal-fired power generators,\" according to DOE. The Administration wanted to incorporate the FutureGen program within the CCPI and would fund it at $237.0 million. Other CCPI programs would have received $50.0 million. The FutureGen project is a Bush Administration initiative designed to establish the feasibility of producing electricity and hydrogen from a coal-fired plant yielding no emissions. The CCPI is along the lines of the Clean Coal Technology Program (CCTP), which has completed most of its projects and has been subject to rescissions and deferrals since the mid-1990s. The Administration sought $237.0 million in rescissions in the CCTP program for FY2005, which would have offset the request for FutureGen. The FY2005 law deferred spending $257.0 million of remaining Clean Coal Technology funds, previously appropriated, rather than rescind the money as requested by the Administration. The CCTP eventually will be phased out. In addition to the $17.8 million for FutureGen, the FY2005 law provides $49.3 million for the CCPI.\nEarlier, the House had not supported FutureGen as a separate account or the amount requested, but rather supported it using $18.0 million of previously appropriated CCTP money for FutureGen in FY2005. The House also deferred $237.0 million of CCTP funds for future FutureGen requirements. In its report on the FY2005 bill, the House Appropriations Committee expressed disappointment with the emphasis of the request on funding major, new, long-term energy research efforts, such as FutureGen, at the expense of ongoing energy programs that are expected to yield energy savings and emissions reductions over the next decade ( H.Rept. 108-542 , p. 7). The House approved $105.0 million for the CCPI. In its report, the House Appropriations Committee recommended restoring many of the proposed reductions for research to improve fossil energy technologies. The House Committee stated that it would be \"fiscally irresponsible\" to discontinue research in which major investments have been made before that research is concluded ( H.Rept. 108-542 , p. 8).\nThe Senate Appropriations Committee agreed with the House in its level of funding for Future Gen ($18.0 million), while providing a separate line item for that purpose. The Committee also deferred (rather than rescinded) $257.0 million for CCTP. The Senate Committee did agree with the Administration in supporting $50.0 million for the CCPI.\nFor further information on the Department of Energy (DOE), see its website at http://www.doe.gov/engine/content.do .\nFor further information on Fossil Energy, see its website at http://www.fe.doe.gov/ .",
"The Strategic Petroleum Reserve (SPR), authorized by the Energy Policy and Conservation Act ( P.L. 94-163 ) in late 1975, consists of caverns formed out of naturally occurring salt domes in Louisiana and Texas in which more than 650 million barrels of crude oil are stored. The purpose of the SPR is to provide an emergency source of crude oil which may be tapped in the event of a presidential finding that an interruption in oil supply, or an interruption threatening adverse economic effects, warrants a drawdown from the reserve.\nIn mid-November 2001, President Bush ordered that the SPR be filled to capacity (700 million barrels) using royalty-in-kind (RIK) oil. This is oil turned over to the federal government as payment for production from federal leases. Acquiring oil for the SPR by RIK avoids the necessity for Congress to make outlays to finance direct purchase of oil; however, it also means a loss of revenues to the Treasury in so far as the royalties are paid in wet barrels rather than in cash. Deliveries of RIK oil began in the spring of 2002 and in early 2005 were scheduled to continue through April. Additional deliveries are highly likely until the SPR is filled.\nDeliveries that were scheduled for late 2002 and the first months of 2003 were delayed due to tightness in world oil markets. Some policymakers in the 108 th Congress urged the Administration to suspend RIK deliveries once again so that RIK oil could be released to tight markets. The administration argued that the 100,000-200,000 barrels per day of deliveries to the SPR are marginal volumes too small to have any discernible effect on crude and product prices.\nThere were three attempts during the second session of the 108 th Congress to temporarily suspend deliveries of RIK oil to the SPR. On March 11, 2004, during debate on the FY2005 budget resolution, the Senate agreed to another suspension of deliveries of RIK oil, and sale of this oil instead. Several members of the House also have voiced support for deferral of deliveries. During House floor debate on the Interior appropriations bill, Representative Sanders offered an amendment to suspend RIK deliveries and forbid the expenditure of funds in the bill to maintain the SPR above 647 million barrels, the level at which the SPR was when the Senate passed its budget resolution. The amendment was rejected. The most recent attempt to suspend fill occurred on September 14, 2004, during debate on H.R. 4567 , the FY2005 Department of Homeland Security appropriations bill. Senator Byrd proposed suspension of RIK fill in order to provide $470 million in additional funding for homeland security purposes. The amendment fell on a point of order.\nThe current program costs for the SPR are almost exclusively dedicated to maintaining SPR facilities and keeping the SPR in readiness should it be needed. The costs of transporting RIK oil to SPR sites are now borne by the contractors, so no new money was requested for the SPR petroleum account beginning with FY2004.\nThe request for SPR for FY2005 was $177.1 million—$172.1 million for the SPR and $5.0 million for the Northeast Home Heating Oil Reserve (NHOR). Congress agreed to a funding level of $175.9 million for the program in FY2004, including $4.9 million for the NHOR. The NHOR, established by the Clinton Administration, houses 2 million barrels of home heating oil in above-ground facilities in Connecticut, New Jersey, and Rhode Island. The House agreed to the requested levels, as did the Senate Committee on Appropriations. The enacted appropriation for FY2005, including the NHOR, is $174.6 million.\nComprehensive energy legislation ( H.R. 6 ) reported from conference during the 108 th Congress would have permanently authorized the SPR and NHOR, and would have required that the SPR be filled to its authorized capacity of 1 billion barrels (its current capacity is roughly 700 million barrels) as soon as practicable. The legislation was not enacted.\nFor further information on the Strategic Petroleum Reserve , see its website at http://fossil.energy.gov/programs/reserves/spr/ .\nCRS Issue Brief IB87050, The Strategic Petroleum Reserve , by [author name scrubbed].",
"The National Defense Authorization Act for FY1996 ( P.L. 104-106 ) authorized sale of the federal interest in the oil field at Elk Hills, CA (Naval Petroleum Reserve -1 (NPR-1)). On February 5, 1998, Occidental Petroleum Corporation took title to the site and wired $3.65 billion to the U.S. Treasury. P.L. 104-106 also transferred most of two Naval Oil Shale Reserves (NOSR) to DOI; the balance of the second was transferred to DOI in the spring of 1999. On January 14, 2000, the Department of Energy (DOE) returned the undeveloped Naval Oil Shale Reserve-2 (NOSR-2) to the Ute Indian Tribe; the FY2001 National Defense Authorization ( P.L. 106-398 ) provided for the transfer. The United States retains a 9% royalty interest in NOSR-2, with any proceeds to be applied to the costs of remediating a uranium mill tailings site near Moab, UT. In 1999, NOSR-3 was transferred to the Department of the Interior in 1999). Conditions of the transfer of NOSR-3—and the prior sale of the Elk Hills field—were that DOE remained responsible for environmental remediation activities.\nThis leaves in the Naval Petroleum Reserves program two small oil fields in California and Wyoming, which were estimated to generate revenue to the government of roughly $7.2 million during FY2005. Congress provided $18.0 million to maintain the Naval Petroleum Reserves (NPR) during FY2004. Similarly, the House agreed to the Administration's recommendation to maintain spending at $18.0 million in FY2005. The Senate Committee on Appropriations recommended the same level. The final appropriation for FY2005 is $17.8 million.\nIn settlement of a long-standing dispute between California and the federal government over the state's claim to Elk Hills as \"school lands,\" the California Teachers' Retirement Fund (CTRF) is to receive 9% of the Elk Hills sale proceeds after the costs of sale have been deducted. The agreement between DOE and California provided for five annual payments of $36.0 million beginning in FY1999, with the balance due to be paid in equal installments in FY2004 and FY2005. The FY2004 budget provided $72.0 million, including an advance appropriation of $36.0 million for the Elk Hills School Lands Fund, to be paid on October 1 of the following fiscal year. For FY2005, the Administration also requested $72.0 million, and the House agreed to $72.0 million pending a final determination of how much additional money is due to the CTRF. The Senate Committee on Appropriations also recommended $72.0 million, including an advance appropriation of $36.0 million, payable on October 1, 2005. The FY2005 enacted level is $71.5 million, consisting of a $35.5 million advance appropriation from previous years and a $36.0 million advance appropriation for FY2006.\nFor further information on Naval Petroleum and Oil Shale Reserves , see its website at http://fossil.energy.gov/programs/reserves/npr/ .",
"The FY2005 budget request ( Budget Appendix , p. 397) notes that the \"Administration's energy efficiency programs have the potential to produce substantial benefits for the Nation—both now and in the future—in terms of economic growth, increased energy security and a cleaner environment.\" In particular, the request \"continues the Hydrogen Fuel Initiative to accelerate the worldwide availability and affordability of hydrogen-powered fuel cell vehicles.\"\nThe Administration's request sought $875.9 million ($584.7 million, excluding Weatherization) for energy efficiency, which is $2.1 million, or 0.2%, less than the FY2004 appropriation. Compared with the FY2004 appropriation, the request would have cut R&D funding from $606.9 million to $543.9 million, a decrease of $62.9 million, or 10%. The request originally included $291.2 million for Weatherization, which is $64.0 million more than the FY2004 appropriation. See Table 15 below.\nThe House Appropriations Committee's report (p. 123) stated that \"the jurisdiction for the Weatherization Program has been moved to the Subcommittee on Labor, Health and Human Services, Education, and Related Agencies (LHE), which has jurisdiction for the Low Income Home Energy Assistance Program (LIHEAP) that also includes funding for weatherization.\" The House-passed LHE bill ( H.R. 5006 , H.Rept. 108-636 ) had $238.0 million for Weatherization, which included $11.0 million added by H.Amdt. 721 . This is $10.8 million more than the FY2004 appropriation and is $53.2 million less than the DOE request. Also, the report (p. 128) \"encourages\" DOE to conduct \"an up-to-date assessment\" of the Weatherization program comparable to the benefit-cost evaluation conducted by Oak Ridge National Laboratory in 1994.\nIn the Interior bill, the House approved $656.1 million for DOE energy conservation funding in FY2005, excluding the Weatherization program. Combined with $238.0 million for Weatherization funding in the LHE bill, the House approved a total of $894.0 million for FY2005. Thus, compared with the Administration's request, the House sought an increase of $18.1 million, or 2%. This is comprised of $67.1 million more for R&D and $48.9 million less for grants.\nThe House Appropriations Committee's report (p. 7) noted \"disappointment\" that the request emphasized funding for \"long-term\" efforts such as FreedomCAR, at the expense of ongoing programs that will yield energy and emissions savings \"over the next ten years.\" Thus, the report recommended (p. 8) \"restoring many of the reductions proposed in the budget request for energy conservation research ... [because] it would be fiscally irresponsible to discontinue research in which we have made major investments without bringing that research to a logical conclusion.\" Also, the report explained (p. 7) that R&D funding needs to be higher than the request to \"... achieve the goals of energy independence, dramatically lower energy consumption, and significantly reduced emissions.\" To this end, the House Committee recommended, and the House approved, an R&D increase of $67.0 million over the request. (For more information, see CRS Issue Brief IB10020, Energy Efficiency: Budget, Oil Conservation, and Electricity Conservation Issues, by [author name scrubbed].)\nThe House Appropriations Committee's report contained a number of provisions affecting energy conservation. They are: (1) DOE should implement all recommendations by the National Academy for Public Administration to eliminate positions and achieve administrative cost savings; (2) the DOE budget document for FY2006 should include sub-activities in the program table; (3) DOE should invest more in stationary fuel cells; (4) research on fuel cell start-ups in freezing weather should get \"sufficient\" funding; (5) DOE should do a new solicitation for off-highway research; (6) the Vulcan Beam Line shall receive a $1.0 million earmark; (7) performance assessments should be conducted for the Building America program; (8) staffing and program funding for Industries of the Future should not be reduced further; (9) competitive grants for the metal casting industry should go to consortia focused on small business participation; (10) DOE should supplement funding for the State Technologies Advancement Collaborative (STAC) program; (11) the Cooperative Program with States should be closely coordinated with DOE's Fossil Energy Program; (12) funding for the review of programs by the National Academy of Science should be fixed as a permanent annual expense line; and (13) DOE is encouraged to contract with Oak Ridge National Laboratory to perform another in-depth evaluation of the Weatherization Program.\nThe Senate Appropriations Committee reported the FY2005 Interior Appropriations bill with $854.3 million for DOE's Energy Efficiency Program. It included $580.5 million for R&D, which is $30.4 million less than the House bill. Also, the Senate committee-reported bill includes $230.0 million for Weatherization grants, which is $8.0 million less than the House approved in the LHE bill. (For more information, see CRS Issue Brief IB10020, Energy Efficiency: Budget, Oil Conservation, and Electricity Conservation Issues, by [author name scrubbed].)\nCongress enacted $640.1 million for DOE's Energy Efficiency Program. Compared with the FY2004 appropriation, the FY2005 law has $13.3 million less for R&D. This difference includes $17.7 million less for Industrial Technologies and $11.1 million less for Vehicle Technologies, but also $9.8 million more for Fuel Cells and $7.3 million more for Buildings. The LHE appropriation law has $228.2 million for Weatherization grants, which is $1.0 million more than the FY2004 appropriation. (For more information, see CRS Issue Brief IB10020, Energy Efficiency: Budget, Oil Conservation, and Electricity Conservation Issues, by [author name scrubbed].)\nFor further information on energy conservation , see the DOE website at http://www.eere.energy.gov/ .\nCRS Issue Brief IB10020. Energy Efficiency: Budget, Oil Conservation, and Electricity Conservation Issues , by [author name scrubbed].\nCRS Report RS21442, Hydrogen and Fuel Cell Vehicle R&D: FreedomCAR and the President's Hydrogen Fuel Initiative , by [author name scrubbed].\nCRS Report RL32543, Energy Savings Performance Contracts: Reauthorization Issues , by [author name scrubbed].",
"The Indian Health Service (IHS) is responsible for providing comprehensive medical and environmental health services for approximately 1.5 million to 1.7 million American Indians and Alaska Natives who belong to 562 federally recognized tribes located in 35 states. Health care is provided through a system of federal, tribal, and urban Indian-operated programs and facilities. IHS provides direct health care services through 36 hospitals, 59 health centers, 2 school health centers, 49 health stations, and 5 residential treatment centers. Tribes and tribal groups, through IHS contracts and compacts, operate another 13 hospitals, 172 health centers, 3 school health centers, 260 health stations (including 176 Alaska Native village clinics), and 28 residential treatment centers. IHS, tribes, and tribal groups also operate 9 regional youth substance abuse treatment centers and 2,252 units of residential quarters for staff working in the clinics.\nIHS funding is separated into two Indian Health budget categories: Health Services, and Facilities. The enacted IHS appropriation for FY2005 is $2.99 billion, $17.8 million or 0.6% increase from the President's FY2005 request for $2.97 billion, and a 2% increase from the FY2004 final appropriation of $2.92 billion. The IHS FY2005 appropriation is 2% below the House-passed total of $3.03 billion, and 0.4% below from the Senate Appropriations Committee reported amount of $3.0 billion (see Table 16 below). Of the total IHS appropriation enacted for FY2005, 87% will be used for health services and 13% for the health facilities program.",
"IHS Health Services are funded not only through congressional appropriations, but also from money reimbursed from private health insurance and federal programs such as Medicare, Medicaid, and the State Children's Health Insurance Program (SCHIP). The final estimated total reimbursement in FY2005 is $598.7 million, an increase of about $31.0 million or 5% over the FY2004 estimate of $567.6 million.\nThe IHS Health Services appropriation for FY2005 is $2.60 billion, 0.6% below the President's request of $2.61 billion, but 3% above the FY2004 final appropriation of $2.53 billion. The Services budget has several subcategories: clinical services, preventive health services, and other services.\nThe Clinical Services budget includes by far the most program funding. The enacted Clinical Services budget of $2.09 billion is $9.7 million less than the requested budget of $2.10 billion, but $65.6 million over the FY2004 appropriation of $2.02 billion. Clinical Services include primary care at IHS and tribally run hospitals and clinics. Hospital and health clinic programs make up the bulk or 62% of the Clinical Services budget. For FY2005, the hospitals and clinic programs will receive $1.29 billion, about 0.5% less than the President's request but 3% more than the appropriation of $1.25 billion for FY2004. For other programs within Clinical Services, dental programs will get $108.7 million, mental health programs $55.0 million, alcohol and substance abuse programs $139.7 million, and the catastrophic emergency fund $17.8 million. Contract care, another Clinical Services budget item, refers to health services purchased from local and community health care providers when IHS cannot provide medical care and specific services through its own system. The enacted appropriation for FY2005 for contract care is $480.3 million, up $1.2 million from FY2004 and the President's request of $479.1 million.\nFor Preventive Health Services, the final FY2005 appropriation is $110.6 million, a reduction of $1.6 million from the President's request of $112.2 million, but an increase of $3.7 million, or 3%, from the $106.9 million appropriated in FY2004. Funding for each program within preventive health services will increase over FY2004 levels. Program totals will be $44.9 million for public health nursing, $12.5 million for health education in schools and communities, $1.6 million for immunizations in Alaska, and $51.7 million for the tribally administered community health representatives program that supports tribal community members who work to prevent illness and disease in their communities.\nFor other health services, the enacted appropriation for FY2005 is $395.4 million, a decrease of $3.1 million from the FY2004 appropriation of $398.5 million. Programs with decreased appropriations include $30.4 million for scholarships to health care professionals (down $399,000), $2.3 million for tribal management grants to tribes (down $33,000), and $263.7 million for contract support costs (down $3.7 million). Contract support costs are awarded to tribes for administering programs under contracts or compacts authorized by the Indian Self-Determination Act ( P.L. 93-638 , as amended). They pay for costs tribes incur for financial management, accounting, training, and program start up. Most tribes and tribal organizations are participating in new and expanded self-determination contracts and self-governing compacts. The appropriation increased slightly ($340,000) to $32.0 million for health-related activities in off-reservation urban health projects from an FY2004 total of $31.6 million. Funding for IHS administration and management costs for programs IHS operates directly increased by $714,000 to $61.4 million. According to IHS, the increase is to pay for IHS headquarters staffing because staff decreases over the past several years have hampered the agency's capability to perform oversight and outreach activities. The final appropriation includes $5.6 million for self-governance, the same as in FY2004.",
"The IHS's Facilities category includes money for the construction, maintenance, and improvement of both health and sanitation facilities. The total FY2005 appropriation is $388.6 million, an increase of $34.1 million (10%) over the President's request of $354.4 million, but a $2.8 million (0.7%) decrease from the FY2004 appropriation of $391.4 million.",
"In the Balanced Budget Act of 1997 ( P.L. 105-33 ), Congress created two programs for diabetes: the IHS Special Diabetes Program for Indians, and the National Institutes of Health (NIH) Special Research Program for Type 1 Diabetes. The law required that the SCHIP appropriation for FY1998 through FY2002 be reduced by $60 million each year, with $30 million going to the NIH Type 1 research program and $30 million allocated to the IHS diabetes program. In 2000, the Benefits Improvement and Protection Act (part of P.L. 106-534 ) increased funding for each of these diabetes programs and extended authority for grants to be made under both. For each grant program, total funding was increased to $100 million for FY2001, FY2002, and FY2003. For FY2001 and FY2002, $30 million of the $100 million came from the SCHIP program appropriation and $70 million came from the general Treasury. In FY2003, the whole $100 million was drawn from the general Treasury out of funds not otherwise appropriated.\nIn December 2002, Congress extended the funding for these special diabetes programs, through amendments to the Public Health Service Act ( P.L. 107-360 ), authorizing $150 million for each of the programs each year for FY2004 through FY2008. This funding from the general Treasury is separate from regular IHS and NIH appropriations.\nFor further information on the Indian Health Service, see its website at http://www.ihs.gov/ .",
"The Office of Navajo and Hopi Indian Relocation (ONHIR) and its predecessor were created pursuant to a 1974 act ( P.L. 93-531 , as amended) to resolve a lengthy dispute between the Hopi and Navajo tribes involving lands originally set aside by the federal government for a reservation in 1882. Pursuant to the 1974 act, the lands were partitioned between the two tribes. Members of one tribe living on land partitioned to the other tribe were to be relocated and provided new homes, and bonuses, at federal expense. Relocation is to be voluntary.\nONHIR's chief activities consist of land acquisition, housing acquisition or construction, infrastructure construction, and post-move support, all for families being relocated, as well as certification of families' eligibility for relocation benefits. Congress has been concerned, at times, about the speed of the relocation process and about avoiding forced relocations or evictions.\nFor FY2004, ONHIR received an appropriation of $13.4 million. For FY2005, the Administration proposed $11.0 million, an 18% decrease, to which the House agreed. The Senate Appropriations Committee recommended $5 million, a reduction of 63% from the FY2004 appropriation, arguing that carryover funds from previous fiscal years would offset the reduction. The conference committee agreed with the Senate, so the FY2005 appropriation for ONHIR was $4.9 million, a 63% reduction from FY2004.\nRelocation began in 1977 and is not yet complete. ONHIR has a backlog of relocatees who are approved for replacement homes but have not yet received them. Most families subject to relocation were Navajo—an estimated 3,485 Navajo families had resided on land partitioned (or judicially confirmed) to the Hopi, while 27 Hopi families had lived on Navajo partitioned land, according to ONHIR data. While 95% of the Navajo families have been relocated to replacement homes, ONHIR estimates that 163 Navajo families as of the end of FY2003 have yet to complete relocation. Most of these remaining 163 Navajo families are not currently living on Hopi partitioned land, but a majority have not reached the stage of seeking a replacement home. Fourteen of the 163 Navajo families are still residing on Hopi partitioned land, according to ONHIR, and some of them refuse to relocate. All but one of the 27 Hopi families on Navajo partitioned land had completed relocation by the end of FY2003, according to ONHIR.\nONHIR estimated in its FY2004 strategic plan that it would complete relocation moves by the end of FY2006 and post-move assistance by the end of FY2008, but stated that this schedule depended on infrastructure needs and relocatees' decisions. Congressional committees have in the past expressed impatience with the speed of relocation but have not recently criticized the current pace.\nA long-standing proviso in ONHIR appropriations language, retained in the FY2005 act, prohibits ONHIR from evicting any Navajo family from Hopi partitioned lands unless a replacement home were provided. This language appears to prevent ONHIR from forcibly relocating Navajo families in the near future, because of ONHIR's backlog of approved relocatees awaiting replacement homes. As the backlog is reduced, however, forced eviction may become an issue, if any remaining Navajo families refuse relocation and if the Hopi Tribe were to exercise a right under P.L. 104-301 (a 1996 settlement of related Hopi-U.S. issues) to begin legal action against the United States for failure to give the Hopi \"quiet possession\" of all Hopi partitioned lands.",
"The Smithsonian Institution (SI) is a museum, education, and research complex of 17 museums and galleries, the National Zoo, and research facilities throughout the United States and around the world. Nine of its museums and galleries are located on the National Mall between the U.S. Capitol and the Washington Monument. The SI is responsible for over 400 buildings with approximately 8 million square feet of space. It is estimated to be 70% federally funded, and also is supported by various types of trust funds. A federal commitment to fund the Smithsonian Institution had been established by legislation in 1846.",
"The Bush Administration proposed $628.0 million for the Smithsonian, a 5.0% increase over the enacted FY2004 level ($596.3 million). See Table 17 below. For Salaries and Expenses, the Smithsonian would have received $499.1 million, a 2.0% increase over the FY2004 amount of $488.7 million. Salaries and Expenses cover administration of all of the museums and research institutions that are part of the Smithsonian Institution. In addition, it includes program support and outreach, and facilities services (security and maintenance).",
"The House-passed appropriation for the Smithsonian ($619.8 million) reflected a 4% increase over the FY2004 law with a 1% decrease from the Administration's request. The Smithsonian Institution's Salaries and Expenses account would have received $496.9 million, an increase of $8.3 million over the FY2004 law but a decrease of $2.2 million from the Administration's request.",
"The Senate committee-reported appropriations bill for the Smithsonian Institutions (627.0 million) reflected an increase of $7.2 million over the House level and of $30.7 million over the FY2004 level. The Smithsonian's Salaries and Expenses account would received $490.1 million, a decrease of $9.0 million from the Administration's request and a decrease of $6.8 million from the House-passed level.",
"The FY2005 final appropriation provides $615.2 million for the Smithsonian, reflecting a decrease of $4.7 million from the House-passed bill and $11.9 million from the Senate committee-reported bill. The Smithsonian's Salaries and Expenses account will receive $489.0 million, a $1.1 million decrease from the Senate committee-reported bill, and a $7.9 million decrease from the House-passed bill.",
"Beginning in FY2004, a new account title—Facilities Capital—\"is being used; it is comprised of revitalization, construction, and facilities planning and design. The FY2004 law provided $107.6 million and the FY2005 budget would have provided $128.9 million for Facilities Capital. The House-passed FY2005 bill would have provided $122.9 million, and the Senate committee reported bill would have provided $136.9 million for Facilities Capital. For FY2005, Congress enacted $126.1 million for Facilities Capital, $110.4 million for revitalization, $7.9 million for construction, and $7.9 million for facilities planning and design. Revitalization funds are for addressing advanced deterioration in SI buildings, helping with routine maintenance and repair in Smithsonian Institution facilities, and making critical repairs.",
"The Administration request, the House-passed bill, and the Senate committee-reported bill would have provided $32.2 million for operating expenses for the NMAI, a decrease from the FY2004 law of $38.1 million. For FY2005, Congress enacted $31.7 million for NMAI. In the past the NMAI was controversial. Opponents of constructing a new museum argued that the current Smithsonian Institution museums needed renovation, repair, and maintenance more than the public needed another museum on the National Mall. Proponents argued that there had been too long a delay in providing a museum in Washington to house the Indian collection. Based on an estimate of $219.3 million for construction of the Indian museum, the Smithsonian Institution indicated that some of its trust funds in addition to SI's Salaries and Expenses funds could be used to cover opening costs. The groundbreaking ceremony for the NMAI took place September 28, 1999 and the grand opening ceremony was September 21, 2004, beginning with a celebration called the \"First Americans Festival.\"",
"The direction of SI's research priorities is of concern to Congress. A past controversy involved the proposed closing of the Smithsonian Institution Center for Materials Research and Education (SCMRE), which the Smithsonian Institution decided to retain. The FY2002 Interior Appropriations law provided that an independent, \"blue ribbon\" science commission be established to deal with this and other decisions. The commission's report of January 2003 noted that science programs of the Smithsonian Institution have eroded over time due to a \"long-term trend in declining support for mandatory annual salary increases.\" Of the 76 recommendations in the Science Commission report, according to the SI, more than three quarters of them have been addressed in their attempts to revitalize science. The FY2004 law provided $3.5 million for the SCMRE, and the FY2005 appropriation provides $3.5 million.",
"A new National Museum of African American History and culture (NMAAHC) has been established within the Smithsonian Institution through P.L. 108-184 . The museum will collect, preserve, study and exhibit African American historical and cultural material and will focus on periods of history including the time of slavery, Reconstruction, the Harlem Renaissance, and the civil rights movement. The FY2005 budget and the Senate committee-reported bill would have provided $5.0 million whereas the House-passed bill would have provided $4.0 million for the NMAAHC for selection of personnel for planning, site selection, and capital fund raising. The FY2005 appropriation provides $3.9 million for the NMAAHC. The opening of the National Museum of the American Indian brings with it the question of space left on the Mall for the NMAAHC, and whether or not another space will be offered and approved by the National Capital Planning Commission (NCPC), the Commission of Fine Arts, and the National Capital Memorial Commission.",
"The FY2005 request, the House-passed bill, and the Senate committee-reported bill would have provided $17.8 million for salaries and expenses at the National Zoo. The final FY2005 appropriation provides $17.6 million for the National Zoo. Recently, Congress and the public have been concerned about the National Zoo's facilities and the care and health of its animals. The Smithsonian Institution has a plan to revitalize the zoo, making the facilities safer for the public and healthier for the animals. The Administration's request specified an estimated $19 million (under the Facilities Capital account) to begin the National Zoo's revitalization, to include construction of a new elephant facility to be completed by 2007. According to SI, the National Zoo is 110 years old and the physical environment is deteriorating—many of the largest animals (e.g., lions, tigers, and elephants) are housed in the oldest areas. Space is a major health concern. The new construction, designed to provide ample space for elephants and other animals, will put the National Zoo in compliance with the U.S. Department of Agriculture and American Zoo and Aquarium Association standards, and will help to correct the \"infrastructure deficiencies\" found throughout the National Zoo. The estimated total cost of the National Zoo revitalization is $68.3 million, including future years' funding for completing construction in FY2006. This figure does not include an estimated $12 million expected to be raised from private funds.",
"In addition to federal appropriations, the Smithsonian Institution receives income from trust funds to expand its programs. The SI trust fund includes general trust funds, contributions from private sources, and government grants and contracts from other agencies. General trust funds include investment income and revenue from \"business ventures\" such as the Smithsonian magazine, and retail shops. There are also trust funds that are private donor-designated funds that specify and direct the purpose of funds. Finally, government grants and contracts are provided by various government agencies for projects specific to the Smithsonian Institution, and they were estimated to total $104.1 million in FY2004.\nOf concern to Congress is the extent to which the Smithsonian Institution has control when donor and sponsor designated funds put restrictions on the use of that funding. Designated funds in FY2004 were estimated to total $84.5 million. There is concern that donor designated funding may require a building to be renamed for that individual or corporate donor, even if an appropriate name is already being used. In addition, there is debate over whether companies who are allowed to advertise at cultural events might in some way compromise the integrity of the Smithsonian Institution. The Congress has been considering these issues as part of the fiscal year appropriations debates for the past few years in order to help maintain the strength of the Smithsonian Institution.\nFor further information on the Smithsonian Institution, see its website at http://www.si.edu/ .",
"One of the primary vehicles for federal support for the arts and the humanities is the National Foundation on the Arts and the Humanities (NFAH), composed of the National Endowment for the Arts (NEA); the National Endowment for the Humanities (NEH); and the Institute of Museum Services (IMS), now constituted as the Institute of Museum and Library Services (IMLS) with an Office of Museum Services (OMS). The NEA and NEH authorization expired at the end of FY1993, but they have been operating on temporary authority through appropriations law. The Institute of Museum and Library Services and the Office of Museum Services were created by P.L. 104-208 , and reauthorized by P.L. 108-81 .\nAmong the questions Congress continually considers is whether funding for the arts and humanities is an appropriate federal role and responsibility. Some opponents of federal arts funding argue that NEA and NEH should be abolished altogether. Other opponents argue that culture can and does flourish on its own through private support. Proponents of federal support for arts and humanities contend that the federal government has a long tradition of support for culture and that abolishing NEA and NEH could curtail or eliminate programs that have national significance and purpose (such as national touring theater and dance companies). Some representatives of the private sector say that they are unable to make up the gap that would be left by the loss of federal funds for the arts.",
"NEA's direct grant program for the arts currently supports approximately 1,600 grants. State arts agencies are now receiving over 40% of grant funds, with 1,000 communities participating nationwide, particularly from under-represented areas that lack cultural facilities and programs.\nFor FY2005, Congress enacted $121.3 million for NEA, $9.7 million less than the House-passed bill ($131.0 million), slightly higher than the Senate committee-reported bill and FY2004 appropriation ($121.0 million), but a decrease of 13% from the Administration's budget ($139.4 million). See Table 18 below. The FY2005 House-passed bill contained a floor amendment that added $10.0 million to the American Masterpieces program for NEA and $3.5 million to NEH's We the People program, while offsetting these amounts through cuts to DOI's departmental management. The FY2005 budget had proposed the American Masterpieces program to be funded under NEA grants and state partnerships. This national initiative would include touring programs, local presentations and arts education in the fields of dance, visual, arts and music. The Senate committee-reported bill did not provide additional funds for the American Masterpieces program, although the Committee, stated that the program \"has merit\"( S.Rept. 108-341 , p. 77). During consideration of the bill in committee, some members of the Senate Appropriations Committee urged that when the bill went to the floor or to conference, that the House-passed level for NEA be accepted—$131.0 million. For FY2005, Congress enacted $2.0 million for American Masterpieces and $121.3 million for NEA.\nThe FY2005 law provides $21.4 million to the Challenge America Arts fund, a program of matching grants for arts education, outreach, and community arts activities for rural and under-served areas. The NEA is required to submit a detailed report to the House and Senate Appropriations Committees describing the use of funds for the Challenge America program.\nAlthough there appears to be an increase in congressional support for the NEA, debate often recurs on previous questionable NEA grants when appropriations are considered. Congress continues to restate the language of NEA reforms in appropriations laws. For example, both the FY2004 and FY2005 appropriations laws retain language on funding priorities and restrictions on grants, including that no grant may be used generally for seasonal support to a group, and no grants may be for individuals except for literature fellowships, National Heritage fellowships, or American Jazz Master fellowships.",
"The NEH generally supports grants for humanities education, research, preservation and public humanities programs; the creation of regional humanities centers; and development of humanities programs under the jurisdiction of the 56 state humanities councils. NEH also supports a Challenge Grant program to stimulate and match private donations in support of humanities institutions.\nFor FY2005, Congress enacted $138.1 million for NEH, a decrease of (3%) from the House-passed bill ($142.0 million) and of 15% from the FY2005 budget ($162.0 million), but an increase of 2% over the FY2004 appropriation and the Senate committee-reported bill (both $135.3 million). The FY2005 appropriation includes $15.9 million for NEH matching grants and $122.2 million for grants and administration. A floor amendment to the House-passed bill increased funding for the We the People initiative. The final appropriation for FY2005 provides $11.2 million for the We the People initiative, an increase over the FY2004 appropriation and Senate committee-reported amount of $9.9 million, but a significant decrease (66%) from the Administration's request of $33.0 million. These grants include model curriculum projects for schools to improve course offerings in the humanities—American history, culture, and civics.",
"The Office of Museum Services provides grants-in-aid to museums in the form of leadership grants, museum conservation, conservation project support, museum assessment, and General Operating Support (GOS) to help over 400 museums annually to improve the quality of their services to the public. Effective with FY2003, the appropriation for the Office of Museum Services (OMS) was moved from the Interior and related agencies appropriations bill to the appropriations bill for the Departments of Labor, Health and Human Services, and Education, and related agencies. For further information on FY2005 appropriations, see CRS Report RL32303, Appropriations for FY2005: Labor, Health and Human Services, and Education , by [author name scrubbed].\nFor further information on the National Endowment for the Arts , see its website at http://arts.endow.gov/ .\nFor further information on the National Endowment for the Humanities , see its website at http://www.neh.gov/ .\nFor further information on the Institute of Museum and Library Services , see its website at http://www.imls.gov/ .\nCRS Report RS20287, Arts and Humanities: Background on Funding , by [author name scrubbed].",
"",
"The LWCF is authorized at $900 million annually through FY2015. However, these funds may not be spent without an appropriation. The LWCF is used for three purposes. First, the four principal federal land management agencies—Bureau of Land Management, Fish and Wildlife Service, National Park Service, and Forest Service—draw primarily on the LWCF to acquire lands. The sections on those agencies earlier in this report identify funding levels for their land acquisition activities. Second, the LWCF funds acquisition and recreational development by state and local governments through a grant program administered by the NPS. Third, Presidents have requested, and Congress has appropriated, money from the LWCF to fund some related activities that do not involve land acquisition. This third use is a recent addition, starting with the FY1998 appropriation. Programs funded have varied from year to year. Most of the appropriations for federal acquisitions generally are earmarked to management units, such as a specific National Wildlife Refuge, while the state grant program rarely is earmarked.\nThrough FY2005, the total authorized amount that could have been appropriated from the LWCF since its inception was $28.1 billion. Actual appropriations have been $14.2 billion. Table 19 shows appropriations since FY2002 and the Administration request and congressional actions for FY2005. For the five years ending in FY2001, appropriators had provided generally increasing amounts from the fund for federal land acquisition. The total had more than quadrupled, rising from a low of $138.0 million in FY1996 to $453.2 million in FY2001. However, since then appropriations have declined significantly.\nReductions of the magnitude that occurred in FY2003 and again in FY2004 for federal land acquisition and state grants were last seen in the early and mid 1990s as part of efforts to address the federal budget deficit. Not only did the total for federal land acquisition and grants to states (excluding other programs) decline in FY2003 and again in FY2004, but each of the five component accounts also declined each year. Currently, the federal budget deficit has drawn increased attention, as it did during the early and mid 1990s. Also, there has been enhanced interest in funding other priorities, mostly tied to the war on terrorism.",
"The Administration requested a total of $900.2 million for FY2005, of which a total of $314.0 million would have gone to federal land acquisition and state grants. The remainder, $586.2 million, was the largest amount requested in the program's history for purposes other than land acquisition and stateside grants. The programs and amounts, listed on page DH-48 of the FY2005 Interior Budget in Brief, included Forest Service's Forest Stewardship Program ($40.7 million), Forest Legacy Program ($100.0 million), and Urban and Community Forestry Program ($32.0 million); and the Fish and Wildlife Service's State and Tribal Wildlife Grants ($80.0 million), Landowner Incentive Grants ($50.0 million), Private Stewardship Grants ($10.0 million), Cooperative Endangered Species Grants ($90.0 million), and North American Wetlands Conservation Fund Grants ($54.0 million).\nThe House-passed legislation provided no new funding for earmarked acquisitions. The report of the House Committee on Appropriations characterizes these acquisitions as \"a low priority\" ( H.Rept. 108-542 , p. 5). Funds in the House bill either mirrored, or were reductions from, the Administration's request and would have gone largely to acquisition management. State grants would have remained almost unchanged from FY2004. The largest change was that the House-passed bill would have provided $92.5 million for only two other programs—the Forest Legacy Program and the Habitat Conservation Program portion of the Cooperative Endangered Species Conservation Fund. This was nearly $500 million less than the Administration's request for funding for other programs. In the minority views attached to the report, Representatives Obey and Dicks stated that they \"disagree with the illogically-driven opposition to land acquisition,\" but did not comment on LWCF funding for other programs ( H.Rept. 108-542 , p. 180).\nThe total for LWCF in Senate legislation was $549.0 million, which would have been less of a reduction from funding in past years than the House-passed bill. This legislation provided almost the same total as the Administration requested for federal land acquisition, although the amount for the NPS was more than $22 million less than the request, while the amount for the FS more than $15 million than the Administration request. More specifically, the Senate legislation earmarked $17.9 million for 11 BLM sites, $34.7 million for 36 FWS sites, $45.3 million for 19 NPS sites, and $66.5 million for 37 FS sites. State grants were almost the same as the House bill. The Senate bill provided more than $237 million to 5 other programs, 4 of which are administered by the Fish and Wildlife Service.\nThe FY2005 law provides more than the House had allocated, but less than the Senate for each of the four federal land management agencies for acquisition. The total for state grants is little changed from the request and the amounts in the House and Senate bills. The FY2005 appropriation for other purposes totals $203.4 million for four FWS programs and one FS program, which is less than half the Administration request but more than double the amount that the House bill would have provided. The enacted levels and overall consideration of LWCF funding appeared to be somewhat less contentious this year.",
"Congress created the Conservation Spending Category (CSC), as an amendment to the Balanced Budget and Emergency Deficit Control Act of 1985, in the FY2001 Interior appropriations law. The CSC, which is also being called the Conservation Trust Fund by some, combines funding for more than two dozen resource protection programs including the LWCF. (It also includes some coastal and marine programs funded through Commerce appropriations). This action was in response to both the Clinton Administration request for substantial funding increases in these programs under its Lands Legacy Initiative, and congressional interest in increasing conservation funding through legislation known as the Conservation and Reinvestment Act (CARA), which passed the House in the 106 th Congress. The FY2001 Interior appropriations law authorized that total spending for CSC would grow each year by $160.0 million, from $1.6 billion in FY2001 (of which $1.2 billion would be through Interior Appropriations laws) to $2.4 billion in FY2006. All CSC funding is subject to the appropriations process. (Also, how programs are categorized, or \"scored,\" matters—the Administration and the Appropriations Committees disagree on whether all or portions of funding for some programs should be credited to the CSC.) The appropriations history through FY2005 is as follows.\nThe FY2001 laws exceeded the target of $1.6 billion by appropriating a total of $1.68 billion; $1.20 billion for Interior appropriations programs and $0.48 billion for Commerce appropriations programs. (Totals for Interior and Commerce funding were both increases from the preceding year of $566 and $160 million, respectively.) The FY2002 request totaled $1.54 billion for this group of programs, and Congress appropriated $1.75 billion, thus almost reaching the target of $1.76 billion. The appropriation for the Interior portion was $1.32 billion, reaching the authorized target amount. The FY2003 request totaled $1.67 billion for this group of programs, a decrease from FY2002 funding, and below the target of $1.92 billion. Congress appropriated a total of $1.51 billion. For the Interior portion, Congress provided $1.03 billion, about $410 million less than the authorized target of $1.44 billion. The FY2004 request totaled $1.33 billion, according to estimates compiled by Interior and Commerce Appropriations subcommittee staffs. This amount is below the target of $2.08 billion. For the Interior portion, the request was $1.00 billion, and the target is $1.56 billion. (The Administration had an alternative estimate that increases the total FY2004 request to $1.22 billion for Interior programs, but it is based on some different assumptions about which programs to include.) The total appropriated is not specified in congressional documents. The FY2005 request from the Department of the Interior included $1.05 billion for the CSC, an increase of $140 million over the FY2004 appropriation for the same group of programs, according to the Department. However, this total did not include requests from the Forest Service or Department of Commerce. Neither the Forest Service nor the Department of Commerce used the CSC as a structure for organizing or tabulating their requests. In any case, these requests, in total, are likely to be well below the target of $2.24 billion. The total appropriated is unclear.\nNone of the FY2005 bills or accompanying committee reports identified funding levels for the CSC, with one exception. The House Appropriations Committee's report accompanying the FY2005 House-passed bill mentions the CSC only in the minority views, where Representatives Obey and Dicks state that the bill would fund the CSC at $850 million below the $1.7 billion target for FY2005. The report does not include other funding levels or broader discussions of the CSC. The Senate Appropriations Committee's report accompanying the FY2005 appropriations bill did not mention the CSC by name in a discussion of conservation funding ( S.Rept. 108-341 , p.5). It stated that the committee \"remains concerned\" about proposals to create \"direct entitlement funding\" for selected conservation programs, thereby removing them from the annual oversight of the appropriations process. It noted that the Committee continues to provide funding for many of these programs.\nCRS Report RL30444, Conservation and Reinvestment Act (CARA) (H.R. 701) and a Related Initiative in the 106 th Congress , by [author name scrubbed] and [author name scrubbed] (pdf).\nCRS Report RS20471. The Conservation Spending Category: Funding for Natural Resource Protection , by Jeffrey Zinn.\nCRS Report RL33531, Land and Water Conservation Fund: Overview, Funding History, and Current Issues , by [author name scrubbed].",
"The alterations of the natural flow of water by a series of canals, levees, and pumping stations, combined with agricultural and urban development, are thought to be the leading causes of environmental deterioration in the South Florida ecosystem. In 1996, Congress authorized the U.S. Army Corps of Engineers to create a comprehensive plan to restore, protect, and preserve the entire South Florida ecosystem, which includes the Everglades ( P.L. 104-303 ). A portion of this plan, the Comprehensive Everglades Restoration Plan (CERP), completed in 1999, provides for federal involvement in the restoration of the ecosystem. Congress authorized the Corps to implement CERP in Title IV of the Water Resources Development Act of 2000 (WRDA 2000, P.L. 106-541 ). While restoration activities in the South Florida ecosystem are conducted under several federal laws, WRDA 2000 is considered the seminal law for Everglades restoration.\nBased on CERP and other previously authorized restoration projects, the federal government, along with state, local, and tribal entities, is currently engaged in a collaborative effort to restore the South Florida ecosystem. The principal objective of CERP is to redirect and store \"excess\" freshwater currently being discharged to the ocean via canals, and use it to restore the natural hydrological functions of the South Florida ecosystem. CERP seeks to deliver sufficient water to the natural system without impinging on the water needs of agricultural and urban areas. The federal government is responsible for half the cost of implementing CERP, and the other half is borne by the State of Florida, and to a lesser extent, local tribes and other stakeholders. CERP consists of 68 projects that are expected to be implemented over approximately 36 years, with an estimated total cost of $7.8 billion; the total federal share is estimated at $3.9 billion.",
"Appropriations for restoration projects in the South Florida ecosystem have been provided as part of several annual appropriations bills. The Department of the Interior and Related Agencies Appropriations laws have provided funds to several DOI agencies for restoration projects. Specifically, DOI conducts CERP and non-CERP activities in Southern Florida through the National Park Service, U.S. Fish and Wildlife Service, U.S. Geological Survey, and Bureau of Indian Affairs.\nAppropriations for other restoration projects in the South Florida ecosystem have been provided to the Corps (Energy and Water Development Appropriations); National Oceanic and Atmospheric Administration (NOAA), (Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations); U.S. Environmental Protection Agency (EPA), (VA, HUD, and Related Agencies Appropriations); and U.S. Department of Agriculture (Department of Agriculture and Related Agencies Appropriations). (For information on other Everglades funding, see CRS Report RS22048, Everglades Restoration: The Federal Role in Funding , by [author name scrubbed] and [author name scrubbed].)\nFrom FY1993 to FY2004, federal appropriations for projects and services related to the restoration of the South Florida ecosystem exceeded $2.3 billion dollars, and state funding topped $3.6 billion. The average annual federal cost for restoration activities in Southern Florida in the next 10 years is expected to be approximately $286 million per year. For FY2005, the Administration requested $231.0 million for the Department of the Interior and the Army Corps of Engineers for restoration efforts in the Everglades. Of this total, $67.0 million was for the implementation of CERP.",
"For FY2005, the DOI was appropriated $65.5 million for CERP and non-CERP restoration activities, over $40 million less than the requested amount of $105.9 million, and $3.6 million less than the enacted level of $69.1 million in FY2004. For the implementation of CERP, the DOI was appropriated $8.5 million. See Table 20 .\nOf the FY2005 enacted funding level of $65.5 million, the NPS received $45.1 million for land acquisition, construction, and research activities; the FWS received $12.1 million for land acquisition, refuges, ecological services, and other activities; the USGS received $7.7 million for research, planning, and modeling; and the BIA received $0.5 million for water projects and restoration on tribal lands. See Table 20 below.\nThe FY2005 enacted level of funding was less than the FY2005 Administration's request due to the omission of one proposed land acquisition project under the NPS. The request for $40.0 million to acquire mineral rights underlying Big Cypress National Preserve was not granted. The Collier Resources Company has mineral rights in the preserve and reached an agreement in principle to sell them to the DOI. Forty million dollars would have covered a portion of the cost of the mineral rights, estimated at $120 million. Appropriators did not include this funding in FY2004 appropriations because the agreement had not been formally approved and a DOI inquiry assessing the value of the mineral rights had been initiated. The House-passed and the Senate committee-reported bills do not explicitly provide funds for these mineral rights.\nIn its report on the FY2005 bill, the House Appropriations Committee expressed concerns over the coordination and research towards restoring the South Florida ecosystem. The House Committee directed DOI to submit, by November 2004, a report describing the research projects to be funded by the NPS and USGS with FY2005 appropriations. Further, the Committee directed DOI to submit a report describing how it is implementing recommendations made by the General Accounting Office and National Academy of Sciences regarding coordination and management of Everglades research. The Senate committee report did not explicitly state this concern. However, a provision in the Senate committee bill provided that NPS construction funds for implementation of modified water deliveries to ENP are to be spent in accordance with the FY2004 Interior Appropriations law, which placed conditions on appropriations based on the monitoring of phosphorus pollution. This provision was enacted; see below for details.",
"The enacted FY2005 appropriations provides $8.0 million for the Modified Water Deliveries Project, which is $4.8 million below the FY2004 enacted level of $12.8 million. According to the FY2005 law, funds appropriated in this act and any prior acts for this project will be provided unless administrators of four federal departments/agencies (Secretary of the Interior, Secretary of the Army, Administrator of the EPA, and the Attorney General) indicate in their joint report (to be filed annually until December 31, 2006) that water entering the A.R.M. Loxahatchee National Wildlife Refuge and Everglades National Park do not meet state water quality standards, and the House and Senate Committees on Appropriations respond in writing disapproving the further expenditure of funds. These provisions also were included in the House-passed and Senate committee-reported bills for FY2005 appropriations.\nThese provisions were enacted based on concerns regarding a Florida State Law (Chapter 2003-12, enacted on May 20, 2003) that amended the Everglades Forever Act of 1994 (Florida Statutes §373.4592) by authorizing a new plan to mitigate phosphorus pollution in the Everglades. Phosphorus is one of the primary water pollutants in the Everglades and a primary cause for ecosystem alteration in the Everglades. Provisions conditioning funds on the achievement of water quality standards were not requested in the Administration's budget for FY2005. (For more information see CRS Report RL32131, Phosphorus Mitigation in the Everglades , by [author name scrubbed] and [author name scrubbed].)\nFor further information on Everglades Restoration , see the website of the South Florida Ecosystem Restoration Program at http://www.sfrestore.org and the website of the Corps of Engineers at http://www.evergladesplan.org/ .\nCRS Report RS22048, Everglades Restoration: The Federal Role in Funding , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL31621, Florida Everglades Restoration: Background on Implementation and Early Lessons , by [author name scrubbed].\nCRS Report RS21331, Everglades Restoration: Modified Water Deliveries Project , by [author name scrubbed] (pdf).\nCRS Report RS20702, South Florida Ecosystem Restoration and the Comprehensive Everglades Restoration Plan , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL32131, Phosphorus Mitigation in the Everglades , by [author name scrubbed] and [author name scrubbed].",
"The Bush Administration's Competitive Sourcing Initiative would subject diverse commercial activities to public-private competition. The goal of this government-wide effort, first outlined in 2001, is to save money through competition between government and private businesses in areas where private businesses might provide better commercial services, for instance, law enforcement, maintenance, and administration. The initiative has been controversial, with concerns including whether it would save the government money and whether the private sector could provide the same quality of service in certain areas.\nFor agencies funded by the Interior appropriations bill, concern has centered on the National Park Service, the Forest Service, and agencies and activities in the Department of Energy (DOE) that are funded through the bill. The Consolidated Appropriations Act for FY2005 placed spending limits on DOI and DOE competitive sourcing studies during FY2005, unless Congress approves the reprogramming of additional funds under revised reprogramming guidelines printed in H.Rept. 108-330 . For DOI, the cap is $3.25 million, and DOE agencies in the bill are limited to $0.5 million. Forest Service spending is limited to no more than $2.0 million. The law also specifies that agencies include, in any reports to Congress on competitive sourcing, information on the full costs associated with sourcing studies and related activities. The FY2005 House-passed bill sought to require the Secretaries of DOI, DOE, and Agriculture (for the Forest Service) to report annually to the House and Senate Appropriations Committees on competitive sourcing activities during the previous year. This language was not enacted.\nThe FY2004 Interior appropriations law ( P.L. 108-108 ) also contained spending limits for competitive sourcing studies of agencies and required agencies to report annually to Congress on their competitive sourcing activities. These reporting requirements were repealed by P.L. 108-447 . P.L. 108-108 further required agencies to specify in their annual budget submissions the level of funding requested for such studies. In adopting the language, conferees expressed support for the \"underlying principle\" of the Administration's initiative, but concern that the effort was being conducted too fast for its costs and implications to be understood and \"in violation\" of guidelines on reprogramming funds. In particular, there was concern that the Forest Service was reprogramming money without approval. Language in the FY2004 House-passed bill sought to bar agencies from using funds in the bill to begin new competitive sourcing studies. The President threatened to veto the bill if this language was included, and it was not enacted. (For more information on competitive sourcing generally, see CRS Report RL32017, Office of Management and Budget Circular A-76: Selected Issues , by [author name scrubbed], and CRS Report RL32079, Federal Contracting of Commercial Activities: Competitive Sourcing Targets , by [author name scrubbed].)",
"An ongoing controversy over conflicting water levels for upper and lower Missouri River Basin states was an issue during the markup of the Senate Committee on Appropriations of the FY2005 Interior appropriations bill. A provision to change a trigger that requires the U.S. Army Corps of Engineers (Corps) to implement drought conservation measures on the Missouri River remained in S. 2804 after a debate to have it removed during committee markup, but was not enacted into law. No similar language had been included in the House-passed bill.\nThe drought conservation measures would suspend navigational releases from Missouri River reservoirs if storage at the reservoirs falls below a defined level. For the last few years, upper basin reservoirs have experienced low water levels during an ongoing drought in the basin, and navigation has continued in the lower basin although at a minimum service level and with a shortened navigation season. The current trigger to implement drought conservation measures established by the Corps' 2004 Missouri River Master Water Control Manual is 31 million acre-feet (MAF) of storage at a March 15 storage check. The trigger in S. 2804 was for the suspension of navigation if the system storage level was at or below 40 MAF at any time during the year (not just on March 15). The current storage level is 35.7 MAF; storage on March 15, 2005 is estimated to be between 34.9 MAF and 36.5 MAF. For more information on the Missouri River management debate, see CRS Issue Brief IB10120, Army Corps of Engineers Civil Works Program: Issues for the 109 th Congress , by [author name scrubbed] and [author name scrubbed].",
"",
"CRS Report RL32373, Abandoned Mine Land Fund Reauthorization: Selected Issues , by [author name scrubbed] (pdf).\nCRS Report RL30444, Conservation and Reinvestment Act (CARA) (H.R. 701) and a Related Initiative in the 106 th Congress , by [author name scrubbed] and [author name scrubbed] (pdf).\nCRS Report RS21331, Everglades Restoration: Modified Water Deliveries Project , by [author name scrubbed] (pdf).\nCRS Report RS21402, Federal Lands, R.S. 2477, and \" Disclaimers of Interest \" , by [author name scrubbed].\nCRS Report RL31621, Florida Everglades Restoration: Background on Implementation and Early Lessons , by [author name scrubbed].\nCRS Report RL32244, Grazing Regulations: Changes by the Bureau of Land Management , by [author name scrubbed].\nCRS Report 96-123. Historic Preservation: Background and Funding , by [author name scrubbed].\nCRS Report RL33531, Land and Water Conservation Fund: Overview, Funding History, and Current Issues , by [author name scrubbed].\nCRS Issue Brief IB89130. Mining on Federal Lands , by [author name scrubbed].\nCRS Report RS21157, Multinational Species Conservation Fund , by [author name scrubbed] and [author name scrubbed].\nCRS Report RS20902, National Monument Issues , by [author name scrubbed].\nCRS Issue Brief IB10145, National Park Management , coordinated by [author name scrubbed].\nCRS Report RL33806, Natural Resources Policy: Management, Institutions, and Issues , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].\nCRS Report RL31392, PILT (Payme nts in Lieu of Taxes): Somewhat Simplified , by [author name scrubbed].\nCRS Report RS20702, South Florida Ecosystem Restoration and the Comprehensive Everglades Restoration Plan , by [author name scrubbed] and [author name scrubbed].",
"CRS Report RS20471. The Conservation Spending Category: Funding for Natural Resource Protection , by [author name scrubbed].\nCRS Report RS20002, Federal Land and Resource Management: A Primer , by [author name scrubbed] (pdf).\nCRS Report R40225, Federal Land Management Agencies: Background on Land and Resources Management , coordinated by [author name scrubbed].\nCRS Report RL30335, Federal Land Management Agencies ' Permanently Appropriated Accounts , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].\nCRS Report RL34273, Federal Land Ownership: Current Acquisition and Disposal Authorities , by [author name scrubbed] and [author name scrubbed].\nCRS Issue Brief IB10076. Bureau of Land Management (BLM) Lands and National Forests , by [author name scrubbed] and [author name scrubbed], coordinators.\nCRS Report RL32131, Phosphorus Mitigation in the Everglades , by [author name scrubbed] and [author name scrubbed].",
"CRS Report RS20287, Arts and Humanities: Background on Funding , by [author name scrubbed].\nCRS Issue Brief IB10020. Energy Efficiency: Budget, Oil Conservation, and Electricity Conservation Issues , by [author name scrubbed].\nCRS Report RL30755, Forest Fire/Wildfire Protection , by [author name scrubbed].\nCRS Report RS21442, Hydrogen and Fuel Cell Vehicle R&D: FreedomCAR and the President's Hydrogen Fuel Initiative , by [author name scrubbed].\nCRS Report RL30647, National Forest System Roadless Area Initiatives , by [author name scrubbed] and [author name scrubbed].\nCRS Report RS20852, The Partnership for a New Generation of Vehicles: Status and Issues , by [author name scrubbed] (pdf).\nCRS Issue Brief IB87050. The Strategic Petroleum Reserve , by [author name scrubbed].\nCRS Report RL33990, Wildfire Funding , by [author name scrubbed].",
"Information regarding the budget, supporting documents, and related departments, agencies and programs is available at the following web or gopher sites.\nHouse Committee on Appropriations http://appropriations.house.gov/\nSenate Committee on Appropriations http://appropriations.senate.gov/\nCRS Appropriations Products Guide http://www.crs.gov/products/appropriations/apppage.shtml\nCongressional Budget Office http://www.cbo.gov/\nGeneral Accounting Office http://www.gao.gov\nHouse Democratic Caucus http://www.dems.gov/\nHouse Republican Conference http://www.gop.gov/\nOffice of Management and Budget http://www.whitehouse.gov/omb/\nSenate Democratic Conference http://www.democrats.senate.gov/\nSenate Republican Policy Committee http://rpc.senate.gov/",
"Department of the Interior (DOI) http://www.doi.gov/\nBureau of Land Management (BLM) http://www.blm.gov/nhp/index.htm\nFish and Wildlife Service (FWS) http://www.fws.gov/\nHistoric Preservation http://www2.cr.nps.gov/\nInsular Affairs http://www.doi.gov/oia/index.html\nMinerals Management Service (MMS) http://www.mms.gov/\nNational Park Service (NPS) http://www.nps.gov/\nOffice of Surface Mining Reclamation and Enforcement (OSM) http://www.osmre.gov/osm.htm\nOffice of Special Trustee for American Indians http://www.ost.doi.gov/\nU.S. Geological Survey (USGS) http://www.usgs.gov/",
"",
"Agriculture, Department of (USDA) http://www.usda.gov/\nDepartment of Agriculture: U.S. Forest Service http://www.fs.fed.us/\nEnergy, Department of (DOE) http://www.doe.gov/engine/content.do\nEnergy Budget http://www.mbe.doe.gov/budget/05budget/\nEnergy Conservation Programs http://www.eere.energy.gov/\nFossil Energy http://www.fe.doe.gov/\nNaval Petroleum Reserves http://fossil.energy.gov/programs/reserves/npr/\nStrategic Petroleum Reserve http://fossil.energy.gov/programs/reserves/spr/\nHealth and Human Services, Department of (HHS) http://www.dhhs.gov/\nIndian Health Service (IHS) http://www.ihs.gov/",
"Advisory Council on Historic Preservation http://www.achp.gov\nInstitute of American Indian and Alaska Native Culture and Arts Development http://www.iaiancad.org/\nInstitute of Museum and Library Services http://www.imls.gov/\nJohn F. Kennedy Center for the Performing Arts http://Kennedy-Center.org/\nNational Capital Planning Commission http://www.ncpc.gov\nNational Endowment for the Arts http://arts.endow.gov/\nNational Endowment for the Humanities http://www.neh.gov/\nNational Gallery of Art http://www.nga.gov/\nSmithsonian Institution http://www.si.edu/\nU.S. Holocaust Memorial Council and U.S. Holocaust Memorial Museum http://www.ushmm.org/\nWoodrow Wilson International Center for Scholars http://wwics.si.edu/"
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{
"question": [
"What is included within the Interior and related agencies appropriations bill?",
"What did the two bills passed by the House and the Senate do?",
"What were the effects of these bills?",
"What did these bills provide for in case of emergency?",
"What did the House, Senate, and conference committee debate during consideration of FY2005 funding?",
"What were the main areas of debate during this funding consideration?",
"What else did the House, Senate, and conference committee debate over?",
"What happened with these provisions in the end?"
],
"summary": [
"The Interior and related agencies appropriations bill includes funds for the Department of the Interior (DOI), except for the Bureau of Reclamation, and for some agencies or programs within three other departments—Agriculture, Energy, and Health and Human Services. It also funds numerous related agencies.",
"H.R. 4568, the Interior and Related Agencies Appropriations bill for FY2005, was passed by the House (334-86) on June 17, 2004. The bill contained $20.03 billion. The Senate companion bill, S. 2804, was reported by the Senate Committee on Appropriations (S.Rept. 108-341) on September 14, 2004 and would have provided $20.26 billion.",
"Both the House passed and Senate committee-reported bills reflected an increase over the President's FY2005 request ($19.69 billion), but a decrease from the FY2004 enacted level ($20.51 billion).",
"Both FY2005 bills included $500 million for emergency firefighting for FY2005, with emergency funds available if certain conditions are met.",
"The House, Senate, and conference committee debated many controversial policy issues during consideration of FY2005 funding.",
"They included the appropriate funding level for wildland fire fighting, land acquisition, and the arts; agency competitive sourcing activities; agency maintenance backlogs; Indian trust fund management; Outer Continental Shelf leasing; filling the Strategic Petroleum Reserve (SPR); alteration of the Abandoned Mine Lands fund; snowmobiling in Yellowstone National Park; management of wild horses and burros on federal lands; categorical exclusions for grazing on Forest Service lands; and Missouri River management.",
"Other contentious provisions related to lands and resources in Alaska, such as development of roads in the Tongass National Forest (AK); challenges to logging projects in Alaska; and an exchange of lands in the Yukon Flats National Wildlife Refuge (AK).",
"Some of the controversial provisions (both general and Alaska related) were not enacted into law."
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GAO_GAO-13-93
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{
"title": [
"Background",
"Reentry Population Needs",
"Grant Program Administration and Reentry Grant History",
"Prior Findings Related to Fragmentation, Overlap, and Duplication across DOJ Grant Programs",
"Federal Reentry Grant Programs Are Fragmented but Minimally Overlapping, Reducing the Risk for Duplication",
"Nine Reentry Grant Programs Are Fragmented across Three Federal Agencies",
"Grant Program Overlap Is Minimal and the Risk of Duplication Is Low",
"Agencies Have Taken Steps to Coordinate Their Reentry Programs and Further Reduce the Potential for Unnecessary Duplication in Funding",
"Agencies Have Acknowledged Where Overlap Exists and Have Taken Steps to Coordinate Efforts",
"Agencies Have Taken Action, or Have Actions Under Way, to Further Reduce the Risk of Unnecessary Duplication",
"Agencies Are Measuring Grantee Performance and Conducting Program Evaluations, but Additional Information Sharing Could Be Beneficial",
"Agencies Require Grantees to Collect Information on a Variety of Metrics to Assess Grantees’ Performance",
"Agencies Analyze Grantee Performance Data to Improve Operations but Additional Information Sharing Could Be Beneficial",
"DOJ and Labor Have Commissioned Program Evaluations, and Efforts Are Ongoing to Determine Program Effectiveness in Reducing Recidivism",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments",
"Appendix I: The Role of the Federal Bureau of Prisons in Reentry",
"Appendix II: Federal Interagency Reentry Council Accomplishments",
"Appendix III: Summary of Ongoing Agency Reentry Program Evaluations",
"Appendix IV: Comments from the Department of Justice",
"Appendix V: Comments from the Department of Labor",
"Appendix VI: Comments from the Department of Health & Human Services",
"Appendix VII: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"",
"The potential needs of the reentry population vary and generally cross over several areas, as shown in figure 1. For example, according to the BOP Director’s statement to Congress in March 2012, most inmates need assistance with things such as job skills, vocational training, education, substance abuse treatment, and parenting skills if they are to successfully reenter society. Further, according to the Federal Interagency Reentry Council, about 66 percent of inmates have substance abuse or dependence issues, and 24 percent have mental illness issues. In addition, according to various Urban Institute reports on reentry, between 54 and 40 percent of former inmates were not able to obtain employment within 7 to 10 months of release. In addition, former inmates are subject to a wide variety of legal and regulatory sanctions and restrictions, which are referred to as collateral consequences.\nBOP provides reentry services to inmates within federal prisons (see app. I for a list of services). Other federal agencies, through their reentry grant program funds, assist state and local entities in providing reentry services to the reentry population that may return to their communities. For example, a community nonprofit organization may receive a federal grant to assist members of the reentry population in their job training skills following inmates’ release from prison. Such services funded through the grant may include job placement or vocational training, such as construction.",
"Federal grant programs are generally created by statute and funded through appropriations. Competitive grants are announced through solicitations—or announcements to applicants of funding opportunities— and a single program may award funding through multiple solicitations. Once a grant is awarded, statutes may require that a primary grant recipient—that is, the one to whom the federal agency makes the original award—then award a portion of its grant to a subgrantee. Where statutes do not require subgranting, a grantee may voluntarily choose to award all or a portion of its funds to subgrantees. Further, federal agencies’ monitoring of grantee performance is important to help ensure that grantees are meeting program and accountability requirements. Table 1 describes the phases of the federal grant life cycle and the common activities agencies engage in within each phase.\nFederal grants to assist with reentry efforts have been in place for several years and have had a number of incarnations. Two of these former efforts are the Serious and Violent Offender Reentry Initiative (SVORI) and the Prisoner Reentry Initiative (PRI). SVORI—a $300 million collaborative effort among DOJ, Labor, HHS, and the Departments of Education and Housing and Urban Development—began in 2002. The goal of the SVORI grant program was to reduce recidivism among high-risk offenders—those who faced multiple challenges upon returning to the community from incarceration. SVORI concluded in fiscal year 2005, but its goals continued through the PRI, which DOJ and Labor administered. The PRI grant program focused on reducing recidivism by helping former inmates find work and providing them access to other critical services in their communities. PRI concluded in fiscal year 2008 when its appropriation expired.\nSince PRI’s conclusion, DOJ, Labor, and HHS each have implemented grant programs that support reentry services at the state and local levels. The Second Chance Act of 2007 authorizes the Attorney General to administer federal grants to state and local government agencies, territories, or Indian tribes, or any combination thereof, in partnership with stakeholders, service providers, and nonprofit organizations to provide employment assistance, substance abuse treatment, housing, mentoring, and other services that can help reduce recidivism. DOJ administers these grants through the SCA program and has awarded funding through a number of SCA solicitations. Under the Second Chance Act of 2007 and the Workforce Investment Act of 1998, Labor implemented its RExO program and has awarded funding through a few RExO solicitations. RExO is designed to strengthen communities to which the majority of former inmates return to through an employment-centered program that incorporates mentoring, job training, and other comprehensive transitional services. This program seeks to reduce recidivism by helping former inmates find work when they return to their communities. Finally, HHS developed the ORP solicitation under its Programs of Regional and National Significance grant program. The purpose of ORP is to expand or enhance substance abuse treatment and related recovery and reentry services to former inmates returning to the community.",
"In 2010, we were directed to identify programs, agencies, offices, and initiatives with duplicative goals and activities within departments and government-wide and report annually to Congress. In March 2011 and February 2012, we issued our first two annual reports in response to this requirement. In our 2012 report and a subsequent follow-on report, we found that of the 253 grant solicitations that DOJ issued in fiscal year 2010, there was overlap across 10 justice areas, including corrections, recidivism, and reentry. We reported that this overlap contributed to the risk of unnecessarily duplicative grant awards for the same or similar purposes. We also reported that DOJ generally lacked awareness of the extent to which its grant programs overlapped and thus was not positioned to minimize the risk of potential unnecessary duplication before making grant awards. In the July 2012 report that expanded on these findings, we recommended, among other things, that DOJ assess its grant programs for overlap and that DOJ require its grant applicants to report past, current, and prospective federal funding it has or plans to receive. DOJ agreed with our recommendations and has begun to take steps to implement them, such as exploring options to carry out an assessment to determine the extent of unnecessary duplication, if any, and the risk associated with unnecessary program duplication.",
"",
"DOJ, Labor, and HHS separately provided new or continuation grant funding to support direct services to the adult reentry population through nine grant programs in fiscal year 2011. Since more than one federal agency is involved in this same broad area of national interest, these programs are fragmented. As shown in table 2, these agencies awarded about $630 million to new grantees in that year. In some cases, the program is exclusively for reentry—as is the case with Labor’s RExO program. In other instances, such as DOJ’s Edward Byrne Memorial Justice Assistance Grant program, grantees may use the money for reentry-related services, but they may also use it for other criminal justice- related matters, such as indigent defense.\nFragmentation of these federal grant programs is due in part to the legislative creation of the programs. For example, under the Second Chance Act of 2007, DOJ is directed to administer federal grants to provide employment assistance, substance abuse treatment, housing, mentoring, and other services that can help reduce recidivism. Accordingly, DOJ developed the SCA grant program, and issued a variety of solicitations under this grant program. While HHS is required to address priority substance abuse treatment needs of regional and national significance, the Secretary may carry out these activities directly or through grants or cooperative agreements, and accordingly, HHS developed the ORP solicitation.",
"When considering, collectively, which applicants are eligible for the grant programs, the extent to which the reentry population is the sole target of the grant programs’ services, and the primary services these grant programs fund, we found that overlap across the nine programs was minimal. Therefore, the risk of duplication—when two or more agencies or programs are engaged in the same activities, provide the same services to the same beneficiaries, or provide funding for the same purpose—is low.\nWith respect to applicant eligibility, because there are three primary categories of applicants—state and local governments; tribal governments; and private, nonprofit, and community-based organizations—there is some overlap in this area. Specifically, as illustrated in table 3, five of the nine grant programs extended eligibility to all three categories of applicants. However, one allowed only state and local government applicants, and another allowed only private, nonprofit, or community-based applicants. Analyzing the data from the vantage point of the applicants themselves, state and local government agencies could apply to eight of the nine programs; tribal governments could apply to seven; and private, nonprofit, or community-based could apply to six.\nNevertheless, with respect to the extent to which the grant programs targeted the reentry grant population, we found greater variation and less overlap. Across the nine programs, as table 4 illustrates, three restricted, or targeted, their funds exclusively for use in assisting the reentry population. These were DOJ’s SCA program, Labor’s RExO program, and HHS’s Health Improvement for Re-entering Ex-offenders Initiative. Another five programs offered a range of solicitations, but at least one of these programs’ solicitations exclusively targeted the reentry population. For example, HHS issued a solicitation for ORP under its Programs of Regional and National Significance Program. Last, one program—DOJ’s Edward Byrne Memorial Justice Assistance Grant Program—was so broad as to encompass reentry amongst a number of other criminal justice or corrections uses. Since more than half of the programs target populations other than the reentry population, the overlap in this area is minimal.\nWe also found greater variation, and thus less overlap, when assessing the primary services these nine grant programs fund, as shown in table 5. Across the nine programs, one grant program covered a wide range of reentry services; two programs’ primary services were mental health and substance abuse; one program’s primary services were employment and life, family, and parenting skills; and the remaining five programs had one or no primary use of funding. For example, DOJ’s Residential Substance Abuse Treatment for State Prisoners primarily funded substance abuse treatment for state prisoners, and Labor’s RExO program primarily funded services for employment assistance. Analyzing the data from the vantage point of the primary services, the greatest number of programs—four of the nine—focused funding primarily on substance abuse treatment, a different grouping of three programs focused its funding for health issues, another set of three focused on mental health and substance abuse treatment, and another set of three focused on employment. Because of the range in primary services that these programs fund, the overlap in this area is minimal as well.\nWhen considering the three areas together—applicant eligibility, targeting of services, and primary services funded—the overall overlap is minimal. Specifically, there were variations in the applicant eligibility standards and target populations, even when grant programs allowed spending for the provision of similar services. For example, Labor’s reentry program limits eligibility to private, nonprofit organizations that will use the funds primarily to assist current or former inmates—residing in or released from any facility—with their employment needs. In contrast, one of DOJ’s reentry programs limits eligibility to governmental entities that will use the funds primarily to assist current or former inmates—residing in or released from state, local, or tribal facilities—with their substance abuse treatment needs. As we have previously reported, having multiple agencies with varying expertise involved in delivering services can be advantageous. For example, agencies may be better able to tailor programs to suit their specific missions and needs. We have also previously reported that overlap among grant programs may be desirable because such overlap can enable granting agencies to leverage multiple funding streams to serve a single purpose. For example, according to DOJ officials, they encourage grantees to use multiple streams of funding to fully implement their projects when local and federal funding is limited.\nFurther, federal agency officials from DOJ, Labor, and HHS stated that reentry can be enhanced by coinvestment—where a variety of entities in one community are receiving funds from multiple sources to assist with reentry—as these reentry programs can complement one another. We observed the benefits of this coinvestment when we interviewed grantees. For example, one of the nine grantees we interviewed received funds in 2011 from two different grant programs—ORP and RExO. These two funding streams helped the grantee provide both substance abuse treatment and employment assistance to the reentry population it served. Another grantee received a HHS Healthy Marriage Promotion and Responsible Fatherhood Grant in fiscal year 2011, and also received a RExO grant in 2012. The former assisted fathers reentering the community to develop parenting, relationship, and money management skills, while the latter grant would be used to assist both male and female former inmates with obtaining employment. Further, a few grantees stressed that the reentry population had various needs and that it is important that not just one need be met, but that the full array of services be available to prevent recidivism. According to Labor officials, given the volume of ex-offenders that are released each year, competition for limited reentry assistance from service providers in their communities is stiff. Of the more than 700,000 inmates released each year, according to each agency’s most recent annual data, the SCA program provided services to approximately 6,600; the RExO program provided services to about 7,500; and the ORP program provided services to about 3,300.\nAlthough the overlap is minimal across applicant eligibility, program targeting, and the services the grant programs fund—and the risk for duplication is therefore low—we have previously reported that the existence of overlapping grant programs is an indication that agencies should increase their awareness of where their funds are going. have also reported that in addition to increasing their individual awareness, granting agencies should coordinate to ensure that any resulting duplication in grant award funding is purposeful rather than unnecessary. According to DOJ officials, it is in the best interest of each agency to know where there is active overlap between existing inmate reentry projects, as this allows for coordination of service delivery and the leveraging of federal resources, if appropriate. As we discuss in the next section of this report, DOJ, Labor, and HHS have implemented a number of mechanisms, partly in recognition of the overlap that does exist, to coordinate their granting efforts. Furthermore, officials acknowledge that even more can be done to increase awareness over the flow of federal funds and manage the risk, however low it may be, of unnecessary duplication.\nGAO-12-517.",
"",
"With acknowledgment of some overlap, DOJ, Labor, and HHS have taken a variety of steps to coordinate their reentry efforts as a means to prevent unnecessary duplication and share promising practices. The steps are consistent with best practices for interagency collaboration, and include intra- and interagency working groups, the collective Federal Interagency Reentry Council, and a national resource center to obtain information, such as promising practices.\nIntra-agency coordination. Recognizing some overlap across their grant programs, both DOJ and HHS developed intra-agency working groups to internally coordinate their reentry efforts. For example, DOJ launched Project Reentry in 2010 to “focus federal resources on increasing public safety and maximizing the efficient use of public safety dollars by reducing recidivism rates.” According to DOJ officials, DOJ has some of the same members on Project Reentry as it has on the Federal Interagency Reentry Council to ensure that communication and collaboration is in place between the two groups. According to DOJ officials, Project Reentry provides opportunities for DOJ components to communicate; coordinate; brainstorm; and implement projects, initiatives, and ideas focused on improving outcomes in prisoner reentry. Efforts of Project Reentry include organizing workshops on reentry issues and supporting reentry courts by developing a tool kit on reentry. According to HHS officials, in 2010, its working group developed an agency-wide inventory of HHS efforts to assist incarcerated and reentering individuals and their families. According to a HHS official from the office that coordinated the inventory efforts, the primary purpose of the inventory is to serve as a resource document so that HHS officials are aware of what projects are going on and who is working on them. Although the official stated that the working group no longer has regular meetings, members now informally coordinate and participate in the Federal Interagency Reentry Council.\nInteragency coordination. Agency officials from DOJ, Labor, and HHS report that they have developed strong partnerships with their counterpart grant makers as a result of prior collaborative initiatives, such as SVORI and PRI. Although officials from DOJ and HHS reported that some of this grant coordination is informal and ad hoc, DOJ, Labor, and HHS have developed more formal and ongoing coordination mechanisms, as well. For example, DOJ’s Bureau of Justice Assistance and HHS’s Substance Abuse and Mental Health Services Administration first developed a memorandum of understanding in 2009 to improve formal coordination and communication in various programmatic areas, including reentry. Specifically, the agreement states that these agencies will coordinate on the development of grant solicitations, grantee conferences, and the vetting of relevant publications, among other things. Reference to this agreement is also included in subsequent ORP grant solicitations, stating that these agencies “share a mutual interest in supporting and shaping offender reentry-treatment services, as both agencies fund ‘offender reentry’ programs . . . ORP grantees will be expected to seek out and coordinate with any local federally-funded offender reentry initiatives including ‘Second Chance Act’ offender reentry programs, as appropriate.” The memorandum assists these agencies in establishing a mutually reinforcing or joint strategy, consistent with best practices for interagency collaboration. Agency officials reported that their interagency coordination has encouraged personal relationships among grant- administering staff and as a result, they are in contact at various phases in the grant life cycle. For example, officials from all three agencies said they are sharing some draft grant solicitations with one another to obtain feedback before issuing them. DOJ and Labor officials stated that they share the solicitations when the subject matter is relevant and not on a routine basis with all federal agencies. DOJ officials also stated that they are sharing lists of funded grant recipients with Labor, and that they publicly announce grant award decisions.\nFederal Interagency Reentry Council. To enhance coordination across the federal agencies involved in reentry activities, the council’s working group has taken several actions since its inception in 2011. Consistent with best practices for interagency collaboration, the council has helped agencies to define and articulate a common outcome, establish mutually reinforcing or joint strategies, identify and address needs by leveraging resources, and agree on roles and responsibilities. Specifically, the Federal Interagency Reentry Council has Inventoried all major federal reentry programs, including grant programs that supported reentry services in fiscal years 2009 and 2010, and Federal Interagency Reentry Council officials stated that they continue to update the inventory to include resources available in 2011 and future years. According to HHS officials, the council modeled this effort after HHS’s initiative to develop its intra-agency inventory. Further, HHS officials stated that understanding what resources are available is the first step to preventing unnecessary duplication.\nConvened research staff from 12 of its member agencies to regularly share information about reentry research and identify opportunities for research collaboration. Supporting the collaborative efforts of the council, officials from HHS, DOJ, and the Department of Commerce’s Census Bureau convened a research conference in January 2012 to discuss developing and improving federal household survey measures relating to incarceration. According to a HHS official, such measures would increase knowledge of the effects of incarceration and reentry on individuals and their families.\nWorking with the Office of Management and Budget, developed an interagency intranet site for the council, which allows all federal agencies to share key documents and resources. Information included on the site includes PowerPoint briefings and reentry-related recommendations.\nIn addition to its efforts to coordinate across federal reentry grant programs, according to member agency officials, the Federal Interagency Reentry Council has been focused on reducing the barriers that exist for the reentry population. For example, the council has taken several actions to address collateral consequences of criminal convictions—these are the laws and policies that restrict former inmates from things such as employment, welfare benefits, access to public housing, and eligibility for student loans for higher education. Such collateral penalties place substantial barriers to an individual’s social and economic advancement and can challenge successful reentry. Appendix II provides a summary of the council’s efforts to reduce reentry barriers and to achieve its other goals.\nThe National Reentry Resource Center. The Second Chance Act provided for the establishment of the National Reentry Resource Center, which was established in 2008. DOJ partially funds the center, and under a cooperative agreement, the Council of State Governments Justice Center manages it. The center’s staff provide education, training, and technical assistance to states, tribes, territories, local governments, service providers, nonprofit organizations, and corrections institutions working on reentry issues. The National Reentry Resource Center’s mission is to advance the reentry field through knowledge transfer and dissemination and to promote evidence-based best practices. Some of the activities the National Reentry Resource Center staff, along with key stakeholders, have undertaken include the development of the Reentry Services Directories, National Criminal Justice Initiatives Map, a library of reentry resources, and a website known as the What Works in Reentry Clearinghouse, among other things.\nReentry Service Directories. In 2009, the National Reentry Resource Center catalogued state-led reentry efforts and launched a nationwide online directory of state reentry coordinators. Understanding the important role local governments play in reentry, in partnership with other stakeholders, the center has expanded the directories to include city- and county-led initiatives.\nNational Criminal Justice Initiatives Map. Taking the inventory on federal reentry resources that the Federal Interagency Reentry Council assembled, the National Reentry Resource Center developed an online, interactive map that highlights major federal reentry initiatives and identifies reentry grantees in every state. The map seeks to provide a place-based catalog of national initiatives and programs designed to reduce the recidivism rates of people returning from prison, jail, and juvenile facilities. According to Federal Interagency Reentry Council and Council of State Governments Justice Center officials, this resource allows both federal staff and local stakeholders to identify reentry resources in their jurisdictions and coordinate more effectively at the local level. However, at present, the map does not include the flow of funds to subgrantees. For example, one grantee we interviewed in New York stated that its program did not provide direct services in the New York area— although the grantee is listed on the map as being a provider in New York. Rather, the grantee stated that its program provided funds to four of its affiliates in other states. Council of State Governments Justice Center officials stated that the map is based on the Federal Interagency Reentry Council’s inventory and is for informational purposes. Further, Federal Interagency Reentry Council officials stated that they continually work to update the inventory, and associated map, and that these efforts mark the first step to visually depicting the general flow of federal dollars. Five of the nine grantees we interviewed reported utilizing the map and finding it very useful. For example, three grantees reported that it was useful in helping them identify other resources in their jurisdictions. Three other grantees that had not used the map stated that they think it would be useful for future use.\nLibrary of reentry resources. The web-based library includes documents of interest to state and local policymakers, community and faith-based organizations, and the reentry population. Resources are organized by topic, such as juveniles, sex offenders, substance abuse, and mental health and include publications authored by organizations, researchers, service providers, and practitioners working in the reentry field.\nWhat Works in Reentry Clearinghouse. This website—launched in 2012—offers access to research on the effectiveness of a wide variety of reentry programs and practices. According to the website, it provides a one-stop shop for practitioners and service providers seeking guidance on evidence-based reentry interventions, as well as a useful resource for researchers and others interested in reentry. The clearinghouse currently includes information on employment, housing, and mental health, and the National Reentry Resource Center has plans to add additional issue areas. Since the site was recently launched, it is too soon to assess how grantees are using this website to inform their program design and implementation.\nOther efforts to share promising practices across agencies. In addition to some of the efforts listed above, DOJ, Labor, and HHS have, for example, held conferences or meetings for their grantees so that they may meet with one another, learn from panelists and presenters, and share information. DOJ officials stated that for the first time, in May 2012, its SCA conference was open to other federal agency reentry grantees. The grantees we interviewed stated that this type of coordination with other grantees has been, or would be, very useful, and that they learn information about other grantees through mechanisms such as conference calls and through their technical advisers. In addition, all three agencies share information on their agency websites about promising practices to sustain successful reentry efforts. Specifically, DOJ maintains the Crime Solutions website—CrimeSolutions.gov—which includes information to assist users with practical decision making and program implementation on specific justice-related programs, including reentry, and presents the existing evaluation research against standard criteria. The CrimeSolutions.gov and What Works in Reentry Clearinghouse are linked to each other. Further, Labor maintains a website for its RExO grantees to share information, such as stories of efforts of grantees, and HHS officials stated that they are in the process of fully implementing a similar website. Finally, the Council of State Governments Justice Center, with support from DOJ, launched a reentry program database in 2010, which highlights community-based reentry programs that self-report promising practices and policies that facilitate successful reentry.",
"In addition to the steps that DOJ, Labor, and HHS have taken— independently and through the Federal Interagency Reentry Council—to coordinate reentry efforts, they have also taken, or plan to take, further action to reduce the potential that grantees are using funds from different agencies or programs for the same purpose. As our prior work at DOJ has shown, if an applicant, either as a grantee or as a subgrantee, receives multiple grant awards from overlapping programs, the risk of unnecessary duplication increases, since the applicant may receive funding from more than one source for the same purpose without federal agencies being aware that this situation exists. Such duplication may be unnecessary if, for example, the total funding received exceeds the applicant’s need, or if neither granting agency was aware of the original funding decision. To help guard against this, HHS requires its reentry grantees to provide current or potential funding information from applicants. Officials stated that they have used this information for some grant programs to help ensure that funds will not be awarded for activities that are already supported by other agencies. Further, in response to our findings and recommendations from prior work, which specifically addressed issues of overlap and the importance of DOJ having awareness of the other sources of funds that applicants may have applied for or are receiving, DOJ has plans under way to assess all of its grant programs to determine the extent of any unnecessary duplication.",
"",
"To assess individual grantee performance, DOJ, Labor, and HHS require their SCA, RExO, and ORP grantees to collect information on a variety of metrics, including those specific to recidivism. According to DOJ’s Bureau of Justice Statistics, there is no single definition of recidivism that is used universally. Instead, recidivism is composed of multiple measures, including, rearrest, reconviction, or a return to jail or prison with or without a new sentence—all of which indicate an individual’s return to the criminal justice system. Therefore, agencies require grantees to collect information on measures such as the number of program participants who are arrested or reincarcerated. In some cases, federal agencies may include all these measures in their assessment of how well grantees are doing to help inmates successfully transition to nonprison life. In other cases, an agency may use fewer measures.\nFor the SCA grant program, DOJ defines recidivism as “a return to prison and/or jail with either a new conviction or as a result of a violation of the terms of supervision within 12 months of initial release.” Although DOJ officials have established a goal that SCA programs should reduce recidivism, they have not set a specific numeric target. Instead, officials stated that they compare the results individual grantees report in reducing recidivism with the average across all SCA grantees. DOJ officials stated that they are waiting for the results of an ongoing SCA program evaluation, which we discuss later in this report, so that they will have more information to determine what, if any, numerical targets would be most appropriate and what effect the SCA program has had on recidivism. Although DOJ officials have been collecting recidivism data from SCA grantees quarterly, they stated that they cannot use these data to determine the program’s impact on recidivism because they have concerns with the validity and reliability of data. Specifically, according to DOJ officials, some SCA grantees experienced difficulties accessing recidivism data, and as a result, data may not accurately reflect the criminal justice outcomes of the participants after they receive reentry services. For example, a grantee that is a county jail facility may not have access to criminal justice data outside its jurisdiction, which makes it difficult to track if a participant commits another crime in a different jurisdiction.\nTo help address data reliability challenges, DOJ officials stated that, as of October 2012, they will require SCA grantees to report on recidivism measures once at the end of their grant period rather than every quarter, as previously required. DOJ officials told us that they believe the reduced frequency in reporting will give grantees more time to access and review data they acquire from secondary sources and result in numbers that more accurately reflect recidivism outcomes. In addition, DOJ officials stated that this change will provide DOJ staff with more time to provide SCA grantees targeted technical assistance in data collection and reporting, which they believe will help mitigate the challenge of acquiring data from secondary sources. In another step to help ensure the reliability of data DOJ collects, the department requires SCA grantees to report on the source of their data, as well as any steps taken to ensure its validity.\nFor the RExO grant program, Labor defines recidivism as those cases in which an individual is “re-arrested for a new crime or re-incarcerated for revocation of the parole or probation order within 1 year of their release from prison.” If a participant is rearrested and subsequently released without being convicted of a new crime during that time, Labor stipulates that RExO grantees may remove these participants from the recidivism rate. Using this definition, Labor has set a target goal for its grantees that no more than 22 percent of all the participants a grantee serves should recidivate, which is half the national rate of recidivism at 12 months. Labor reported to Congress as part of its fiscal year 2013 Congressional Budget Justification that RExO grantees have achieved this goal with an average of 14 percent of RExO participant’s recidivating. However, Labor officials stated that recidivism can be a difficult outcome measure to track and they have had some concerns about the accuracy of data reported by grantees. As a result, according to Labor officials, they require RExO grantees to maintain documentation supporting the recidivism outcomes they report. During RExO program operations site visits, Labor officials stated that they review case files to ensure grantees are maintaining this documentation. Further, on an annual basis, Labor officials stated that they review all the performance data RExO grantees submit to ensure program outcomes have been reported for all participants. Additionally, Labor officials stated that the ongoing RExO program evaluation, discussed later in this report, will independently verify the recidivism outcomes reported by grantees.\nAlthough HHS officials stated that the department does not collect data on recidivism from its ORP grantees because no single definition of recidivism is used universally, HHS does require ORP grantees to report on the “criminal justice status” of program participants, which includes information on their arrest or incarceration. Using its definition, HHS has set a target goal for its grantees that 95 percent of all participants will have reported having no involvement with the criminal justice system for the 30 days prior to the reporting period—or no more than 5 percent of all participants reporting involvement with the criminal justice system during this time. HHS reported to Congress in its fiscal year 2013 Congressional Budget Justification that its ORP grantees active in fiscal year 2011 achieved this goal with 4.8 percent of participants’ reporting involvement with the criminal justice system during the 30 days prior to the reporting period. In contrast to Labor’s requirement that RExO grantees maintain documentation supporting the recidivism outcomes they report, HHS requires ORP grantees to have their participants self-report any interaction with the criminal justice system for the 30 days prior to each reporting period. According to HHS officials, they take steps to validate data and perform periodic audits to ensure their validity. Table 6 provides an overview of the measures each agency collects from its grantees to indicate recidivism.\nIn addition to recidivism-specific metrics, DOJ, Labor, and HHS also require grantees to collect and report on performance information related to other grant purposes. For example, Labor’s RExO program is focused on reducing recidivism through employment assistance. Accordingly, Labor officials also require its grantees to monitor and report on the percentage of participants who enter employment, the employment retention rate, and the average earnings of program participants. Similarly, as HHS’s ORP program aims to expand or enhance substance abuse treatment and related recovery, HHS officials require its grantees to monitor and report on the rate of substance abuse relapse and the number of participants who receive inpatient or outpatient treatment. Further, DOJ developed a core set of performance measures that all SCA grantees are required to report on, such as the rate of successful program completion, but it also includes metrics particular to the specific SCA solicitation. For instance, since the SCA Family-Based Prisoner Substance Abuse Treatment solicitation requires grantees to involve families in treatment services, DOJ requires grantees to report on the number of family members who participate in services.",
"DOJ, Labor, and HHS analyze recidivism data to improve grant program operations in a variety of ways, but agencies could enhance information sharing about the methods they use to collect and analyze data to determine and report on overall program effectiveness. Agencies require their reentry program grantees to submit performance reports, at varying intervals, using their respective web-based grant management systems. According to officials from all three agencies, they use data grantees provide to determine the effectiveness of individual grantees. If data indicate a problem, officials stated that they may visit a grantee’s operations in person or otherwise provide targeted technical assistance to improve program outcomes. Table 7 describes the systems each agency uses, the frequency with which grantees are required to report, and the frequency with which agencies analyze grantee data.\nThe grant management systems DOJ, Labor, and HHS use to monitor grantee effectiveness have different functionalities that present different benefits to agencies and grantees in collecting and analyzing performance data to improve operations. Specifically, Labor and HHS require RExO and ORP grantees to use MIS and SAIS to submit performance reports. Although grantees are required to submit reports to Labor and HHS on a quarterly or semiannual basis, because the systems allow grantees to enter participant-level data directly, grantees may enter these data more frequently for case management purposes. In fact, both agencies expect their grantees to use the systems as case management tools. According to HHS officials, they require ORP grantees to regularly enter participant-level data and provide data analysis training so grantees can use data to inform program decisions. For instance, HHS officials stated that ORP grantees use SAIS to aggregate data to identify trends or gaps in services and then make adjustments as needed in their operations. Further, two RExO grantees we met with reported finding Labor’s MIS system useful, as they could use a single system for both case management and grant-reporting purposes. In contrast, one SCA grantee we interviewed stated that it had to develop its own case management systems to track participant-level data, since DOJ requires its grantees to enter aggregate, rather than participant-level, data into DOJ’s PMT.\nBecause RExO and ORP grantees can use MIS and SAIS to enter participant-level data and may do so on a more frequent basis, Labor and HHS officials can monitor and take action in response to those data. For instance, Labor officials use MIS to generate a weekly report that provides them with a snapshot of performance across all RExO grantees. According to officials, they can review data from the weekly report to see how many participants entered employment or who was arrested or reincarcerated. If data reveal that a particular grantee is showing a lower than expected rate of entered employment or other result indicating a program challenge, Labor officials stated that they take action to work with the grantee to identify resources and technical assistance that could improve the performance outcome. One RExO grantee we met with stated that Labor technical assistants visited its operations site about three or four times each year for the duration of its grant and provided helpful assistance that the grantee believes resulted in increased program participation. Similarly, according to HHS officials, they use SAIS on an ongoing basis to monitor performance across ORP grantees. According to program officials, if SAIS data indicate an issue, they can initiate on- site clinical or administrative technical assistance on an as-needed basis to improve a program outcome. In contrast, DOJ collects aggregate-level data through PMT, which DOJ officials stated that they review quarterly. In addition, for certain grant programs, DOJ employs a semiannual review process that it calls GrantStat. Officials stated that during a GrantStat review, they assess PMT performance data and other relevant information, such as grantees’ semiannual narrative reports and input from DOJ’s technical assistance providers. DOJ’s goal during GrantStat is to determine how effective an overall grant program is in meeting its goals and which grantees may need targeted technical assistance, and in which areas, to improve their operations and participant outcomes. While DOJ has applied the GrantStat review process to several programs that it funds—as resources have permitted—officials stated that they used GrantStat specifically to assess the performance of selected SCA grantees in April and May 2011. As a result, DOJ officials stated that they had a better understanding of the quality of data that SCA grantees submit using PMT. They also stated that the assessment helped inform future funding decisions, such as which SCA grants funded in fiscal year 2009 should be continued. According to DOJ officials, planning is under way to determine the programs that will be prioritized next for GrantStat review.\nAlthough agency officials stated that they have had discussions about the capabilities of their systems, agencies have not formally met with one another, or through the Federal Interagency Reentry Council, to discuss the relative strengths and challenges of their systems, how frequently they collect and analyze grantee performance data, and how they determine overall program effectiveness. For example, according to Labor officials, they provided an informational overview of MIS to HHS officials, and provided HHS with access to MIS so officials could test the functionality of the system. In addition, DOJ officials stated that they had informational discussions with other members of the Federal Interagency Reentry Council, particularly Labor, about their performance measurement systems. Part of the Federal Interagency Reentry Council’s mission is to enhance communication, coordination, and collaboration across federal agency reentry initiatives. Further, we have previously reported on the importance of interagency coordination and information sharing across federal entities. We have also reported on the importance of measuring performance.information-sharing and collaborative forums, such as the one the Federal Interagency Reentry Council affords, all three agencies would have an opportunity to share information on (1) what data they collect, (2) how often they review and analyze data, and (3) what decisions their analyses inform to improve program operations and report results, as well as to consider the feasibility of adopting any promising practices as appropriate. DOJ, Labor, and HHS generally agreed that information sharing of this kind would be useful. Discussions going forward would need to consider things such as the design of each system, the strengths and limitations of the respective grant management systems vis-à-vis each agency’s grant management policies and requirements, and the cost and benefits of adopting promising practices.",
"In addition to the program-monitoring activities that agencies have taken at the individual grantee level, DOJ and Labor have spent approximately $22 million to commission program evaluations to assess the effectiveness of selected reentry grant programs. Program evaluations are individual systematic studies conducted periodically or on an ad hoc basis to assess how well a program is working. They are often conducted by experts external to the program, inside or outside the agency, as well as by program managers. As we have previously reported, for programs where outcomes, such as reducing recidivism, may not be achieved quickly, or where their relationship to the program is uncertain, program evaluations may be needed in addition to performance measurement, to examine the extent to which a program is achieving its objectives.Accordingly, DOJ and Labor have commissioned program evaluations, examples of which are listed below.\nThe Second Chance Act authorizes DOJ’s National Institute of Justice to evaluate the effectiveness of the SCA projects funded using a methodology that generates evidence of which reentry approaches and strategies are most effective. Accordingly, the National Institute of Justice commissioned evaluations of grant programs funded under two SCA solicitations—SCA Reentry Courts and SCA Adult Demonstration. DOJ estimates that a report providing final results for the SCA Reentry Courts will be completed in summer 2015 and that a report providing interim results of the SCA Adult Demonstration program will be completed in spring 2013. DOJ officials also told us that a report with final results of the SCA Adult Demonstration program should be completed in summer 2015.\nLabor commissioned a program evaluation of its RExO grant program with officials expecting final results in June 2014. The evaluation began in fiscal year 2008 and examines impacts on participants’ post- program labor market outcomes and rates of recidivism by comparing outcomes of RExO participants with the outcomes of randomly assigned individuals who are eligible for but do not receive RExO services.\nSee appendix III for summary information regarding ongoing DOJ and Labor ongoing program evaluations.\nThe findings of these evaluations will likely add to the information agencies have to demonstrate the overall effectiveness of these programs as currently implemented in reducing recidivism. But because these evaluations are ongoing, it limits the available evidence agencies’ have to demonstrate their effectiveness in reducing recidivism. Nevertheless, agencies already have the results of program evaluations that Labor and DOJ commissioned for PRI and SVORI—predecessor reentry programs to SCA and RExO that were intended to reduce recidivism. In terms of recidivism, the final PRI program evaluation published in January 2009 concluded that recidivism rates across all grantees appeared low at 1 year postrelease. However, the report noted that findings on recidivism should be interpreted with caution because “while required grantees to verify and document that participants were not re-arrested before entering data into MIS, site visits revealed that some grantee staff used a ‘no news is good news’ approach by recording that participants had not recidivated, even if they were not able to verify the outcome.” The report stated that recidivism outcome data were missing for about 12 percent of PRI program participants. Additionally, as noted in the evaluation report, the study did not include a control or comparison group and therefore was not intended to assess the effectiveness of PRI at improving program outcomes. DOJ’s National Institute of Justice’s evaluation of the SVORI program concluded that when compared with nonprogram participants, SVORI participants showed no discernible differences on outcomes with respect to recidivism. A subsequent report funded by DOJ concluded in February 2012 that additional research was necessary into the sequencing and effects of specific combinations of reentry services and that a longer follow-up period with program participants may be necessary to observe the positive effects of the SVORI program on participants’ criminal behavior and interactions with the criminal justice system. According to DOJ officials, the design of the ongoing SCA Adult Demonstration evaluation includes assessing the types, intensity, and quality of the services being provided over 3 years.\nFurther, a 2010 DOJ Inspector General report identified program deficiencies with both PRI and SVORI. For instance, the report found that SVORI and PRI grantees were not required to identify a baseline recidivism rate that would be needed to calculate any changes in recidivism rates as a result of the program. Additionally, SVORI solicitations issued between 2002 and 2004 did not specify a time frame after release in which to track a program participant’s recidivism. As noted in the Inspector General report, a time frame after release in which to track recidivism outcomes is needed so that progress can be demonstrated and outcomes compared at varying points during the monitoring period. In addition, the report recommended, among other things, that agencies require reentry grantees to establish baseline recidivism rates to facilitate comparison of recidivism rates between participants of reentry programs and nonparticipants. For both the SCA and RExO reentry grant programs, DOJ and Labor have taken steps to address some of the deficiencies. For example, DOJ requires its SCA grantees to provide a baseline recidivism rate they can use later to determine program impact, if any, on recidivism. Additionally, both DOJ and Labor have specified a 12-month time frame after release from prison or jail by which to measure recidivism. Further, according to Labor officials, as a result of the deficiencies identified with the PRI and SVORI programs, the department implemented several steps, including annually reviewing data, to ensure the reliability and validity of the recidivism data that RExO grantees report.\nIn contrast, HHS officials stated that although they do conduct program evaluations, they have not done this for ORP because of its size compared with other HHS grant programs. According to HHS’s Office of the Inspector General, HHS is the largest grant-making organization in the federal government, awarding $370 billion in grants in fiscal year 2010. However, HHS does permit ORP grantees to spend up to 20 percent of their grant funds on program evaluations and data collection. According to HHS officials, they collect and periodically review these evaluations and have used the findings, alongside other research, to change elements of program design. For example, officials stated that they changed the ORP solicitation to require that grantees work with correctional facilities to ensure a smoother transition and greater continuity of treatment services as an inmate transitions to community- based treatment. However, officials stated that the majority of performance data they use to analyze ORP’s overall program effectiveness is gathered through the information individual grantees report using SAIS.",
"Given the number of federal agencies involved in reentry, the high levels of recidivism, and current resource constraints facing the federal government, it is important that federal agencies be well aware of how their grant funds are spent and monitor grantee performance to ensure the highest return on federal investment. Accordingly, federal agencies have taken a variety of actions to enhance coordination to prevent unnecessary duplication and monitor grantees performance. These actions include developing a memorandum of understanding to improve formal coordination and communication, sharing draft grant solicitations with one another to obtain feedback before issuing them, and inventorying all major federal reentry programs. Additionally, as multiple agencies are involved in federal efforts to reduce recidivism, they have an opportunity to learn from one another about promising approaches for collecting and analyzing data and making determinations about individual grantee and overall grant program effectiveness. Given that the effect of prior reentry efforts—SVORI and PRI—on recidivism was inconclusive, effective analysis of recidivism data gathered from current reentry programs is particularly important. However, DOJ, Labor, and HHS officials have not formally shared information on the relative strengths and limitations of the respective grant management systems and their unique approaches to monitoring outcomes. By taking action to share information on how well their grantees reduce recidivism, agencies could leverage existing collaborations, such as the Federal Interagency Reentry Council, and further strengthen their program management.",
"To better utilize the performance information they collect from grantees, enhance the capacity of their respective grant management systems, and improve overall management of reentry programs designed to reduce recidivism, we recommend that the Attorney General, the Secretary of Labor, and the Secretary of Health and Human Services maximize existing information-sharing forums, such as the Federal Interagency Reentry Council, to (1) share details on how agencies collect and analyze their data, as well as how they determine program effectiveness, and (2) consider the feasibility of adapting any promising practices in the future.",
"We provided a draft of this report to DOJ, Labor, and HHS for comment. We received written comments from each that are reproduced in appendixes IV through VI, respectively. In addition, DOJ and HHS provided technical clarifications, which we incorporated where appropriate.\nDOJ concurred with the recommendation in this report. Labor and HHS did not specifically state whether they concurred with our recommendation. All three departments reported that they would establish a subcommittee of the Federal Interagency Reentry Council Staff Working Group in the first quarter of fiscal year 2013 to (1) share performance measures, (2) assess and monitor grant performance information collected from grantees with a goal of improving overall management of reentry programs designed to reduce recidivism, and (3) communicate best practices for improving the coordinated delivery of evidenced-based services. These proposed steps, if implemented, would address the intent of our recommendation.\nWe are sending copies of this report to the Attorney General, the Secretary of Labor, the Secretary of Health and Human Services, selected congressional committees, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-9627 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix VII.",
"According to the Department of Justice’s (DOJ) Federal Bureau of Prisons (BOP), the process of reentry begins the day an inmate is incarcerated, and generally should continue after an inmate is released. BOP considers reentry to be a high priority and includes it in its mission: “The mission of the BOP is to protect society by confining offenders in the controlled environments of prisons and community-based facilities that are safe, humane, cost-efficient, and appropriately secure, and to provide inmates with a range of work and other self-improvement programs that will help them adopt a crime-free lifestyle upon their return to the community.”\nBOP estimated that about $640 million of its $6.6 billion fiscal year 2012 operating budget is dedicated to reentry activities. According to BOP officials, the estimate is based on the costs of larger programs that specifically support reentry, such as education and vocational training initiatives and drug treatment programs. But officials stated that because reentry is a process and not a specific program, some initiatives that support reentry would not be captured in this estimate. For example, at a minimum, all BOP institutions offer the General Equivalency Diploma or English as a Second Language programs and therefore BOP included the costs of these programs as part of its reentry activities budget. However, the estimate does not include BOP-sponsored activities that are relevant to reentry that may be held on more of an ad hoc basis at individual BOP institutions. As we reported in September 2012, according to BOP officials, growth in the inmate population has led to increased waiting lists for programs. For instance, as of the end of fiscal year 2011, about 2,400 inmates in male medium security institutions participated in residential drug treatment, almost 3,000 more inmates were on the waiting list to participate, and the average wait for enrollment exceeded 3 months. Table 8 illustrates the variety of reentry-related programs BOP provides.\nFurther, BOP developed a plan in 2011 to implement the Inmate Skills Development Initiative. Through this initiative, BOP intends to measure skills inmates acquired through effective programs with the goal of reducing rates of recidivism. Once fully implemented, the process will involve identifying inmate strengths and weaknesses using a standardized assessment tool, linking programs used to identify specific deficit areas, and tracking the inmates’ progress on their individualized plans throughout incarceration. According to BOP officials, correctional facilities are currently utilizing an assessment tool to measure inmates’ skills, and consider the initiative’s plan to be a living document that they will continue to update and improve. In 2010, we reported on BOP’s progress in implementing the Inmate Skills Development Initiative.report, we recommended that BOP develop a plan for implementing the initiative that includes key tasks, responsibilities and timelines, as well as a comprehensive cost estimate. BOP has since taken actions to implement these recommendations.",
"The Attorney General convened the Federal Interagency Reentry Council for its first meeting on January 5, 2011. At that meeting, the council adopted a mission statement to (1) make communities safer by reducing recidivism and victimization, (2) assist those returning from prison and jail in becoming productive citizens, and (3) save taxpayer dollars by lowering the direct and collateral costs of incarceration. In addition, the council developed the following goals: identify research and evidence-based practices, policies, and programs that advance the council’s mission around prisoner reentry and community safety; identify federal policy opportunities and barriers to improve outcomes for the reentry population; promote federal statutory, policy, and practice changes that focus on reducing crime and improving the well-being of formerly incarcerated individuals, their families, and communities; identify and support initiatives in the areas of education, employment, health, housing, faith, drug treatment, and family and community well- being that can contribute to successful outcomes for formerly incarcerated individuals; leverage resources across agencies that support this population in becoming productive citizens, and reducing recidivism and victimization; and coordinate messaging and communications about prisoner reentry and the administration’s response to it.\nAccording to the council, reentry is not only a public safety issue, but it also involves a variety of other issues, as shown in figure 2.\nTo address this wide range of issues, at its first meeting, the council developed a number of short-term issues on which to focus. These included providing visibility and transparency to federal reentry programs and policies, coordinating and leveraging federal resources for reentry, and removing federal barriers to reentry.\nCouncil working group members, who currently represent 20 federal agencies, reported in 2011 and 2012 accomplishing several activities to achieve these short-term goals, some of which are highlighted in table 9.",
"Table 10 provides summary information about the Department of Justice and Department of Labor Second Chance Act (SCA) and Re-integration of Ex-offenders (RExO) evaluations of grant programs that support adult reentry services.",
"",
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"",
"In addition to the contacts named above, Joy Booth, Assistant Director; Tracey Cross; Justin Dunleavy; David Alexander; Billy Commons, III; Katherine Davis; and Eric Hauswirth made key contributions to this report."
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{
"question": [
"What did the Departments of Justice (DOJ), Labor (Labor), and Health and Human Services (HHS) do in the fiscal year 2011?",
"What were the GAO's findings?",
"What would be some examples of minimally overlapping reentry grant programs with low risk of duplication?",
"Why are the reentry grant programs administered by the Departments of Justice (DOJ), Labor (Labor), and Health and Human Services (HHS) significant?",
"What have the DOJ, Labor, and HHS done?",
"What is an example of the coordination in reentry efforts?",
"What do the DOJ, Labor, and HHS do in terms of sharing promising practices?",
"What actions have the agencies taken to reduce overlap?",
"What could the DOJ, Labor, and HHS enhance?",
"What data do the DOJ, Labor, and HHS collect?",
"What is the problem when the DOJ, Labor, and HHS collaborate?",
"What would be the effect of the DOJ, Labor, and HHS collaborating to share information?",
"What are the challenges that former inmates face?",
"What does recent data suggest about the rearrest rate of former inmates?",
"What benefits are available for inmates who successfully reenter society?",
"What was the GAO asked to review regarding former inmate recidivism?",
"How exactly did the GAO do this?"
],
"summary": [
"In fiscal year 2011, the Departments of Justice (DOJ), Labor (Labor), and Health and Human Services (HHS) separately administered nine fragmented but minimally overlapping reentry grant programs with low risk of duplication.",
"Specifically, GAO found that these grant programs are fragmented since more than one federal agency is involved in administering the programs. Further, GAO found that overlap across the nine programs was minimal because the programs varied in (1) their applicant eligibility criteria, (2) the extent to which their funds solely benefit the reentry population, and (3) their primary services funded.",
"For example, Labor's reentry program limits eligibility to private, nonprofit organizations that will use the funds primarily to assist current or former inmates--residing in or released from any facility--with their employment needs. In contrast, one of DOJ's reentry programs limits eligibility to governmental entities that will use the funds primarily to assist current or former inmates--residing in or released from state, local, or tribal facilities--with their substance abuse treatment needs.",
"Given the variance across eligible applicants, beneficiaries, and primary services, the overlap across the nine programs is minimal and the risk of duplication--when two or more agencies or programs are engaged in the same activities, provide the same services to the same beneficiaries, or provide funding for the same purpose--is low.",
"DOJ, Labor, and HHS have acknowledged where some overlap exists and therefore have taken steps to coordinate their reentry efforts to further prevent unnecessary duplication and share promising practices.",
"For example, in 2011, the U.S. Attorney General convened the Federal Interagency Reentry Council--a group of federal agencies whose mission is to make communities safer; assist those returning from prison and jail in becoming productive, taxpaying citizens; and save taxpayer dollars by lowering the direct and collateral costs of incarceration. Further, agency officials from all three agencies reported that they share grant solicitations with one another before issuing them, and in 2009, DOJ and HHS established a memorandum of agreement to formally coordinate funding activities related to reentry.",
"Further, agency officials from all three agencies reported that they share grant solicitations with one another before issuing them, and in 2009, DOJ and HHS established a memorandum of agreement to formally coordinate funding activities related to reentry.",
"In addition, all three agencies have taken action, or have actions under way, to require their grant applicants to report other federal funds they are receiving, or plan to receive, and consider this information before they will make new award decisions.",
"DOJ, Labor, and HHS are measuring grantee performance and conducting program evaluations, but they could enhance information sharing about the methods they use to collect and analyze data to determine how effectively grantees reduce recidivism.",
"To monitor grantee performance, DOJ, Labor, and HHS collect different performance information, such as rearrest, reincarceration, and employment rates, through several web-based grant management systems, each with varying strengths and limitations.",
"However, the agencies have not formally discussed these systems with one another, or how they analyze the data they collect, despite engaging in collaborations during which such discussions would be practical and useful.",
"Consistent with effective interagency coordination practices, sharing information like this could help the agencies better leverage existing practices and improve their approaches to determining and reporting on grantee effectiveness.",
"Former inmates face challenges as they transition into, or reenter, society, such as finding housing and employment.",
"According to the most recent data available, more than two-thirds of state prisoners are rearrested for a new offense within 3 years of release, and about half are reincarcerated.",
"Federal reentry grants are available for state and local providers, as successful reentry reduces rearrest or reincarceration, known as recidivism.",
"GAO was asked to review (1) the extent to which there is fragmentation, overlap, and duplication across federal reentry grant programs; (2) the coordination efforts federal grant-making agencies have taken to prevent unnecessary duplication and share promising practices; and (3) the extent to which federal grant-making agencies measure grantees’ effectiveness in reducing recidivism.",
"GAO identified and analyzed the grant programs and agencies that supported reentry efforts in fiscal year 2011; analyzed agency documents, such as grant solicitations; and interviewed agency officials."
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CRS_R42370
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{
"title": [
"",
"Background",
"Legal Requirements for Religious Exemptions to Health Care Coverage Requirements",
"Neutral Laws of General Applicability",
"Religious Freedom Restoration Act of 1993: Applying Heightened Scrutiny to Burdens on Religious Exercise",
"Public Health and Gender Equity as Compelling Interests",
"Accommodating Religious Exercise to Achieve the Government's Interest",
"Constitutional Concerns with Defining Religious Exemptions",
"Potential Consequences for Non-Compliance with Requirements for Contraceptive Coverage",
"Enforcement of the Preventive Health Services Requirement Under ERISA, the PHSA and the IRC",
"ERISA",
"PHSA",
"IRC",
"Potential Liability under Title VII of the Civil Rights Act of 1964",
"Legislative Options to Address Exemptions for Religious Employers",
"H.R. 3897/S. 2043: The Religious Freedom Restoration Act of 2012",
"H.R. 1179/S. 1467: The Respect for Rights of Conscience Act of 2011",
"Selected Examples of Existing Legislative Language for Religious Exemptions",
"Federal Laws",
"State Contraceptive Coverage Laws"
],
"paragraphs": [
"Since the enactment of the Patient Protection and Affordable Care Act (ACA) in 2010, religious institutions have raised concerns regarding the applicability of certain statutory provisions that would require the coverage of health services to which religious organizations may object. Specifically, health plans offered by employers and health insurers must cover certain recommended preventive health services without cost sharing (e.g., charging a co-payment or deductible) to patients for such services. Following enactment of ACA, the U.S. Departments of Health and Human Services (HHS), Labor, and Treasury issued interim final regulations that required coverage for a range of preventive services. The resulting rules and related guidance included coverage of contraceptive methods.\nThis requirement has generated controversy and debate involving religious groups who oppose contraception based on their religious beliefs. HHS, Labor, and Treasury have issued final rules to exempt certain religious employers from complying with the requirement that health plans include contraceptive services. However, the controversy has intensified over the scope of the exemption, which appears to apply to churches, but potentially not other religiously affiliated institutions such as universities, hospitals, and social service providers. This report will analyze the legal implications for the preventive services requirements and the potential penalties faced by religious organizations that do not comply with the rule. It also examines proposed legislative options and examples of religious exemptions in existing state and federal law.",
"ACA, as amended, greatly expanded the scope of federal regulation over health insurance provided through employment based group health coverage, as well as coverage sold in the individual insurance market. Federal health insurance standards created by ACA require, among many other things: an extension of dependent coverage to age 26 if such coverage is offered; the elimination of preexisting condition exclusions; a bar on lifetime annual limits on the dollar value of certain benefits; and a prohibition on health insurance rescissions except under limited circumstances.\nSection 2713 of the Public Health Service Act (PHSA), as added by ACA and incorporated under section 715(a)(1) of the Employee Retirement Income Security Act (ERISA) and section 9815(a)(1) of the Internal Revenue Code (IRC), requires group health plans and health insurance issuers that offer group or individual health insurance coverage to provide coverage for certain preventive health services without imposing any cost sharing requirements. Section 2713(a)(4) indicates that such services will include \"with respect to women, such additional preventive care and screenings ... as provided for in comprehensive guidelines supported by the Health Resources and Services Administration....\"\nFollowing the enactment of ACA, HHS commissioned the Institute of Medicine (IOM) to recommend preventive services that should be considered in the development of comprehensive guidelines. The IOM made its recommendations in a July 19, 2011 report. Among the IOM's recommendations was coverage of \"the full range of Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity.\"\nOn August 1, 2011, HHS, Labor, and Treasury (the Departments) published guidelines based on the IOM's recommendations. The guidelines are supported by the Health Resources and Services Administration (HRSA).\nInterim final regulations that address the coverage of preventive health services were first published in the Federal Register on July 19, 2010. On August 3, 2011, in response to comments received about these regulations, an interim final rule that amended the July 19, 2010 regulations was published. Most notably, the interim final rule provides HRSA with the authority to exempt \"religious employers\" from the preventive health services guidelines \"where contraceptive services are concerned.\" A definition for the term \"religious employer\" was added by the interim final rule:\n[A] \"religious employer\" is an organization that meets all of the following criteria:\n(1) The inculcation of religious values is the purpose of the organization;\n(2) The organization primarily employs persons who share the religious tenets of the organization;\n(3) The organization serves primarily persons who share the religious tenets of the organization; and\n(4) The organization is a nonprofit organization as described in section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code of 1986, as amended.\nThis definition was criticized by some for being so narrow that many religious institutions that provide health, educational, or charitable services would likely not be considered religious employers for purposes of the exemption. The Departments received over 200,000 comments on the amended interim regulations, with some commenters urging a broader definition for the term \"religious employer.\"\nOn February 15, 2012, the Departments published final rules on the coverage of contraceptive services. The final rules provide for the adoption of the definition established in the August 3, 2011 interim final rule. In response to those who urged a broader exemption that would include religiously affiliated employers that may not qualify as \"religious employers\" under the definition, the Departments noted:\nA broader exemption ... would lead to more employees having to pay out of pocket for contraceptive services, thus making it less likely that they would use contraceptives, which would undermine the benefits [of requiring coverage of contraceptive services without cost sharing].\nAt the same time, however, the Departments provided for a temporary enforcement safe harbor for non-exempted, nonprofit organizations with religious objections to contraceptive coverage. During the safe harbor, the Departments plan to develop and propose changes to the final regulations that would accommodate these nonprofit organizations:\nSpecifically, the Departments plan to initiate a rulemaking to require issuers to offer insurance without contraception coverage to such an employer (or plan sponsor) and simultaneously to offer contraceptive coverage directly to the employer's plan participants (and their beneficiaries) who desire it. Under this approach, the Departments will also require that, in this circumstance, there be no charge for the contraceptive coverage.\nIn guidance issued by HHS, the agency explained that the temporary enforcement safe harbor will be in effect until the first plan year that begins on or after August 1, 2013. The guidance indicates that organizations that meet all of the following criteria will not be subject to enforcement action for failing to provide contraceptive coverage in a group health plan that it establishes or maintains:\n(1) The organization is organized and operates as a non-profit entity.\n(2) From February 10, 2012 onward, contraceptive coverage has not been provided at any point by the group health plan established or maintained by the organization, consistent with any applicable State law, because of the religious beliefs of the organization.\n(3) The group health plan established or maintained by the organization provides to participants notice, as prescribed in the guidance, that states that contraceptive coverage will not be provided under the plan for the first plan year beginning on or after August 1, 2012.\n(4) The organization self-certifies that it satisfies the aforementioned criteria and documents its self-certification in accordance with procedures prescribed in the guidance.\nFinally, the guidance maintains that the Department of Labor and the Department of the Treasury will also not take any enforcement action against an organization that complies with the conditions of the temporary enforcement safe harbor.",
"One of the most controversial issues related to the final rules is whether the exemption for religious employers comports with established principles that protect the religious freedom of churches and other religiously affiliated organizations. Both constitutional and statutory rules govern whether an exemption would be required and what the scope of that exemption may be. The First Amendment's religion clauses serve as a guarantee that individuals and entities will neither be required to act under a prescribed religious belief (the Establishment Clause), nor be prohibited from acting under their chosen religious beliefs (the Free Exercise Clause). The Religious Freedom Restoration Act of 1993 (RFRA) requires that federal actions that substantially burden religious exercise must have a compelling governmental interest and be narrowly tailored to meet that interest.\nCourts have generally held that religious exemptions are not constitutionally required for laws and regulations that do not specifically target religious exercise. However, such exemptions may be enacted by Congress or promulgated by an agency as a matter of public policy. Thus, religious exemptions to requirements for health benefits coverage are generally regarded as permissible, but not required.",
"Although the U.S. Supreme Court had historically applied a heightened standard of review to government actions that allegedly interfered with a person's free exercise of religion, the Court reinterpreted that standard in its 1990 decision, Employment Division, Department of Human Resources of Oregon v. Smith . Since then, the Court has held that the Free Exercise Clause never \"relieve[s] an individual of the obligation to comply with a valid and neutral law of general applicability.\" Under this interpretation, the constitutional baseline of protection was lowered, meaning that laws that do not specifically target religion are not subject to heightened review under the Constitution. Accordingly, it is less likely that religious groups will be able to successfully argue for constitutional protection from laws of general applicability that incidentally burden their religious exercise.\nEven before the Court's reinterpretation of the requirements for religious exercise under the First Amendment, it indicated in multiple decisions that religious groups are not guaranteed to avoid burdens on their religious exercise when a law serves a valid and important public purpose. Since 1879, the Court has drawn an important distinction in free exercise cases—that religious exercise includes both beliefs and actions:\nLaws are made for the government of actions, and while they cannot interfere with mere religious belief and opinions, they may with practices. ... Can a man excuse his practices to the contrary because of his religious belief? To permit this would be to make the professed doctrines of religious belief superior to the law of the land, and in effect to permit every citizen to become a law unto himself.\nThe Court's decision permitted the government to regulate individuals' actions stemming from a religious belief, but not the religious belief itself.\nThe history of the Court's free exercise jurisprudence indicates that religious beliefs cannot excuse \"compliance with an otherwise valid law prohibiting conduct that the State is free to regulate.\" Under this rule, the Court has upheld laws proscribing behavior that may be compelled by some religious beliefs, including polygamy laws, child labor laws, Sunday-closing laws, conscription laws, tax laws, as well as controlled substances laws.\nThe Court's landmark 1990 decision in Employment Division, Department of Human Resources of Oregon v. Smith definitively established that religious exemptions are not constitutionally required for religiously motivated actions that would violate a generally applicable law. In Smith , members of the Native American Church were fired from positions at a private organization after they ingested peyote, a substance prohibited under controlled substances laws, for sacramental purposes. They challenged their subsequent ineligibility for unemployment benefits as a violation of their free exercise rights. In other words, they sought to avoid the resulting penalty of violating the controlled substances law because their actions were motivated by their religious beliefs. The Court rejected this argument, noting that the free exercise of religion has never been held to be absolute such that individuals may avoid complying with generally applicable laws because those laws conflict with their religious beliefs.\nThus, exemptions from generally applicable laws are not constitutionally guaranteed for individuals with religious objections to those laws. Prior to Smith , whether such an exemption was required would depend on whether the law was justified by a compelling interest. As noted earlier, the Court nonetheless upheld laws that imposed incidental burdens on religious exercise without religious exemptions. However, in Smith , the Court indicated that the compelling interest standard was not applicable for exemptions for generally applicable criminal laws:\nThe government's ability to enforce generally applicable prohibitions of socially harmful conduct, like its ability to carry out other aspects of public policy, \"cannot depend on measuring the effects of a governmental action on a religious objector's spiritual development.\"\nDespite not recognizing a constitutional requirement for religious exemptions, the Court emphasized that the legislature remained free to consider whether an exemption was appropriate through the political process.\nAlthough federal courts have never considered the constitutionality of requirements to cover contraceptives and related health services, at least two state courts have considered challenges to religious exemptions to similar rules at the state level. State laws in California and New York require health insurance plans that cover prescription drugs to include coverage for prescription contraceptives (see Table A-1). Each state includes an exemption for religious employers that is essentially identical to the federal exemption. Courts in both states upheld the requirements as neutral laws of general applicability under the Smith analysis. The California Supreme Court explained that a law may have references to religion, as the religious exemption to contraceptive coverage does, while remaining a law of general applicability.\nIn addition to finding that the law was neutral toward religion on its face, the California Supreme Court also held that the law did not indicate latent hostility toward religion, rejecting the argument that the law discriminated against the Catholic Church because its beliefs oppose the use of contraceptives. The court noted that most religious employers were subject to the state coverage requirements, yet because most of those employers' religious tenets did not oppose contraceptives, they could not qualify for the exemption. By providing an exemption for the religious employers that would object, including the Catholic Church, the court explained that the law could not be understood as discrimination against that church, but rather an accommodation that benefited it: \"That the exemption is not sufficiently broad to cover all organizations affiliated with the Catholic Church does not mean the exemption discriminates against the Catholic Church.\" Reaching the same conclusion, the New York Court of Appeals (its highest court) echoed this explanation: \"To hold that any religious exemption that is not all-inclusive renders a statute non-neutral would be to discourage the enactment of any such exemptions—and thus to restrict, rather than promote, freedom of religion.\"",
"Congress responded to the Court's holding in Smith by enacting RFRA in 1993, which statutorily reinstated the heightened standard of protection for government actions interfering with a person's free exercise of religion. Although the Court in 1997 struck down as unconstitutional portions of RFRA that applied to state and local governments, the heightened standard provided by RFRA still applies to federal government actions. RFRA provides that a statute or regulation of general applicability may substantially burden a person's exercise of religion only if it (1) furthers a compelling governmental interest and (2) uses the least restrictive means to further that interest. This standard is sometimes referred to as strict scrutiny analysis.\nBecause RFRA essentially reinstated the heightened scrutiny applied prior to Smith , a case decided before Smith may provide insight into how a court might evaluate an exemption to the requirements for contraceptive coverage. In United States v. Lee , an Amish man claimed that paying FICA taxes violated his belief in an obligation to provide similar assistance for church members. Lee argued that his religion prohibited him from accepting such benefits from the state or paying taxes to fund the social security system. Similar to arguments asserted by groups opposing requirements to provide contraceptive coverage, Lee argued that because he and several employees objected to the benefits received by his payment of FICA taxes, he should be exempt from paying the employer's share of the taxes.\nAlthough the Court recognized a burden on Lee's religious belief, it noted that the burden was not sufficient to find a violation of Lee's free exercise rights, explaining that such burdens may be justified if they \"accomplish an overriding governmental interest.\" The Court assessed the government's interest in the social security system as \"very high,\" noting that it was a \"comprehensive insurance system with a variety of benefits available to all participants\" and that \"mandatory participation is indispensable to the fiscal vitality of the social security system.\" The Court held that the burden was justified by the governmental interest in \"maintaining a sound tax system.\"\nThe Court then considered whether providing an accommodation for religious objectors would interfere with that interest, noting the difficulties of providing \"myriad exceptions flowing from a wide variety of religious beliefs.\" Because various religious objections may be difficult to administer in such a large system, the Court explained that the narrow exception provided by Congress for self-employed individuals was a sufficient accommodation. That exemption allowed individuals who were self-employed and held religious beliefs that opposed the acceptance of benefits offered by the social security program to avoid paying taxes toward the program because such individuals would not be participating in the program. Self-employed individuals with religious objections could be easily and fairly distinguished from all employees of an employer with religious objections. The Court recognized Congress' ability to expand that accommodation through additional legislation, but held that the existing exemption was sufficient to avoid interfering with the government's interest in maintaining a functional tax system.\nUnder a RFRA analysis, like that used in Lee , a court considering a legal challenge to the federal contraceptive coverage requirement must find a compelling governmental interest for the action alleged to violate religious exercise. If the court identifies a compelling interest, the government may regulate that activity. However, the regulation must be implemented in a manner that would burden religion as narrowly as possible while achieving the government's interest. Thus, the reinstatement of the compelling interest test generally means that religious groups may have more success arguing for protection from legal requirements that conflict with their religion, though courts have still indicated that the scope of such exemptions may be limited.",
"Among the stated goals and benefits of the preventive services requirements at issue are the improvement of public health and the equitable distribution of costs for preventive services. Courts have recognized each of these interests as compelling when faced with free exercise challenges to requirements with similar goals.\nThe Supreme Court has long upheld laws that promote public policies relating to public health as a valid exercise of protecting the welfare of the people. Courts have recognized a compelling state interest in statutes preventing the spread of disease, and the Supreme Court has explained that \"the right to practice religion freely does not include liberty to expose the community or the child to communicable disease or the latter to ill health or death.\" Although the Court's decision to hold the interest of public health above the interest of individuals to freely exercise their religious belief was made before the Court applied strict scrutiny to religious exercise cases, it nonetheless provides an indication of the nature of the government's interest in public health regulation. In a decision that did apply heightened constitutional review, the Court has also held that the government's interest in tax programs used to fund health care programs outweighs individuals' interests in exercising their religion freely. The Court's treatment of public health as an interest paramount to individual religious practice indicates a recognition of public health as a compelling state interest.\nIn challenges to state legislation mandating coverage of contraceptives with similar goals as the federal rules, courts have also recognized the significance of the government's interest in gender equity. The California Supreme Court recognized the state's interest in eliminating gender discrimination as compelling when faced with a legal challenge to a state requirement for coverage of contraceptives. The court explained that the purpose of the legislation at issue in the case was to eliminate the economic inequity existing between the out-of-pocket health care costs of men and women, resulting from the cost of contraceptives and unintended pregnancies. The New York Court of Appeals also noted the state's interest in gender equity and providing women better health care resulting from a requirement for contraceptive coverage.",
"Even if the government has a compelling interest in requiring coverage of contraceptives, it must use the least restrictive means to achieve that interest in order for the requirement to be upheld consistent with RFRA. That is, the government must make the burden on religious exercise as narrow as possible. This test may be met by providing alternative means of compliance with the legislation, such as an exemption. Allowing individuals who object to the program on religious grounds and would not receive benefits from the program to opt out of coverage would satisfy both the individual's free exercise of religion and the government's interest in protecting public health at large.\nDetermining whether an accommodation is necessary may depend on the nature of the requirement and the burden it imposes on the objecting individual or organization. For example, it may be argued that unless the insurance plan itself conflicts with the employer's religious beliefs (e.g., like the Amish employer in Lee ), the employer is not substantially burdened to trigger free exercise protections because requiring coverage of certain health services does not require that the employer or employee's seek or accept the benefits of that coverage. In other words, if the religious employer's objection is to the use of contraceptives, the requirement to offer a particular health plan that would cover contraceptives does not force the employer or its employees to acquire or use contraceptives in violation of religious beliefs. On the other hand, if the religious employer objects to facilitating access to contraceptives, a court would likely defer to the employer's understanding of its religious tenets to recognize a substantial burden and proceed with the compelling interest analysis.\nIt is certainly possible for courts to determine that no exemption may be made to certain government mandates, and courts have upheld mandates related to public health without exemptions for conflicting religious beliefs. For example, in the context of some state vaccination requirements, religious exemptions have not been required under the Free Exercise Clause. Relying on the Supreme Court's implication that public health concerns outweigh the right to exercise one's religion without interference, some state supreme courts have held that mandatory vaccination programs are not a violation of religious freedom.\nAlthough exemptions have not been required in all instances, the Supreme Court has explained that, under RFRA, an exemption may be required if the government cannot show that uniform application of a particular requirement is necessary to avoid \"seriously [compromising] its ability to administer the program.\" Under this standard, a court may find that an accommodation is possible without undermining the program, but that the exemption may need to be drawn narrowly. Consider, for example, the distinction the Court drew regarding religious exemptions under social security tax requirements. The Court held that a broad exemption extending to any employer with a religious objection was not required because such an exemption would undermine the government's ability to maintain the social security system by excluding all of that employer's employees, regardless of their religious beliefs. However, it recognized the viability of a narrow exemption applied only to the self-employed because those individuals could be easily identified and excluded from the system without detrimental effect because they also would not be drawing on the benefits.\nAlthough RFRA's requirements do not apply to state laws, state courts nonetheless considered the elements of strict scrutiny analysis when deciding related issues under state law. One court that considered contraceptive coverage requirements similar to the federal rules indicated that a narrowly drawn exception essentially limited to churches and church associations is adequate to accommodate religious burdens in this context. The California Supreme Court explained that \"any broader exemption increases the number of women affected by discrimination in the provision of health care benefits,\" the avoidance of which it had recognized as a compelling interest.\nNoting that the organization challenging the requirement employed many individuals who did not share the religious beliefs of the organization, the New York Court of Appeals suggested that religious organizations could not expect broad accommodations from such requirements. The court stated that because legislation frequently affects employment relationships, \"when a religious organization chooses to hire nonbelievers it must, at least to some degree, be prepared to accept neutral regulations imposed to protect those employee's legitimate interests in doing what their own beliefs permit.\"",
"Under religious exercise protections, courts have clearly stated that even in instances where a religious exemption may not be constitutionally or statutorily required, Congress may include or broaden such an exemption at its discretion. However, it is noteworthy that a religious exemption may be challenged as a violation of the Establishment Clause if it treats individuals or organizations differently based on their religious belief. The Establishment Clause prohibits preferential treatment of one religion over another or preferential treatment of religion generally over nonreligion. Allowing an exemption based on religion may be construed as special treatment for religious adherents, particularly in cases in which the legal provisions limit the scope of the exemption to members of only specific religions or to only religious beliefs (that is, excluding philosophical beliefs).\nExemptions that are specifically available only to certain religions have been construed in some cases as a violation of the Establishment Clause. The Supreme Court has held that legislation that provides protection or exemption for a specific religious group violates the Establishment Clause, which forbids preferential treatment based on religion. If a law benefits a religious group, the religious group alleged to be favored by the law must be one of many religious groups eligible for similar treatment or the special treatment must be made through a series of benefits offered separately to multiple groups.\nAt the same time, a generally available religious exemption may be construed as a violation of the Establishment Clause because it provides preferential treatment to individuals with religious beliefs, but does not permit individuals who might object on nonreligious philosophical grounds to claim the exemption. However, the mere fact that an exemption addresses religion will not automatically make that law unconstitutional, and a number of generally available religious exemptions have been upheld. The Supreme Court has upheld religious exemptions to government programs, where the exemptions were enacted to prevent government interference with religious exercise. For example, Title VII of the Civil Rights Act prohibits discrimination based on religion in employment but also provides an exemption from that prohibition for certain religious organizations, yet the Supreme Court found that the law did not violate the Establishment Clause.\nIn the context of a religious exemption to contraceptive coverage requirements, state courts have upheld exemptions for which some, but not all, religious entities are eligible under the Establishment Clause. One court declared that \"legislative accommodation to religious believers is a long-standing practice completely consistent with First Amendment principles.\" Another court noted that a number of laws specifically referencing religion, for the purpose of exempting certain religious organizations from legal requirements that would infringe upon their religion, have nonetheless been upheld as constitutional.",
"Employers that object to contraceptives coverage requirements and do not qualify for an exemption may refuse to offer the required coverage. While ACA does not expressly include enforcement tools, such as judicial review or penalties, that may be imposed for violating the preventive health services requirement, this requirement was added to the PHSA and incorporated into ERISA and the IRC, and it seems that enforcement may be carried out through mechanisms in those statutes. Furthermore, employers who do not cover contraceptives may face potential liability under Title VII of the Civil Rights Act of 1964, as some courts have indicated that denying coverage may constitute sex discrimination.",
"The requirement to provide preventive health services, along with many other insurance market reforms in ACA, applies to group health plans, broadly defined as plans established or maintained by an employer and that provide medical care. In general, group health plans can be insured (i.e., purchased from an insurance carrier) or self-insured (funded directly by an employer). These ACA requirements also apply to \"health insurance issuers,\" health insurers that issue a policy or contract to provide group or individual health insurance coverage. However, several of ACA's insurance market reforms, including the preventive health services requirements, do not apply to \"grandfathered health plans,\" which are existing group health plans or health insurance coverage (including coverage from the individual health insurance market) in which a person was enrolled on the date of enactment of ACA (i.e., March 23, 2010). As discussed above, with respect to the preventive health services requirements in ACA, health plans and health insurance coverage established or maintained by a \"religious employer\" could be exempt from providing contraceptive services, and certain organizations with religious objections to contraceptive coverage are not to be subject to an enforcement action under a temporary enforcement safe harbor. Aside from these exceptions, if a group health plan or health insurance issuer is subject to the insurance market reforms in Title I of ACA, it appears that the penalties discussed below could be potentially applied if health coverage was not provided in line with federal requirements.\nNeither the preventive health services requirement itself nor several of the other insurance reforms in Title I of ACA expressly include a means for enforcing these new health insurance standards, although these new standards were added to Title XXVII of the PHSA and incorporated into Part 7 of the ERISA and Chapter 100 of the IRC. Thus, if these new health insurance standards are not followed, it appears that enforcement may be carried out through mechanisms (such as judicial review and other penalties) that existed prior to ACA in these three federal statutes.\nThe type of penalty that may be applied to a particular health plan or health insurance issuer and the entity responsible for imposing it would depend upon whether the plan is subject to ERISA, the PHSA, or the IRC. These three laws apply federal health insurance standards to different types of private-sector health coverage. In general, Part 7 of ERISA is administered by the Department of Labor and regulates health coverage provided by employers in the private sector. ERISA applies to insured and self-insured group health plans, as well as insurance issuers providing group health coverage. However, ERISA does not generally apply to governmental or church plans.\nTitle XXVII of the PHSA, administered by HHS, applies to self-insured governmental plans, health insurance issuers providing group health coverage, and coverage in the individual market. The IRC, as administered by the Department of the Treasury, covers employment-based group health plans, including church plans, but does not apply to health insurance issuers. While the enforcement mechanisms are different under each of the three statutes, the Secretaries of HHS, Labor, and the Treasury have shared interpretive and enforcement authority.",
"The provisions of ACA were incorporated by reference into Part 7 of ERISA. The Secretary of Labor may take enforcement action against employers that offer group health plans which violate ERISA, but may not enforce ERISA's requirements against health insurance issuers. Section 502(a) of ERISA provides that the Secretary may bring a civil action to enjoin any act or practice that violates ERISA, or to obtain \"other appropriate equitable relief\" to rectify an ERISA violation or enforce the act's requirements.\nIn addition, section 502(a) of ERISA authorizes various civil actions that may be brought by a participant or beneficiary of a plan against group health plans and health insurance issuers. This section also provides for and limits the remedies (i.e., relief) available to a successful plaintiff. Among the claims that may be brought under section 502(a) of ERISA, section 502(a)(1)(B) authorizes a plaintiff (i.e., a participant or a beneficiary in an ERISA plan) to bring an action against the plan to recover benefits under the terms of the plan, or to enforce or clarify the plaintiff's rights under the terms of the plan. Under this section, if a plaintiff's claim for benefits is improperly denied, the plaintiff may sue to recover the unpaid benefit. Since ACA did not amend section 502 of ERISA, presumably the section would authorize review of claims arising out of a violation of the incorporated ACA provisions. Accordingly, if a group health plan or health insurance issuer failed to provide contraceptive services pursuant to guidelines authorized by ACA, it seems possible, for example, that a plan participant could be able to bring a claim for that benefit.",
"In general, the private health insurance requirements of Title XXVII of the PHSA, as amended by ACA, apply to health insurance issuers and to non-federal self-funded governmental group plans. Prior to ACA, state and local governments could elect to exempt their plans from certain requirements of the PHSA, subject to certain exceptions. However, this election is not applicable to the provisions added to the PHSA by ACA, and thus these plans are subject to ACA's federal health insurance standards.\nEnforcement of the PHSA requirements is different for health insurance issuers than for governmental plans. The Secretary of HHS is the primary enforcer of the PHSA requirements with respect to non-federal governmental plans. But, with respect to health insurance issuers, states are the primary enforcers of the private health insurance requirements. The PHSA provides that \"[i]n the case of a determination by the Secretary [of HHS] that a State has failed to substantially enforce a provision (or provisions) in this part with respect to health insurance issuers in the State, the Secretary shall enforce such provision (or provisions) ... insofar as they relate to the issuance, sale, renewal, and offering of health insurance coverage in connection with group health plans or individual health insurance coverage in such State.\" It appears that failure to provide contraceptive services may be seen as a failure to comply with the requirements of the PHSA and may trigger these enforcement mechanisms.\nHealth insurance issuers and governmental plans that fail to comply with the PHSA requirements may be subject to a maximum penalty of $100 per day for each individual with respect to which such a failure occurs. Similar to the IRC, certain minimum penalty amounts may apply to a plan or employer if the violation is not corrected within a specified period, or if a violation is considered to be more than de minimis. In determining the amount of the penalty, the Secretary must take into account the entity's previous record of compliance with the PHSA provisions. In addition, a penalty may not be imposed for a violation if it is established to the Secretary's satisfaction that none of the entities knew (or if exercising reasonable diligence would have known) that the violation existed. If the violation was due to reasonable cause and not willful neglect, a penalty would not be imposed if the violation were corrected within 30 days of discovery.",
"Under the IRC, failure to meet the group health plan requirements is enforced through the imposition of an excise tax. For single-employer plans, employers are generally responsible for paying this excise tax. Under multiemployer plans, the tax is imposed on the plan. A group health plan that fails to comply with the pertinent requirements in the IRC may be subject to a tax of $100 for each day in the noncompliance period with respect to each individual to whom such failure relates. However, if failures are not corrected before a notice of examination for tax liability is sent to the employer, and these failures occur or continue during the period under examination, the penalty will not be less than the lesser of $2,500 or the regular tax amount described above. Where violations are considered to be more than de minimis, the amount will not be less than $15,000. Limitations on a tax may be applicable under certain circumstances (e.g., if the failure was due to reasonable cause and not to willful neglect, and is corrected within a specified timeframe). It should be noted that church plans are exempt from minimum excise tax requirements, and may have a longer time frame to correct a violation before a tax is imposed. In addition, if a failure is due to reasonable cause and not willful neglect, the Secretary has discretion to waive part or all of the tax amount to the extent that the payment of the tax would be compared to the failure at issue.",
"Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment on the basis of race, color, religion, national origin, or sex. Certain religious employers (see discussion in section below) are exempt from the prohibition on religious discrimination. Employers qualifying for the exemption may consider religion in employment decisions, but those employers may not discriminate on any other basis forbidden by Title VII. Thus, although a religious organization may consider an employee or applicant's religion without violating Title VII, the organization may still violate Title VII if it treats employees differently based on the individual's race, color, national origin, or sex. Furthermore, the exemptions in Title VII appear to apply only with respect to employment decisions regarding hiring and firing of employees based on religion. Once an organization makes a decision to employ an individual, the organization may not discriminate on the basis of religion regarding the terms and conditions of employment, including compensation, benefits, privileges, etc. In other words, religious organizations that decide to hire individuals with other religious beliefs cannot later choose to discriminate against those individuals with regard to wages or other benefits that the organization provides to employees.\nIn 2000, the U.S. Equal Employment Opportunity Commission (EEOC) found that an employer's decision to cover certain preventive care services, but not prescription contraceptives, violated Title VII. The EEOC explained that the employer's policy for coverage of prescription drugs and devices must be applied equally to men and women. The employer's health plan covered a variety of comparable preventive services and excluded only prescription contraceptives. Noting that prescription contraceptives are only available for women, the EEOC found that the employer's decision to omit prescription contraceptives from coverage constituted sex discrimination. The EEOC decision applies only to the facts of the case before the Commission, and courts that have considered the issue have reached different conclusions.\nTwo federal district courts held that employers that offered prescription drug plans, but failed to provide coverage for prescription contraceptives, violated the prohibition on sex discrimination under Title VII. As one court explained,\nTitle VII does not require employers to offer any particular type or category of benefit. However, when an employer decides to offer a prescription plan covering everything except a few specifically excluded drugs and devices, it has a legal obligation to make sure that the resulting plan does not discriminate based on sex-based characteristics and that it provides equally comprehensive coverage for both sexes. In light of the fact that prescription contraceptives are used only by women, [the employer's] choice to exclude that particular benefit from its generally applicable benefit plan is discriminatory.\nHowever, a decision by the U.S. Court of Appeals for the Eighth Circuit reached a different conclusion. The 8 th Circuit found the EEOC's decision \"unpersuasive,\" noting that it lacked the force of law. The court appears to have distinguished its case from the EEOC decision because the employer's health plan excluded coverage for any contraceptive services—whether prescription or not—and therefore did not impact only women, contrary to the facts in the EEOC decision. Accordingly, the court held that the employer had not violated Title VII.\nIt is important to note that Title VII's application would be unaffected by the applicability of the religious exemption to the preventive health services requirement. In other words, even if a religious employer qualifies for an exemption from the requirements for contraceptive coverage under ACA and even if the employer qualifies for Title VII's religious discrimination exemption, the employer must still comply with Title VII's ban on sex discrimination. However, it appears plausible that employers may avoid liability under Title VII if their health plans omit coverage for any contraceptives, rather than distinguishing between prescription and non-prescription contraceptives.",
"",
"Bills that would exempt individuals and entities with religious objections from the coverage of contraceptive and sterilization services have been introduced in the House and Senate. The proposed legislation would amend section 2713 of the Public Health Service Act to exempt individuals and entities from requirements related to contraceptive or sterilization service if those individuals and entities have a religious objection to such services. The bill states\nNo guideline or regulation issued pursuant to subsection (a)(4), or any other provision of the Patient Protection and Affordable Health Care Act, or the amendments made by that Act ( P.L. 110-148 ), shall—\n(A) require any individual or entity to offer, provide, or purchase coverage for a contraceptive or sterilization service, or related education or counseling, to which that individual or entity is opposed on the basis of religious belief; or\n(B) require any individual or entity opposed by reason of religious belief to provide coverage of a contraceptive or sterilization service or to engage in government-mandated speech regarding such service.\nThe proposed exemption provided in the bill is very broad. It would apply to individuals and entities, regardless of their affiliation with a religious institution, the purpose or mission for which they are organized, or the religious nature of the business or operations of the entity. Religious exemptions already existing in federal law for religious organizations generally require that organizations seeking exemption demonstrate at least some of these characteristics in order to qualify.\nThe breadth of the exemption, as discussed earlier in this report, is a matter of congressional discretion. It seems that the groups apparently omitted from the current rule's exempted employers, that is, universities and hospitals, would be covered by this exemption. On the other hand, an exemption with few parameters may allow an unintended range of employers to avoid compliance with the coverage requirements. As courts have noted, a broad exemption may allow the religious beliefs of an employer to be imposed on employees who do not share those beliefs. It should also be noted that widely applicable exemptions may be seen to undermine the goals of the original legislation.",
"The Respect for Rights of Conscience Act would amend ACA to exempt health plans from the mandatory preventive services coverage rule with respect to any item or service, if covering that item or service would violate the religious beliefs or moral convictions of the group health plan issuer, group health plan sponsor, or any other entity offering the plan. It does not appear that this exemption would be limited to only those religious employers that meet explicitly enumerated criteria, as is currently required. For example, if the Respect for Rights of Conscience Act were enacted, it is likely that a hospital or university affiliated with a church would be exempt from covering prescription contraceptives if such coverage conflicted with the teachings of that church, even though the hospital or university would not qualify as a religious employer under the final rules of the Departments.\nIn the case of health plans on the individual market, plans would also be exempt if coverage of the relevant items or services would be contrary to the religious beliefs or moral convictions of the purchaser or beneficiary of the health plan. For example, if a self-employed individual who had no objection to prescription contraceptives sought an individual policy to cover herself and her family, the health plan would still not be required to cover prescription contraceptives if such coverage were contrary to the religious beliefs or moral convictions of another member of her family covered under the policy. However, this provision would only be applicable to plans offered in the individual market. Consequently, a plan offering group coverage would not appear to be exempt from covering a particular item or service solely because an individual covered by the plan had religious or moral objections to the coverage of that particular item or service; to be considered exempt, the group health plan would also need to show that the issuer, plan sponsor, or other entity offering the plan objected to covering the item or service.\nThe Respect for Rights of Conscience Act would also affect coverage requirements imposed as part of the essential health benefits (EHB) package, designated by the Secretary of HHS. Beginning in 2014, current law requires health insurance issuers to ensure that coverage offered in the individual or small group market includes coverage of all EHBs. Additionally, plans must cover all EHBs in order to be sold through the American Health Benefit Exchanges, and to be eligible for the premium subsidies offered to households with incomes below 400% of the federal poverty level. If enacted, the Respect for Rights of Conscience Act would permit health plans to avoid any coverage requirement imposed as an EHB, if providing coverage of the item or service would be contrary to the religious beliefs or moral convictions of the health plan, the sponsor of the health plan, or another entity offering the plan. As with the final rules, health plans in the individual market would also be able to decline to cover items or services to which the purchaser or beneficiary of the plan objects.\nIn addition to the protections for health plans described above, the Respect for Rights of Conscience Act includes conscience protections for health care providers. Specifically, it would prohibit any provision in Title I of ACA from being construed to require a health care provider to provide, participate in, or refer for any specific item or service that is contrary to the provider's religious beliefs or moral convictions.\nThe Respect for Rights of Conscience Act would also provide an explicit private right of action to enforce the rights of refusal that would be created by the bill. The federal courts would be given jurisdiction to hear such actions, and to award all forms of legal or equitable relief, specifically including temporary or permanent injunctive relief, declaratory relief, damages, costs, and attorneys' fees. Suits may be brought by the Attorney General of the United States, or any other person having standing to complain of a violation.\nAs discussed above, a refusing health plan would not be subject to penalties for failing to provide EHBs or required preventive services under the final rules. However, the Respect for Rights of Conscience Act does allow some financial consequences to fall on refusing health plans. Specifically, if a health plan declines to cover a required service, based on a religious or moral objection, the Secretary of HHS may issue regulations or other guidance to ensure that such plans maintain an aggregate actuarial value that is at least equivalent to health plans that do not exclude coverage of those items. Under such authority, the Secretary of HHS might require that a health plan that refused to cover prescription contraceptives reduce the deductibles or co-pays applicable to services that are covered in order to provide the same actuarial value as plans that cover prescription contraceptives.",
"A number of religious exemptions have been enacted to legislative mandates, both in the context of state requirements for contraceptive coverage and other unrelated contexts. These may be useful in Congress' consideration of whether to grant a statutory exemption to the preventive health services requirements.",
"Section 1402(g)(1) of the IRC provides an exemption from self-employment income tax for individuals with certain religious objections to insurance coverage. It also provides the basis for the exemption from the individual coverage requirement in the ACA. The section 1402(g)(1) exemption applies if the individual seeking exemption:\nis a member of a recognized religious sect or division thereof and is an adherent of established tenets or teachings of such sect or division by reason of which he is conscientiously opposed to acceptance of the benefits of any private or public insurance which makes payments in the event of death, disability, old-age, or retirement or makes payments toward the cost of, or provides services for, medical care....\nAlternatively, section 702 of Title VII of the Civil Rights Act of 1964 provides an exemption from the prohibition against religious discrimination in employment decisions. It has been replicated in other nondiscrimination legislation, for example, the Americans with Disabilities Act. Section 702 applies to:\nA religious corporation, association, educational institution, or society with respect to the employment [i.e. hiring and retention] of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.\nHowever, the terms religious corporation, association, educational institution, or society are not defined, and there is no definitive standard in judicial decisions to determine whether an organization qualifies for the exemption. The Supreme Court declined to review a case that would have provided an opportunity to announce a uniform standard in 2011. However, lower courts have considered several factors when deciding whether an organization qualifies for the exemption: (1) the purpose or mission of the organization; (2) the ownership, affiliation, or source of financial support of the organization; (3) requirements placed upon staff and members of the organization (faculty and students if the organization is a school); and (4) the extent of religious practices in or the religious nature of products and services offered by the organization.\nThese examples are generally available exemptions, such that any member of any religious organization with the beliefs described in the provision would qualify, and do not state specific religious groups with which objectors must be associated. The Supreme Court has held that these models are constitutionally permissible.",
"Twenty-eight states have enacted laws which have been interpreted to require insurers to cover contraceptives in the same way as other prescription drugs may be covered. These states have adopted varying approaches to define the scope of entities that may be exempt from the mandates based on religious or moral objections. Table 1 provides a description of the definition used in each state with a contraceptive mandate.\nThese definitions can be separated into four general categories, although there are variations among the states within each category. First, nine of the 28 states with some form of a contraceptive mandate provide no explicit exemption based on religious or moral objections. However, in many instances, the mandate may be avoided by refraining from offering prescription drug coverage generally, or by seeking regulation under ERISA.\nSecond, eight of the remaining 19 states that do exempt some religious entities define the scope of exempt religious entities using some variation of a multi-pronged test, requiring some or all of the following criteria to be met:\n1. The entity's purpose must be the inculcation of religious values; 2. The entity primarily must employ members of the same religion; 3. The entity primarily must serve members of the same religion; and 4. The entity must be a church, an integrated auxiliary of a church, a convention or association of churches, or engaged in the exclusively religious activities of any religious order under section 6033 of the IRC.\nThis multi-pronged definition resembles the definition adopted in the final rules, which requires all four prongs to be satisfied. Three of these eight states, California, New York, and Oregon, also require all four prongs to be met in order to qualify as exempt from the respective state contraceptive coverage mandate on the grounds of a religious objection. The remaining five states (Arizona, Arkansas, Hawaii, Michigan, and North Carolina) only require two or three of these criteria, in different combinations, to be met. For example, Arizona does not require an entity's purpose to be the inculcation of religious values in order to be exempt, while North Carolina does not require exempt entities to serve primarily members of the same religion.\nIn the third category are six states (Connecticut, New Jersey, Maine, Massachusetts, Rhode Island, and West Virginia) which use definitions that incorporate the definition of \"church\" under the Federal Income Contributions Act (FICA). The FICA definition includes churches, conventions or associations of churches, or elementary or secondary schools which are controlled, operated, or principally supported by a church or by a convention or association of churches.\nFinally, five states (Delaware, Maryland, Missouri, Nevada, and New Mexico) provide an exemption for religious employers or entities, but do not further define what a religious entity is or provide a specific test to be used."
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"question": [
"What has happened since the enactment of the Patient Protection and Affordable Care Act (ACA) in 2010?",
"What has the U.S. Departments of Health and Human Services, Labor, and Treasury done with regards to the ACA?",
"What is covered under this exemption?",
"How is the religious employer exemption from the ACA controversial?",
"What do constitutional and statutory rules govern?",
"What is the general opinion of courts regarding religious exemption from coverage?",
"How is Congress involved?",
"What does the Religious Freedom Restoration Act of 1993 (RFRA) require?",
"How must a court decide whether a federal action is allowed under the RFRA?",
"What have courts decided about the RFRA?",
"How have state courts acted similarly to federal courts?",
"How may employers with health plans that fail to offer required coverage be penalized?",
"How can the ACA enforce this requirement?",
"How else can employers be held liable?",
"What is the purpose of this report?",
"What about religious organizations does this report investigate?",
"What does this report discuss about organizations that fail to provide coverage?",
"What does the report analyze about statutory exemptions?"
],
"summary": [
"Since the enactment of the Patient Protection and Affordable Care Act (ACA) in 2010, controversy has surrounded the applicability of requirements for health plans and health insurers to cover certain recommended preventive health services, including a range of contraceptive services, without cost sharing.",
"The U.S. Departments of Health and Human Services, Labor, and Treasury have issued regulations that provide an exemption from ACA for certain religious employers who have religious objections to contraceptives.",
"The exemption appears to cover churches and church associations, but potentially does not extend to other religiously affiliated employers, such as universities and hospitals.",
"The scope of the exemption has been the subject of intense debate and has raised questions of the legal protections for religious institutions.",
"Both constitutional and statutory rules govern whether a religious exemption from the coverage requirement is required and what the scope of that exemption may be.",
"Courts have generally held that exemptions to legal mandates that conflict with religious beliefs are permissible, but not required under the First Amendment. The U.S. Supreme Court has indicated in several decisions that a religious exemption is not required for neutral laws of general applicability, and state courts have applied the Court's analysis to state contraceptive requirements.",
"The Court has explicitly noted, however, that an exemption may be included or broadened at the discretion of Congress.",
"As a statutory protection, the Religious Freedom Restoration Act of 1993 (RFRA) requires that any federal action that substantially burdens religious exercise must (1) further a compelling interest and (2) use the least restrictive means to further that interest.",
"Because the contraceptive coverage requirement is a federal action subject to RFRA, a court must find that the requirement serves a compelling interest and is implemented to burden as few religious objectors as possible without undermining that interest.",
"Courts, including state courts considering challenges to similar provisions in state law, have recognized at least two of the stated purposes of the requirement—public health and gender equity—as compelling interests.",
"State courts have also upheld exemptions that are essentially identical to the one included in the federal rule as sufficient accommodations which use the least restrictive means to avoid undermining that interest.",
"Employers with health plans that fail to offer the required coverage of contraceptives and do not qualify for an exemption may be subject to penalties or other liability.",
"With respect to the preventive health services requirement, ACA does not expressly include a means of enforcing the provision. However, if a health plan or health insurer does not provide contraceptive coverage, it is possible that enforcement mechanisms found in the Employer Retirement Income Security Act, the Public Health Service Act, and the Internal Revenue Code could be applied.",
"Furthermore, employers who do not cover contraceptives may be subject to liability for sex discrimination under Title VII of the Civil Rights Act of 1964, even if the employer qualifies for the religious exemption.",
"This report provides an overview of the preventive health services requirements and the exemption for religious employers.",
"It analyzes the legal protections for religious organizations with objections to the requirements and examines state court decisions upholding similar requirements.",
"The report also discusses the implications of non-compliance for organizations that do not qualify for the exemption and fail to provide the required coverage.",
"Finally, the report analyzes several legislative proposals for statutory exemptions (H.R. 3897/S. 2043; H.R. 1179/S. 1467) and provides examples of religious exemptions in other federal laws and in state contraceptive coverage laws."
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|
CRS_RL30631
|
{
"title": [
"",
"Background on Congressional Pensions",
"Retirement Plans Available to Members of Congress",
"Members First Elected Before 1984",
"Members First Elected Since 1984",
"Age and Length-of-Service Requirements",
"Retirement Under CSRS",
"Retirement Under FERS",
"Coordination of FERS Benefits with Social Security",
"Social Security Retirement Benefits17",
"Social Security Earnings Limit19",
"The Thrift Savings Plan: An Integral Component of FERS",
"Required Contributions to Retirement Programs",
"CSRS",
"CSRS Offset",
"FERS: Covered Prior to December 31, 2012",
"FERS: First Covered January 1, 2013, Through December 31, 2013",
"FERS: First Covered After December 31, 2013",
"Temporary Increase in Employee Contributions to CSRS and FERS",
"Social Security Payroll Taxes",
"Total Payroll Deductions",
"Dual Coverage",
"CSRS Offset",
"FERS",
"Social Security",
"Pension Plan Benefit Formulas",
"Pension Benefits Under CSRS",
"Pension Benefits Under FERS",
"Pensions for Members with Service Under Both CSRS and FERS",
"Retirement Benefits Under the CSRS Offset Plan",
"Replacement Rates",
"Cost-of-Living Adjustments",
"The Thrift Savings Plan",
"Mandatory Coverage Under FERS",
"Retirement Benefits for Members with Limited Service",
"Forfeiture of Annuity37"
],
"paragraphs": [
"",
"The Civil Service Retirement Act of 1920 (P.L. 66-215) established a pension system for federal employees in the executive branch of government. Coverage under the Civil Service Retirement System (CSRS) was extended to Congress in January 1942 by P.L. 77-411. That law was repealed just two months later in response to adverse public opinion. In 1946, P.L. 79-601 again extended CSRS coverage to Congress, at the option of Members, with higher contributions and greater benefits than those applicable to regular federal employees. In its report on that legislation, the Special Committee on the Organization of Congress stated that a retirement plan for Congress\nwould contribute to independence of thought and action, [be] an inducement for retirement for those of retiring age or with other infirmities, [and] bring into the legislative service a larger number of younger Members with fresh energy and new viewpoints concerning the economic, social, and political problems of the Nation.\nThe Social Security Amendments of 1983 ( P.L. 98-21 ) required all federal employees hired in 1984 or later to participate in Social Security. These amendments also required all Members of Congress to participate in Social Security as of January 1, 1984, regardless of when they first entered Congress. Requiring federal workers to participate in both CSRS and Social Security would have duplicated some benefits and would have resulted in employee payroll deductions for the two programs that would exceed 13% of pay. After mandating Social Security coverage of new federal employees beginning in 1984, Congress directed the development of a new retirement plan for federal workers with Social Security coverage as its foundation. The result of this effort was the Federal Employees' Retirement System Act of 1986 ( P.L. 99-335 ).\nThe Federal Employees' Retirement System (FERS) went into effect in 1987, and employees first hired in 1984 or later were automatically enrolled in this plan. Employees who had been in the federal government before 1984 were given the option to remain in CSRS—without Social Security coverage—or to switch to FERS. The options for Members of Congress differed from those available to other federal employees because the 1983 amendments required all Members of Congress to participate in Social Security. Members first elected in 1984 or later were given the option to enroll in FERS as well as being covered by Social Security, or to be covered only by Social Security. Members who had been in Congress before 1984 could elect to stay in CSRS in addition to being covered by Social Security; to elect coverage under an \"offset plan\" that integrates CSRS and Social Security; to elect coverage under FERS in addition to being covered by Social Security; or to be covered only by Social Security.\nBecause of the uncertain tenure of congressional service, FERS was originally designed, as CSRS had been, to provide a larger benefit for each year of service to Members of Congress and congressional staff than to most other federal employees. Prior to P.L. 112-96 , all Members of Congress also became eligible for retirement annuities at an earlier age and with fewer years of service than most other federal employees. However, all Members of Congress and congressional staff also paid a higher percentage of salary for their retirement benefits than do most other federal employees before P.L. 112-96 was enacted.\nThe Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) made two significant changes to the retirement benefits of Members of Congress who are first covered by FERS after December 31, 2012. First, P.L. 112-96 decreased the FERS benefit accrual rate (used in the FERS pension calculation) for Members first covered by FERS (or reelected with less than five years of FERS service) after December 31, 2012, to be the same as regular FERS employees. Therefore, the larger benefit per year of service is no longer available to Members (or congressional employees) first covered by FERS after December 31, 2012.\nSecond, P.L. 112-96 also increased the FERS employee contributions by 1.8 percentage points for Members of Congress first covered by FERS (or reelected with less than five years of FERS service) after December 31, 2012. Therefore, Members newly covered by FERS in 2013 are required to contribute 3.1% of pay to FERS. Subsequent to P.L. 112-96 , the Bipartisan Budget Act of 2013 ( P.L. 113-67 ) further increased the FERS employee contributions by an additional 1.3 percentage points for all individuals, including Members of Congress, first covered by FERS (or rehired/reelected with less than five years of FERS service) after December 31, 2013. Therefore, under P.L. 113-67 , Members of Congress and other federal employees first covered by FERS beginning in 2014 are required to contribute 4.4% of pay to FERS.\nThus, for individuals first covered by FERS after December 31, 2012, there is no longer a larger employee contribution under FERS required for Members and congressional employees in comparison with regular FERS employees; all of these groups contribute 3.1% of pay toward their FERS annuity if first covered in 2013 or 4.4% of pay if first covered by FERS after 2013. Members of Congress first elected after December 31, 2012, however, remain eligible for retirement annuities under FERS at earlier ages and with fewer years of service than most other federal employees.\nThere were 611 retired Members of Congress receiving federal pensions based fully or in part on their congressional service as of October 1, 2016. Of this number, 335 had retired under CSRS and 276 had retired under FERS. Members who had retired under CSRS had completed, on average, 23.5 years of civilian federal service. Their average annual CSRS annuity in 2016 was $74,028. Those who had retired under FERS had completed, on average, 15.8 years of civilian federal service. Their average retirement annuity in 2016 (not including Social Security) was $41,076. The average age of retired Members of Congress receiving retirement annuities in 2016 was 76 for those who had retired under CSRS and 73 for those who had retired under FERS.",
"",
"Members of Congress who were first elected before 1984 may be covered under one of four retirement plans:\nDual Coverage. This is full coverage by both CSRS and Social Security. CSRS Offset. This is coverage by CSRS and Social Security, but with CSRS contributions and benefits reduced (\"offset\") by the amount of Social Security contributions and benefits. FERS. This is composed of the FERS basic annuity, Social Security, and the Thrift Savings Plan (TSP). Social Security Only. This occurs if the Member declines other coverage.\nMembers and other federal employees who were covered under CSRS had the opportunity to switch to FERS during two six-month \"open seasons\" in 1987 and 1998. In 1987, less than 5% of eligible federal employees switched from CSRS to FERS, and in 1998 less than 1% of eligible employees switched.",
"Members of Congress who were first elected in 1984 or later are covered automatically by the Federal Employees' Retirement System. Prior to the Legislative Branch Appropriations Act, 2004 ( P.L. 108-83 ), all Members could decline this coverage. Effective with passage of P.L. 108-83 , however, Representatives entering office on or after September 30, 2003, may not elect to be excluded from such coverage. All Senators, regardless of date, and those Representatives serving as Members prior to September 30, 2003, continue to be able to decline this coverage.\nFERS is composed of three elements:\n1. Social Security; 2. the FERS basic annuity , a monthly pension based on years of service and the average of the three highest consecutive years of basic pay; and 3. the Thrift Savings Plan , into which participants can deposit up to a maximum of $18,500 in 2018 (participants who are at least age 50 in 2018 can make an additional \"catch-up\" contribution of up to $6,000). Their employing agency matches employee contributions up to 5% of pay.\nMembers who enter Congress with at least five years of previous federal employment covered by CSRS can choose to participate in the CSRS Offset Plan rather than FERS.",
"Members become vested in (legally entitled to) a pension benefit under CSRS or FERS after five years of service. The age and service requirements for retirement eligibility are determined by the plan under which a Member is covered at the time of retirement, regardless of whether he or she has previous service covered under a different plan. Depending on a Member's age and years of service, a pension can be taken immediately upon retirement or only on a deferred basis. Likewise, the Member's age and years of service, as well as the starting date of the annuity, will determine whether he or she is eligible for a full pension or a reduced pension.",
"Four retirement scenarios are possible for Members covered by CSRS or the CSRS Offset Plan.\nRetirement with an immediate, full pension is available to Members aged 60 or older with 10 years of service in Congress, or aged 62 with 5 years of civilian federal service, including service in Congress.\nRetirement with an immediate, reduced pension is available to Members aged 55 to 59 with at least 30 years of service. It is also allowed if the Member separates for a reason other than resignation or expulsion after having completed 25 years of service, or after reaching the age of 50 and with 20 years of service, or after having served in nine Congresses.\nRetirement with a deferred, full pension is available if the Member leaves Congress before reaching the minimum age required to receive an immediate, unreduced pension and delays receipt until reaching the age at which full benefits are paid. A full pension can be taken at the age of 62 if the Member had 5-9 years of federal service, or at the age of 60 if the Member had at least 10 years of service in Congress. At the time of separation, the Member must leave all contributions in the plan to be eligible for the deferred pension.\nRetirement with a deferred, reduced pension is available to a Member at the age of 50 if he or she retired before that age and had at least 20 years of federal service, including at least 10 years as a Member of Congress.",
"There are four possible retirement scenarios for Members who are covered by FERS.\nRetirement with an immediate, full pension is available to Members aged 62 or older with at least 5 years of federal service; aged 50 or older with at least 20 years of service; and at any age to Members with at least 25 years of service.\nRetirement with an immediate, reduced pension is available at the age of 55 to Members born before 1948 with at least 10 years of service. The minimum age will increase to 56 for Members born from 1953 through 1964 and to 57 for those born in 1970 or later.\nRetirement with a deferred, full pension is available at the age of 62 to former Members of Congress with at least five years of federal service.\nRetirement with a deferred, reduced pension is available at the minimum retirement age of 55 to 57 (depending on year of birth) to a former Member who has completed at least 10 years of federal service. The pension annuity will be permanently reduced if it begins before the age of 62.",
"The FERS basic annuity was designed to supplement Social Security retirement benefits. FERS retirees under age 62 who retire with an unreduced pension are eligible for a temporary supplement to their FERS pension to fill in until Social Security eligibility is reached at the age of 62. The supplement is an amount estimated to equal the Social Security benefits accrued from federal service, and is paid from the time of retirement until the age of 62. The FERS supplement ends at the age of 62 regardless of whether the individual applies for Social Security at that time. Like Social Security benefits paid before the full retirement age (66 years for individuals born between 1943 and 1954), the supplement is reduced if the retiree has earnings above a specified annual limit. This \"FERS supplement\" is payable to Members who retire at the ages of 55 to 57 (depending on year of birth) or older with at least 20 years of service. A former Member with at least 20 years of FERS service also may begin to draw the supplement upon reaching the age of 55 to 57.",
"Since January 1, 1984, all Members of Congress have been required to pay Social Security taxes. The laws governing payment of Social Security taxes and eligibility for Social Security benefits apply to Members of Congress in the same way they apply to any other covered worker.\nRetirement with full benefits. The \"full retirement age\" under Social Security is 66 years for those individuals born between 1943 and 1954. Forty quarters of covered employment are required to be eligible for retired worker benefits. Under current law, the age for full benefits is gradually increasing, beginning with people born in 1937, until it reaches the age of 67 for those born in 1960 or later.\nRetirement with reduced benefits. The earliest that retired worker benefits can be taken under Social Security is the age of 62. Benefits taken at 62 are permanently reduced, based on the number of months between the person's age at retirement and the full retirement age. A worker retiring at the age of 62 in 2015 would receive a benefit equal to 75% of the benefit that would be payable if the worker were retiring at the Social Security full retirement age. When the full retirement age reaches the age of 67 in 2022 and later, the monthly benefit paid at 62 will be 70% of the amount that would be paid if the beneficiary were aged 67.",
"Social Security benefits are reduced for beneficiaries under the full retirement age (age 66 for individuals born between 1943 and 1954) who have earnings from paid employment that exceed thresholds that are defined in statute. In 2018, Social Security beneficiaries under the full retirement age of 66 are subject to a reduction in benefits if their annual earnings exceed $17,040 ($1,420 per month) for any year prior to the year in which they attain full retirement age. These beneficiaries lose $1 in benefits for every $2 in earnings above the threshold.\nFor any months in the same year that Social Security beneficiaries attain full retirement age, the reduction in benefits is lower and the annual exempt earnings amount is greater than described above. That is, for any months in the year that a beneficiary meets the full retirement age for Social Security (age 66 for individuals born between 1943 and 1954), the annual earnings limit in 2018 is $45,360 ($3,780 per month). Individuals lose $1 in benefits for every $3 in earnings above the threshold for any of these months.\nThe earnings thresholds described above are adjusted annually for average wage growth in the U.S. economy. Retirees who have passed the full retirement age receive full benefits regardless of earnings.",
"The TSP is a defined contribution retirement plan similar to those authorized under Section 401(k) of the tax code for employers in the private sector. For all federal employees enrolled in FERS, their employing agency contributes an amount equal to 1% of their base pay to the TSP, whether or not the employee chooses to contribute anything to the plan. FERS employee contributions of up to 5% of pay are matched by the employing agency. Employees covered by CSRS can participate in the TSP, but they receive no employer matching contributions. In 2018, employees enrolled in TSP can make voluntary contributions of up to $18,500. Employees aged 50 or older can contribute an additional $6,000 in 2018 (for a total contribution limit of $24,500).\nTSP employee contributions may be made on a pretax basis, in which case neither the contributions nor investment earnings that accrue to the plan are taxed until the money is withdrawn. Alternatively, P.L. 111-31 authorized a qualified Roth contribution option to the TSP. Under a Roth contribution option, employee salary deferrals into a retirement plan are made with after-tax income. Qualified distributions from the Roth TSP plan option—generally, distributions taken five or more years after the participant's first Roth contribution and after he or she has reached the age of 59½—are tax-free.",
"",
"Regular federal employees covered by CSRS contribute 7.0% of pay to the Civil Service Retirement System. Their employing agencies contribute a further 7.0% of payroll to the CSRS on behalf of these workers. Members of Congress who are covered by CSRS are required to contribute 8.0% of salary to the plan, and the U.S. Congress makes an employer contribution of 8.0% of payroll on their behalf.",
"Members of Congress covered by the CSRS Offset Plan contribute 1.8% of pay up to the Social Security taxable wage base ($128,400 in 2018), and 8.0% of pay above this amount, to the Civil Service Retirement System. They also contribute 6.2% of pay up to the Social Security taxable wage base to the Social Security trust fund.",
"Currently, regular federal employees who were covered by FERS prior to December 31, 2012, contribute 0.8% of pay to FERS and their employing agencies contribute an amount equal to 13.7% of pay. Currently, Members of Congress and congressional staff who were covered by FERS prior to December 31, 2012, pay 1.3% of salary for FERS coverage, and Congress pays 20.8% of pay for Members of Congress and 19.1% of pay for congressional employees who are enrolled in FERS. Members and employees enrolled in FERS also contribute 6.2% of pay up to the Social Security taxable wage base to the Social Security trust fund. Their employing agencies also contribute an additional 6.2% on the same wage base to the Social Security trust fund.",
"Federal employees hired (or rehired with less than five years of FERS service) after December 31, 2012, but before January 1, 2014, are subject to increased contributions in accordance with P.L. 112-96 (the Middle Class Tax Relief and Job Creation Act of 2012). Currently, regular FERS employees hired in calendar year 2013 currently contribute 3.1% of pay to their FERS annuity and their employing agencies will contribute 11.9% of pay. Members of Congress first elected in 2013 and congressional employees first hired in 2013 also contribute 3.1% of pay. Currently, Congress contributes 11.9% of payroll for these Members and congressional employees first elected or hired in 2013 who are enrolled in FERS. Members and employees enrolled in FERS also contribute 6.2% of pay up to the Social Security taxable wage base to the Social Security trust fund. Their employing agencies contribute an additional 6.2% on the same wage base to the Social Security trust fund.",
"Under P.L. 113-67 , the Bipartisan Budget Act of 2013, federal employees hired (or rehired with less than five years of FERS service) after December 31, 2013, are subject to further increased FERS contributions. Regular FERS employees first hired after 2013 contribute 4.4% of pay to their FERS annuity. Members of Congress first covered by FERS after 2013 and congressional employees first hired after 2013 also contribute 4.4% of pay. Currently, employing agencies contribute 12.0% of pay for regular FERS employees, Members of Congress, and congressional employees. Members and employees enrolled in FERS also contribute 6.2% of pay up to the Social Security taxable wage base to the Social Security trust fund. Their employing agencies also contribute an additional 6.2% on the same wage base to the Social Security trust fund.",
"Under the terms of the Balanced Budget Act of 1997 ( P.L. 105-33 ), employee contributions under CSRS and FERS rose by 0.25 percentage points in January 1999 and by a further 0.15 percentage points on January 1, 2000. Employee contribution rates were scheduled to increase by another 0.10 percentage points on January 1, 2001. Employee contributions were then to revert to the 1998 levels after December 31, 2002. Pension benefits accrued by federal workers would not have increased as a result of the temporarily higher employee contributions to CSRS and FERS mandated by the Balanced Budget Act. The higher contribution rates mandated by the Balanced Budget Act were repealed for all federal employees except Members of Congress by P.L. 106-346 , the FY2001 Department of Transportation and Related Agencies Appropriations Act. Contribution rates for Members reverted to 8.0% under CSRS and 1.3% under FERS on January 1, 2003.",
"All Members of Congress pay Social Security payroll taxes, regardless of their other retirement plan coverage. The Social Security tax rate of 6.2% applies to gross wages up to $128,400 in 2018, which is the Social Security taxable wage base . The Social Security taxable wage base is adjusted each year for wage growth in the economy. Members of Congress, like all other workers covered by Social Security, pay Medicare Hospital Insurance taxes on all earnings at a rate of 1.45% of pay.",
"Total payroll deductions for federal retirement programs depend on the combination of programs by which a Member is covered. The required payments are exclusive of any voluntary investments in the TSP. The following are the current required contributions.",
"Members with full CSRS coverage plus Social Security contribute 14.2% of the first $128,400 of salary in 2018. They also pay 8.0% to CSRS on salary above that amount (i.e., above $128,400 in 2018).",
"Members in the CSRS Offset Plan pay 6.2% to Social Security and 1.8% to CSRS on the first $128,400 of salary in 2018; they pay 8.0% to CSRS on salary above $128,400 in 2018.",
"Members first covered by FERS before 2013 pay 1.3% to FERS on total salary and 6.2% to Social Security on the Social Security taxable wage base (first $128,400 of salary in 2018). Members first covered by FERS in calendar year 2013 pay 3.1% to FERS on total salary and 6.2% to Social Security on the Social Security taxable wage base. Members first covered by FERS after 2013 contribute 4.4% of total salary to FERS and 6.2% to Social Security on Social Security taxable wage base.",
"All Members pay 6.2% of their first $128,400 in salary to Social Security in 2018. The Social Security taxable wage base is indexed to national average wage growth and is adjusted annually.",
"Pension benefits under both CSRS and FERS are computed according to (1) the retiree's average annual salary for the three consecutive years of highest pay (known as \"high-3\" average salary); (2) the number of years of service completed under the pension plan; and (3) the \"accrual rate\" at which benefits accumulate for each year of service. The pension is the product of these factors, expressed as follows:",
"The accrual rate for each year of congressional service covered by CSRS is 2.5%. Therefore, the CSRS pension equals\nFor example, after 30 years of congressional service and a high-3 average salary of $174,000, the initial annual CSRS pension for a Member who retired in December 2014 at the end of the 113 th Congress at the age of 60 or later would be\n$174,000 × 30 × .025 = $130,500\nFederal law limits the maximum CSRS pension that may be paid at the start of retirement to 80% of the Member's final annual salary. (See 5 U.S.C. §8339(f).) To receive an initial pension equal to 80% of final salary, a Member must complete 32 years of congressional service covered by CSRS (32 × .025 = .80). The smallest starting pension under CSRS is 12.5% of high-3 salary for a Member with five years of service. (Pensions based on less than 10 years of service cannot begin before the age of 62.)\nMost Members who entered Congress before 1984 and who chose to stay in the CSRS elected the \"CSRS offset\" plan. When a Member who has retired under the offset plan first becomes eligible for Social Security (usually age 62 or older), the CSRS pension is reduced by the amount of Social Security benefits that he or she is entitled to as a result of congressional service. This offset is applied even if the Member does not apply for a Social Security retirement benefit. In the example above, the offset would be approximately $25,900 annually.",
"For Members of Congress covered by FERS prior to December 31, 2012, the accrual rate for congressional service covered by FERS is 1.7% for the first 20 years and 1.0% for each year beyond the 20 th . The basic retirement annuity under FERS for Members first elected prior to 2012 is equal to\nMembers who began congressional service before 1984 and who elected to join FERS will receive credit under FERS from January 1, 1984, forward. Thus, at the close of the 114 th Congress in December 2016, a participant could have a maximum of 32 years of service under FERS. Assuming that a Member retired at the end of 2016 with 20 years of congressional service under FERS, and a high-3 average salary of $174,000, the resulting annual FERS pension would be\n[$174,000 × .017 × 20] = $59,160\nFor Members of Congress covered by FERS after December 31, 2012, the accrual rate for congressional service covered by FERS is 1.0% per year of service, or, if the Member has at least 20 years of service and serves until at least the age of 62, the benefit accrual rate is 1.1% per year of service. This is the same accrual rate that applies to regular FERS employees.\nThere is no maximum pension under FERS. (It would take 66 years of service under FERS to reach the 80% maximum permissible under CSRS.) The smallest unreduced FERS pension for Members first covered by FERS prior to 2013 is 8.5% of high-3 salary with five years of service (.017 × 5 years), which is payable no earlier than the age of 62. A Member covered by FERS prior to 2013 with 10 years of service who takes a pension at the earliest allowable age of 55 would receive a reduced pension equal to 11% of high-3 salary (.017 × 10 years, reduced by .05 times the seven-year difference between the individual's age at retirement and the age of 62).",
"Members who were participating in CSRS when the FERS plan went into effect could elect to leave CSRS and join FERS during a six-month \"open season\" in 1987. Members who switched to FERS are entitled to a CSRS pension for the years before 1984, provided that they had completed at least five years of service under CSRS by December 31, 1983. Their service from January 1, 1984, onward is covered under FERS. When these Members retire, their pension is computed using the CSRS formula for the CSRS-covered years and the FERS formula for the years covered by FERS. The same high-3 salary, which is generally the salary earned in the three years immediately preceding retirement, is used in both formulas. The two pension amounts (CSRS and FERS) are then added together. For Members who switched from CSRS to FERS, FERS rules govern the age and years of service for retirement eligibility.\nFor example, the pension for a Representative or Senator who retired in December 2014 at the end of the 113 th Congress with a total of 32 years of service (5 years covered under CSRS and 27 years covered under FERS) and a high-3 salary of $174,000 would be:",
"Members who were participating in CSRS before January 1, 1984, and who chose not to switch to FERS could elect either to have full coverage under both CSRS and Social Security or to stay in CSRS and have their CSRS contributions and benefits reduced (\"offset\") by the amount of Social Security taxes paid and Social Security benefits received. New Members who enter Congress with at least five years of previous civilian federal employment that was covered under CSRS also may join the CSRS Offset Plan. Under this plan, a Member pays 6.2% of salary up to the Social Security taxable maximum to Social Security and 1.8% of salary up to this earnings level to CSRS. When annual earnings reach the maximum amount taxable under Social Security, the Member pays 8.0% of salary for the rest of the year to CSRS. During retirement, the individual's CSRS pension is reduced by the amount of the Social Security benefit that is attributable to his or her federal service. The reduction in the CSRS annuity begins at the age of 62, whether or not the retiree elects to receive Social Security at that time.\nAs an example of the CSRS Offset Plan, assume that a Representative or Senator retired at the end of the 113 th Congress with 31 years of congressional service. According to the CSRS benefit formula, this Member's initial retirement annuity would be $134,850. However, if he or she were aged 62 or older, this amount would be reduced by an amount equal to the Social Security benefits earned from congressional service from January 1, 1984, through December 31, 2014. For an individual retiring in December 2014 at the age of 65 with 31 years of congressional service covered by Social Security, the annual reduction would be approximately $25,900.",
"The adequacy of pension plans is often evaluated by comparing the benefits paid at the time of retirement with pre-retirement earnings. The initial annual pension is computed as a percentage of final annual pay to derive the \"earnings replacement rate.\" This is the proportion of pre-retirement earnings replaced by the pension. In both CSRS and FERS, pensions are based on the average of the highest three consecutive years of earnings, which are usually the final three years before retirement.\nTable 1 shows the percentage of high-3 average pay replaced by a congressional pension for a Member retiring with an immediate pension under CSRS or FERS at specified ages and years of service. (FERS benefits apply only to service after 1983. Therefore, 2014 is the first year after which a Member or other federal employee could potentially have completed 30 years of FERS service. Additionally, FERS benefits were designed to complement Social Security benefits; therefore, FERS annuities necessarily have lower replacement rates than CSRS annuities.)",
"CSRS annuities are adjusted for inflation once each year on the same schedule and by the same percentage as Social Security benefits. These \"cost-of-living adjustments,\" or COLAs, are based on the rate of increase in the Consumer Price Index for Urban Wage Earners (CPI-W). CSRS annuities and Social Security benefits are increased each January by the annual percentage change in the CPI-W. As a cost-control measure, Congress has mandated that FERS annuities will increase by less than the percentage change in the CPI-W whenever the annual rate of increase in that index exceeds 2.0%. If the CPI-W rises by 2% or less, FERS annuities are increased by the same percentage as the increase in the CPI. If the CPI rises by 2.1% to 3%, FERS annuities are increased by 2%. If the CPI rises by more than 3%, FERS annuities are increased by one percentage point less than the rate of increase in the CPI.\nInitial CSRS annuities may not exceed 80% of a Member's final pay. Over time, however, if congressional pay were to remain unchanged, a retired Member's CSRS pension could exceed the nominal amount of his or her final pay. Nevertheless, because COLAs merely prevent the purchasing power of an annuity from being eroded by inflation, the real value of a CSRS pension does not increase or decrease during retirement, provided that the price index on which the COLA is based is an accurate measure of the rate of inflation.",
"The Thrift Savings Plan (TSP) is a retirement savings and investment program through which federal employees can save money to supplement their pension income. The TSP is open to participants in both CSRS and FERS, but in consideration of the smaller pensions paid by FERS, Congress has authorized more generous incentives for workers covered by FERS to save for retirement through the TSP. In 2018, FERS participants may invest up to $18,500 in the TSP. Participants who are at least age 50 in 2018 can make an additional \"catch-up\" contribution of up to $6,000. The maximum annual contribution is indexed to inflation. Individuals enrolled in FERS who invest in the TSP also receive a matching contribution from their employing agency on the first 5% of pay that they invest in the plan. CSRS participants also may invest up to the annual statutory maximum in the TSP, but they receive no employer matching contributions.\nThe government automatically deposits into the TSP an amount equal to 1.0% of basic pay on behalf of an employee enrolled in FERS, regardless of whether the individual voluntarily invests additional sums. Members of Congress and congressional staff become vested in this 1.0% \"agency automatic contribution,\" plus any investment earnings on it after completing two years of service. All participants in FERS are immediately vested in their own contributions and in government matching contributions to the TSP, as well as any investment earnings on these contributions. Unless an individual chooses the Roth TSP option, contributions to the TSP are made on a pretax basis; contributions and investment earnings are not taxed until money is withdrawn from the plan. Under the Roth TSP option, however, employee contributions are made with after-tax income and qualified distributions from the plan are then tax-free.\nWithdrawals from the TSP are subject to the federal income tax—except for qualified distributions from the Roth TSP option—and withdrawals before the age of 59½ may be subject to a 10% tax penalty. There is no penalty if the individual is aged 55 or older and is eligible for an immediate pension from CSRS or FERS; if the withdrawals are in the form of a life annuity; or if the withdrawals are taken in a series of \"substantially equal periodic payments\" on the basis of the individual's remaining life expectancy. Employees who leave federal employment can continue to defer taxes on their TSP account balances either by leaving the money in the TSP or by transferring all or part of these funds to an Individual Retirement Account (IRA) or other eligible retirement arrangement, such as a 401(k) plan. At retirement, participants may withdraw money from their TSP accounts in any of four ways. They can\nreceive the account balance in a single payment. receive a series of monthly payments. (Payments may be for a fixed number of months or a fixed dollar amount. Monthly payments also can be based on an IRS life expectancy table.) purchase a life annuity. elect a partial distribution as a lump sum and take the remainder as either a series of equal payments or as an annuity.\nParticipants who have separated from federal service must make an election for withdrawing funds from the TSP no later than February 1 of the year following the year in which the later of two events occurs: (1) the individual turns 65, (2) the individual reaches the 10 th anniversary of the first contribution to his or her account. Separated employees must begin withdrawals no later than April of the year after they reach the age of 70½, at which time the TSP will begin to distribute funds to the participant automatically if he or she has not yet made a withdrawal election. Until an employee separates from the federal government, he or she can continue to contribute to the TSP, regardless of age.",
"Until the Legislative Branch Appropriations Act, 2004 ( P.L. 108-83 ), all Members could opt to decline coverage under FERS. Section 104 of P.L. 108-83 , however, amended the provisions of law applicable to coverage of Members of the U.S. House of Representatives under FERS. Effective with passage of P.L. 108-83 , Representatives (including a Delegate or Resident Commissioner to Congress) entering office on or after September 30, 2003, may not elect to be excluded from such coverage. The changes under P.L. 108-83 did not affect Senators. Therefore, all Senators and those Representatives serving as Members prior to September 30, 2003, continue to be able to decline FERS coverage.",
"The vesting requirement to become entitled to a pension benefit under CSRS or FERS is five years. Members who do not meet this five-year requirement—for instance, one-term Members in the U.S. House of Representatives—are not entitled to an annuity under CSRS or FERS. It may be the case, however, that an individual with less than five years of service as a Member may meet this vesting requirement as a result of combining previous federal service or additional federal service subsequent to service as a Member.\nTo qualify for a retired worker Social Security benefit, an individual must accumulate at least 40 quarters of covered employment, or 10 years of Social Security-covered employment (among other requirements). These Social Security benefits are based on the average of a worker's highest 35 years of earnings. A Member of Congress with limited service may qualify for Social Security benefits based on a lifetime earnings and employment history that includes more than congressional service.\nFinally, Members of Congress who participate in FERS—even Members with limited service—are immediately vested in their own contributions and in any government matching contributions to their TSP accounts, as well as any investment earnings on these contributions. In addition, Members of Congress and congressional staff become vested in the 1.0% \"agency automatic contribution\" to their TSP accounts under FERS, plus any investment earnings on it, after completing two years of service.",
"Section 8312 of Title 5 provides that a federal employee, including a Member of Congress, may not receive a retirement annuity for any period of federal service if that individual is convicted of certain offenses that were committed during the period of service when the annuity was earned. In general, the crimes that would lead to forfeiture of a federal retirement annuity under this provision of law are limited to acts of treason or espionage.\nSection 401 of the Honest Leadership and Open Government Act of 2007 ( P.L. 110-81 , September 14, 2007) amended 5 U.S.C. Section 8332 to exclude from creditable service toward a retirement annuity any service as a Member of Congress of an individual convicted of a felony involving\n1. bribery of public officials and witnesses; 2. acting as an agent of a foreign principal while a federal public official; 3. fraud by wire, radio, or television, including as part of a scheme to deprive citizens of honest services; 4. prohibited foreign trade practices by domestic concerns; 5. engaging in monetary transactions in property derived from specified unlawful activity; 6. tampering with a witness, victim, or an informant; 7. racketeer influenced and corrupt organizations; 8. conspiracy to commit an offense or to defraud the United States; 9. perjury; or 10. subornation of perjury.\nThe law directs the Office of Personnel Management to issue regulations to specify the circumstances under which the spouse or children of such individual may be eligible for benefit payments under CSRS or FERS, taking into consideration (1) the financial needs of the spouse or children; (2) whether the spouse or children participated in a specified offense of which such individual was convicted; and (3) what measures, if any, may be necessary to ensure that the convicted individual does not benefit from any such payment.\nSection 15(a) of the STOCK Act ( P.L. 112-105 , April 4, 2012) further amended 5 U.S.C. Section 8332 so that a Member of Congress would lose the credit for service as a Member for the purposes of a retirement annuity if convicted of one of the numerous corruption offenses not only during time served as a Member of Congress, but also if convicted of any of such offenses while the President, the Vice President, or as an elected official of a state or local government.\nIn addition, Section 15(b) of the STOCK Act also adds other federal criminal laws relating generally to public corruption or elections, for which a final felony conviction would result in losing creditable service as a Member of Congress for federal pension purposes, including, among other offenses,\n1. criminal offenses include conflicts of interest; 2. conspiracy to make false claims; 3. making false claims to the government; 4. vote buying; 5. illegal solicitation of political contributions from federal employees; 6. soliciting political contributions in a federal building or office; 7. theft, conversion, or embezzlement of government funds or property; 8. false statements to the government; 9. obstruction of proceedings before government agencies; or 10. attempt to evade or defeat paying taxes."
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{
"question": [
"What social security tax did federal civil service employees and members of Congress pay before 1984?",
"Instead of Social Security benefits, what were they covered by?",
"How did this practice get changed?",
"What was the CSRS turned into?",
"What system covers members of Congress elected in 1984 and after?",
"What allows and disqualifies members of Congress from declining this coverage?",
"What other options do certain members of Congress have?",
"What is the result of providing coverage for members of Congress?",
"How are congressional pensions financed?",
"What taxes do all members pay?",
"What other taxes do members covered by FERS before 2013 pay?",
"What other taxes do members covered by FERS during 2013 pay?",
"What other taxes do members covered by FERS after 2013 pay?",
"What other taxes do members covered by CSRS Offset pay?",
"How can Members of Congress be considered eligible for a pension?",
"How much money can members receive from a pension?",
"Is there a limit to how much a member can receive from their pension?"
],
"summary": [
"Prior to 1984, neither federal civil service employees nor Members of Congress paid Social Security taxes, nor were they eligible for Social Security benefits.",
"Members of Congress and other federal employees were instead covered by a separate pension plan called the Civil Service Retirement System (CSRS).",
"The 1983 amendments to the Social Security Act (P.L. 98-21) required federal employees first hired after 1983 to participate in Social Security. These amendments also required all Members of Congress to participate in Social Security as of January 1, 1984, regardless of when they first entered Congress.",
"Because CSRS was not designed to coordinate with Social Security, Congress directed the development of a new retirement plan for federal workers. The result was the Federal Employees' Retirement System Act of 1986 (P.L. 99-335).",
"Members of Congress first elected in 1984 or later are covered automatically under the Federal Employees' Retirement System (FERS).",
"All Senators and those Representatives serving as Members prior to September 30, 2003, may decline this coverage. Representatives entering office on or after September 30, 2003, cannot elect to be excluded from such coverage.",
"Members who were already in Congress when Social Security coverage went into effect could either remain in CSRS or change their coverage to FERS.",
"Members are now covered under one of four different retirement arrangements:",
"Congressional pensions, like those of other federal employees, are financed through a combination of employee and employer contributions.",
"All Members pay Social Security payroll taxes equal to 6.2% of the Social Security taxable wage base ($128,400 in 2018).",
"Members first covered by FERS prior to 2013 also pay 1.3% of full salary to the Civil Service Retirement and Disability Fund (CSRDF).",
"Members of Congress first covered by FERS in 2013 contribute 3.1% of pay to the CSRDF.",
"Members of Congress first covered by FERS after 2013 contribute 4.4% of pay to the CSRDF.",
"Members covered by CSRS Offset pay 1.8% of the first $128,400 of salary in 2018, and 8.0% of salary above this amount, into the CSRDF.",
"Under both CSRS and FERS, Members of Congress are eligible for a pension at the age of 62 if they have completed at least five years of service. Members are eligible for a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service.",
"The amount of the pension depends on years of service and the average of the highest three years of salary.",
"By law, the starting amount of a Member's retirement annuity may not exceed 80% of his or her final salary."
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GAO_GAO-14-799
|
{
"title": [
"Background",
"Overview of U.S. Assistance to Egypt",
"U.S. Direct Funding of Democracy and Governance Assistance in Egypt",
"Views on Egyptian Law Governing Activities of NGOs",
"Prosecution of NGOs in Egypt",
"Egypt’s Political Transitions",
"The U.S. Government Identified Risks but Has Not incorporated Lessons Learned from Experience in Egypt",
"The U.S. Government Identified Potential Risks with Directly Funding Democracy and Governance Assistance in Egypt",
"The U.S. Government Has Taken Some Steps to Manage Risks, but Has Not Taken Steps to Incorporate Lessons Learned from Egypt",
"The U.S. Government Provided the NGOs Prosecuted in Egypt with Diplomatic, Legal, Financial, and Grant Flexibility Support",
"The U.S. Government Provided Diplomatic Support to the Prosecuted U.S. NGOs",
"The U.S. Government Provided Legal and Related Support to the Prosecuted U.S. NGOs",
"The U.S. Government Provided Financial Support to the Prosecuted U.S. NGOs",
"The U.S. Government Provided Grant Flexibility Support to the Prosecuted U.S. NGOs by Approving Modifications to Their Grants",
"Two of the Four NGOs Identified Areas Where They Needed Additional Support from the U.S. Government",
"The Prosecution of NGO Workers Affected U.S. Democracy and Governance Assistance in Egypt",
"The Four Prosecuted U.S. NGOs Are No Longer Conducting Democracy and Governance Programming inside Egypt",
"The NGO Trial Exacerbated Existing Challenges for Some, but Not All, of the Other NGOs Implementing Democracy and Governance Assistance in Egypt",
"The Amount of Funding and Number of Grants Awarded for Democracy and Governance Projects in Egypt Decreased after the NGO Trial",
"The NGO Prosecutions Made Some Democracy and Governance Activities More Challenging for the U.S. Government to Fund in Egypt",
"Conclusions",
"Recommendation for Executive Action",
"Agency Comments",
"Appendix I: Scope and Methodology",
"Appendix II: Comments from the Department of State",
"Appendix III: Comments from the U.S. Agency for International Development",
"Appendix IV: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"",
"Since 1979, when the Israel-Egypt peace treaty was signed, Egypt has been among the top recipients of U.S. bilateral assistance in the world. In the more than 30 years since the signing of the treaty, Egypt has been a key strategic partner of the United States in the Middle East.\nIn fiscal years 2009 through 2014, the U.S. government allocated an average of approximately $1.5 billion annually in assistance for Egypt. The U.S. government provided the majority of this assistance to the Egyptian military through the Foreign Military Financing program, with annual allocations of approximately $1.3 billion during this period. The U.S. government also provided economic assistance to Egypt in fiscal years 2009 through 2014 that funded a range of economic development, health, education, and democracy and governance projects. The U.S. government funded the majority of its economic assistance to Egypt through the Economic Support Fund (ESF) account, with $200 million to $250 million allocated annually to Egypt during this period.",
"Egypt’s progress toward greater democratization has been a longstanding objective of the U.S. government, but it became a greater priority after the January 2011 revolution. While the U.S. government has funded democracy and governance activities in Egypt for more than 10 years, some of which was through agreements with the Egyptian government, the United States increased its direct funding to NGOs for such activities after the 2011 revolution.\nUSAID; State’s Bureau of Democracy, Human Rights, and Labor (DRL); and State’s Middle East Partnership Initiative (MEPI) all fund democracy and governance programming in Egypt. Generally, USAID funds its democracy and governance activities in Egypt with ESF funds, DRL uses funding from the Human Rights and Democracy Fund, and MEPI funds its activities with regional ESF funds. In total, USAID has awarded approximately $108 million between fiscal year 2009 and March 31, 2014, for democracy and governance assistance in Egypt, and State has awarded approximately $32 million for democracy and governance assistance in fiscal year 2009 through March 31, 2014. In February 2011, shortly after the revolution, USAID and State reprogrammed $50 million in prior year ESF funds and allocated an additional $15 million in democracy funding to provide additional democracy and governance assistance to support Egypt’s political transition. It awarded all of this funding directly to NGOs and other organizations to fund a variety of activities including political party strengthening, election monitoring, and independent media development.\nIn 2004, the U.S. government began discussions with the Egyptian government regarding a program to directly fund NGOs and other organizations to implement democracy and governance activities in Egypt outside of the framework of an implementing assistance agreement. From September to November 2004, the two governments worked to outline a process by which the United States would directly fund such activities. Further information on this process can be found in the sensitive version of our report.\nShortly thereafter, Congress approved an amendment to the Consolidated Appropriations Act of 2005 (the Brownback Amendment), which provided further direction regarding assistance for democracy and governance activities in Egypt. The Brownback Amendment stated, “That with respect to the provision of assistance for Egypt for democracy and governance activities, the organizations implementing such assistance and the specific nature of that assistance shall not be subject to the prior approval by the Government of Egypt.” In fiscal year 2005, USAID began using some democracy and governance assistance to directly fund NGOs and other types of organizations to implement democracy and governance activities, rather than working with the Egyptian government under the implementing assistance agreement. Soon after USAID started to directly fund NGOs and other types of organizations to implement democracy and governance activities in fiscal year 2005, the Egyptian government raised objections. Among other things, the Egyptian government stated that USAID was violating the terms of the process that the two governments had outlined in a 2004 exchange of letters. However, the U.S. government officials responded that they were interpreting their commitments based upon the conditions applied by the Brownback Amendment and agreement in diplomatic discussions on direct funding to NGOs. According to State officials, DRL and MEPI have never funded any democracy and governance activities in Egypt under an implementing assistance agreement and have always funded their activities directly.",
"Egypt’s Law 84, which was passed in 2002, governs the activities of foreign and Egyptian NGOs, according to documents we reviewed. Among other things, the law establishes requirements for NGOs to register with the Egyptian government before beginning operations, according to documents we reviewed. According to Egyptian government officials, Egyptian NGOs are required to obtain their registration from the Ministry of Social Solidarity, while foreign NGOs must first complete a standing agreement with the Ministry of Foreign Affairs and then register with the Ministry of Social Solidarity. Egyptian NGOs must also obtain approval from the Ministry of Social Solidarity to receive funding from foreign sources, according to Egyptian government officials.\nU.S. government and NGO officials and documents noted that Law 84 establishes registration requirements for NGOs, but also asserted that there are significant ambiguities in the law and that it is sometimes inconsistently applied by Egyptian government officials. U.S. government and NGO officials stated that these issues complicate NGOs’ attempts to register and obtain approval to receive foreign funding. For example, although USAID understands that Law 84 contains a provision that allows for automatic registration if an NGO does not hear back from the Egyptian government in 60 days after submitting its application, USAID noted that there is significant ambiguity over how this provision is applied, including whether or not it applies to foreign NGOs. According to a senior official from Egypt’s Ministry of Social Solidarity, the 60-day time frame applies only to Egyptian NGOs. In addition, State reported in its Egypt Report on Human Rights Practices for 2011 that the Egyptian government generally allowed unregistered NGOs to operate, but that such NGOs operated in violation of the law and faced the risk of government harassment and interference, or closure.",
"The Egyptian government strongly objected to some of the U.S. government’s planned assistance for democracy and governance after the January 2011 revolution, including the award of funding to unregistered NGOs. These concerns led to the Egyptian Ministry of Justice questioning officials from several NGOs about their activities in late 2011. Subsequently, in December 2011, the Egyptian police raided the offices of four U.S. NGOs that were implementing U.S.-funded democracy and governance activities—Freedom House, ICFJ, IRI, and NDI. In February 2012, the Egyptian government charged employees of these four organizations and a German organization, the Konrad Adenauer Foundation, with establishing and operating unauthorized international organizations, according to government documents. At the time of the charges, all four U.S. organizations reported that they had submitted registration applications to the Egyptian government. In June 2013, an Egyptian court convicted a total of 43 employees from the four U.S. NGOs and the Konrad Adenauer Foundation, of these charges and the NGOs had to close their operations in Egypt. Table 1 provides a summary of the grants the U.S. government awarded after the January 2011 revolution to the four U.S. NGOs that were prosecuted. All of the American staff from the NGOs were allowed to leave Egypt before the convictions.",
"Since the January 2011 revolution that ended the almost 30-year rule of Hosni Mubarak, Egypt has continued to undergo a series of political transitions. After a transitional period of military rule following President Mubarak’s resignation, Mohamed Morsi of the Muslim Brotherhood became Egypt’s first democratically elected president in June 2012. However, in July 2013, the Egyptian military removed Morsi from power after widespread protests against his rule. After Morsi’s removal, the military appointed the Chief Justice of Egypt’s Supreme Constitutional Court, Adli Monsour, to serve as interim president. Former Field Marshal Abdelfattah al-Sisi was subsequently elected as president in May 2014. Figure 1 provides a timeline of key events in Egypt’s political transition and the NGO trial.",
"Consistent with their agencies’ policies and internal control standards, State and USAID identified potential risks as far back as 2005 with directly funding democracy and governance assistance in Egypt, but noted that it was difficult to assess the extent and specific nature of these risks in the aftermath of the revolution, given the significant political changes that had just taken place. Also consistent with their agencies’ policies and internal control standards, State and USAID have taken some steps as far back as 2005 to plan for managing the risks of providing democratic and governance assistance, but they have not taken steps to incorporate lessons learned from the events leading up to and including the prosecution of U.S.-funded NGOs in Egypt into their risk management plans. We have previously reported on the importance of lessons learned in planning agencies’ activities.",
"Consistent with its policies, as well as internal control standards, the U.S. government identified potential risks in providing democracy and governance assistance in Egypt. Both State’s Foreign Affairs Manual and USAID’s Automated Directives System emphasize the need for program managers to identify and assess potential risks to their programs. State and USAID’s requirements reflect and incorporate the Standards for Internal Control in the Federal Government, which states that internal control should provide for an assessment of the risks the agency faces from both external and internal sources. These internal control standards note that agency managers need to comprehensively identify risks and should consider all significant interactions between the agency and other parties.\nThe U.S. government has identified potential risks in implementing its democracy and governance assistance in Egypt since it began directly funding organizations, including unregistered NGOs, in 2005. U.S. officials and documentation noted that such assistance has been an ongoing source of tension with the Egyptian government since then. For example, beginning in 2005, the Egyptian government made repeated requests for USAID to stop funding Egyptian organizations that were not registered with the Ministry of Social Solidarity as NGOs or U.S. organizations that did not have a standing agreement with the Ministry of Foreign Affairs. The Egyptian government claimed that such direct assistance was a violation of the agreement reached between the two countries prior to the passage of the Brownback Amendment. However, the U.S. government disagrees with this interpretation of the agreements between the two countries. For example, U.S. government officials repeatedly noted that the Egyptian Foreign Minister had acknowledged that the Egyptian government did not have veto power over U.S.-funded democracy and governance activities. However, according to documents we reviewed, the Foreign Minister had also stated that Egypt did not favor direct funding for democracy and governance activities and retained the right to be kept fully informed of these activities and that the entire process should be undertaken in full respect of the relevant Egyptian laws. The Egyptian Minister of International Cooperation said that direct funding of NGOs that had not completed the required registration procedures is a violation of Egyptian law.\nThe U.S. government further identified the risks of directly funding democracy and governance assistance in 2009, when the Egyptian government threatened to not allow all USAID assistance in Egypt for fiscal year 2009 if USAID did not stop directly funding unregistered organizations.\nIn planning for the implementation of the $65 million in funding for democracy and governance assistance after the January 2011 revolution, the U.S. government identified the potential risk that the Egyptian government would object to the planned assistance. According to State and USAID officials, after the revolution, U.S. government officials determined that USAID would once again directly fund organizations, including unregistered NGOs, as part of an expansion of its democracy and governance programming in Egypt. The U.S. government acknowledged potential risks with this approach. For example, in a March 14, 2011, memo approving the planned use of the $65 million in democracy and governance assistance funds, USAID noted that the Egyptian government would potentially object to USAID’s intention to fund organizations that had not been registered to operate in the country and specifically noted the possible risks of funding IRI and NDI.\nWhile the U.S. government acknowledged potential risks, State and USAID officials also noted that it was difficult to assess the extent and specific nature of these risks in the aftermath of the revolution, given the significant political changes that had just taken place. For example, USAID officials stated that given the nature of the revolution, some U.S. government officials believed that the Egyptian government would embrace democratic change and that it would be more inclusive in regulating NGOs and other civil society organizations. Additionally, State and USAID stated that ambiguities in Egyptian law and its inconsistent application also complicated assessments of risk. According to U.S. government and NGO officials, the Egyptian government provided conflicting information regarding the legal status of some NGOs receiving U.S. funds. For example, officials from two of the prosecuted NGOs stated that they had received assurances from the Egyptian Ministry of Foreign Affairs that their registration paperwork was in order and that their registration applications would be approved shortly, before the raids on their offices took place in December 2011. In addition, the Egyptian government accredited IRI and NDI to serve as monitors during the parliamentary elections in November and December 2011 and January 2012, which U.S. and NGO officials noted led many to interpret that the Egyptian government was supportive of the two organizations’ activities.",
"State and USAID have taken some steps to plan for managing the risks of providing democratic and governance assistance, but have not taken steps to incorporate lessons learned from their experience in Egypt. Both State’s Foreign Affairs Manual and USAID’s Automated Directives System emphasize the need for agencies to not only assess risk, but also plan ways to manage those risks that are identified. In addition, Standards for Internal Control in the Federal Government states that once risks have been identified, they should be analyzed for their possible effect. The standards note that such risk analysis generally includes estimating the risk’s significance, assessing the likelihood of its occurrence, and deciding how to manage the risk and what actions should be taken. USAID’s Automated Directives System also notes that lessons learned should be incorporated in USAID’s planning efforts. State’s Foreign Affairs Manual does not address lessons learned specifically; however, we have previously reported on the importance of lessons learned in planning agencies’ activities. We have reported that the use of lessons learned is a principal component of an organizational culture committed to continuous improvement, which serves to communicate acquired knowledge more effectively and to ensure that beneficial information is factored into planning, work processes, and activities. Lessons learned provide a powerful method of sharing good ideas for improving work processes, quality, and cost-effectiveness.\nState and USAID have taken some steps to plan for managing the risks of providing democracy and governance assistance in Egypt. USAID officials stated that their actions to regularly notify the Egyptian government of activities that they were directly funding, as the two governments had agreed to, was a means of seeking to manage risks related to their democracy and governance assistance.\nIn an effort to manage risks globally, State has worked with other international partners to create an assistance fund to support NGOs operating in high-risk environments around the world. State and its partners launched the fund in July 2011 with initial funding of $4 million donated by 13 countries, including the United States. The fund is designed to provide emergency financial assistance to NGOs, including for legal costs, and to support advocacy initiatives on behalf of NGOs operating in hostile environments.\nIn addition, USAID, in conjunction with State, issued a global cable in April 2013 that identified increasing risks to NGOs and other civil society organizations around the world and provided missions operating in such environments with guidance on how they could work to counter such threats. The cable suggests that missions focus on three key areas: prevention, adaptation, and the development of innovative approaches. The cable recommends that USAID missions: make prevention a focus by monitoring legal restrictions on civil society, and by developing real-time responses to threats to civil society through diplomatic pressure and support for local civil society organization advocacy efforts; make adaptation a focus by helping organizations to continue fulfilling their missions in the face of new regulations and enhancing their flexibility to adapt quickly to changing conditions, and engage and enhance civil society organizations in all development; and make the development of innovative approaches a focus by working through intermediaries, third countries, or regional platforms with a focus on information security and technology to provide virtual assistance.\nHowever, the cable does not provide any guidance for specific countries, including Egypt. One of the USAID officials who led the effort to develop the cable noted that USAID would like to develop more specific guidance for individual countries to help missions better manage risk.\nWhile State and USAID have taken some steps to manage potential risks associated with democracy and governance assistance, they have not taken steps to document and incorporate lessons learned from the experience of attempting to directly fund democracy and governance assistance in Egypt, which could help guide future U.S. efforts in Egypt and other potentially challenging environments. Both State and USAID officials noted that their democracy and governance activities in Egypt will continue to face potential risks going forward if the current challenging environment in the country persists. USAID officials said that issues related to potential future risks will still need to be addressed. For example, USAID officials noted that since the NGO trial began, USAID has revised its Automated Directives System to require missions to conduct risk analysis as part of the development of their Country Development Cooperation Strategies. However, as of June 2014, USAID had not completed such a strategy for Egypt and USAID officials stated that they had set no specific date for work on the strategy to begin. As noted in agency policy documents, internal control standards, and previous GAO work, State and USAID would benefit from the further development of plans to manage future risks to their democracy and governance assistance in Egypt that incorporate lessons learned from their experiences in Egypt.",
"From the time after the December 2011 raids through the conviction of the NGO workers in June 2013, the U.S. government took a number of actions to support the four U.S. NGOs prosecuted in Egypt—Freedom House, ICFJ, IRI, and NDI. These actions included providing the NGOs with diplomatic, legal, financial, and grant flexibility support. Two prosecuted NGOs noted certain areas where they needed additional support from the U.S. government.",
"The U.S. government undertook a range of diplomatic to defend the employees of the four U.S. NGOs. Both U.S. officials at the embassy and senior officials from Washington, D.C. met repeatedly with officials in the Egyptian government, including the Egyptian armed forces, and the Morsi administration in an attempt to reach a diplomatic resolution to the issue. For example, as part of its diplomatic efforts, the U.S. government held a series of ultimately successful negotiations with the Egyptian government to have the travel ban on the U.S. employees of the NGOs lifted to enable them to depart the country in advance of the trial. In the interim, before the travel ban was lifted, the U.S. government allowed American staff from the organizations that were in the country and were fearful of being arrested to be housed at the U.S. embassy in Cairo.\nThe U.S. government also met regularly with officials from the four U.S. NGOs to help them devise strategies for dealing with the Egyptian government.",
"The U.S. government also provided legal support to the four U.S. NGOs. State representatives attended various hearings during the course of the trial and State and Department of Justice lawyers worked with the NGOs’ attorneys to develop legal strategies. State and Department of Justice attorneys provided assistance by working to have Interpol “red notices” filed by the Egyptian government overruled. If these notices had been left to stand, the U.S. NGO employees would have been subject to arrest upon arrival at international ports of entry in countries that are Interpol members, according to State and NGO officials. In addition, State provided assistance to the convicted U.S. NGO employees by writing a letter that stated that the U.S. government did not consider the convictions valid, which was signed by the Deputy Assistant Secretary of State for Democracy, Human Rights, and Labor, according to State and NGO officials.",
"The U.S. government provided financial support to the four U.S. NGOs by allowing them to use funding from their grants to pay for legal fees, court costs, fines, and other associated costs related to their trial. State and USAID exercised their authority under Section 636(b) of the Foreign Assistance Act to allow for the organizations to use funding from their grants for such costs. USAID reported that NDI, IRI, and ICFJ used a total of $3.1 million in grant funds on legal costs associated with the trial. In addition, State DRL reported that NDI, IRI, and ICFJ used a total of $1.7 million, and MEPI reported that Freedom House used a total of $94,000 in grant funds on legal costs associated with the trial. According to State officials, the amount of grant money that each organization used for legal costs was based on the amount the organizations had requested from State and USAID and the organizations’ grant amounts. State and USAID officials noted that the organizations may use additional grant funds for legal costs in the future. Table 2 summarizes the amounts of U.S. funding from their grants used by the four organizations for their legal costs, as of June 2014.\nIn addition, three of the NGOs reported that they were allowed to use funding from their grants to pay for other personnel-related costs of employees convicted in the case. State DRL officials also noted that the bureau used one of its rapid-response mechanisms to provide emergency support to an employee of one of the NGOs, who requested assistance out of fears for his safety and that of his family, given the hostility that the prosecuted NGO employees faced from many in the Egyptian public.",
"The U.S. government also supported the four U.S. NGOs by approving various modifications to their grants that allowed them to adjust the planned activities under their projects, given the constraints the organizations were facing. State and USAID both approved extensions to the period of performance for the grants to allow the organizations to continue using grant funding for their operations during the duration of the trial. State and USAID also approved other grant modifications to allow the organizations to modify their programming when various planned activities became unfeasible because of the trials. For example, when Freedom House determined that it was no longer feasible to continue its work with civil society organizations in Egypt, MEPI allowed Freedom House to instead submit a report on challenges faced by civil society organizations in Egypt. In addition, when it became clear that NDI would not be able to develop a media center in Cairo for political groups to use, as it had originally planned to do as part of its grant, USAID allowed NDI to instead develop online tools for these political groups to use.",
"In general, the four prosecuted U.S. NGOs did not identify many areas where they required additional support from the U.S. government; however, officials from two NGOs did raise certain issues related to U.S. government support. Officials from one NGO noted that it had taken almost a year for State to provide the letters for that organization’s employees stating that the U.S. government did not recognize the convictions, but noted that the letters were eventually provided. In addition, an official from this organization noted that the NGO had requested that the U.S. government help one of its Egyptian employees, who is now living in exile, for help finding employment in the United States, but that the U.S. government had not provided assistance to date. Officials from a different NGO noted that they had requested that the U.S. government take the matter to an international dispute mechanism because the organization believed that the trial was essentially a dispute between the U.S. and Egyptian governments.",
"The trial of employees of four U.S. NGOs—Freedom House, ICFJ, IRI, and NDI—from 2012 to 2013 significantly affected U.S. democracy and governance assistance in Egypt. Specifically, the four organizations that were prosecuted by the Egyptian government are no longer conducting activities inside Egypt. The NGO trial exacerbated existing challenges for some of the other NGOs implementing U.S. democracy and governance programs. Since the start of the trial in February 2012 the amount of funding that State and USAID have awarded for new or ongoing democracy and governance projects in Egypt has significantly decreased, going from about $72 million in 2011 to about $6 million in 2013. The trial also made certain types of democracy and governance activities more challenging for the U.S. government to fund in Egypt.",
"The trial of Freedom House, ICFJ, IRI, and NDI employees from February 2012 through June 2013 affected the ability of these organizations to conduct their democracy and governance activities in Egypt and resulted in funds being redirected for legal costs related to the trial. These four organizations made up a significant portion of USAID’s and State’s democracy and governance assistance after the 2011 revolution, accounting for about $32 million, or nearly half, of the approximately $65 million in democracy and governance initially awarded after the revolution. However, approximately $4.9 million of the State and USAID funding for these NGOs was spent on legal costs, rather than on program activities.\nAs a result of the trial, the four prosecuted NGOs are no longer conducting democracy and governance programming inside Egypt, and three have moved to online and other methods of delivering trainings for Egypt. According to a Freedom House official, Freedom House continued some of its activities until the verdict, in June 2013. After the verdict, according to a Freedom House official, Freedom House stopped all of its programming in Egypt and has since received no U.S. government funding for programming in Egypt. According to ICFJ officials, ICFJ stopped all of its activities in Egypt after its offices were raided in December 2011. After the raids on their offices, IRI and NDI observed the Egyptian parliamentary elections in January 2012, but did not conduct any further activities in Egypt. ICFJ, IRI, and NDI continued some of their activities through on-line training modules and held some trainings using other methods, according to officials from these NGOs. In November 2012, NDI launched an online learning portal with training modules on long-term political party development, campaign planning, election monitoring, and civil society development, among others.\nThe NGO trial adversely affected the results that the four prosecuted organizations could achieve with their Egypt programming. USAID’s 2012 review of democracy and governance assistance in Egypt found that the trial had an adverse effect on the results that IRI and NDI could achieve. Both organizations cancelled numerous activities as a result of the raids and the initiation of the trial. IRI and NDI cancelled election observation, voter education activities, and political party development trainings, among others. In addition, NDI closed civil society resource centers in Egypt and stopped plans to establish a media center for training political parties and candidates in Egypt. According to IRI officials, after the 2011 revolution, IRI’s democracy and governance activities were able to reach more than 24,000 direct beneficiaries in Egypt, but since the June 2013 verdict, IRI programs have reached fewer than 500. Before the raids in 2011, NDI conducted public opinion research through 43 focus groups on voter attitudes among women and youth and shared the results with 23 political parties participating in the 2011-2012 parliamentary elections. Because of the trial, however, NDI was unable to conduct any further focus group sessions. Similarly, Freedom House and ICFJ also canceled activities. According to State officials, Freedom House had been planning to build the capacity of Egyptian civil society organizations, but could not complete the task after the trial began and instead submitted a report on the challenges faced by civil society in Egypt. According to ICFJ officials, ICFJ’s activities were limited by the trial, as it could no longer carry out any trainings of citizen journalists in Egypt. ICFJ’s citizen journalist trainings are now done online or using other methods.",
"For some, but not all, of the other NGOs conducting U.S.-funded democracy and governance programs in Egypt, the 2012 trial exacerbated challenges to their efforts. NGOs receiving foreign funding in Egypt reported that they had faced challenges in implementing their activities well before the 2011 revolution and 2012 trial. For example, some Egyptian NGOs reported experiencing delays in getting approval from the Ministry of Social Solidarity to receive foreign funding since at least 2009. In addition, some U.S.-based NGOs reported facing delays in the registration process prior to 2011. One U.S-based NGO applied for registration in 2005, but did not receive it until 2010, according to an official from that organization. However, after the revolution and raids on NGOs’ offices in 2011, some U.S.-funded NGOs were able to successfully implement their democracy and governance projects. For example, one U.S.-based NGO, which had obtained registration, was able to implement a project on election administration, electoral processes, and citizen participation after the revolution and raids. After the raids on a number of NGOs’ offices in December 2011, NGO officials reported that some groups were initially reluctant to accept U.S. government funding, to include U.S. government branding on their materials, and to participate in U.S.-funded projects.\nThe trial exacerbated an already challenging environment for Egyptian civil society organizations. According to USAID reviews of its democracy and governance assistance in 2011 and 2012, negative press reports in the Egyptian media about civil society organizations affected the ability of civil society organizations to operate. Such organizations were portrayed by the Egyptian media as spies because they were receiving foreign funding, according to NGO officials with whom we spoke in Egypt. USAID grantees reported facing delays in getting Egyptian government approval for their activities several months before and during the time period of the trial. A 2012 report by the USAID Inspector General found that in March 2012, 12 of the 24 NGOs to which USAID had awarded grants after the 2011 revolution—with activities worth $28.5 million—were not on track to achieve their goals. According to the Inspector General’s report, although the program began in April 2011, at least 7 of the 16 Egyptian organizations had not received Egyptian government approval to receive foreign funding by March 2012, with 1 organization’s approval denied and other organizations’ activities delayed up to 11 months after USAID had awarded their grants. According to USAID officials, USAID eventually terminated three of its grants because the organizations implementing the grants determined that they were not able to meet their program objectives, which may have stemmed in part from delays or a lack of approval to receive foreign funding. State/MEPI officials noted that some of the NGOs that they funded in 2011 withdrew from their grants for similar reasons.",
"Since the beginning of the NGO trial in 2012, the number and total dollar value of grants awarded for democracy and governance activities in Egypt has decreased. U.S. officials noted that the NGO trial and the hostile environment it created for democracy and governance assistance contributed to this decrease. In addition, they noted that other factors also contributed to the significant decrease in democracy and governance funding awarded in fiscal years after 2011. For example, due to changing circumstances in Egypt, USAID did not submit a notification to Congress of its intent to obligate fiscal year 2012 funds for democracy and governance assistance to Egypt until February 2014 and did not submit a notification to Congress of its intent to obligate fiscal year 2013 funds for democracy and governance assistance to Egypt until May 2014. According to our review of USAID and State data, between fiscal year 2009 and March 31, 2014, USAID has awarded about $108 million and State has awarded about $32 million for democracy and governance assistance to Egypt. With the use of $65 million in prior year ESF funding in 2011, State and USAID significantly increased the number of democracy and governance activities that they funded in Egypt. For example, USAID almost tripled the number of grants it awarded for democracy and governance from 10 grants in fiscal year 2010 to 27 grants in fiscal year 2011. In addition, MEPI awarded 53 grants for democracy and governance in Egypt in fiscal year 2011, compared with 24 grants in fiscal year 2010. However, as shown in figures 2 and 3 below, the amount of funding and number of grants awarded for democracy and governance assistance to Egypt have decreased significantly since fiscal year 2011. For example, the amount of funding that USAID awarded declined by nearly 60 percent from fiscal year 2011 to fiscal year 2012, going from about $52 million to about $21 million. It declined further to about $4 million in fiscal year 2013. The number of grants USAID awarded declined from 27 in fiscal year 2011, to 4 in fiscal year 2012, to 2 in fiscal year 2013 (see fig. 2).\nThe amount of funding that State awarded for democracy and governance assistance declined approximately 84 percent, from about $20 million in fiscal year 2011 to approximately $3 million in fiscal year 2012. It declined further to about $2 million in fiscal year 2013. The number of grants that State awarded declined from 73 in fiscal year 2011, to 26 in fiscal year 2012, to 13 in fiscal year 2013, as shown in figure 3 below.\nAs of March 31, 2014, USAID had disbursed about $75 million of the approximately $108 million it awarded for democracy and governance activities that began in fiscal year 2009 through March 31, 2014. USAID continued to manage 17 active democracy and governance awards in Egypt as of March 31, 2014. As of June 30, 2014, State had disbursed about $22 million of the approximately $32 million it awarded for democracy and governance activities in fiscal years 2009 through March 31, 2014. State continued to manage 37 active democracy and governance awards in Egypt as of March 31, 2014.",
"After the conclusion of the NGO trial, some democracy and governance activities have become more challenging for State and USAID to fund in Egypt. State and USAID are not funding new political party strengthening activities given the environment in Egypt after the NGO trial as of March 31, 2014. IRI and NDI had been conducting such activities in Egypt prior to the trial, but are no longer operating in Egypt. State officials noted that funding other NGOs to conduct this type of activity in Egypt is possible, but that it would be challenging to do so. According to USAID, as of February 2014, the U.S. government is focusing its democracy and governance assistance in areas that aim to support more transparent and participatory political processes, more responsive and accountable governance, and more effective civil society and human rights activities. For example, a USAID and MEPI-funded NGO observed the January 2014 constitutional referendum and May 2014 presidential election. Both State and USAID officials emphasized the need to be flexible in their programming to respond to any opportunities that may arise to fund democracy and governance activities in Egypt in the future. State officials noted that various issues have affected the ability of the U.S. government to implement its democracy and governance programming in Egypt beyond just the NGO prosecutions, including the U.S. government’s relationship with the government of Egypt, policy considerations regarding different types of programming, and the ability to safely implement programming in a highly complex and rapidly changing environment.",
"The United States and Egypt have been longstanding military and political allies over the past three decades. The United States has provided billions of dollars in military and economic assistance to Egypt and partnered with Egypt on a range of security efforts in the region. While much of the U.S. and Egyptian governments’ relationship is anchored in shared security interests, the United States has also sought to support Egypt’s progress toward democracy, particularly after the January 2011 revolution.\nThere are certain inherent risks associated with the U.S. government’s provision of democracy and governance assistance around the world, as the ruling government or other powerful entities may view such assistance as running counter to their interests. However, the U.S. government may decide that it is willing to accept such risks if it determines that it has a clear foreign policy interest in supporting progress toward democracy in a country, as it did in Egypt. The U.S. government cannot ensure that there will be no unintended or adverse consequences in providing democracy and governance assistance, but it can take steps to identify and manage potential risks. In planning its significant expansion of democracy and governance assistance in Egypt after the 2011 revolution, the U.S. government identified potential risks, given the Egyptian government’s past objections to the direct funding of NGOs to promote democracy dating back to 2005. Subsequent Egyptian government actions, including the prosecution of the four U.S. NGOs, demonstrated the extent of the risk that the U.S. government faced in supporting such efforts in Egypt. As a result of these actions, a portion of U.S. democracy and governance assistance was not used for its original purpose.\nThe U.S. government has stated its intent to continue to support Egypt’s and other countries’ progress toward democracy. The U.S. government will likely continue to face risks in implementing such assistance. Accordingly, it is vital that the U.S. government be able to apply lessons learned from past experience as it moves forward with funding future democracy and governance assistance efforts.",
"To help ensure that State and USAID are better positioned to respond to unintended or adverse consequences related to their future democracy and governance assistance in Egypt and other countries, we recommend that the Secretary of State and the USAID Administrator take steps to identify lessons learned from their experiences in Egypt and work to incorporate these lessons into plans for managing risks to their future democracy and governance assistance efforts.",
"We provided State and USAID with a draft of this report for their review. Both agencies provided technical comments, which we incorporated as appropriate. State and USAID also provided written comments, which are reproduced in appendixes II and III, respectively. In their written comments, State and USAID concurred with our recommendation and noted certain steps they are already taking that they can build on in responding to our recommendation.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of State, and the Administrator of USAID. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-7331 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made contributions to this report are listed in appendix IV.",
"The objectives of this review were to examine (1) the extent to which the U.S. government identified and managed potential risks of providing U.S. democracy and governance assistance in Egypt; (2) what support, if any, the U.S. government provided to the nongovernmental organizations (NGO) prosecuted by the Egyptian government; and (3) the extent to which U.S. democracy and governance assistance in Egypt has been affected, if at all, by the prosecution of NGO workers.\nTo address all three objectives, we interviewed officials at the Department of State (State) and the U.S. Agency for International Development (USAID) who manage or coordinate democracy and governance assistance in Egypt. In Washington, D.C., we interviewed officials at State’s Bureau of Near Eastern Affairs who coordinate foreign assistance for Egypt, including democracy and governance assistance; officials who manage democracy and governance assistance provided through the Middle East Partnership Initiative (MEPI), and officials from State’s Bureau of Democracy, Human Rights, and Labor who manage assistance for Egypt. We also interviewed officials at USAID’s Bureau for the Middle East who coordinate assistance for Egypt, including democracy and governance assistance. At the U.S. embassy in Cairo, we interviewed officials who manage democracy and governance assistance, including State and USAID officials who participate in the Democracy Working Group, a State official from the Public Affairs section, and State officials in the political section who manage MEPI’s local grants program for Egypt. At the USAID mission in Cairo, we interviewed officials in USAID’s Democracy and Governance Office.\nTo examine the extent to which the U.S. government identified the potential risks of providing U.S. democracy and governance assistance in Egypt, we reviewed memos approving democracy and governance assistance for Egypt, letters between the U.S. and Egyptian governments discussing the provision of democracy and governance assistance, State cables describing Egyptian government concerns with U.S. assistance, and implementing assistance agreements between the United States and Egypt regarding democracy and governance assistance. We also applied the Standards for Internal Control in the Federal Government. To determine agency policies for conducting risk assessments, we reviewed State’s Foreign Affairs Manual and USAID’s Automated Directives System. We also reviewed a State cable dated April 18, 2013, that describes challenges and responses for supporting civil society organizations, including those that implement democracy and governance programs, in restrictive environments. We reviewed U.S. laws related to democracy and governance assistance. We also reviewed Egyptian Law 84 of 2002, which outlines the legal requirements for Egyptian and foreign NGOs to operate in Egypt and the requirements for Egyptian NGOs to receive foreign funding. The opinions on the requirements of Egyptian law expressed in this report reflect the views of entities and individuals we interviewed, not an official position on the part of GAO. We interviewed State and U.S. officials who manage or coordinate democracy and governance assistance for Egypt in Washington, D.C., and Cairo, Egypt. In addition, we interviewed a senior official at the Egyptian Ministry of International Cooperation responsible for coordinating U.S. assistance, including democracy and governance assistance. We also interviewed Egyptian government officials from the Ministries of Foreign Affairs, International Cooperation, and Social Solidarity—the three ministries that coordinate bilateral assistance with the United States or authorize the registration of organizations that implement U.S.-funded democracy and governance assistance.\nTo examine what support, if any, the U.S. government provided to the NGOs prosecuted by the Egyptian government, we interviewed and obtained written responses from officials at the four U.S.-funded NGOs that were prosecuted—Freedom House, the International Center for Journalists (ICFJ), the International Republican Institute (IRI), and the National Democratic Institute (NDI). We reviewed quarterly and final progress reports for their U.S.-funded projects and modifications made to their grant agreements with State and USAID. We interviewed State and USAID officials in Washington, D.C., and Cairo, Egypt; reviewed State cables describing assistance provided to the prosecuted NGOs; and reviewed a State document providing legal advice to the NGOs. We also obtained information from State and USAID on the amounts of grant funding the agencies authorized to be used for legal and related costs associated with the prosecutions.\nTo examine the extent to which U.S. democracy and governance assistance in Egypt may have been affected by the prosecution of NGO workers, we interviewed officials from State and USAID in Washington, D.C., and Cairo, Egypt, that manage or coordinate this assistance. We interviewed and obtained written responses from officials at the four U.S.- funded NGOs that were prosecuted—Freedom House, ICFJ, IRI, and NDI. We also conducted roundtable discussions in Cairo, Egypt, with 17 other organizations that had received U.S. funding to implement democracy and governance activities in Egypt from fiscal years 2009 through 2013, but were not prosecuted. We selected this nongeneralizable sample of organizations to ensure representation among the four democracy and governance program areas (civil society, good governance, rule of law and human rights, and political competition and consensus building); U.S., Egyptian, and international organizations; organizations that received small and large amounts of U.S. funding; organizations whose U.S.-funded projects had varying start and end dates; and organizations funded by State and USAID. We reviewed documentation from State and USAID that described challenges implementing democracy and governance in Egypt during fiscal years 2009 through 2013. This documentation included annual portfolio reviews of USAID’s democracy and governance assistance in Egypt, annual performance reports prepared by the U.S. embassy in Cairo, various State and USAID strategy documents and resource requests, and State cables. We also reviewed progress reports for projects implemented by the four NGOs that were prosecuted and the organizations that participated in our roundtable discussions. We obtained and analyzed data from State and USAID on all democracy and governance awards that the agencies funded from fiscal year 2009 through March 31, 2014. We determined that these data were sufficiently reliable for the purposes of reporting on the number and value of awards made by State and USAID for democracy and governance programming in Egypt from fiscal year 2009 through March 31, 2014.\nWe conducted this performance audit from November 2013 to July 2014 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"",
"",
"",
"",
"In addition to the contact named above, Jeff Phillips (Assistant Director), Ryan Vaughan (Analyst-In-Charge), Drew Lindsey, Rachel Dunsmoor, Ashley Alley, Jeff Isaacs, Debbie Chung, Justin Fisher, Oziel Trevino, Tracy Harris, and Kaitlan Doying made major contributions to this report."
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|
{
"question": [
"Why did the U.S. government not provide democracy and governance assistance in Egypt?",
"Why would the Egyptian government object to democracy and governance assistance?",
"What recommendation does the USAID and Department of State make?",
"How has the USAID and State made progress towards this goal?",
"What has the State and USAID not yet done which may have been helpful to do with relation to future risk management plans?",
"How did the U.S. government help the four prosecuted U.S. NGOs?",
"What diplomatic and legal efforts were made?",
"What did the U.S. government allow the NGOs to do with their grants?",
"What effect on U.S. democracy and governance assistance did the trial of the four NGOs have?",
"What issues are other NGOs having?",
"What difficulties has the U.S. government faced in providing democracy and governance assistance in Egypt?",
"How has Egypt worked with the United States in the past?",
"What has happened to Egypt since 2011?",
"What did the U.S. government try to do?",
"What was Egypt's response toward the U.S. government?"
],
"summary": [
"The U.S. government identified potential risks in providing democracy and governance assistance in Egypt, including the Egyptian government's likely objection to the U.S. plan to use $65 million to directly fund nongovernmental organizations (NGO) in 2011.",
"The Egyptian government had repeatedly raised objections to such direct funding since the U.S. Agency for International Development (USAID) began it in 2005.",
"USAID and Department of State (State) guidance calls for the development of risk management plans for their programs.",
"State and USAID have taken some steps to manage the risks of providing democracy and governance assistance in Egypt, including the issuance of an April 2013 cable that provided guidance on how to counter increasing risks to NGOs globally.",
"However, State and USAID have not documented lessons learned from the U.S. experience in Egypt or used these lessons to inform their risk management plans for future democracy and governance assistance.",
"The U.S. government provided the four prosecuted U.S. NGOs with diplomatic, legal, financial, and grant flexibility support.",
"The U.S. government's diplomatic efforts included holding multiple meetings with Egyptian officials to try to defend the NGO employees. U.S. legal support to the NGOs included working with the NGOs' lawyers to develop legal strategies for the case.",
"U.S. financial support allowed the four U.S. NGOs to use a total of $4.9 million in funding from their grants to pay for various legal costs related to the trial. Finally, the U.S. government allowed the four NGOs to modify their grants to adjust their planned activities and time frames as a result of the trial.",
"The Egyptian government's trial of the four U.S. NGOs significantly affected U.S. democracy and governance assistance in Egypt. The four prosecuted U.S. NGOs are no longer conducting activities inside Egypt and modified or stopped a number of their programs.",
"Other NGOs implementing U.S. democracy and governance programs reported experiencing delays in obtaining Egyptian government approval to receive U.S. funds.",
"Since the start of the trial, in 2012, the amount of funding and number of grants awarded for democracy and governance projects in Egypt decreased (see fig.) and some activities are now more challenging for the U.S. government to implement.",
"For over 30 years, Egypt has been a key strategic partner of the United States and the recipient of billions of dollars of U.S. assistance.",
"Starting with its revolution in January 2011, Egypt has undergone a series of political transitions.",
"Shortly after the revolution, the U.S. government allocated $65 million in assistance for a range of activities to support Egypt's progress toward democracy.",
"However, the Egyptian government objected to the U.S. government providing this assistance directly to NGOs, including to some that it viewed not to be registered under Egyptian law. In June 2013, the Egyptian government convicted employees of four U.S. NGOs."
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CRS_R45031
|
{
"title": [
"",
"Introduction",
"The Official Measure of Poverty",
"What is the SPM?",
"Broadly Comparing the Official Poverty Measure to the SPM",
"The Supplemental Poverty Measure: Research to Address Limitations of the Official Poverty Measure",
"Criticisms of the Official Poverty Measure",
"Motivation for a New Poverty Measure",
"Moving Toward the SPM: Decades of Research",
"Multiple Series of Alternative Poverty Measures",
"Developing the SPM: Consolidating the Research, and Public Comment",
"How Is the SPM Currently Computed?",
"Definition of Need in SPM Poverty Thresholds",
"Goods and Their Costs",
"Adjustment of the Thresholds by Homeownership or Rental Status",
"Adjustment of the Thresholds by Geographic Variations in Housing Costs",
"Adjustment of the Thresholds by Family Size",
"Adjustment of the Thresholds for Changes over Time",
"Definition of Resources in SPM Poverty Thresholds",
"Money Income and Other Resources",
"Money Income",
"Estimated Value of In-Kind Benefits",
"Expenses Subtracted from Income",
"Work-Related Expenses Other than Child Care",
"Child Care Expenses",
"Medical Out-of-Pocket Expenses (MOOP)",
"Child Support Paid",
"Family Units in the SPM",
"Use of the SPM",
"Insights Obtainable from the SPM",
"Effects of Transfer Programs, Taxes, Tax Credits, and Expenses",
"Comparison of Impacts among Resource Components",
"Differences in the Demographic Profile of the Poor",
"Geographic Differences",
"Limitations of the SPM and Outstanding Issues",
"Data Considerations",
"Cash Valuation of Noncash Benefits: Not Fully Interchangeable",
"Out-of-Pocket Medical Costs Are Measured, But Not the Full Benefit of Subsidies",
"Lump Sum Nature of Tax Credits",
"Nature of the SPM: a Relative or an Absolute Measure?",
"Appendix. Poverty Thresholds under the SPM and the Official Poverty Measure"
],
"paragraphs": [
"",
"As its name might suggest, t he S upplemental Poverty Measure (SPM) was developed to supplement , but not replace , the official poverty measure by addre ssin g some of its met hodological limitations . T he official measure provides a consistent historical view of poverty in the United States , but t he SPM may be better suited to help ing c ongress ional policymakers and other experts understand how taxes and government programs affect the poor . Also, it may better illustrate how medical expenses and work-related expenses such as child care can affect a family's economic well-being .\nThis report describes the SPM , how it was developed, how it differ s from the official poverty measure , and the insights it can offer . This report will not dis cuss potential consequences of changes to anti-poverty programs, nor will it provide an analys is of poverty trends .",
"The official measure of poverty was developed in the 1960s by Mollie Orshansky, an analyst at the Social Security Administration. It was based on food costs in that decade as well as the share of a family's total budget that was devoted to food according to family budgets in the mid-1950s. The food cost it used was the U.S. Department of Agriculture's (USDA's) Economy Food Plan. A 1955 survey of family consumption determined that about one-third of a family's spending was on food. Thus, the poverty thresholds were developed as three times the cost of the Economy Food Plan, with some adjustments for two-person families and single individuals to account for their higher fixed costs. In the current official measure of poverty, the thresholds developed in the 1960s have been adjusted only for price inflation, as measured by the Consumer Price Index for All Urban Consumers (CPI-U).\nUnder the official poverty measure, an individual is counted as poor if his or her family's pre-tax money income falls below the poverty threshold. Pre-tax money income excludes the value of government noncash benefits provided either privately or publicly, such as health insurance, Supplemental Nutrition Assistance Program (SNAP) benefits, or housing assistance. It also does not consider taxes paid to federal, state, or local governments, or tax benefits (such as the Earned Income Tax Credit, EITC) that might be received by families. The official poverty measure is computed for the non-institutionalized population.",
"The SPM was designed to address limitations of the official poverty measure. Like the official poverty measure, it is a measure of economic deprivation. It defines poverty status for families and individuals by comparing resources against a measure of need . Measures of need are used to establish poverty thresholds that are valued in dollars.\nThe SPM poverty thresholds measure a standard of living based on expenditures for food, clothing, shelter, and utilities (FCSU), and \"a little more\" for other expenses. The resources measured against those thresholds represent disposable income (after taxes and certain other expenses), including the value of noncash benefits, that are available to families to meet those needs.\nThe SPM is considered a research measure, because it is designed to be updated as techniques to quantify poverty and data sources improve over time, and because it was not intended to replace either official poverty statistics or eligibility criteria for anti-poverty assistance programs.",
"Both the SPM and the official measure determine the poverty status of people and families by comparing their financial resources against poverty thresholds. For both measures, poverty thresholds vary by family size and composition, and families whose resources are lower than the thresholds are considered to be poor. The differences between the SPM and the official measure reflect changes in household composition in the more than 50 years since the official measure was developed. The differences also partly spring from attempts to more accurately assess the needs and resources of families. Some of the innovations surrounding the calculation of needs and resources embodied in the SPM are based on data that were not yet available when the official measure was developed.\nThe measures differ in their definitions of the following:\nN eed , as it is used in the thresholds (the dollar amounts used to determine poverty status). Unlike the official measure, the SPM's measure of need is geographically adjusted based on housing costs by metropolitan area or by state for nonmetropolitan areas. Furthermore, three sets of SPM thresholds are computed by the housing status of a family—as homeowners with a mortgage, homeowners without a mortgage, or renters—to reflect differences in housing costs. Thus, while the official poverty measure uses 48 poverty thresholds to represent families' needs, the SPM uses thousands. F inancial resources that are considered relevant for comparing against the measure of need as specified in the thresholds. Financial resources to meet needs, whether in the SPM or the official measure, are based on the sum of income of all family members. While the official measure uses money income before taxes, the SPM makes additional adjustments and considers a wider range of resources. F amily , for the purpose of assigning thresholds and counting resources. The SPM uses an updated approach to more explicitly take account of how household members share resources based on their relationships, which the Census Bureau's definition of \"family\" (used in the official measure) does not capture completely.\nOne of the most important differences between the two measures, however, is that the SPM is intended to be revised periodically, using improved data sources and measurement techniques as they become available, while the official poverty measure is intended to remain consistent over time. A summary of the differences is provided in Table 1 .",
"The SPM was developed after decades of research focused on overcoming the limitations of the official poverty measure. These limitations are not easy to surmount, as evidenced by dozens of alternative poverty measures developed over the years by the Census Bureau and by academia, and the working papers and reports written about those measures.",
"Over time, the official poverty measure has faced criticism, including the following:\nThe official poverty thresholds are not adjusted to reflect geographic variations in costs. Owing to the limitations of the source data available at the time the official measure was developed, it is based on money income before taxes; however, most individuals pay for their basic necessities using after-tax income. This represents a disconnection between the way needs were specified in the thresholds (which represent a level of need) and the definition of resources available for meeting those needs. The official measure captures the effects of some but not all government programs intended to provide relief for the poor because the income used in the official measure is money income before taxes. The programs that are captured are those that provide money income benefits before taxes: Social Security, Supplemental Security Income (SSI), Temporary Assistance for Needy Families (TANF), and any state or local relief programs based on money income. The programs that are not captured are the EITC and the Child Tax Credit, which, despite their large effects for low-income workers with children, are not considered because they are tax credits and only reflected in after-tax income; and a host of noncash benefits such as the Supplemental Nutrition Assistance Program (SNAP), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), housing subsidies, and subsidized medical care. Many of these programs did not exist when the official measure was developed in the 1960s. The official measure captures neither the needs incurred nor the resources brought in by household members who are not related by birth, marriage, or adoption. These include unmarried partners and their children (if any are present) and foster children not legally adopted. While the official measure is adjusted for overall inflation, it does not consider the extent to which the prices of basic necessities have shifted in relation to all goods and services. Therefore, it can be argued that the inflation adjustment used in the official measure does not accurately reflect the purchasing power needed, in a practical sense, to remain at the poverty line compared to previous decades.",
"While there has been broad agreement among poverty scholars that these issues are drawbacks to the official poverty measure, overcoming them has proven to be difficult. Scholars in the federal government, universities, and private research institutions have spent decades developing approaches to address these shortcomings and evaluating the effectiveness of those approaches.\nFor example, adjusting the poverty thresholds by g eographic variations in costs i s difficult , because price levels within a state can vary greatly among its different metropolitan areas , as we ll as between metropolitan and nonmetropolitan areas . Numerous approach es were developed over the years to adjust thresholds geographically, and because of a lack of comprehensive small-area geographic detail on prices, earlier approaches were more limited in their ability to accurately reflect cost variations within states . Research inquiries into the other issues listed above— particularly the valuation of noncash benefits s uch as subsidized health care— proved to be just as thorny.",
"",
"In attempting to address the shortcomings of the official poverty measure, dozens of alternative poverty measures were developed over multiple decades. For instance, in the 1980s the Census Bureau began providing alternative definitions of income that subtracted taxes from income and estimated the monetary value of noncash benefits, and showed the effects of these definitions on estimated poverty rates, in an \"R&D\" series of reports. The approaches used in these reports for estimating the value of noncash benefits were discussed in a conference attended by analysts from the federal government, universities, and other research institutions. Eventually, as variations of the Consumer Price Index (CPI) were developed by the Bureau of Labor Statistics, the Census Bureau began to include poverty estimates based on those indices in the R&D series as well. Between 1992 and 1995, a panel from the National Academy of Sciences (NAS) met to develop recommendations for an improved poverty measure, in response to a congressional request from the Joint Economic Committee and funded through the Bureau of Labor Statistics, the Department of Health and Human Services, and the Food and Nutrition Service of the U.S. Department of Agriculture. The NAS report was published in 1995. Since the report's publication, the Census Bureau has been publishing data on alternative poverty measures based on both the older R&D series and the newer NAS-based methodologies. Unlike the R&D series, which focused on alternative definitions of income and applying a different index to adjust thresholds for inflation, the NAS-based experimental measures made adjustments both to the thresholds and the income definition, and estimated work-related expenses and medical out-of-pocket expenses. Research continued, both at the Census Bureau and elsewhere, to refine the measurement methods and use the most current data sources available.",
"In 2009, the Office of Management and Budget (OMB) organized an Interagency Technical Working Group (ITWG) for establishing a Supplemental Poverty Measure. At that point, dozens of experimental poverty measures focusing on the various aspects of poverty measurement discussed above had been developed. The ITWG put forth a single measure (the SPM) to consolidate the research and emphasize not only sound concepts and methodology in the measure's development, but also practicality in the measure's maintenance, computation, and usage. The ITWG did not intend to replace the official measure, and it was expected that refinement of both the SPM's methodology and its data sources would continue.",
"As mentioned above, the SPM differs from the official poverty measure in three broad ways. First, the measure of need is defined differently in the SPM's poverty thresholds. Second, the economic resources measured in the SPM differ from those counted in the official poverty measure. Third, the definition for \"family\" units used in the SPM is not the same.\nIn determining an individual's poverty status, the poverty thresholds are compared with his or her family's economic resources. Information on relationships within the household determines which threshold is appropriate to use and whose resources are to be compared with that threshold. This information on family relationship and resources is measured using household surveys, and the way it is measured is affected and limited by what is asked in the surveys.\nThrough 2016, the Census Bureau has produced estimates of individuals living in poverty as measured by the SPM using the Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS) as the source of the family relationship and income information used to compute poverty status. The CPS ASEC is also the survey used to produce the official poverty estimates at the national level. Thus, the SPM poverty estimates are based on the detail available in, and the limitations of, the CPS ASEC. If other surveys were to be used to estimate SPM poverty, their limitations and advantages would affect what information could be produced.",
"",
"In drawing the \"poverty line,\" neither the SPM nor the official poverty measure attempted to parse out exactly how much of every type of good or service, with corresponding prices, is needed by a family to form an overall budget. Instead, both the SPM and the official measure used data on families' spending. In the case of the official measure, this was the spending related to food. The official measure's thresholds were based on food costs in the 1960s and food spending patterns of families in 1955. According to a 1955 USDA food consumption survey, families spent approximately one-third of their income on food, on average; therefore, the costs of the food plans were multiplied by three to produce family income amounts.\nThe SPM uses the costs of food, clothing, shelter, and utilities (FCSU) as measured in the Consumer Expenditure Survey (CE). These items were selected because the panel considered them to be broadly accepted as universal needs and relatively noncontroversial. The panel did not specify exact amounts for items within these broad categories, but rather focused on overall spending patterns within the categories using CE data. Furthermore, the panel acknowledged that other items would be needed by families, such as non-work related transportation, personal care products, cleaning supplies, and the like; but rather than attempt to specify exact amounts for these items, the panel instead allowed for \"a little more\"—20% of the cost of FCSU—for miscellaneous items (that is, the threshold represents the cost of FCSU multiplied by 1.2).\nTo obtain the dollar amount used as a starting point for computing the complete set of thresholds, an average is taken among consumer units whose out-of-pocket expenditures on FCSU rank in the 30 th to the 36 th percentiles, among units with exactly two children, according to the Consumer Expenditure Survey. Determining the average is the first step in computing the thresholds; the next step is adjusting that average by homeownership or rental status.",
"Three sets of poverty thresholds are used in the SPM: one for homeowners with a mortgage, another for homeowners without a mortgage, and a third for renters. These differing sets of thresholds based on tenure (ownership or rental status) reflect that housing costs can differ greatly among these three groups. Housing costs make up roughly 40% to 50% of the expenditures represented in the SPM thresholds; for homeowners without mortgages the housing-related expenditures are at the lower end of that range, while renters and homeowners with mortgages tend toward the upper end of the range. Moreover, these groups tend to differ demographically as well. Homeowners without mortgages tend to be older but also have lower incomes on average than homeowners with mortgages. Homeowners with mortgages are younger, have greater income, and are more likely to be raising children. Renters have lower income than the homeowner groups but also tend to be younger and are more likely to be raising children than homeowners without mortgages.\nLike the other costs used in the SPM thresholds, the housing costs are obtained using data from the Consumer Expenditure Survey. It provides information on housing costs by tenure for the United States as a whole, but it does not provide the level of geographic detail needed to perform geographic adjustment.",
"The SPM adjusts for geographic differences in housing costs. It uses the American Community Survey's information on median rental costs in a geographic area and compares it to the national median rent.\nTo obtain comparable rent costs, a standard rental unit—two bedrooms with complete kitchen and plumbing facilities—is used. The median gross rent (including utility costs), based on ACS five-year data, is used in the comparison. Indices are computed by state: one index for each metropolitan area within the state, and an index representing all nonmetropolitan areas within the state. Once the indices are computed, a portion of the reference threshold (the part representing housing costs) is multiplied by them to produce SPM thresholds geographically adjusted for housing costs.",
"The thresholds are adjusted for family size and composition to allow that costs increase as family size increases, but also that there are economies of scale—efficiencies can be obtained by sharing resources. The mathematical relationship that describes how the thresholds are adjusted by family size and composition is called the equivalence scale .\nIn the official measure, the equivalence scale is not computed explicitly, but rather driven by the food plan costs upon which the official thresholds were based. In contrast, the SPM uses mathematical formulas to adjust the thresholds by family size. The formulas are used to compute scale factors. A scale factor is a number that is multiplied by a standard dollar amount, representing the equivalent of one adult's needs, in order to increase the threshold proportionately to reflect the costs incurred by the increase in family size. The scale factors are computed using the number of adults and children in the family as inputs, along with important parameters.",
"The SPM uses a different approach from the official measure in adjusting the threshold amounts over time. The official thresholds are adjusted annually for inflation using the CPI-U; no other adjustments are made. The SPM thresholds, in contrast, are recomputed based on the most recent five years of data on families' expenditures on FCSU, obtained from the Consumer Expenditure Survey. This approach differs conceptually from the official measure's inflation adjustment in three ways:\n1. Instead of directly factoring in a measure of overall inflation, the SPM includes the effects of inflation through the amounts that families spent on FCSU (as reported in the Consumer Expenditure Survey). 2. Price changes on goods and services other than FCSU are not considered directly—only families' spending on FCSU. Families' FCSU spending, moreover, is not held to be any fixed percentage of families' overall income (unlike the official measure, where the thresholds were fixed at three times the cost of food in the 1960s and updated for overall inflation since then). That means if FCSU spending grows as a portion of family income, the SPM thresholds will rise to reflect that spending, even if family income does not rise. Conversely, if family income rises, and a greater portion of family income was spent on goods other than FCSU, the SPM thresholds would reflect only the changes in FCSU spending. 3. The SPM thresholds are set at approximately the 33 rd percentile of FCSU spending, by ranking the FCSU spending across all two-child families in the Consumer Expenditure Survey sample. This is different from setting a fixed dollar amount in a single time period and adjusting for inflation thereafter. The SPM thresholds are computed so that even if the distribution of family expenditures changes over time, two-thirds of families will have reported spending more on FCSU than is allotted in the SPM thresholds.\nAdditionally, the ITWG intended for the SPM methodology to be updated periodically, as poverty measurement research identifies ways to improve the measure and as new data sources become available. The official thresholds, on the other hand, are updated for inflation but no methodological changes to them have been planned: in keeping the methodology consistent, the Census Bureau continues to follow OMB's Statistical Policy Directive 14.",
"The SPM takes account of a wider array of resources than the official measure, and it also takes account of taxes and expenses in a way the official measure does not. The official poverty measure uses money income before taxes as its definition of resources. While this definition was based on the best data available when the official measure was developed in the 1960s, it is inconsistent with the poverty thresholds as they were conceptually defined. The thresholds were constructed to represent the total amount of money families had available to spend; the food costs as identified by the USDA food plans and as consolidated by Orshansky into families of different sizes and compositions were meant to reflect the fraction of a family's money that was available to be spent on food. The degree of privation represented by the official thresholds was characterized by the food plans' effectiveness at providing a \"fair or better\" diet, but not necessarily a good diet, while keeping the food costs low.\nThe SPM was designed to define the resources available to a family consistently with the needs specified in the thresholds (FCSU plus a bit extra for miscellaneous expenses, such as non-work related transportation and personal care). The items used to construct the income measure are presented below, and are discussed more fully in the Census Bureau's report on the SPM.",
"",
"The CPS ASEC, which is the data source used by the SPM to identify most resources, asks about 18 types of income. These include government cash benefits—such as Social Security, Unemployment Insurance, Workers' Compensation, Supplemental Security Income, public assistance received in the form of cash (such as Temporary Assistance for Needy Families)—or child support received. Not all income sources included in the CPS ASEC are taxable income.",
"Unlike the official measure, the SPM includes estimates of the monetary value of in-kind benefits, such as for food and subsidized housing, in the measure of income. These benefits are relevant because they are used to provide the items specified in the poverty thresholds. The SPM incorporates estimated values for several in-kind benefits:\nSupplemental Nutrition Assistance Program ( SNAP ) . The SPM includes SNAP in its resource definition because families use it to help meet their food needs—and food costs are included in the SPM thresholds. CPS ASEC asks respondents whether anyone in the household received SNAP, and if so, what the face value of the benefits was. Amounts for the entire household are prorated to the family units as defined for the SPM when the two types of units are not identical. Special Supplemental Nutrition Program for Women, Infants, and Children ( WIC ) . The SPM includes WIC in its resource definition. However, the CPS ASEC does not ask respondents how much in WIC benefits they received, only whether they received benefits at all. For the purposes of estimating benefits, the Census Bureau assumes 12 months of participation when the respondent reports having received them. This assumption may overestimate the value of benefits received. To compute the benefit amounts received, the Census Bureau refers to WIC program information from the USDA, and uses age information reported in the CPS ASEC to determine which household members receive benefits. School Lunch . Subsidized school lunches are included in the SPM resource definition. The CPS ASEC asks whether children \"usually\" ate lunch at school, and whether it was free or reduced price. No further information on benefit amounts is available from the CPS ASEC. For the purpose of computing the SPM, the children are assumed to have received lunches every day. The costs of school lunches are obtained from USDA's Food and Nutrition Service (information on the school breakfast costs are not available). This approach likely overestimates the value of school lunch benefits received. Subsidized housing . Because the SPM includes shelter costs in the thresholds, the SPM includes subsidized housing in its resource definition. The Census Bureau estimates the \"market rent\" value for the housing unit and subtracts from that an estimated amount paid by the tenant. The difference is the estimated housing subsidy. Market rent is estimated using administrative data from the Department of Housing and Urban Development (HUD), and the amounts paid are estimated using HUD program rules and income information on the CPS ASEC. For computing poverty status under the SPM, the estimated subsidies are capped at the housing portion of the threshold minus the estimated amount paid by the tenant—housing subsidies can free up resources for a family to purchase other goods, but housing benefits cannot be used to purchase other goods and services once the family's housing needs have been met. Home energy assistance . Utility costs are included in the SPM thresholds; therefore, home energy assistance is included in the SPM resource definition. The CPS ASEC asks about energy assistance received for the entire year, and the SPM uses this data. However, respondents may have difficulty reporting exact amounts of energy assistance when Low Income Home Energy Assistance Program (LIHEAP) payments are made directly to landlords or energy providers. The manner by which the assistance is provided can vary by state.",
"Families typically pay for their needs using after-tax income; for that reason, the SPM uses after-tax income in its definition of resources. However, the CPS ASEC does not ask respondents about taxes paid. In order to compute after-tax income, the Census Bureau estimates taxes using a model. The CPS ASEC income and demographic data are used to estimate the probability of families' filing statuses (such as married filing jointly or married filing separately), having itemized deductions, and having capital gains, using the distribution of those variables as found in IRS data (Statistics of Income, or SOI).",
"Money that families spend as part of going to work is not available for meeting the needs specified in the SPM thresholds. Therefore, those expenses must be subtracted from income in order for the SPM's resource definition to be consistent with the thresholds. A flat amount, representing weekly work-related expenses other than child care, is multiplied by the number of weeks worked for every working family member. The flat amount is based on 85% of median weekly work expenses as reported in the Survey of Income and Program Participation. Apart from child care, most work expenses are linked to transportation to and from one's job. Work expenses—particularly commuting costs—can vary a great deal between geographic areas and across families in the same area. The NAS panel that developed recommendations for an improved poverty measure (mentioned above) observed that when making choices about residence and employment, families weigh the advantages of more expensive housing close to work (with lower commuting costs) versus less expensive housing further from work (with higher commuting costs). The panel was therefore unable to recommend a method that accurately reflected the variations in work expenses across families and geographic areas that was substantially more precise than assigning a flat amount across families based on number of weeks worked. However, research into improving the measure of these work-related expenses is ongoing.",
"If child care is needed in order for a family member to work, then the additional resources brought in by that worker do not represent the full amount earned—child care costs must be subtracted to reflect the available money for purchasing the needs identified in the SPM thresholds. Respondents to the CPS ASEC are asked whether child care expenses are incurred while the parents are working, and if so, how much they are. When computing resources for the SPM, the sum of child care expenses and other work-related expenses are capped at the income of the lower-earning parent (so that for determining poverty status, expenses cannot exceed the amount brought in by working).",
"As part of the section of the CPS ASEC questionnaire that asks about health insurance coverage, respondents are asked to report the amount of their health insurance premiums and other medical care costs that they paid out-of-pocket. These costs, called MOOP, are subtracted from income when computing available resources relevant for meeting needs defined in the SPM.\nPoverty measurement scholars debated for decades about the approach to use when taking account of medical costs in relation to poverty. On one hand, poor health can affect people's quality of life, affect their ability to earn more income, and change their spending habits. Thus, it affects people's economic behavior, which, it can be argued, is relevant for measuring poverty. On the other hand, the causes of poor health are not always linked to monetary factors. Health issues are often caused by physical phenomena unrelated to economics, which can lead to the argument that health care should not be included in a poverty measure but rather considered as a separate indicator of well-being. Moreover, the choices about whether to be insured and what kind of insurance to purchase heavily influence levels of spending on health care, both for the healthy and the sick. At the same time, it seems incongruous to consider a person who is healthy (and who therefore does not need expensive health care) as poorer than a sick person who receives expensive health care but otherwise has the same resources as the healthy person.\nTo resolve this conundrum, the SPM does not include health expenses as part of the threshold—as medical needs vary greatly and not always predictably. Instead, it subtracts MOOP from the resource definition, as those resources are considered to be necessary expenditures (if and when they are incurred) and are not available to be spent on the needs defined in the thresholds. This approach, moreover, does not include the value of health care dispensed by insurance providers or by public coverage. It only considers the portion spent out-of-pocket by patients and their families.",
"Because child support received is a form of money income and is counted as a resource in the SPM, any child support paid to another household would be double-counted if it were not subtracted from income. The person paying child support, moreover, cannot use the amounts paid to meet the needs specified in the SPM thresholds. The CPS ASEC includes child support received in its measure of money income, and because of a series of questions added in 2010 it now asks respondents whether child support is paid to other households and the amounts thereof. The SPM resource measure therefore includes child support received (if any) and subtracts child support paid (if any).",
"The SPM captures how some nonrelatives share needs and resources in a way the official poverty measure does not. The official measure defines a family as all persons related by birth, marriage, or adoption who reside in the same housing unit. That definition treats each partner in unmarried cohabiting couples as separate units. It also excludes unrelated individuals under age 15, such as foster children. Because the surveys on which poverty estimates are based do not ask income questions of persons under age 15, any children under that age who cannot be matched with an older person's income have an indeterminate poverty status and are excluded from tabulation totals.\nThe SPM defines family units—termed \"SPM resource units\"—differently from the official measure, using the detailed information on relationships among household members gathered by the CPS ASEC. This relationship detail includes the ability to identify foster children and, because of survey improvements in the 1990s and 2000s, cohabiting couples. The SPM treats cohabiting unmarried couples and any children they may have as part of the same unit and assigns thresholds and computes family income accordingly. This is done to more accurately reflect the way that people within households incur expenses and share resources to meet them. Similarly, all foster children under age 22 are included in the SPM resource units. Not only do these changes reflect recent demographic trends, but they also coordinate broadly with the \"consumer unit\" concept in the Consumer Expenditure Survey (CE).\nStill excluded from SPM tabulations, however, are members of the Armed Forces living in barracks, the incarcerated population, residents of nursing homes, other institutionalized persons, and the homeless population. These individuals are not eligible for interview in the CPS, as its primary purpose is to measure employment among the civilian noninstitutional population.",
"As mentioned earlier, the ITWG never intended for the SPM to replace the official poverty measure or to fulfill administrative purposes. It supplements the official measure by allowing for analyses of the low-income population that would not otherwise be possible. Particularly visible and of possible relevance to Congress are the effects that taxes and tax credits, noncash transfer programs, and work-related and medical expenses have on poverty. The SPM also highlights differences in the demographic profile of those identified as poor. Even with improved visibility into those areas, however, the SPM has important limitations to be considered.",
"",
"The official poverty measure captures only those government benefits that are paid in cash. This includes the largest government transfer program, Social Security, though it excludes Medicare. However, in terms of programs targeted to lower income people and families, the official measure excludes noncash medical, food, and housing benefits as well as benefits paid through the tax code. Over time, means-tested benefits paid in noncash forms or through the tax code have grown to account for most of what the federal government spends on low-income assistance. For example, in FY2015 the federal government spent $5.5 billion on veterans' pensions, $6.4 billion on TANF cash assistance, and $62.1 billion on Supplemental Security Income (SSI). These cash benefits are included in both the official poverty measure and the SPM. However, the federal government also spent a total of $80.6 billion on refundable tax credits, $103.1 billion on food assistance, and $44.6 billion on housing, much of which are benefits that are captured only in the SPM.\nFigure 1 illustrates the impact of various resource components on the number of people identified as poor using the SPM. Bars pointing left (negative) indicate the number of people kept out of the population identified as poor by the SPM's treatment of that resource component. The bars pointing right (positive) indicate the number of people added to the estimated poor population by the SPM's treatment of the component. These data show how the population estimated to be poor would change if the SPM omitted a particular component (either by subtracting resources, or failing to subtract taxes and expenses) but do not take into account any behavioral changes people would make in the absence of any one program, tax, credit, or expense. Furthermore, the data illustrate changes to the poverty population estimate with each component considered in isolation. People are often affected by multiple resource components; therefore, the numbers represented by separate bars should not be added together.",
"Social Security, along with SSI, TANF, and other cash welfare assistance; Unemployment Insurance; child support received; and Workers' Compensation, are money income sources that are included in both the official poverty measure and the SPM. Of these income sources, Social Security has the biggest impact on the number of persons kept out of poverty according to the SPM (26.1 million persons in 2016). While it was designed to be a universal program and not targeted specifically to the poor, it has a large antipoverty effect nevertheless. While most of those kept above poverty by Social Security were ages 65 and older (17.1 million), a substantial minority were younger: 7.5 million were age 18 to 64, and 1.5 million were children under age 18. Some of those in the younger age groups are Social Security recipients themselves because of a disability, but others were kept out of poverty because an older family member received it.\nThe remaining resource components shown in Figure 1 are not included in the official poverty measure but are included in the SPM. Of these, none individually have as large an impact on the estimated poor population as Social Security. After it, the components with the most impact are MOOP (with 10.5 million persons added to the poverty population once those expenses are taken into account); refundable tax credits (with 8.1 million kept out of the estimated poor population because they or a family member received the credits), work expenses, including child care (6.0 million added to the poverty population, on the margin); FICA (4.7 million added to the poverty population, on the margin); and SNAP (3.6 million kept out of the poor population, on the margin).",
"As seen above, people can be affected by multiple resource components considered in the SPM. As a result, the profile of the poor population as identified by the SPM is different from that identified by the official poverty measure. Fewer children are identified as poor in the SPM because many government assistance programs, such as WIC, TANF, and the Additional Child Tax Credit (ACTC), are targeted toward families with children. Conversely, more working-age adults are in poverty in the SPM because they are more likely to have work expenses (including child care expenses). These expenses are partially offset by EITC, but only working families receive it. Working families with children could get ACTC, but they have to have qualifying children. Slightly more of the aged are below poverty under the SPM than under the official measure because they are more likely to incur MOOP, which are subtracted from income. While MOOP can be high for the aged, their effect on poverty rates is mitigated by the fact that homeowners without a mortgage (such as aged persons who have paid off their mortgages and still live in that house) have lower housing expenses—and in turn lower poverty thresholds—than do mortgage-paying homeowners and renters.\nFurther details are given in the Census Bureau's report, T he Supplemental Poverty Measure: 201 6 .",
"As shown in Table A-1 in the Appendix , poverty thresholds in the SPM vary geographically and are typically different from their corresponding official poverty threshold. The SPM thresholds for New York illustrate within-state variation. SPM thresholds for the Binghamton metro area are lower than their corresponding official poverty threshold, while for New York City they are considerably higher (between $2,000 and $8,000 higher in 2016 than their corresponding official threshold).\nNevertheless, regional patterns emerge. Poverty rates in the Northeast and West tend to be higher under the SPM than under the official measure, in part because of the relatively higher thresholds in those regions, compared with the Midwest and the South. The SPM thresholds in 2016 for California (a western state) and Alabama (a southern state) illustrate the most extreme examples: the highest poverty threshold (for homeowners with mortgages in the San Jose-Sunnyvale-Santa Clara metro area, California) and the lowest poverty threshold (for homeowners without mortgages in nonmetropolitan Alabama) were found to apply in these states.\nAs a caveat, while the SPM thresholds tend to increase poverty rates in the Northeast and Midwest and decrease poverty rates in the South and West compared with the official measure, the thresholds are not the only driver of SPM poverty rates. Regional differences in income, noncash benefits, and items subtracted from SPM resources (such as MOOP or work expenses) also drive differences in regional poverty rates.",
"",
"Because it is based mainly on survey data, the SPM warrants the same caveats as do any estimates based on surveys (including the official poverty measure): the data are estimates based on a sample of the population and, as a result, have margins of error. Additionally, means-tested transfers and certain types of non-transfer income are underreported in the CPS ASEC.\nPortions of SPM resources—notably the values of taxes and some noncash benefits—are not asked of respondents in the CPS ASEC and need to be estimated using models. The models take care to use administrative data where appropriate to ensure that the estimated amounts reflect external totals and distributions; nevertheless, the estimated amounts are not perfect. For example, the estimated total benefits from both the EITC and the child tax credit are substantially lower than those found when examining federal income tax returns. Thus, the estimates understate the impact these two tax provisions have on poverty as measured by the SPM.",
"The SPM includes the values of in-kind food and housing benefits in measuring resources. While resources such as these are used to meet the needs (FCSU) specified in the thresholds, and thus it is consistent to include them as resources in the SPM, in-kind benefits, unlike money income, are not fungible . That is, barring illegal trading, they cannot be used to meet any expense that arises, but only the needs for which they are specified. While the FCSU amounts in the thresholds are based empirically on spending patterns, it should not be assumed that every family's needs are the same. Because a family could use money income to meet its specific levels of need, but does not have the same flexibility with in-kind benefits, the in-kind benefits are worth somewhat less than their face value to families whose needs are met in one area but not another.\nIn measuring resources, the SPM method caps housing benefits because a large housing subsidy can only fill housing needs. Housing benefits are capped at the housing portion of the SPM poverty threshold minus the amount of rent paid by a tenant. On the other hand, SNAP benefits are counted at their full face value, even though their \"value\" to the recipient might be less than that amount.",
"The SPM accounts for expenses for health care and insurance by subtracting MOOP from family resources. That is, it does not count the \"value\" of health insurance as a resource, and subtracts from resources health insurance premium payments, deductibles, copayments, and other out-of-pocket health expenses made by the family. Medical needs are not included in the SPM poverty thresholds.\nThis treatment of medical expenses does not take account of all the economic effects of subsidized medical care generally. Two families with different health insurance arrangements, and different health care needs, but the same amounts of MOOP would be treated identically by the SPM: their (identical) MOOP would be subtracted from their income. However, those same families may not be equally as well off if one of the families kept its out-of-pocket costs down by purchasing a less comprehensive insurance plan than the other family and decided to forego certain types of health care. The SPM thresholds were defined to include the recurring needs of food, clothing, shelter, utilities, and a little more for miscellaneous expenses; MOOP are subtracted from family income because they cannot be used to meet the needs identified in the threshold.\nThis treatment of medical expenses also means that some of the largest noncash benefits programs—Medicare, Medicaid, and premium assistance under the Patient Protection and Affordable Care Act—are not explicitly taken into account in determining SPM poverty status. There has been some research into methods and measures that would incorporate medical risk, and how it is affected by health insurance, into measures of economic well-being to complement the current SPM.",
"Tax credits, when they are provided to filers, are given as a lump sum based on income in the previous year. The SPM imputes taxes in the year they are earned, but in reality the credit will not appear in the family's income until the following year. Furthermore, tax credits are given as a lump sum, but poverty is a spell phenomenon. Both the SPM and the official poverty measure examine resources in a full calendar year compared with a threshold based on the calendar year. The economic status of families, however, can change throughout the year. A family may experience poverty because one or more workers in the family lost a job and months passed before the worker was able to find another one, putting the family in a poverty spell for that duration. The tax credit, therefore, may or may not provide relief during the poverty spell, depending on the spell's timing in the year and the severity of expenses faced by the family throughout the year. Longitudinal datasets like the Survey of Income and Program Participation can unmask the length of time people and families spend in poverty. However, they typically have smaller sample sizes than the CPS ASEC, which limits their ability to provide detailed geographic analyses.",
"There has been some debate about whether the SPM is closer to a relative or an absolute poverty measure. A relative poverty measure is one in which poverty is defined with respect to some percentile of the income distribution (e.g., half of median income), while an absolute measure uses a fixed dollar cutoff updated for inflation over time.\nRelative poverty measures keep pace with changes in the income distribution over time and identify the economically worst-off portion of the population, but they may not necessarily be tied to a particular level of well-being. Because relative poverty measures are based on the income distribution, it is possible for poverty to increase even when incomes throughout the distribution rise if the distribution of income becomes wider. This potential disconnection between the poverty rate and levels of well-being is considered to be a weakness of relative measures.\nAbsolute poverty measures are set to a fixed income amount representing a level of economic well-being at a point in time, adjusted periodically for inflation. They are consistent over time in representing the number of people below a resource level, and are more sensitive over time than relative measures to detecting the shares of the population unable to obtain this level, and presumably, economic well-being.\nThe SPM includes aspects of both relative and absolute measures in its computation, and gauging whether the SPM is closer to one or the other is an unresolved question. The SPM thresholds are based on roughly the 33 rd percentile of expenditures on FCSU, using the five most recent years of CE data. In this sense, the SPM can be thought of as relative because the thresholds are computed based on a percentile within the distribution of expenditures. On the other hand, the thresholds are not computed using overall income, but rather expenditures, and only for a limited set of basic goods (FCSU, plus 20% extra for miscellaneous expenses). It is theoretically possible for incomes to rise at a different rate than expenditures on basic goods, which if true would imply that the SPM is not a relative measure. Moreover, expenditures on FCSU are driven not only by income but also by prices, which can be affected by factors other than the income distribution.\nThe question of whether the SPM is relative or absolute has meaning for those trying to evaluate whether the SPM accurately describes the poor population both in a single year and over time. It also highlights the value judgments involved in determining what is meant by \"poverty\" and in expressing that determination using a concrete metric. In the case of the official poverty measure, the level of well-being is characterized by the likely nutritional impact of the Economy Food Plan, with fewer than 1 in 10 families on that plan meeting their recommended nutritional requirements, and about half of families on that plan failing to get two-thirds of them (see footnote 27 ). The description of the SPM in this report, and the tables provided in the Appendix , are intended to help readers better gauge for themselves the levels of well-being on which the SPM is based.",
"Unlike the official poverty measure, which uses 48 poverty thresholds that are updated annually for inflation and applied nationwide, the SPM thresholds are computed using additional variables, resulting in thousands of thresholds once they are geographically adjusted. The SPM thresholds are based on Consumer Expenditure Survey (CE) data for food, clothing, shelter, and utilities (FCSU), and adjustments are made thereafter by housing tenure (that is, for homeowners with mortgages, homeowners without mortgages, and renters), by geographic variations in housing costs for each housing tenure group, and by family composition.\nThree tables are shown below, to illustrate the dollar amounts used to determine poverty status in both the SPM and the official measure. Table A-1 focuses only on SPM poverty thresholds for a two-adult two-child family, by housing tenure, and illustrates the range of geographic cost variation. In contrast, Table A-2 illustrates how the SPM thresholds vary by family composition, but without geographic adjustment. Table A-3 presents the official poverty thresholds, for comparison."
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{
"question": [
"How were the official poverty thresholds derived?",
"How did the food budget change to become the official poverty thresholds?",
"How have the poverty thresholds changed since their introduction?",
"On what are SPM’s thresholds based?",
"What is the process to determine poverty thresholds?",
"How are financial resources calculated in both measures?",
"How are the financial resources differently calculated by the SPM?",
"What are some examples of these expenses?",
"Why are expenses subtracted from family income?",
"How does this difference in financial resource calculation make the SPM more consistent?",
"How does the SPM differ from the official measure?",
"How can these differences be explained?",
"What is different about the SPM's resource definition?",
"What benefits does the SPM offer?",
"What is one flaw of the SPM?",
"What is another flaw of the SPM?",
"Does the SPM measure poverty as an \"absolute\" measure?"
],
"summary": [
"The official poverty thresholds measure needs derived from the cost of an austere food budget.",
"The food budget was multiplied by three, based on the finding that food accounted for about one-third of total family expenditures in 1955.",
"Since their original computation, these thresholds have been adjusted annually for price inflation.",
"In contrast, the SPM's thresholds are based on consumer expenditures for food, clothing, shelter, and utilities, and it uses five years of data from the Consumer Expenditure Survey in calculating needs and thresholds.",
"Developing the SPM thresholds starts with spending data for families with exactly two children. These data are refined by using approximately the 33rd percentile of families' expenditures on food, clothing, shelter, and utilities. Next, an extra 20% is figured into the thresholds for miscellaneous expenses such as cleaning supplies and personal care items.",
"Financial resources to meet needs, whether in the SPM or the official measure, are based on the sum of income of all family members.",
"While the official measure uses money income before taxes, the SPM makes additional adjustments and considers a wider range of resources. The SPM includes the value of certain in-kind benefits (such as food and housing subsidies), uses income after estimated federal and state taxes, and subtracts some expenses from income.",
"These expenses include medical out-of-pocket costs, such as health insurance premiums, physician co-pays, and over-the-counter medications; child support paid outside of the household; and work expenses, such as child care and the cost of commuting, tools, uniforms, or licensing fees related to a person's employment. Work expenses, including child care, are capped at the amount of earnings from work of the lowest-earning family member.",
"These expenses are subtracted from family income because they cannot be used to obtain the needs defined in the SPM thresholds.",
"Unlike the official poverty measure, the range of financial resources included in the SPM is defined to be consistent with the types of needs used to compute the SPM poverty thresholds.",
"The demographic profile of the poverty population is different under the SPM than under the official measure. Children have a comparatively lower poverty rate (percentage in poverty) under the SPM, and the aged (65 and older) and working-age persons (18 to 64) have comparatively higher poverty rates.",
"These differences can be explained by the SPM's resource definition.",
"The SPM includes tax credits and in-kind benefits that help families with children (in effect, boosting the measure of family income). It subtracts medical out-of-pocket expenses, which disproportionately affects the aged (lowering their measure of income), and subtracts work-related expenses, which disproportionately affects the working-age population (lowering their measure of income).",
"The SPM can give policymakers the tools to understand how taxes and government programs, including the noncash programs, affect the poor. It also illustrates how medical expenses and work-related expenses such as child care can affect a family's economic well-being.",
"However, the SPM poverty estimates are derived from household survey data, and hence are affected by issues such as underreporting of income from government benefit programs, limitations on how tax liabilities and tax benefits can be estimated based on survey data, and differences in how noncash benefits and lump-sum tax refunds are \"valued\" by program recipients versus how they are valued for the purposes of poverty measurement.",
"Additionally, the SPM does not directly value health insurance provided publicly or privately. Further, poverty has historically been measured in the United States as an \"absolute\" measure, based on how many people fall below a set standard of living.",
"Questions have been raised about whether the SPM continues to measure poverty in that way, or represents a \"relative\" measure of poverty, based on how the population ranks in terms of well-being relative to each other."
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GAO_GAO-17-613
|
{
"title": [
"Background",
"Overview of FEMA’s Workforce",
"FEMA Misconduct Directive and Manuals",
"FEMA Offices Involved in Managing Misconduct",
"DHS OIG Role in Reviewing and Investigating Misconduct",
"General Misconduct Process",
"FEMA Has Developed and Documented Misconduct Policies and Procedures for Most Employees, but Not its Entire Workforce",
"FEMA Has Documented Misconduct Policies and Procedures for Most of its Employees, and Is Taking Steps to Offer Misconduct Training to Supervisors",
"FEMA Has Not Documented Misconduct Policies and Procedures for Surge Capacity Force",
"Reservist Policies and Procedures Do Not Outline Disciplinary Actions or Address the Appeals Process",
"FEMA Does Not Communicate Range of Offenses and Penalties to its Entire Workforce",
"FEMA Records Data on Employee Misconduct Cases and Their Outcomes, but Could Improve the Quality and Usefulness of These Data",
"Multiple FEMA Offices Collect and Store Data on Employee Misconduct",
"FEMA OCSO Recorded Approximately 600 Misconduct Complaints from January 2014 through September 30, 2016",
"Aspects of FEMA’s Data Limit Their Usefulness for Identifying and Addressing Trends in Employee Misconduct",
"Limited Standardization of Fields and Entries",
"Limited Use of Unique Case Identifiers",
"Lack of Documented Guidance on Data Entry",
"FEMA Shares Misconduct Case Information Among Personnel Management Offices and with DHS OIG, but Does Not Accurately Track DHS OIG Referred Misconduct Complaints",
"FEMA Personnel Management Offices Meet Regularly to Discuss Misconduct Allegations and Ongoing Investigations and Send Monthly Status Updates to DHS OIG",
"FEMA’s Procedures for Tracking DHS OIG Referred Cases Need Improvement",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: Comments from the Department of Homeland Security",
"Appendix III: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"",
"FEMA’s workforce consists of employees hired under both Title 5 and the Stafford Act, as well as individuals from two other workforce components who are not FEMA employees, but who can be deployed for disaster response: the DHS Surge Capacity Force and FEMA Corps.\nTitle 5 employees are permanent and temporary employees who form FEMA’s day-to-day workforce, and can be deployed as needed during a disaster.\nStafford Act employees include CORE and Reservists hired specifically to support disaster-related activities on a temporary or intermittent basis. COREs are temporary employees with 2- to 4-year appointments, while Reservists work on an intermittent basis and are deployed as needed.\nSurge Capacity Force volunteers include employees of other DHS components who augment FEMA’s workforce in the event of a catastrophic disaster. Their first and only deployment as of May 2017 was to assist in response and recovery efforts after Hurricane Sandy in 2012. FEMA manages and coordinates the Surge Capacity Force program.\nFEMA Corps is a national service program managed by AmeriCorps National Civilian Community Corps (NCCC). FEMA Corps members support disaster response and recovery efforts and work under the direction of FEMA staff.\nAs shown in table 1 below, FEMA’s available disaster response workforce, including Surge Capacity Force and FEMA Corps totaled over 22,600 in March 2017.\nFEMA’s workforce categories are subject to different employee rights and legal protections. For example, Title 5 employees are generally afforded notice and appeal rights, while Reservists serve in temporary intermittent positions and can be terminated at any time with or without cause.",
"In 2012, FEMA issued a policy directive outlining procedures for reporting misconduct within the agency, conducting administrative investigations, and reporting actions taken in cases where the misconduct allegation was sustained. The FEMA Administrative Investigations Policy directive (FD 123-19) lays out misconduct responsibilities for employees, managers, and supervisors, and for the personnel management offices involved in managing misconduct. The directive also describes three types of administrative investigations:\nManagerial Inquiry: managers or supervisors may be assigned to conduct an inquiry when the allegation is not complex (e.g., tardiness, absence without leave) and involves a minimal number of witnesses.\nOffice of the Chief Security Officer (OCSO) Investigation: OCSO personnel are assigned to conduct investigations of allegations that are criminal in nature, or have the potential to be criminal in nature, for example travel card fraud or a physical altercation.\nIndependent Investigation: senior FEMA or other government officials may be assigned to conduct investigations into complex allegations that involve multiple offices and witnesses, senior employees, or prohibited personnel practices such as political coercion.\nThe process for conducting investigations is further discussed in FEMA’s Administrative Investigations Policy manual (FEMA Manual 123-19-1).\nFEMA’s Employee Discipline Manual (FEMA Manual 255-3-1) describes the policies, procedures, and responsibilities for taking conduct-related discipline against permanent Title 5 employees. The manual discusses options for disciplinary actions, which include reprimands and suspensions of 14 days or less, and adverse actions, which include suspensions for 15 days or more, demotions, and removals. The manual also lays out employee grievance and appeal rights. The policies and procedures described in the manual apply solely to permanent Title 5 employees. As discussed later in this report, the discipline and appeals process varies for other workforce categories.",
"Within FEMA, three primary offices are involved in reviewing, investigating, and adjudicating employee misconduct allegations.\nOCSO Internal Investigations Branch (IIB): conducts investigations related to more serious allegations, such as those that may involve potential criminal misconduct.\nThe Office of the Chief Component Human Capital Officer (OCCHCO) Labor and Employee Relations Branch (LER): advises supervisors who conduct lower level investigations and inquiries, such as time and attendance violations, and provides recommendations on any counseling or any disciplinary or adverse action for all cases.\nThe Office of the Chief Counsel (OCC) Personnel Law Branch (PLB): provides legal advice during investigations and conducts legal reviews of certain reports of investigation and all disciplinary and adverse actions.\nRepresentatives from these three offices form FEMA’s Administrative Investigations Directive (AID) Committee, which reviews misconduct allegations, assigns investigators, and tracks the status of open cases.",
"DHS OIG also plays a role in reviewing and investigating certain misconduct allegations. DHS Management Directive 0801.1 requires officials from all DHS components, including FEMA, to refer certain categories of misconduct to DHS OIG for review, such as allegations of criminal misconduct against a DHS employee and any allegations of misconduct against senior employees. After reviewing the allegation, DHS OIG may elect to initiate an investigation or refer the case back to the component, such as FEMA, for review. DHS OIG receives complaints (from employees, supervisors, the public, and agency referrals) against employees in all DHS components through the DHS OIG Hotline, which is a resource for reporting corruption, fraud, waste, abuse, mismanagement, or misconduct. Table 2 below shows the average number of misconduct complaints received through the DHS OIG Hotline from fiscal year 2014 through 2016 by selected DHS component. These complaints represent alleged offenses only, and not final actions or adjudication results.",
"FEMA receives allegations of employee misconduct from individuals both within and outside the agency. Individuals (including members of the public) can report these allegations through a number of different mechanisms, including, but not limited to, FEMA’s OCSO Tipline, LER specialists, and the DHS OIG Hotline. Employees can also report misconduct to their supervisors and union representatives. The AID Committee reviews most allegations, including those declined by DHS OIG and returned to FEMA. LER reviews complaints received directly from managers or employees to determine if they need to be discussed at the AID Committee meetings. Allegations may then be assigned to one of the three types of administrative investigations discussed earlier. Once completed, reports of investigation are forwarded to LER for review. LER recommends appropriate disciplinary or adverse action, if warranted. Figure 1 below outlines the general steps in FEMA’s misconduct process, including DHS OIG’s role in reviewing and investigating allegations. Variations in potential case outcomes and the appeals process by workforce category are discussed later in this report.",
"",
"FEMA has developed a policy outlining procedures regarding investigations of misconduct as documented in FEMA’s Administrative Investigations Policy directive. The directive applies to all FEMA personnel. While FEMA Corps and Surge Capacity Force members are not FEMA employees, OCSO officials stated that the investigations process is the same regardless of the workforce category. FEMA has also documented misconduct policies and procedures regarding options to address misconduct and appeals for Title 5 and CORE employees. For Title 5 employees the options to address misconduct include both disciplinary and adverse actions. FEMA Corps disciplinary policies and procedures are the responsibility of AmeriCorps NCCC and are documented in their member handbook. Figure 2 outlines the options to address misconduct and appeal rights for Title 5, CORE, and FEMA Corps as documented in their respective employee discipline and program manuals.\nAccording to LER officials, as of February 2017, most supervisors had been offered training on FEMA’s 2015 Employee Discipline Manual, which applies to Title 5 employees. Three more training sessions are planned for 2017. Additionally, PLB partnered with LER in 2016 to offer misconduct and documentation training for all supervisors. In 2016, PLB and LER completed 21 joint trainings. They held two more joint trainings in March 2017.",
"FEMA has not documented misconduct policies and procedures for Surge Capacity Force members. DHS issued the Surge Capacity Force Concept of Operations in 2010, which outlines FEMA’s base implementation plan for the Surge Capacity Force. However, the document does not address any elements pertaining to Surge Capacity Force human capital management, specifically misconduct and disciplinary policies and procedures.\nAccording to the FEMA Surge Capacity Force Coordinator, despite the lack of documentation, any incidents of misconduct would likely be investigated by FEMA’s OCSO, which would then refer the completed report of investigation to the employee’s home component for adjudication and potential disciplinary action. Additionally, OCSO officials said that while they were unaware of any misconduct investigations involving Surge Capacity Force members to date, if an incident were to occur they would follow the procedures in the Administrative Investigations Policy directive and also notify the member’s home component of the incident. However, although no allegations of misconduct were made at the time, the FCO in charge of one of the Hurricane Sandy Joint Field Offices said he had not seen anything in writing or any formal guidance that documents or explains how the process would work and stated that he would have had to contact FEMA headquarters for assistance in determining how to address any misconduct. Furthermore, he noted that taking the time to figure out the Surge Capacity Force misconduct process would have detracted from time spent on the Joint Field Office’s mission. LER officials stated that they would be able to walk through the procedures with supervisors and managers if asked. However, because these procedures are not documented, the process is not transparent and information is not readily available. LER officials noted that while LER specialists can quickly answer questions, it would be beneficial for the procedures to be documented. A PLB official also told us that FEMA should have a written policy for potential Surge Capacity Force misconduct.\nStandards for Internal Control in the Federal Government advises management to develop and maintain documentation of its internal control system. This documentation can assist in management’s ability to communicate controls to personnel, and is a means to retain organizational knowledge as well as communicating that knowledge to external parties. Without documented guidance, FEMA cannot ensure that Surge Capacity Force misconduct is addressed adequately in a timely and comprehensive manner, which could negatively affect the extent to which Joint Field Offices can accomplish their mission after a disaster. Furthermore, FEMA’s 2015 update to the Surge Capacity Force Concept of Operations calls for increasing the size of the Surge Capacity Force workforce from its current size of approximately 6,000 volunteers to 36,000 volunteers and also does not address any human capital management issues, including misconduct. This planned expansion further underscores the importance of documenting policies and procedures in order to address potential misconduct.",
"FEMA’s Reservist Program Manual lacks documented policies and procedures on disciplinary options to address misconduct and appeal rights for Reservists. Both LER and PLB officials told us that, in practice, disciplinary actions for Reservists are limited to reprimands and termination. According to these officials, FEMA does not suspend Reservists because they are an intermittent, at-will workforce deployed as needed to respond to disasters. FCOs and cadre managers have the authority to demobilize Reservists and remove them from a Joint Field Office if misconduct occurs, which may be done in lieu of suspension. Furthermore, LER and PLB officials also told us that, in practice, FEMA grants Reservists the right to appeal a reprimand or termination to their second-level supervisor. Although officials stated that FEMA is carrying out these policies and procedures in practice, the actions are not documented in the Reservist Program Manual.\nStandards for Internal Control in the Federal Government advises management to document policies for each unit in its area of responsibility. Each unit, with guidance from management, determines the policies necessary to operate, as well as documents policies in the appropriate level of detail to allow management to effectively monitor activity. According to FEMA officials, because of the at-will nature of their employment, Reservists are not subject to the same policies, procedures, and appeal rights as Title 5 employees, such as a suspension as an option to address misconduct. However, the procedures that are executed in practice are not reflected in the Reservist Program Manual. Without documented Reservist disciplinary options and appeals policies, supervisors and Reservist employees may not be aware of all aspects of the disciplinary and appeals process. Additionally, seven supervisors and managers in two of the three regions and one of the three cadres we spoke with noted that there is a perception of inconsistency and unfairness in the discipline process. For example, one manager told us that if cadre management provided more information on outcomes in addressing misconduct, it would help improve the perception that misconduct is being seriously addressed at FEMA. Clear documentation of the Reservist disciplinary options and appeals policies and procedures currently in practice would help to address the concerns of inconsistency.",
"FEMA revised its employee disciplinary manual for Title 5 employees in 2015, and in doing so, eliminated the agency’s table of offenses and penalties. Tables of offenses and penalties are used by agencies to provide guidance on the range of penalties available when formal discipline is taken. They also provide awareness and inform employees of the penalties which may be imposed for misconduct. Since revising the manual and removing the table, FEMA no longer communicates possible punishable offenses to its entire workforce. Instead, information is now communicated to supervisors and employees on an individual basis. Specifically, LER specialists currently use a “comparators” spreadsheet with historical data on previous misconduct cases to determine a range of disciplinary or adverse actions for each specific misconduct case. The information used to determine the range of penalties is shared with the supervisor on a case-by-case basis; however LER specialists noted that due to privacy protections they are the only FEMA officials who have access to the comparators spreadsheet. PLB and LER officials stated that the new comparators spreadsheet is an improvement over the old table, which contained overly broad categories and had not been updated since 1981. According to officials, the comparators spreadsheet is easier to use and thus it is easier to ensure cases are consistent across the agency.\nSupervisors and managers we spoke with shared their perspectives on how offenses and penalties are communicated both through the prior table and the new comparators spreadsheet. Specifically, 11 supervisors and managers in all three regions and cadres we spoke with, as well as both union representatives we interviewed, cited the benefits of a table in communicating punishable offenses and the range of penalties. These benefits included transparency, consistency, and possible deterrence against engaging in misconduct. For example, one supervisor noted that a table of offenses and penalties is beneficial for both employees and supervisors because it removes ambiguity and makes the disciplinary process more transparent. Additionally, as discussed earlier, other supervisors and managers told us that there is a perception that misconduct cases are handled inconsistently. However, management officials in one region, and one supervisor in another region, noted they preferred the new case-by-case comparators system and did not see benefits to having a table of offenses and penalties. Another manager noted that a table was useful in certain cases with specific rules, such as travel card misuse; however, many cases are more complicated and in those situations a strict table is less effective. The remaining supervisors and managers did not offer their perspective on this topic.\nStandards for Internal Control in the Federal Government advises management to consider standards of conduct, assigned responsibility, and delegated authority when establishing expectations. Management establishes expectations of competence for key roles as well as for all personnel through policies within internal control systems. Because information about offenses and penalties is not universally shared with supervisors and employees, FEMA management are limited in their ability to set expectations about appropriate conduct in the workplace and to communicate consequences of inappropriate conduct. Additionally, a FEMA OCCHCO official noted that FEMA is considering re-introducing a table which would inform employees and supervisors of misconduct offenses and penalties. Communicating information about offenses and common ranges of penalties, such as in a summary table that does not include individual case information, could help to provide transparency for employees and their supervisors on the range of penalties to expect for different types of misconduct and mitigate the perception that misconduct is handled inconsistently across FEMA’s workforce.",
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"The three offices on the AID Committee involved in investigating and adjudicating employee misconduct complaints each maintain separate case tracking spreadsheets with data on employee misconduct to facilitate their respective roles in the process.\nOCSO collects data in a case tracking spreadsheet about employee misconduct complaints and investigations. For example, the spreadsheet contains fields with narrative descriptions of alleged offenses and investigation updates, the locations and FEMA regions where alleged offenses occurred, and the number of days an investigation was open. According to agency officials, all of the cases discussed during weekly AID Committee meetings are in the OCSO case tracking spreadsheet.\nLER also collects data on employee misconduct complaints in a case tracking spreadsheet. Specifically, LER records information on lower- level allegations that do not rise to the level of AID Committee review as well as adjudication information for allegations which were investigated by OCSO. In addition to employee misconduct complaints, LER specialists record all inquiries from supervisors in the LER case tracking spreadsheet, including questions about performance, grievances, and employee counseling. Fields in the LER case tracking spreadsheet include, for example, narrative descriptions of alleged offenses and case summaries, comments with case status updates, and the disciplinary or adverse actions taken, if any.\nPLB collects data on misconduct-related disciplinary or adverse actions it reviews in a case tracking spreadsheet. Fields in the PLB spreadsheet include narrative descriptions of the charge or issue, the employee position and type, and the disciplinary or adverse action taken. According to PLB officials, the data are based on information provided by LER.",
"We analyzed data provided by OCSO in its case tracking spreadsheet and found that there were 595 complaints from January 2014 through September 30, 2016. The complaints involved alleged offenses of employee misconduct which may or may not have been substantiated over the course of an investigation. Some complaints involved multiple allegations of various offenses against multiple subjects. In order to better summarize the number and type of alleged offenses, we developed eight general categories (see table 3 below).\nBased on our analysis, the 595 complaints contained approximately 799 alleged offenses from January 2014 through September 30, 2016. As shown in figure 3 below, the most common type of alleged offenses were integrity and ethics violations (278), inappropriate comments and conduct (140), and misuse of government property or funds (119). For example, one complaint categorized as integrity and ethics involved allegations that a FEMA employee at a Joint Field Office was accepting illegal gifts from a FEMA contractor and a state contractor. Another complaint categorized as inappropriate comments and conduct involved allegations that a FEMA employee’s supervisor and other employees had bullied and cursed at them, creating an unhealthy work environment. Finally, a complaint categorized as misuse of government property or funds involved allegations that a former FEMA employee was terminated but did not return a FEMA-owned laptop.\nLER officials provided summary data on employee misconduct outcomes separately from the LER case tracking spreadsheet. According to the summary data, there were 546 disciplinary or adverse actions related to employee misconduct taken during the last three calendar years — from January 2014 through December 2016. Of those actions, the most common were removals or terminations (354), reprimands (115), suspensions of 14 days or less (64), and suspensions of 15 days or more (6). The most common employee types affected by actions were Reservist (235) and Title 5 (110).\nWe also analyzed data provided by PLB in its case tracking spreadsheet and found that PLB reviewed 454 final disciplinary or adverse actions related to employee misconduct from January 2014 through September 30, 2016. The most common types of action were reprimands (144), suspensions ranging from 1 to 45 days (121), and terminations (118). The most common employee types affected by actions were Title 5 (265), CORE (180), and Reservist (6).\nThere are several potential explanations for the differences between the LER and PLB data on employee misconduct outcomes. A PLB official stated that PLB does not review all disciplinary actions against Reservists; therefore, LER Reservist actions may not appear in the PLB spreadsheet. Further, LER officials stated that they recently started adjusting their recordkeeping and it was possible that some actions were not input by LER specialists into the case tracking spreadsheet. Differences in the data may also be related to limitations we identified in the spreadsheets, as discussed below.",
"OCSO, LER, and PLB collect data on employee misconduct and outcomes, but limited standardization of fields and entries within fields, limited use of unique case identifiers, and a lack of documented guidance on data entry restricts their usefulness for identifying and addressing trends in employee misconduct.",
"We found that there was limited standardization of fields based on our review of OCSO, LER, and PLB case tracking spreadsheets. For example, we attempted to summarize misconduct allegations by employee type using the OCSO spreadsheet. Out of approximately 704 subjects named in complaints from January 2014 through September 30, 2016, the most common employee type was unknown because either the information was not consistently available, or not enough information was available in the case tracking spreadsheet. In 2014 and 2016, the OCSO spreadsheet sometimes included information on the subject’s employee type embedded within narrative summary of allegation fields. In 2015, that information was sometimes included in the narrative fields and sometimes listed in a subject type field unique to that year.\nThere was also limited standardization of entries within fields. For example, in all years the offense field in the OCSO spreadsheet consisted of text entries that described similar offenses in different ways, such as “Travel Card Violation” and “Travel Policy Violation”, or multiple offenses related to a specific complaint, such as “Fraud / Travel Card Violation”. The LER spreadsheet also contained examples of fields with limited standardization of entries. For example, the fields which described a subject’s pay grade consisted of varied text entries, such as “9”, “GS-09”, and “GS-9”. The PLB spreadsheet had similar issues with other fields. Limited standardization of fields and entries within fields restricts the usefulness of the data for identifying and addressing trends in employee misconduct because it makes timely evaluation, summarization, and verification of the data more difficult.",
"We found that there was limited use of unique case identifiers in the OCSO, PLB, and LER case tracking spreadsheets. The OCSO spreadsheet contained several unique case identifier fields, including an IIB case number, OIG case number, and incident number. However, the LER and PLB spreadsheets provided to GAO did not contain these unique case identifier fields. A PLB official confirmed that the LER and PLB case tracking spreadsheets do not include case numbers as identifiers, only subject names. OCSO officials also stated that LER does not use the OCSO IIB case number or the OIG case number, although LER does have access to the OCSO IIB case number from AID Committee meetings. As a result, the spreadsheets do not share the same unique identifier, which makes it more difficult to track the status and outcome of cases across the three case tracking spreadsheets.",
"OCSO, LER, and PLB officials stated that they do not have data dictionaries or documented guidance on data entry for their respective case tracking spreadsheets. A PLB official reported that data are entered into the PLB spreadsheet by a paralegal and spot-checked by a senior PLB official. LER officials noted that they did not provide data dictionaries or guidance because the original case tracker involved a simple Excel spreadsheet rather than a more complicated database system. However, a lack of documented guidance on data entry may make it more difficult to maintain and verify the completeness and accuracy of the data. For example, we identified variations in data entry into the LER case tracking spreadsheet across LER specialists. In 2015, of the 9 LER specialists who entered information into the case tracking spreadsheet, 6 specialists did not enter information into the employee pay grade field, 2 specialists sometimes entered information, and 1 specialist always entered information.\nStandards for Internal Control in the Federal Government advises management to process data into quality information which is appropriate, current, complete, accurate, accessible, and provided on a timely basis. Additionally, management should evaluate processed information, make revisions when necessary so that the information is quality information, and use the information to make informed decisions. As described above, FEMA employee misconduct data are not readily accessible and cannot be verified as accurate and complete on a timely basis. These limitations restrict management’s ability to process the data into quality information which can be used to identify and address trends in employee misconduct. For example, an OCSO official stated that senior OCSO officials recently requested employee misconduct information based on employee type, such as the number of Reservists. However, the data are largely captured in narrative fields, making it difficult to extract without manual review. LER officials stated that LER specialists do not regularly conduct trend analysis on employee misconduct cases, but if they notice an apparent trend such as a number of cases involving misuse and non- payment of travel credit cards they will discuss it during quarterly meetings with component management. Five supervisors and management officials from each of the three regions we spoke with said that information on trends and patterns in employee misconduct would be useful. For example, supervisors could use trend analysis to identify specific types of employee misconduct which have become more common, allowing them to send out policy guidance or schedule targeted trainings to help address the issue.\nLER and OCSO are taking steps to improve their case tracking spreadsheets. Specifically, LER officials reported that they began using Microsoft SharePoint software in January 2017 which includes drop-down selections for all fields except the subject name and comments. The officials stated that they switched to SharePoint in response to DHS requests for specific misconduct information as well as our requests, which raised their awareness of the LER spreadsheet’s limitations. Similarly, an OCSO official stated that OCSO planned to add new fields to their spreadsheet which will make it easier to generate reports and show trends. These are positive steps towards addressing the issues with employee misconduct data quality identified above. However, it is not clear that they will be sufficient to address each of the data limitations we identified and improve the ability to conduct trend analysis. For example, although the LER SharePoint spreadsheet does include an entry number field, it was unclear whether that would allow officials to track the status and outcomes of specific cases across all three case tracking spreadsheets. New fields and increased use of drop-down selections in the LER SharePoint spreadsheet may help improve standardization of fields and entries within fields, but LER specialists may differ in how they interpret fields without documented guidance on data entry. Additionally, it is unclear whether OCSO’s modifications will include increased use of drop-down selections or other means to standardize entries. An OCSO official stated that they are also exploring DHS OIG’s database software, and noted that, if it could be adapted for FEMA’s purposes, it would be a substantial improvement.\nThere are a number of possible quality control measures that could be implemented to help improve the usefulness of FEMA’s data for use in identifying and addressing trends in employee misconduct. At a minimum, based on our analysis of FEMA’s misconduct spreadsheets, the offices could: add additional drop-down fields with standardized entries to make fields easier to summarize; add unique case identifier fields to improve the ability to track cases across the three program offices’ case tracking spreadsheets; develop guidance documents to ensure standardized data entry within each office, including a procedure for quality control checks; or consider adopting the use of database software, which could improve standardization and case tracking across offices.\nThese actions, combined with routine reporting on misconduct trends, could improve upon the initial steps already underway at LER and OCSO and better enable FEMA to manage and report on misconduct information.",
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"In accordance with FEMA’s Administrative Investigations Policy directive, officials from OCSO, LER, and PLB conduct weekly AID Committee meetings to coordinate information on misconduct allegations and investigations. The committee reviews allegations, refers cases for investigation or inquiry, and discusses the status of investigations. According to PLB officials, FEMA’s process for addressing employee misconduct was ad hoc and informal prior to the release of the directive in 2012. For example, officials from key offices did not always meet and share information on a regular basis, as they do now. PLB officials noted that a new FEMA Chief Counsel in 2010 drove changes calling for a formalized directive and clear instructions for managing misconduct. In addition to the weekly AID Committee meetings, LER and PLB officials stated that they meet on a regular basis to discuss disciplinary and adverse actions and ensure that any penalties are consistent and defensible in court. Employee misconduct information is also shared directly with FEMA’s Chief Security Officer and Chief Counsel. For example, OCSO provides the Chief Security Officer with a monthly report of all open investigations. Additionally, PLB provides the Chief Counsel with a monthly report of significant employee litigation, and includes in that report a list of all significant investigations, such as those involving high-level employees as the subject or witness in a case. Within FEMA, these regular meetings and status reports provide officials from key personnel management offices opportunities to communicate and share information about employee misconduct.\nFEMA also provides DHS OIG with information on employee misconduct cases on a regular basis. DHS Management Directive 0810.1 requires that all DHS organizational elements, including FEMA, provide monthly reports to DHS OIG on all open investigations. OCSO complies with this requirement and sends a monthly report that includes updates on investigative activity to DHS OIG. OCSO officials stated that they also provide limited outcome information on a case-by-case basis if DHS OIG specifically requests this information. According to OCSO and DHS OIG officials, DHS OIG does not regularly provide FEMA with updates on ongoing investigations it conducts. However, OCSO officials stated they ask DHS OIG for status updates on these cases frequently, especially if the employee was placed on administrative leave during the investigation.",
"Our review indicates that OCSO has not established effective procedures to ensure that all cases referred to FEMA by DHS OIG are accounted for and subsequently reviewed and addressed. As discussed earlier, FEMA is required to refer certain misconduct allegations to DHS OIG for review before taking any action. OCSO officials told us they follow the guidelines closely and refer all serious misconduct allegations to DHS OIG for initial review. They also noted that DHS OIG declines to investigate and refers most cases back to FEMA for action. As also discussed above, OCSO sends a monthly report of open investigations to DHS OIG. However, while these reports provide awareness of specific investigations, according to OCSO officials, neither office reconciles the reports to a list of referred cases to ensure that all cases are accounted for.\nWe reviewed a non-generalizable random sample of employee misconduct complaints DHS OIG referred to FEMA for review and found that FEMA did not adequately track all referred complaints and therefore could not ensure that all complaints in the sample we selected were reviewed and addressed at the time of our inquiry. Specifically, we tracked a random sample of 20 fiscal year 2016 employee misconduct complaints DHS OIG declined to investigate and referred to FEMA for action. We found that FEMA missed 6 of the 20 complaints during the referral process and had not reviewed them at the time of our inquiry. DHS OIG referred 3 of the 6 complaints to FEMA a year or more prior to our review. As a result of our review, FEMA subsequently took action to review the complaints. The AID Committee recommended that OCSO open inquiries in 3 of the 6 cases to determine whether the allegations were against FEMA employees, assigned 2 cases to LER for further review, and closed 1 case for lack of information. According to an OCSO official, OCSO subsequently determined that none of the allegations in the 3 cases they opened involved FEMA employees and the cases were closed. The remaining 2 cases were open as of April 2017.\nThe results from our sample cannot be generalized to the entire population of referrals from DHS OIG to FEMA; however, they raise questions as to whether there could be additional instances of misconduct complaints that FEMA has not reviewed or addressed. FEMA OCSO officials offered several possible explanations for why the complaints we identified were missed. According to these officials, they sometimes receive large batches of complaints through the FEMA Tipline – some of which may be duplicative. DHS OIG referrals also come in through the Tipline and officials said that it is possible that they may not always accurately identify and record all of the referrals for the AID Committee since some of them are misclassified and some do not involve FEMA employees. Standards for Internal Control in the Federal Government advises management to perform ongoing monitoring – including comparisons and reconciliations or other routine actions. Such activities, either undertaken internally within OCSO or in coordination with DHS OIG, could improve the process. A senior OCSO official agreed that reconciliation procedures would help ensure that all complaints referred by DHS OIG to FEMA are accounted for and noted that FEMA is working with DHS OIG to improve reporting processes and case reconciliation.",
"Employee misconduct can detract from FEMA’s mission and negatively impact public perceptions of the agency, particularly when associated with disaster response efforts. Given the broad scope of FEMA’s mission and the growth and different categories that make up its workforce, an effective process is key to mitigating any negative employee misconduct effects. FEMA has taken actions to manage the employee misconduct investigation and adjudication process. Specifically, FEMA has developed and documented misconduct policies and procedures for most of its employees, and has established procedures for regular internal communication and coordination, as well as information sharing with DHS OIG. However, misconduct policies and procedures for Surge Capacity Force members and outcome options and appeals policies and procedures for Reservists are not documented, and FEMA does not communicate the range of penalties for offenses to all employees. Clear documentation establishing who is responsible for investigating and adjudicating misconduct is especially important given FEMA’s goal of significantly expanding the Surge Capacity Force. Because the Reservist disciplinary action options and appeals currently in practice are not documented, FEMA supervisors and Reservist employees may not be aware of all aspects of the process. Similarly, the lack of communication on the range of penalties for specific offenses to FEMA’s workforce limits management’s ability to set expectations about appropriate conduct in the workplace and to communicate consequences of inappropriate conduct. Clearly documented policies and procedures for all workforce categories and communication about offenses and penalties could help to better prepare management to address misconduct and to mitigate any perceptions that misconduct is handled inconsistently across FEMA’s workforce.\nIn addition, while several FEMA offices collect data on employee misconduct allegations, investigations, and outcomes, limitations related to how the data are collected and managed restrict their usefulness for identifying and addressing trends in employee misconduct. Addressing these limitations by implementing quality control measures could improve FEMA’s ability to track misconduct cases and to identify potential problem areas and opportunities for targeted training. Moreover, developing reconciliation procedures to track cases referred from DHS OIG to FEMA could help reduce the risk that FEMA does not address all misconduct complaints.",
"In order to improve employee misconduct policies and procedures, the Secretary of Homeland Security should direct the FEMA Administrator to take the following three actions: document policies and procedures to address potential Surge document Reservist disciplinary options and appeals policies and procedures that are currently in practice at the agency; and communicate the range of penalties for specific misconduct offenses to all employees and supervisors.\nIn order to better identify and address trends in employee misconduct, the Secretary of Homeland Security should direct the FEMA Administrator to take the following actions: improve the quality and usefulness of the misconduct data it collects by implementing quality control measures, such as adding additional drop-down fields with standardized entries, adding unique case identifier fields, developing documented guidance for data entry, or considering the adoption of database software; and once the quality of the data is improved, conduct routine reporting on employee misconduct trends.\nIn order to ensure that all allegations of employee misconduct referred by DHS OIG are reviewed and addressed, the Secretary of Homeland Security should direct the FEMA Administrator to develop reconciliation procedures to consistently track referred cases.",
"We provided a draft of this report to DHS and FEMA for review and comment. DHS provided written comments which are reproduced in appendix II. In its comments, DHS concurred with our recommendations and described actions planned to address them. FEMA and DHS OIG also provided technical comments, which we incorporated as appropriate.\nWith regard to our first recommendation, that FEMA document policies and procedures to address potential Surge Capacity Force misconduct, DHS stated that FEMA is developing a Human Capital plan for the Surge Capacity Force and will include policies and procedures relating to potential misconduct. DHS noted that these policies and procedures will take into account FEMA’s limited authorities over Surge Capacity personnel who are not FEMA employees. DHS estimated that this effort would be completed by June 30, 2018. This action, if fully implemented, should address the intent of the recommendation.\nWith regard to our second recommendation, that FEMA document Reservist policies and procedures related to disciplinary options and appeals currently in practice at the agency, DHS stated that FEMA will update FEMA Directive 010-06, FEMA Reservist Program, to include procedures for disciplinary actions and appeals current in practice at the agency. DHS estimated that this effort would be completed by December 31, 2017. This action, if fully implemented, should address the intent of the recommendation.\nWith regard to our third recommendation, that FEMA communicate the range of penalties for specific misconduct offenses to all employees and supervisors, DHS stated that FEMA’s OCCHCO is currently drafting a table of offenses and penalties and will take steps to communicate those penalties to employees throughout the agency once the table is finalized. DHS estimated that this effort would be completed by December 31, 2017. This action, if fully implemented, should address the intent of the recommendation.\nWith regard to our fourth and fifth recommendations, that FEMA improve the quality and usefulness of its misconduct data by implementing quality control measures, and, once the quality of the data is improved, conduct routine reporting on employee misconduct trends, DHS stated that FEMA’s OCCHCO is working with the DHS OIG to develop a new case management system. The system will use drop-down fields with standardized entries and provide tools for trend analysis. Once the new system is implemented, DHS stated that FEMA will be able to routinely identify and address emerging trends of misconduct. DHS estimated that these efforts would be completed by March 31, 2018. These actions, if fully implemented, should address the intent of the recommendations.\nWith regard to our sixth recommendation, for FEMA to develop reconciliation procedures to consistently track referred cases, DHS stated that once the new case management system described above is established and fully operational, FEMA will be able to upload all DHS OIG referrals into a single, agency-wide database. Additionally, FEMA will work with DHS OIG to establish processes and procedures that will improve reconciliation of case data. DHS estimated that these efforts would be completed by March 31, 2018. These actions, if fully implemented, should address the intent of the recommendation.\nWe are sending copies of this report to the Secretary of Homeland Security and interested congressional committees.\nIf you or your staff have any questions about this report, please contact me at (404) 679-1875 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.",
"The objectives of this report were to determine (1) the extent to which the Federal Emergency Management Agency (FEMA) has developed policies and procedures for addressing employee misconduct; (2) what data are available on FEMA employee misconduct cases and their outcomes, and the extent to which FEMA uses these data to identify and address trends in employee misconduct; and (3) the extent to which information regarding misconduct cases is shared within FEMA’s personnel management offices and with the Department of Homeland Security Office of the Inspector General (DHS OIG).\nTo address objective one, we reviewed, where available, FEMA’s policies and procedures for reporting, investigating, and adjudicating allegations of misconduct across all of the agency’s workforce categories, including: Title 5 employees, Cadre of On-Call Response/Recovery Employees (CORE), Reservists, Surge Capacity Force members, and FEMA Corps members. Specifically, we reviewed investigation and discipline directives and manuals, as well as program directives and manuals, and interagency agreements related to FEMA Corps, to determine the extent to which FEMA has developed misconduct policies and procedures. At FEMA headquarters we interviewed senior officials from the Office of the Chief Security Officer (OCSO), Office of the Chief Component Human Capital Officer, Labor and Employee Relations Branch (LER), and Office of the Chief Counsel, Personnel Law Branch (PLB). Additionally, we interviewed the Surge Capacity Force and FEMA Corps Coordinators, as well as AmeriCorps officials, to discuss Surge Capacity Force and FEMA Corps misconduct policies and procedures. We interviewed cadre management officials from FEMA’s three largest cadres - Public Assistance, Individual Assistance, and Logistics - to discuss Reservist misconduct policies and procedures. We also spoke with union representatives from two FEMA bargaining units to gain their perspective on how misconduct policies and procedures are implemented for Title 5 and CORE employees.\nAdditionally, we interviewed a non-probability sample of supervisors and managers in three FEMA regions. Specifically, we interviewed three FEMA Regional Administrators or their designated representatives; five Federal Coordinating Officers (FCO), and 11 Public Assistance, Individual Assistance, and Logistics Branch Chiefs from FEMA Regions 2,4, and 6. We selected these three regions based on factors such as geographic dispersion and regions that typically respond to different types of disasters, as well as those with the highest number of misconduct allegations reported to OCSO from January 2014 through September 30, 2016. The results of these interviews are not generalizable to all 10 of FEMA’s regions or all cadres; however, they provided us with both regional and Joint Field Office perspectives on policies and procedures for addressing employee misconduct and supervisory misconduct training.\nTo address objective two, we reviewed and analyzed misconduct case tracking spreadsheets maintained by OCSO, LER, and PLB. We were unable to identify and account for possible duplication of the same complaints in the different spreadsheets. As such, we focused our analysis on individual spreadsheets rather than on aggregating information across all spreadsheets. Specifically, in order to summarize alleged misconduct offenses recorded in the OCSO case tracking spreadsheet, we first reviewed all of the data available on complaints which were received from January 1, 2014 through September 30, 2016. Next, we created eight offense category definitions based on prior GAO reports, discussions with stakeholders, and our review of the summary of allegations and offense fields. Finally, we assigned alleged offenses from the OCSO spreadsheet to the categories. We also attempted to review and summarize the subjects included in each complaint by employee type. However, our ability to do so was limited because that information was not consistently included in the OCSO spreadsheet. In order to summarize final disciplinary and adverse actions reviewed by PLB and recorded in the PLB case tracking spreadsheet, we reviewed all of the data available from January 2, 2014 through September 28, 2016. Next, we selected actions which were categorized as related to employee misconduct and excluded proposed actions. Finally, we summarized final actions by the action type and employee type using existing spreadsheet fields. We also reviewed information on past employee misconduct outcomes and disciplinary actions provided by LER.\nTo assess the reliability of these data, we reviewed the three spreadsheets for any gaps and inconsistencies. We also interviewed agency officials from each office about how data are entered into the spreadsheets, who enters the data, whether they have guidance documents for data entry, and the process of assigning complaints to the offices. We identified limitations which we discuss in the report, but overall found the data in the spreadsheets sufficiently reliable to provide some general information on the nature and characteristics of employee misconduct complaints. In order to determine the extent to which FEMA currently uses these data to identify and address trends in employee misconduct, we interviewed OCSO, LER, and PLB officials. Additionally, we included related questions during the interviews with supervisors and managers in FEMA Regions 2, 4, and 6. Although information obtained from these interviews, as mentioned above, is not generalizable to all 10 regions or all FEMA cadres, it provided insights into how employee misconduct information is shared with FEMA field supervisors.\nTo address objective three, we first reviewed FEMA and DHS OIG employee misconduct directives and manuals to identify any requirements for coordination among internal FEMA offices and with DHS OIG. Next, we interviewed senior OCSO, LER, PLB, and DHS OIG officials to determine the extent to which they coordinate and communicate misconduct information and to obtain their perspectives on information sharing related to misconduct investigations and outcomes. We analyzed documents, including case tracking spreadsheets and reports, to determine what and how frequently employee misconduct information is shared within FEMA and with DHS OIG. Finally, we used fiscal year 2016 data from DHS OIG’s Enforcement Data System to randomly select a non-generalizable sample of 20 FEMA employee misconduct complaints which were referred from DHS OIG to FEMA. We compared these complaints to the OSCO case tracking spreadsheet provided by FEMA. For complaints we were unable to locate, we requested that OCSO provide us with their statuses, including whether or not OCSO had taken action to review or investigate the complaints. Additionally, we asked OCSO to coordinate with LER and PLB and obtain information on the outcomes of all 20 complaints. While not generalizable to all complaints referred from DHS OIG to FEMA, the results of our review provided insight about FEMA’s procedures for tracking referred complaints and ensuring that all allegations of misconduct are addressed. For all three objectives, we reviewed the documents and information we gathered and evaluated them against Standards for Internal Control in the Federal Government.\nWe conducted this performance audit from June 2016 to July 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
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"",
"",
"In addition to the contact named above, Ben Atwater (Assistant Director), Sarah Turpin (Analyst-in-Charge), David Alexander, Dominick Dale, Eric Hauswirth, Rianna Jansen, Stephen Komadina, Kristiana D. Moore, and Heidi Nielson made key contributions to this report."
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{
"question": [
"How effective is the data that FEMA collects on their misconduct cases?",
"How does the number of disciplinary actions compare to the number of complaints of misconduct using data from 2014 through 2016?",
"Why does FEMA need to improve their misconduct data collection?",
"How could FEMA improve their data collection?",
"How does FEMA ensure that cases are reviewed and addressed?",
"What did GAO find, which raised concerns about FEMA’s current procedures to handle complaints?",
"What did FEMA do to address complaints after GAO's review?",
"What did officials determine in these five cases?",
"What concerns does GAO's review raise about FEMA?",
"What can be done to ensure FEMA accounts for all complaints?",
"What are the responsibilities of FEMA?",
"What kinds of workers are employed by FEMA, and how many are there?",
"Why is it in FEMA's best interest to fix its handling of employee misconduct incidents?",
"What was GAO asked to do at FEMA?",
"What did GAO examine in their report about FEMA?",
"What methods did GAO use to review FEMA?",
"Why did GAO analyze a random sample of complaints referred to FEMA?"
],
"summary": [
"FEMA records data on misconduct cases and their outcomes; however, aspects of this data limit their usefulness for identifying and addressing trends.",
"GAO reviewed misconduct complaints recorded by FEMA's Office of the Chief Security Officer (OCSO) from January 2014 through September 30, 2016, and identified 595 complaints involving 799 alleged offenses, the most common of which were integrity and ethics violations. FEMA reported 546 disciplinary actions related to misconduct from calendar year 2014 through 2016.",
"However, limited standardization of data fields and entries within fields, limited use of unique case identifiers, and a lack of documented guidance on data entry across all three offices restricts the data's usefulness for identifying and addressing trends in employee misconduct.",
"Improved quality control measures could help the agency use the data to better identify potential problem areas and opportunities for training.",
"FEMA shares misconduct case information internally and with the Department of Homeland Security Office of Inspector General (DHS OIG) on a regular basis; however, FEMA does not have reconciliation procedures in place to track DHS OIG referred cases to ensure that they are reviewed and addressed.",
"GAO reviewed a random sample of 20 cases DHS OIG referred to FEMA in fiscal year 2016 and found that FEMA missed 6 of the 20 complaints during the referral process and had not reviewed them at the time of GAO's inquiry.",
"As a result of GAO's review, FEMA took action to review the complaints and opened inquiries in 5 of the 6 cases (1 case was closed for lack of information).",
"In 3 of these cases, officials determined that the complaints did not involve FEMA employees. The 2 remaining cases were open as of April 2017.",
"While the results from this review are not generalizable to the entire population of referrals from DHS OIG to FEMA, they raise questions as to whether there could be additional instances of misconduct complaints that FEMA has not reviewed or addressed.",
"Procedures to ensure reconciliation of referred cases across FEMA and DHS OIG records could help ensure that FEMA accounts for all complaints.",
"FEMA is responsible for coordinating government-wide efforts in preparing for, responding to, and recovering from natural or man-made disasters, including acts of terror.",
"The agency relies on permanent and disaster-related temporary employees and has a total workforce of over 22,000.",
"Employee misconduct incidents can detract from FEMA's mission, damage the agency's reputation, and hamper its ability to respond to disasters and maintain public trust.",
"GAO was asked to review employee misconduct at FEMA.",
"This report examines: (1) the extent to which FEMA developed policies and procedures for addressing misconduct; (2) available data on FEMA misconduct cases and the extent to which FEMA uses the data to identify and address trends; and (3) the extent that misconduct cases are shared within FEMA and with DHS OIG.",
"GAO reviewed FEMA procedures, analyzed misconduct data, and interviewed officials from FEMA HQ and three regions (selected based on geographic dispersion and number of misconduct allegations).",
"GAO also analyzed a random, non-generalizable sample of 20 complaints referred from DHS OIG to FEMA to determine whether they were addressed."
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CRS_R43161
|
{
"title": [
"",
"Introduction",
"H-2A Agricultural Worker Visa",
"Legislative Activity in the 113th Congress",
"H.R. 1773",
"S. 744"
],
"paragraphs": [
"",
"Foreign temporary workers, also known as guest workers, have a long history of performing agricultural labor in the United States. In the past, agricultural guest worker programs were established in the United States during times of war. During World War I, for example, tens of thousands of Mexican workers performed mainly agricultural labor as part of a temporary worker program. The controversial Bracero program, which began during World War II and lasted until 1964, brought several million Mexican agricultural workers into the United States. Today, the United States imports agricultural guest workers in much smaller numbers as part of a temporary worker program known as the H-2A visa program.\nThe H-2A program, and agricultural guest worker programs more generally, are controversial. Some view them as a necessary source of legal workers and call for their reform and expansion. Others view the H-2A program, in its current form, as exploitative and argue that it must be thoroughly overhauled if it is to be allowed to continue operating. These differing views are reflected in tensions in agricultural and other guest worker programs between providing protections to U.S. and foreign workers on the one hand and making the programs responsive to legitimate employer needs on the other.\nOver the past 15 years, a variety of legislative proposals have been put forward concerning agricultural guest workers. Some proposals would have reformed the H-2A program, while others would have established new guest worker programs for agricultural workers. Some of these proposals have been introduced in Congress as stand-alone bills, while others have been part of larger comprehensive immigration reform measures. In the 113 th Congress, bills that would create new agricultural guest worker programs have been acted on in the House and the Senate.",
"The Immigration and Nationality Act (INA) of 1952, as amended, enumerates categories of aliens, known as nonimmigrants, who are admitted to the United States for a temporary period of time and a specific purpose. Nonimmigrant visa categories are identified by letters and numbers, based on the sections of the INA that authorize them. Among the major nonimmigrant visa categories is the \"H\" category for temporary workers. Included in this category is the H-2A visa for temporary agricultural workers. The H-2A visa program is administered by the Employment and Training Administration (ETA) of the U.S. Department of Labor (DOL) and U.S. Citizenship and Immigration Services (USCIS) of the U.S. Department of Homeland Security (DHS). DOL's Wage and Hour Division (WHD) also has certain concurrent enforcement responsibilities. The H-2A program currently operates under regulations issued by DHS in 2008 and by DOL in 2010, in addition to the INA provisions.\nThe H-2A program allows for the temporary admission of foreign workers to the United States to perform agricultural labor or services of a seasonal or temporary nature, provided that U.S. workers are not available. Under current regulations, participation in the H-2A program is limited to designated countries. In general, for purposes of the H-2A program, work is of a temporary nature where the employer's need for the worker will last no longer than one year. Thus, an approved H-2A visa petition is generally valid for an initial period of up to one year. An employer can apply to extend an H-2A worker's stay in increments of up to one year, but an alien's total period of stay as an H-2A worker may not exceed three consecutive years. An alien who has spent three years in the United States in H-2A status may not seek an extension of stay or be readmitted to the United States as an H-2A worker until he or she has been outside the country for three months.\nBringing workers into the United States under the H-2A program is a multi-agency process involving DOL, DHS, and the Department of State (DOS). An interested employer must first apply to DOL for a certification that (1) there are not sufficient U.S. workers who are qualified and available to perform the work; and (2) the employment of foreign workers will not adversely affect the wages and working conditions of U.S. workers who are similarly employed. Before filing a labor certification application, prospective H-2A employers must attempt to recruit U.S. workers and must cooperate with DOL-funded state employment service agencies (also known as state workforce agencies, or SWAs) in local, intrastate, and interstate recruitment efforts. Under the H-2A program's \"fifty percent rule,\" employers are required to hire any qualified U.S. worker who applies for a position during the first half of the work contract under which the H-2A workers who are in the job are employed.\nAs part of the labor certification process, H-2A employers must offer and provide required wages and benefits to H-2A workers and workers in \"corresponding employment,\" which is defined in current regulations as employment of non-H-2A workers by an employer who has an approved H-2A labor certification in any work included in the job order or in any agricultural work performed by the H-2A workers. H-2A employers must pay their workers the highest of several wage rates: the federal or applicable state minimum wage, the prevailing wage rate, the adverse effect wage rate (AEWR), or the agreed-upon collective bargaining wage. They must provide a \"three-fourths guarantee\"; that is, they must guarantee to offer workers employment for at least three-fourths of the contract period. H-2A employers also must provide non-commuting workers with housing at no cost, must provide or pay for certain worker transportation, and must provide other specified benefits, including workers' compensation insurance. The INA does not require H-2A employers to provide health insurance coverage. DOL is authorized under the INA to take such actions as necessary to ensure employer compliance with the terms and conditions of H-2A employment.\nAfter receiving labor certification, a prospective H-2A employer can submit an application, known as a petition, to DHS to bring in foreign workers. If the petition is approved, foreign workers who are abroad can then go to a U.S. embassy or consulate to apply for an H-2A nonimmigrant visa from the Department of State. If the visa application is approved, the worker is issued a visa that he or she can use to apply for admission to the United States at a port of entry. H-2A workers can be accompanied by eligible spouses and children, who are issued H-4 visas.\nThe H-2A program is not subject to a statutory numerical limit and has grown significantly over the last 20 years, although it remains quite small relative to total hired farm employment. One way to measure the H-2A program's growth is to consider changes in the number of H-2A visas issued annually by DOS. In FY1992, DOS issued 6,445 visas. In FY2012, according to preliminary DOS data, 65,345 H-2A visas were issued.",
"Over the years, both growers and labor advocates have criticized the H-2A program. Growers complain that the program is administratively cumbersome, expensive, and ineffective in meeting their labor needs. Labor advocates argue that it provides too few protections for workers.\nIn the late 1990s, representatives of growers and workers reached agreement on legislation to address the foreign agricultural worker issue. The legislation became known as the Agricultural Job Opportunities, Benefits, and Security Act, or AgJOBS. It combined provisions to reform the H-2A program with provisions to grant lawful permanent resident (LPR) status to eligible farm workers though a two-stage process. AgJOBS legislation became the basis of a bipartisan compromise on foreign agricultural workers in the 106 th Congress, but that compromise fell apart at the end of that Congress after the 2000 election of President George W. Bush. More recently, AgJOBS titles were included in comprehensive immigration reform bills considered in the 109 th and 110 th Congresses. None of these bills were enacted.\nIn the 113 th Congress, the House Judiciary Committee and the full Senate have acted on separate bills that address foreign agricultural workers. Both bills, among other provisions, would establish new temporary agricultural worker visas. The House Judiciary Committee ordered reported the Agricultural Guest Worker Act, or the AG Act ( H.R. 1773 ), which would create a new H-2C nonimmigrant agricultural worker visa, and the Senate passed a comprehensive immigration reform bill, the Border Security, Economic Opportunity, and Immigration Modernization Act ( S. 744 ), which would establish new W-3 and W-4 nonimmigrant visas for agricultural workers.\nWhile the new agricultural worker visas proposed in the House and the Senate measures are different from one another, they share some similarities that distinguish them from both the existing H-2A visa and the reforms to the H-2A visa proposed in AgJOBS legislation considered in past Congresses. Both the House and the Senate bills would sunset the H-2A visa program. Among the new features of the House-proposed and the Senate-proposed replacement agricultural worker visa programs, these visas, unlike the H-2A visa, would not be limited to temporary or seasonal agricultural work and would not require prospective employers to apply to the Department of Labor for labor certification or to meet all existing certification requirements. Both programs also would provide for at-will employment by agricultural workers. In addition, both the House and the Senate agricultural worker proposals include provisions to enable certain unauthorized aliens to obtain legal temporary or permanent immigration status.",
"H.R. 1773 , as ordered reported by the House Judiciary Committee, would establish a new H-2C agricultural worker visa. An employer seeking to employ H-2C workers would be required to recruit U.S. workers by submitting the job opportunity to the local state workforce agency for posting on the agency website for 30 days. The employer would have to offer the job to any qualified U.S. worker who applies before the first day that an H-2C worker begins work for the employer.\nTo import an H-2C worker, the employer would file a petition with the U.S. Department of Agriculture (USDA) containing specified attestations concerning U.S. worker recruitment, worker benefits and wages, and other issues. Among these attestations, the employer would have to assure that he or she will provide the same minimum benefits, wages, and working conditions to all workers employed in jobs for which the employer is seeking to hire H-2C workers and to other temporary workers in the same occupation at the place of employment. With respect to wages, an employer petitioning for H-2C workers would have to pay the greater of the prevailing wage rate or the applicable federal, state, or local minimum wage. A petitioning employer also would have to guarantee to offer workers employment for at least 50% of the anticipated employment period. Under H.R. 1773 , H-2C employers would not be required to provide housing to workers or to cover their transportation costs.\nAn H-2C worker employed in a job that is temporary or seasonal in nature would be admitted to the United States for an employment period of up to 18 months. An H-2C worker employed in a position that is not temporary or seasonal would be admitted for an employment period of up to 36 months. An H-2C worker who completes a period of employment and is interested in performing additional work would have up to 30 days to find another offer of employment. The worker's period of stay could be extended to perform employment for a petitioning employer (or to perform at-will employment, as discussed later in this section). If an employer wants to employ an H–2C worker who is lawfully present in the United States, the employer would file a petition requesting an extension of the alien's stay and, if applicable, a change in the alien's employment. If the worker is lawfully present on the date the petition is filed, he or she could begin the new period of employment immediately.\nH-2C workers would be subject to maximum stay limits. The maximum continuous period of stay for an H-2C worker employed in a job that is temporary or seasonal would be 18 months. For an H-2C worker employed in a job that is not temporary or seasonal in nature, the initial maximum continuous period of stay would be 36 months and subsequent maximum continuous periods of stay would be 18 months. After reaching the applicable maximum stay limit, an H-2C worker would have to be outside the United States for up to three months before the worker could again be admitted to the United States in H-2C status.\nThe H-2C program would have a numerical cap of 500,000, subject to adjustment by USDA. The cap would not apply to an alien who performs 575 hours of agricultural labor in the United States during the two-year period beginning on the bill's date of enactment.\nH.R. 1773 would establish a trust fund \"for the purpose of providing a monetary incentive for H-2C workers to return to their country of origin upon expiration of their visas.\" Deposits into the trust fund would consist of withheld wages (in the case of H–2C workers employed in temporary or seasonal jobs) and employer payments (in the case of H-2C workers employed in other jobs). H-2C workers would apply for payment of the funds at a U.S. embassy or consulate in their home country. H-2C workers could not be accompanied to the United States by their spouses and children.\nH.R. 1773 would further allow for at-will employment by H-2C workers for employers who are designated as \"registered agricultural employers.\" However, an H-2C worker could only perform such at-will employment if the worker is lawfully present in the United States as an H-2C worker and has completed a period of employment for an H-2C petitioning employer. USDA would be tasked with establishing an application process to designate registered agricultural employers who meet the requirements specified in the bill. These employers would be subject to the same attestations, trust fund requirements, and minimum wage and benefit obligations as employers submitting H-2C petitions, except for the employment guarantee. A designation as a registered agricultural employer would be valid for three years and could be extended for additional three-year terms.\nUSDA would be responsible for conducting investigations and audits to ensure compliance with the requirements of the H–2C program, including the at-will employment provisions. DHS would be directed to remove any H-2C worker from the United States who violates any term or condition of H-2C status.\nH.R. 1773 would permit aliens who were unlawfully present in the United States on April 25, 2013, the day before the bill's date of introduction, to obtain legal temporary status as H-2C agricultural workers. Separate provisions would enable aliens who were present in the United States on April 25, 2013, and who had performed not fewer than 575 hours of agricultural labor in the country during the two-year period ending on the date of the bill's enactment, to continue to perform agricultural labor for an unspecified period of time.",
"S. 744 , as passed by the Senate, would create a W-3 visa for contract agricultural workers and a W-4 visa for at-will agricultural workers as part of a new W nonimmigrant visa category for lower-skilled workers. Prospective W-3 or W-4 employers would need to register as \"designated agricultural employers\" (DAEs) with USDA, as specified in the bill. A registration would be valid for three years and could be renewed for another three years.\nAn employer interested in employing a W-3 or W-4 worker would have to submit the job opportunity to the local state workforce agency and authorize its posting on a DOL job registry for 45 days. The employer would be required to offer the job to any equally or better qualified U.S. worker who applies during this period.\nTo import a W-3 or W-4 worker, a DAE would submit a petition to DHS containing specified attestations, including attestations about contracts, U.S. worker recruitment, and compliance with other employer requirements. Among the latter requirements are guaranteeing to offer employment to W-3 workers for three-quarters of the employment period and providing W-3 and W-4 workers with housing or a housing allowance and transportation costs, as specified. Required wages would be defined based on six standard agricultural occupational classifications, with certain wages specified and others to be determined by USDA, in consultation with DOL. DAEs seeking to hire U.S. workers would have to offer these workers not less than the same benefits, wages, and working conditions as W-3 and W-4 workers, except that they would not be required to provide U.S. workers with housing or a housing allowance. S. 744 identifies five Special Procedures Industries and provides for the issuance of separate regulations by USDA, DHS, or DOL regarding applicable housing, pay, and application procedures for these industries.\nA W-3 or W-4 worker would be admitted to the United States for a period of three years. This period of admission could be extended for one additional three-year period, after which the worker would need to be outside the United States for three months before he or she could be readmitted in W-3 or W-4 status. After a W-3 worker completes a contract with a DAE, the worker could seek subsequent employment with another DAE. A W-4 worker could seek at-will agricultural employment with a DAE at any time. A W-3 or W-4 worker would lose nonimmigrant status and would have to leave the country if he or she is unemployed for a period of more than 60 days, unless granted a waiver by DHS.\nW-3 and W-4 visas would be capped at 112,333 total visas per year during the first five years, with provisions for USDA, in consultation with DOL, to adjust these caps and to set visa limits for subsequent years. W-3 and W-4 workers would not be allowed to bring their spouses and children with them to the United States.\nW-3 and W-4 workers would be covered by all applicable labor and employment laws, including the Migrant and Seasonal Agricultural Workers Protection Act. DOL would be authorized to establish procedures to investigate complaints against employers of W-3 or W-4 workers and to conduct compliance investigations under any labor law. USDA would be required to monitor W-3 and W-4 workers using the electronic employment eligibility verification system that S. 744 would separately establish and a new electronic monitoring system that DHS would be tasked with developing, to monitor the presence and employment of W workers.\nSeparate from the provisions on W-3 and W-4 visas, S. 744 would establish a two-stage agricultural worker legalization program, through which farm workers who had performed a requisite amount of agricultural work in 2011 and 2012 and who satisfy other requirements could obtain a temporary resident status, termed \"blue card\" status. After meeting additional agricultural work and other requirements, these workers could apply for LPR status."
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"question": [
"What agencies are involved in bringing in H-2A workers?",
"Why must employers apply to the DOL for a certification to bring in H-2A workers?",
"What must employers do besides obtain a certification in order to hire H-2A workers?",
"Why has the H-2A program been criticized?",
"What is replacing the H-2A visa?",
"What bills support this new replacement?",
"Why are there separate bills for a replacement instead of just one?",
"How is this new replacement different from the H-2A visa?",
"What sort of reform does S.744 seek to enact?",
"What kinds of workers would be accounted for under S.744?",
"How does S.744 incorporate the current US workforce?",
"What would an employer need to do in order to import a W-3 or W-4 worker?",
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],
"summary": [
"Bringing in H-2A workers is a multi-agency process involving the U.S. Department of Labor (DOL), the U.S. Department of Homeland Security (DHS), and the U.S. Department of State (DOS).",
"As a first step, interested employers must apply to DOL for a certification that (1) there are not sufficient U.S. workers who are qualified and available to perform the work; and (2) the employment of foreign workers will not adversely affect the wages and working conditions of similarly employed U.S. workers.",
"Among the H-2A labor certification requirements, employers must pay the highest of several wage rates and must provide workers with housing, transportation, and other benefits.",
"Over the years, both growers and labor advocates have criticized the program. Growers complain that it is administratively cumbersome, expensive, and ineffective in meeting their labor needs. Labor advocates argue that the H-2A program provides too few protections for workers.",
"The House Judiciary Committee and the Senate have acted on separate bills that would establish new temporary agricultural worker visas to replace the H-2A visa.",
"The House Judiciary Committee ordered reported the Agricultural Guest Worker Act (H.R. 1773) and the Senate passed the Border Security, Economic Opportunity, and Immigration Modernization Act (S. 744).",
"While the new visa programs proposed in these bills are different, they share some similarities that distinguish them from the H-2A program.",
"For example, unlike the H-2A visa, the new visas would not be limited to temporary or seasonal work, would not require prospective employers to apply to DOL for labor certification or to meet all existing certification requirements, and would provide for at-will employment by agricultural workers.",
"S. 744, a comprehensive immigration reform bill that addresses a wide range of immigration issues, would create a W-3 visa for contract agricultural workers and a W-4 visa for at-will agricultural workers.",
"S. 744, a comprehensive immigration reform bill that addresses a wide range of immigration issues, would create a W-3 visa for contract agricultural workers and a W-4 visa for at-will agricultural workers.",
"A prospective W-3 or W-4 employer would have to engage in U.S. worker recruitment.",
"To import a W-3 or W-4 worker, an employer would submit a petition to DHS containing specified attestations, including attestations about contracts, U.S. worker recruitment, and compliance with other employer requirements.",
"Required wages would be defined based on six standard agricultural occupational classifications, with certain wages specified and others to be determined by USDA, in consultation with DOL.",
"W-3 and W-4 visas would be capped initially at 112,333 total visas per year, with provisions for USDA, in consultation with DOL, to adjust these caps and to set visa limits for later years."
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|
GAO_GAO-17-215
|
{
"title": [
"Background",
"AOUSC Is Able to Identify Security Concerns across the Courthouse Portfolio, While the Marshals Service and FPS Are Able to Identify Concerns at the Individual Building Level",
"AOUSC Develops Portfolio-Wide Information About Security Concerns",
"Marshals Service and FPS Identify Building-Specific Security Concerns That Cannot Readily Be Tracked across the Portfolio of Courthouses",
"CSP Shows Potential for Enhancing Security at Federal Courthouses, but Greater Transparency and Collaboration Could Improve the Program",
"Officials at CSP Locations Cite Improvements in Security as a Result of the Program",
"Selection Process for CSP Projects Has Evolved since Inception, with Some Improvements to Transparency and Collaboration",
"Further Opportunities to Improve Transparency and Collaboration of the CSP",
"Agencies Can Take Additional Actions to Address Previous Issues and Improve Coordination and Information Sharing",
"Previously Identified Issues Continue to Impair a Comprehensive Approach to Courthouse Security",
"Effective Execution of Roles and Responsibilities",
"Comprehensive Gathering and Sharing of Information on Security Concerns",
"Accountability for Security at Individual Courthouses",
"Federal Stakeholders Do Not Have an Effective Structure for Addressing Security Issues",
"Conclusions",
"Recommendations",
"Agency Comments",
"Appendix I: Objectives, Scope, and Methodology",
"Appendix II: Comments from the Department of Homeland Security",
"Appendix III: Comments from the General Services Administration",
"Appendix IV: Comments from the Administrative Office of the U.S. Courts",
"Appendix V: GAO Contact and Staff Acknowledgments",
"GAO Contact",
"Staff Acknowledgments"
],
"paragraphs": [
"Security at federal courthouses is complex and involves multiple federal stakeholders with different roles and responsibilities (see fig. 1).\nA 1997 memorandum of agreement (MOA) between these entities defines the roles and responsibilities for each of these stakeholders in protecting federal courthouses and the federal framework for securing courthouses. The MOA recognized areas in which stakeholders are to coordinate their security efforts and established an informal collaboration and oversight mechanism at the regional level.\nThe following federal stakeholders receive funding for court security activities in different ways:\nFPS is funded by the security fees it collects from agencies that occupy GSA facilities for the security services FPS provides and does not receive a direct appropriation.\nThe judiciary receives a court security appropriation. The amount for fiscal year 2016 was approximately $538 million. AOUSC uses part of this appropriation to pay for FPS fees and transfers part to the Marshals Service for specific judiciary related costs or security equipment.\nIn addition to the funds received from AOUSC, the Marshals Service receives direct appropriations for construction in space controlled, occupied, or used by the Marshals Service for prisoner holding and related support (for example, vehicle sally ports and prisoner elevators).\nInstead of receiving direct appropriations, GSA administers the Federal Buildings Fund, which is the primary source of funds for operating federal space held under the custody and control of GSA and the capital costs associated with the space. The Federal Buildings Fund is funded primarily by income from rental charges assessed to tenant agencies occupying GSA-held and -leased space that approximate commercial rates for comparable space and services. Congress exercises control over the Federal Buildings Fund through the appropriations process that sets annual limits— called obligational authority—on how much of the fund can be obligated for various activities. GSA, as an executive branch agency, requests obligational authority from Congress as part of the annual President’s Budget Request. GSA’s total obligational authority for fiscal year 2016 was approximately $10.2 billion.\nThe Interagency Security Committee (ISC) addresses the quality and effectiveness of physical security for federal facilities, including courthouses. The ISC sets out the risk management process for federal facilities in the ISC’s risk management standard. Pursuant to this standard, FPS conducts facility security assessments, which consist of identifying and assessing threats to, and vulnerabilities of, a facility as well as identifying countermeasures (e.g., security equipment) best suited to mitigate vulnerabilities at the facility. These assessments generally focus on building systems and perimeter and entry issues.\nThe ISC risk management standard also lays out standards for establishing facility security committees, which consist of a representative from each of the tenant agencies in the facility, and which are responsible for addressing security issues identified in the facility security assessment and approving the implementation of recommended security countermeasures. These standards include the following: facility security committees are established when two or more federal tenants with funding authority occupy a facility, findings from the FPS facility security assessments are to be presented at facility security committee meetings, and meeting minutes must document each vote to approve or disapprove a recommended countermeasure, and if agenda decisions are disapproved, the meeting minutes must document the chosen risk management strategy.\nAs new threats to federal facilities have emerged, the federal government has released additional directives related to the security of federal facilities, including courthouses. For example:\nThe National Strategy for the Physical Protection of Critical Infrastructures and Key Assets. Following the attacks on September 11, 2001, the White House developed this National Strategy to ensure that initial efforts to protect key assets were sustained over the long term. Courthouse security falls under the National Strategy which outlines the guiding principles that underpin national efforts to secure infrastructure and assets vital to public health and safety, national security, governance, economy, and public confidence.\nThe National Infrastructure Protection Plan. DHS developed this plan to guide the national effort to manage risks to critical infrastructure.",
"",
"Identifying security concerns at federal courthouses is critical to managing the risk to those courthouses. We previously compiled a risk management framework applicable to protecting federal facilities that defined risk management in general as managing across a portfolio. We have also issued other reports in recent years that discuss the importance of understanding risk comprehensively (rather than only on an individual building basis) in order to effectively protect federal facilities consistent with that definition. AOUSC collects security information in a way that provides a picture of portfolio-wide concerns and can be used to comprehensively understand security concerns across the portfolio of federal courthouses. AOUSC assesses and scores courthouses on the security features of court operations, in accordance with the U.S. Courts Design Guide as part of their long-range capital-planning process, according to AOUSC officials. Through this process, AOUSC develops security scores for courthouses that range from 0 to 100, with 100 being an ideal courthouse that meets all assessed security factors, as determined by the judiciary. These scores allow the judiciary to compare security needs across courthouses and understand the relative security deficiencies of one courthouse compared to others. AOUSC has three categories to describe these security scores: below 60 is poor, 60–79 is marginal to acceptable, and 80–100 is good.\nAOUSC’s scores reflect different aspects of courthouse security, such as whether the courthouse has separate pathways for judicial personnel, prisoners, jury members, and the public; secured parking for judges; vehicle sally ports for prisoner transport; an adequate number of courtroom holding cells; and physical barriers to block unwarranted vehicular access. While AOUSC’s security scores consider some aspects of security on the perimeter and in space where prisoners are held, detailed assessments of these aspects of security are the responsibility of FPS and the Marshals Service, consistent with their missions.",
"The Marshals Service and FPS also identify security concerns at individual courthouse facilities, focused on their respective missions, but unlike AOUSC, they do not currently collect this information in a way that it can be readily compared across the portfolio of courthouses to gauge the overall concerns with these buildings. As discussed below, the Marshals Service identifies security concerns through two kinds of project requests to address security concerns. The Marshals Service is taking steps to improve the information it collects; however, these steps may not enable it to understand concerns portfolio-wide as defined by our risk management framework, because of the reasons discussed below.\nMarshals Service officials told us that previously, they had no means to prioritize among project requests to correct deficiencies in judicial space, such as those in courtrooms. The Marshals Service is piloting an initiative to create a means of prioritizing these requests into three levels of priority. However, Marshals Service officials told us that they still will not be able to compare similar concerns from one courthouse to another once the improvements to the process are made, because similar concerns would fall into the same priority level, and the initiative does not have a method for prioritizing within the same priority level.\nFor projects to correct deficiencies in Marshals Service space, such as the areas used to move prisoners throughout the courthouse, headquarters Marshals Service officials told us that they currently rely on institutional knowledge to evaluate requests. Marshals Service officials said that it can be difficult to determine which projects to fund and not all officials would arrive at the same decisions, as there is currently no standard process for reviewing project requests and making funding decisions. To improve this process, the Marshals Service is developing a decision matrix to document how decisions are made, but officials said they were not sure if this process would result in a way to compare projects as part of the portfolio of courthouses, as they are still early in the process of developing the matrix.\nFPS conducts facility security assessments of individual buildings, including courthouses. These assessments consist of identifying and assessing threats to and vulnerabilities of a facility, for example, whether security equipment is working properly. FPS shares these assessments and recommendations for countermeasures with the building’s facility security committee as part of the security services it provides to its customer agencies, and the facility security committee votes on whether to approve or disapprove suggested countermeasures.\nInformation on the status of FPS countermeasure recommendations— whether facility security committees have accepted, rejected, or not made a decision—can provide insight into the level of risk tenant agencies accept at a particular facility and enables risk-informed decisions. FPS began tracking the facility security committee decisions at the individual facility level in fiscal year 2015. Our prior work has found that the tool FPS uses to conduct facility security assessments was not designed to compare risks across federal facilities. FPS officials recognize the value of being able to analyze countermeasures across courthouses and other federal buildings. They said that this information would provide a greater understanding of which countermeasures were consistently accepted or rejected, which could help FPS make better recommendations for all federal buildings, not just courthouses, in its facility security assessments. For example, if FPS knew that a particular recommendation was frequently rejected because it is cost prohibitive, FPS might look for another less costly option to mitigate that deficiency, according to officials.\nFPS is also pursuing the capability to track the status of countermeasures in an automated way as part of initial plans for a software upgrade for its vulnerability assessment tool that allows FPS inspectors to review recommended countermeasures, among other things. However, officials were not certain when, or if, this capability will be ultimately included in the upgrade. FPS officials said that absent the capability to track countermeasure status in an automated way, obtaining information on whether countermeasure recommendations are accepted or rejected across all courthouses (or analyzing it by other variables) would be a labor-intensive process because relevant data are not easy to retrieve and would have to be done so manually. FPS officials said that there might be other ways to obtain this capability, but so far, they have not developed them. Further, FPS officials said that facility security committees often do not report whether they are approving or disapproving a countermeasure, even though the ISC standard calls for approval or disapproval to be documented in the facility security assessment. Tracking information on countermeasure implementation across the portfolio could help hold facility security committees accountable for their responsibilities under the ISC standard.\nThe improvements that both agencies are making to their information on security concerns are promising but may not provide the portfolio-wide information that decision makers need to make risk-informed decisions. Portfolio-wide information could enhance the way that headquarters Marshals Service officials make decisions when selecting security projects, so that the selections address the most urgent needs and FPS could be in a better position to understand the degree to which facility security committees are accepting risk at federal facilities.",
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"Congress provided $20 million in obligational authority for the CSP in the Consolidated Appropriations Act, 2012 and also provided obligational authority for the program for fiscal years 2013, 2015, and 2016, which GSA has designated for 11 projects in 10 locations. The program, which is funded from GSA’s Federal Buildings Fund, is intended to address security deficiencies in existing buildings where physical renovations (“brick and mortar solutions”) are viable, and to provide a vehicle for addressing security deficiencies in a timely and less costly manner than constructing a new courthouse. Program goals include: (a) utilizing existing building assets and government resources cost-effectively; (b) addressing security deficiencies which put the public and government staff at risk; and (c) providing a low-cost alternative to high-cost capital investments. Courts with adequate space to house judicial officers but with poor physical security are eligible to participate because such courts are unlikely to obtain a new courthouse in the foreseeable future. As of March 2016, two projects had been completed, two were in construction, four were in design, and three had not yet begun design, as shown in Table 1.\nCSP projects are designed to improve the separation of circulation in accordance with the U.S. Courts Design Guide, which states that an essential element of security design is the physical separation of the public, judges, and prisoners into three separate paths of circulation so that trial participants do not meet until they are in the courtroom during formal court proceedings. AOUSC officials told us that having three separate paths of circulation is important so that judges are protected from being influenced or threatened by parties to court proceedings, their families, or other members of the public when entering and circulating through a courthouse. They also told us that criminal defendants pose a security risk to co-defendants, witnesses, and the general public. Some of the CSP improvements to address these separate paths of circulation include: Adding or enlarging sally ports: Some federal courthouses have no vehicle sally port (or an inadequate one) for the Marshals Service to load and unload prisoners.\nBuilding secure parking for judges: Some federal courthouses do not have a secure place for judges to park and enter the building.\nAdding elevators for prisoners and/or judges: In some of the older courthouses, the structure of the building and location of elevators may not permit three separate paths of circulation.\nReconfiguring space to provide secure patterns of circulation: Some federal courthouses cannot accommodate the three separate paths of circulation without space reconfiguration.\nWhile CSP projects may not address every security deficiency in a building, officials at locations that have been selected for a CSP project told us that the projects will provide (or have provided) significant improvements to security at those locations. For example, a local GSA official said that the security changes as a result of a completed CSP project has created a “night and day” difference in the overall security of the building as the parking and circulation issues have been addressed. In addition, local Marshals Service officials said that when the CSP project at their location is completed, it will address their highest security priorities and improve security. AOUSC officials have re-evaluated their security scores for the two projects that have been completed, and the security scores have improved. At one location the security score increased from 46.1 (poor) to 80.2 (good), and at the other, the score increased from 58.9 (poor) to 68.2 (marginal to acceptable).",
"The process used to select potential CSP project locations has continued to evolve since the program began in 2012, and as a result, transparency and collaboration related to potential CSP project location selections and program execution have improved. According to OMB’s directive on open government, transparency promotes accountability and collaboration improves the effectiveness of government by encouraging partnerships and cooperation. Similarly, our prior work has recognized that leading practices for capital-planning include that an agency’s project prioritization process be transparent about how project rankings are determined, among other things. In addition, our prior work also recognized that collaboration is key to ensuring the efficient use of limited resources to address issues that cut across more than one agency, and that collaboration ensures that federal efforts draw on the expertise of the involved agencies.\nAt the time of our review, two rounds of CSP project location selections had been finished, and a third round was underway. With each round, the transparency of selection evolved as more criteria were added for selection and more people were involved in the selection process. More specifically:\nDuring the first round of selections, for fiscal year 2012 only, according to AOUSC officials, AOUSC selected four project locations using professional judgment informed by the expertise of GSA and the Marshals Service to get them started quickly because a report and spending plan on program implementation had to be submitted within 90 days of the enactment of the Consolidated Appropriations Act, 2012. For example, one location was chosen because it had an existing concept study that could be used as a basis for the project, and another was prioritized, in part, because of a threat to a judge at that location, according to AOUSC officials.\nFor the second round of project location selections, for projects funded in fiscal years 2013 through 2017, criteria were developed for selection following a two-step process. First, the judiciary developed a preliminary list of project location candidates following a set of “Go/No Go” factors. For example, only courthouse facilities that were federally owned and had resident judges were eligible for selection. Second, AOUSC conducted what it referred to as a “deep dive analysis” that involved a number of factors. While this allowed greater insight into how locations were selected, from our review of AOUSC documents, we noted that there was still a lack of clarity about how some of these factors would be measured. For example, one factor was “type of caseload and proceedings” meaning that a “significant” number of criminal proceedings are conducted in the facility, but it was not clear how locations were evaluated on these criteria. As a result, for the CSP projects selected in round two, we were unable to determine how the criteria were used to prioritize project locations amongst each other and why certain project locations were ultimately selected over others because the decisions (such as why some were selected and others were eliminated from contention) were not documented and it was not clear how all criteria were defined and applied.\nThe process for the third round of potential CSP project location selections (for projects 2018 and beyond) contained additional improvements. AOUSC and federal stakeholders added refinements to the existing two-step process and some additional steps after the “Go/No Go” factors and “deep dive analysis” including: (a) a series of internal judiciary review meetings that further narrowed the list of candidates based on first-hand knowledge and observations; (b) meetings between AOUSC, the Marshals Service, and GSA in March 2016 to narrow the remaining potential locations into three tiers based on security scores as well as other factors; (c) reviews of the feasibility of a project at the top eight locations, and (d) selecting four of those locations for consideration. From our review of AOUSC documents, we noted that this round of project location selections provided important transparency improvements. For example, during this round the CSP had a greater emphasis on buildings with poor security scores—quantitative information that can be objectively reviewed. In round three, only locations with poor security scores (below 60) were considered for the program, and the Judiciary’s Space and Facilities Committee approved four locations for a CSP study in June 2016 that have security scores less than 30 (only 4 of the 10 previous locations chosen for CSP projects had security scores less than 30, see Table 1).\nIn addition to transparency improvements related to the selection process, federal stakeholders have enhanced their collaboration during CSP project execution. GSA officials said that they were not involved in developing the scopes of work for the original four projects in fiscal year 2012 and the corresponding cost estimates for them. As a result, the project concept studies did not consider GSA’s mechanical, engineering, and plumbing standards, which are considered for concepts in other capital projects. GSA officials said that this led to inaccurate estimates and delays in the execution of some 2012 projects. For example, GSA officials said that during one 2012 funded project, they were not consulted on the concept and estimate, and that the estimate was under by about 30 percent, which they said is a significant deviation. After AOUSC conferred with stakeholders on needed improvements in the second round of CSP project selections (fiscal years 2013–2017), GSA officials said that they began reviewing the cost estimates and providing comments to AOUSC. Further, GSA officials said that AOUSC now seeks their expertise on assumptions developed in the concept studies before developing an estimate, which has minimized the amount of re-work required at design.",
"Although federal stakeholders have taken the aforementioned positive steps to improve CSP, not all of the issues with transparency and collaboration have been addressed, in particular:\nKey stakeholders were not clear on the eligibility of particular locations for a CSP project and how to suggest locations for consideration. Marshals Service headquarters officials told us that they have asked that certain court locations be considered for the CSP, but they have been denied. For example, headquarters Marshals Service officials told us that they requested that one particular federal courthouse be a part of the CSP, specifically to add certain features to improve circulation. This courthouse was not included as a potential CSP project location, and the Marshals Service moved forward with the design of the project. GSA officials told us that the judiciary developed a process for identifying CSP projects and subsequent studies resulted in a priority list of locations, and that this courthouse was not put forth by the judiciary to be studied.\nDuring the third round of project selections, that same courthouse was one of four locations removed by the judiciary during the internal judiciary meetings due to having Marshals Service-funded projects, or joint projects, but no Marshals Service officials participated in this discussion. Specifically, documentation from this internal meeting showed that this courthouse was removed due to a Marshals Service project that was already funded. However, local judicial, Marshals Service, and GSA officials told us when we visited that a circulation project was not planned for the location, and Marshals Service officials provided a document that showed that the project has not yet been funded, (project design has been funded). Although the judiciary removed this courthouse from consideration for a project, Marshals Service officials maintain that it could have been a CSP project.\nThere continues to be a lack of clarity about how key deep-dive analysis factors were applied during the most recent round of project selection. For example, one of these factors (as conceptualized in round three) was the number of criminal defendants the courthouse processed. But there is no description of what number of defendants would be too low for a court to be considered further for a CSP project, and the reasons that some locations were removed for a low number of criminal defendants, while others with the same number were put forward, were not clearly documented. For example according to AOUSC documentation, a certain potential location was removed as a candidate during the latest round of CSP selections during internal judiciary meetings because it had zero criminal defendants. However, other locations were put through to the next round that also had zero criminal defendants.\nMarshals Service officials also expressed a transparency concern regarding CSP costs. Specifically, the additional costs they incur from CSP projects are not considered during project selection. According to Marshals Service officials, when the judiciary selects a CSP project, the Marshals Service must find funding for any Marshals Service security equipment needed to support the CSP projects. Marshals Service officials said that in the first year of project selections (2012), the corresponding Marshals Service costs were covered, but that since then, GSA has told them that they would need to provide the funding.\nKey stakeholders hold varying views about how collaborative the process to select CSP projects has been. AOUSC officials said they believe that CSP selection process has been collaborative and that no project was or is approved for CSP funding without the concurrence of the Marshals Service and GSA. However, Marshals Service officials said that they have not found the process of selecting projects to be collaborative, but rather, from their point of view, the CSP projects are selected by the judiciary based on its view of security concerns. GSA officials said that they were not involved in project selection during the first two rounds of CSP project selection, but that during the third round of project selections, the process was more collaborative. Similarly, FPS has generally not been included in the planning or execution of CSP projects. FPS was only included in CSP planning and implementation for one of six CSP project locations we visited, where the local Marshals Service sought FPS’s expertise in placement of security equipment. At these locations, CSP projects may alter the perimeter of the building and could affect FPS’s equipment. For example, local FPS officials in one location we visited said that they did not know about the impending CSP project until we notified them of our visit to tour the project site. They said they would need new security equipment and that they could possibly add their expertise to other aspects of the project early in the process to avert unnecessary costs if they were consulted on this CSP project. AOUSC officials told us that moving forward, FPS will be included in the CSP.\nAs our prior work has shown, the interests of multiple—and often competing—stakeholders may not align with the most efficient use of government resources and can complicate decision making. Better transparency about how projects are selected, could help to ensure that the CSP is not subjected to competing stakeholder interests. Furthermore, as we have also reported, effective collaboration can help maximize performance and results, particularly for issues that cut across more than one agency, as is the case with courthouse security. CSP projects involve multiple stakeholders, and projects have multiple phases, so it can be difficult to ensure that all stakeholders fully understand all program procedures and are involved at the right time and to the right degree throughout the life of the project. An internal control for efficient and effective operations is to ensure that all transactions and other significant events are clearly documented in a manner that allows the documentation to be readily available for examination. With clearer documentation of the process shared with all stakeholders, transparency and collaboration could also be enhanced in the CSP. By developing approaches to provide stakeholders information that clearly describes how all selection criteria are to be applied, how to put forth a location for consideration, what specific costs are eligible for funding within a project, how collaboration is to occur during project selection and execution, and when and how to include all relevant agencies in each phase of the project, stakeholders could be better assured that they all have the same understanding of how the program is supposed to work, that the program is addressing the most urgent needs and that the expertise of all government stakeholders is being used to help ensure that the program is as efficient as possible.",
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"We have previously reported on coordination issues facing the security of courthouses. More specifically, in September 2011, we found that federal stakeholders faced issues, among others, related to implementing their roles and responsibilities, gathering and sharing comprehensive security information, and participating in security committees. At that time, we recommended that FPS and the Marshals Service, in conjunction with the judiciary and GSA, jointly lead an effort to update a 1997 MOA that outlines stakeholders’ roles and responsibilities. Implementation of this recommendation was key to addressing the issues in our view. Since then, FPS officials said that they took the initiative on updating the MOA, working with each party individually and sharing iterative updates based on comments. FPS officials said that they took the lead in this effort because they wanted to address the recommendation and no other agency was moving forward with it. However, despite these efforts, nearly 5 years after the recommendation, the updated MOA still has not been signed. FPS officials told us that the MOA had been set aside at different times since the recommendation was made, in part, due to staff turnover at each agency that in some instances resulted in major revisions to the draft that necessitated additional vetting. In addition, FPS officials said that lengthy reviews and issues coordinating schedules have also contributed to the delays.\nDuring our visits to CSP project locations as a part of this review and during discussions with AOUSC and local court officials, and headquarters and local Marshals Service, GSA, and FPS officials, we found that the issues we identified in September 2011 persist. More specifically, these issues include those outlined below.",
"We found that the Marshals Service’s and FPS’s roles and responsibilities have at times been fragmented. Some local FPS officials said that it can be difficult to determine what entity has responsibility for security equipment. For example, a local FPS official told us about a situation in one courthouse, where some security equipment is monitored by FPS and some is monitored by the Marshals Service. We found the same type of situation in another location and officials were unsure how that arrangement came to be. In addition, headquarters Marshals Service officials told us that overall there is fragmentation between FPS and the Marshals Service in ensuring that security equipment is operational. In one location FPS local officials also said that duplicative security efforts— such as when both the Marshals Service and have FPS have equipment in the same building or part of the building—can create confusion.\nWe found that the level of coordination can be site-specific and personality-driven which can make executing roles and responsibilities difficult. For example, one local FPS official told us that FPS has a very strong relationship with the local Marshals Service officials and judges and are always included in court security meetings. However, at another courthouse, an FPS inspector did not complete all sections in the 2014 facility security assessment, noting that an individual with the Marshals Service would not answer all FPS questions during the interview and that FPS could not be sure that all security equipment was working because that individual would not permit the FPS inspector to conduct testing. FPS and the Marshals Service both have new staff in those roles and officials see the relationship improving; however, another facility security assessment will not be completed until 2017.\nSome local Marshals Service officials said that in certain locations, it is difficult and time consuming for FPS to execute their role of repairing equipment. For example, local Marshals Service officials at one location we visited told us about a recent problem they encountered regarding malfunctioning equipment at another location they serve. Initially, the Marshals Service security contractor assessed that it needed a small, inexpensive part, but the contractor could not fix it because the equipment was owned by FPS. Marshals Service officials said that after 60 days and reaching out through numerous calls and e-mails, FPS received the internal approvals to fix the equipment.",
"We found that there continue to be issues associated with stakeholders gathering comprehensive information on security concerns and sharing the information gathered. As discussed earlier, the Marshals Service and FPS have some information on security concerns for individual courthouses, but cannot readily track the information across the portfolio and address risks to courthouses associated with that analysis, based on the way information is currently gathered. Further, information that agencies already collect is not readily shared with the other agencies. For example, AOUSC officials said that they have had difficulty getting facility security assessments from FPS and have been told by some FPS inspectors that AOUSC officials are not entitled to receive a copy of the assessment, as they are not tenants in the building. Further, FPS officials said that if AOUSC and the Marshals Service shared the information they collect on security concerns with FPS, they could coordinate more with those agencies, but FPS does not routinely have access to information collected by these agencies.\nWithout sharing existing information on security concerns, federal stakeholders do not have complete information to help them look for strategic ways to achieve efficiencies and to address the risks to federal courthouses more comprehensively. Further, if the agencies worked together to gather and understand all of the available security information, they could better understand what information is not collected at a portfolio level, and work on a coordinated strategy to obtain needed information efficiently. GSA officials told us that if more comprehensive information was available and shared regarding deficiencies in courthouses, federal agencies could develop joint acquisition strategies to address widespread deficiencies more efficiently. For example, if FPS develops the capability to track the status of countermeasure recommendations across courthouses in an automated way, as discussed earlier, and the results show that a particular countermeasure is recommended often, but rarely accepted because is it cost-prohibitive, federal agencies could leverage the buying power of the federal government to drive down the cost of the countermeasure.",
"Of the eight locations we visited, three did not have an active facility security committee even though they have other federal tenants in the building. In such buildings, a facility security committee is called for by the ISC standard. Headquarters Marshals Service officials told us that in their experience, facility security committee meetings, in reality, often do not reflect the facility security committee provisions in the ISC standard and that although addressing security needs ultimately falls upon the lead tenant of each facility (the facility security committee chair), there are no accountability mechanisms for ensuring these needs are addressed. FPS officials also said that there is currently no compliance mechanism for the ISC standard. Without attending these meetings, stakeholders involved in courthouse security may be missing opportunities to share information and coordinate so that security risks are better understood and addressed. In 2013, we found that the ISC did not formally monitor agencies’ compliance with ISC standards, but was planning an effort to do so.",
"We found that GSA, AOUSC, the Marshals Service, and FPS did not routinely meet to address courthouse security problems at a national level where decision-making authority exists. For example, more than four and a half years passed before the four federal stakeholders met together in May 2016 to discuss the MOA updates at a national level, although FPS had been working on the update. A GSA official told us that when the four stakeholders did meet, the meeting was very productive. FPS officials said that though they considered assembling the larger group early on, they elected to elicit comments and revisions on a draft to galvanize the most substantive changes needed based on consultation with “key representatives.” AOUSC officials told us that they did not know why they had not met as a group prior to May 2016. In fact, Marshals Service and AOUSC officials said that there was no working group or forum where the four agencies could discuss issues relevant to courthouse security at the national level where decision-making authority exits. In our previous work, we identified interagency working groups as one of the collaboration mechanisms used by agencies to coordinate activities.\nNational level coordination and cooperation in protecting critical infrastructure is a key policy emphasis of the federal government. The federal government has prioritized the protection of federal facilities through directives to address the changing nature of threats to federal facilities, including federal courthouses. Through these documents, the federal government has consistently presented a common vision for critical infrastructure protection: agencies involved in the security of federal facilities should work together cooperatively to provide security to our critical infrastructures in an efficient manner that maximizes the federal government’s limited resources, for example:\nThe National Infrastructure Protection Plan notes the importance of obtaining a shared vision with stakeholders with similar missions, saying that “for the critical infrastructure community, leadership involvement, open communication, and trusted relationships are essential elements to partnership.”\nThe National Strategy for the Physical Protection of Critical Infrastructures and Key Assets states that protecting our critical infrastructures and key assets calls for a transition to a national cooperative approach across federal agencies.\nHowever, the continuing issues related to cooperation that continue to hinder effective courthouse security—in the areas of executing roles and responsibilities, collecting and sharing information on security concerns, and accountability for participating in coordination mechanisms like security committee meetings—illustrate that more could be done to align with the priorities that the federal government has established in these documents. Also, the delays in updating the MOA further illustrate that the cooperative approach described in the National Strategy has not been fully developed. Without a more cooperative approach to securing courthouses, such as through a working group or similar forum, challenges across the portfolio of federal courthouses will likely persist. The physical security of government assets is one of the most challenging aspects of real property management. In fact, one of the reasons that managing federal property is an area that we have designated as high risk is due to the challenges involved with protecting federal facilities. Under the Homeland Security Act of 2002, except for law enforcement and security related functions transferred to DHS, GSA has the responsibility to protect buildings it holds or leases. In its role as a steward of federal courthouses under its custody and control, and as part of its related protection responsibilities, GSA is well positioned to establish a working group or other forum of federal stakeholders to improve cooperative efforts.",
"Securing our nation’s federal courthouses is complex and challenging and four federal stakeholders have a significant role—the judiciary, through its administrative arm, AOUSC; GSA; the Marshals Service; and FPS. Addressing courthouse security concerns begins with good information regarding the risks to each courthouse, but the federal government does not have this comprehensive information. The only portfolio-wide information that the federal government has is collected by AOUSC; however, these scores are only part of the story because comprehensive information related to security concerns identified by the Marshals Service and FPS is not currently used portfolio-wide. While both agencies have plans to enhance their processes, it is unclear whether these improvements will lead to the ability to assess security concerns across the portfolio of courthouses. With better portfolio-wide information from the Marshals Service and FPS, decision makers can be better equipped to make risk-informed decisions.\nAddressing courthouse security concerns can be a costly undertaking, especially in older courthouses that were not designed for modern day security threats, particularly with regard to meeting current standards that call for the separate circulation of judges, prisoners, and the public. The CSP was designed to be a less costly alternative to building new federal courthouses and provides a way to add key security features. Since 2012, the CSP has demonstrated the potential to address security problems for less than the cost of a new courthouse. Transparency and collaboration have improved, showing that the CSP is generally moving in the right direction, but some concerns remain. Stakeholders do not have the same understanding about how the CSP program works at key stages, including project selection, and on how collaboration will occur.\nWhile the CSP has the potential to address security concerns at courthouses that are selected for the program, issues persist related to cooperation and information sharing that we have found in the past. Creating greater cooperation—as the National Strategy suggests—to address courthouse security concerns can help GSA, AOUSC, the Marshals Service, and FPS to systemically identify risks, the resources needed to address those risks, and investment priorities when managing security at these facilities. This effort would involve all relevant stakeholders working together, having quality information to work with, and using it to manage risk and find efficiencies in their efforts. Without a coordinating mechanism at the national level, however, the four agencies are limited in their effectiveness in developing comprehensive approaches for addressing challenges that affect courthouse security.",
"We recommend that the Attorney General instruct the Director of the Marshals Service to ensure that the improvements being made to the Marshals Service’s information on the security concerns of individual buildings allow the Marshals Service to understand the concerns across the portfolio.\nWe recommend that the Secretary of Homeland Security instruct the Director of FPS to ensure that the agency develops the capability to track the status of recommended countermeasures across the courthouse portfolio, either through FPS’s planned software enhancement or other method.\nWe recommend that the Administrator of GSA and the Director of the AOUSC, on behalf of the Judicial Conference of the United States, in conjunction with the Marshals Service and FPS, improve CSP documentation in order to improve transparency and collaboration in the CSP program.\nWe recommend that the Administrator of GSA—in conjunction with AOUSC, the Marshals Service, and FPS—establish a national-level working group or similar forum, consisting of leadership designees with decision-making authority, to meet regularly to address courthouse security issues.",
"We provided a draft of law enforcement sensitive/limited official use version of this report to the DOJ, DHS, GSA, and AOUSC for review and comment. In addition, DOJ and DHS conducted sensitivity reviews of the law enforcement sensitive/limited official use version of this report. As a result of these reviews, this public version of the report omits sensitive information including specific security concerns, the results of AOUSC’s security scores, and the names and locations of courthouses we visited or whose information we analyzed.\nIn response to our request for comments on the law enforcement sensitive/limited official use version of this report, we received an e-mail from DOJ’s Audit Liaison Specialist which stated that DOJ was not providing written comments, but that DOJ agreed with our recommendation to ensure that the improvements being made to the Marshals Service information on the security concerns of individual buildings allows the Marshals Service to understand the concerns across the portfolio. After the law enforcement sensitive/limited official use version was issued, the Marshals Service provided additional information stating that it had several initiatives under way in response to this recommendation, including an approach to real property management that incorporates security, construction, and budget concerns across the portfolio. In addition, DOJ stated that the Marshals Service will work with AOUSC, FPS, and GSA to improve CSP documentation and will support and participate in a national-level working group regarding courthouse security issues. We have not yet evaluated this information to determine if it will address our concerns and recommendation.\nWe also received written comments from DHS, GSA, and AOUSC, which are reproduced in full in appendixes II, III, and IV, respectively. DHS agreed with our recommendation to ensure that FPS develops the capability to track the status of recommended countermeasures across the portfolio. DHS noted that it appreciates our acknowledgement that security at federal courthouses is complex and involves multiple federal stakeholders with different roles and responsibilities. After the law enforcement sensitive/limited official use version of this report was issued, DHS provided additional information stating that it has included cross-portfolio tracking of existing and recommended countermeasures as part of a mission needs statement, with an acquisition decision to be made in 2017. We have not yet evaluated this information to determine if it will address our concerns and recommendation.\nGSA agreed with our recommendations to improve CSP documentation to improve transparency and collaboration and to establish a national- level working group or similar forum to meet regularly to address courthouse security concerns. In the comments, GSA noted that it will develop a comprehensive plan to address the recommendations and is confident that this plan will satisfactorily remedy concerns this report raises. After the law enforcement sensitive/limited official use version of this report was issued, GSA provided additional information stating that it plans to assist the judiciary in developing a statement of work for a CSP handbook and subsequently work with the judiciary, USMS, and FPS to develop the handbook. GSA also provided information stating that it plans to finalize the Courts Security Memorandum of Agreement between AOUSC, the Marshals Service, FPS, and GSA; and that it plans to develop a courthouse security working group charter. We have not yet evaluated this information to determine if it will address our concerns and recommendations.\nAOUSC agreed with our recommendation to improve CSP documentation in order to improve transparency and collaboration and discussed steps that AOUSC is already taking to address this recommendation. AOUSC stated that it has started to compile and document all relevant background, policy, and process information to provide a central resource for all stakeholders to use. Further, AOUSC stated that it plans to develop a handbook/guide for use by GSA, the Marshals Service, FPS, and other stakeholders detailing key aspects of the CSP selection process. AOUSC stated that this documentation will address our recommendation by making documentation readily available for examination by all stakeholders including descriptions of all selection criteria to be applied, how projects are identified, specific costs eligible for funding, and how collaboration will occur during project selection and execution. After the law enforcement sensitive/limited official use version of this report was issued, AOUSC provided additional information about actions it has taken in response to this recommendation, including implementing of a communications plan for all new CSP concept studies and ensuring that all stakeholders are included in CSP concept, design, and construction meetings. In addition, AOUSC stated that the judiciary is working with GSA to jointly develop a CSP handbook, which they plan to complete by the end of 2017. Further, AOUSC stated that all relevant stakeholders were invited to participate in a meeting GSA held to develop a courthouse security working group charter. We have not yet evaluated this information to determine if it will address our concerns and recommendation.\nAll four agencies provided technical comments, which we incorporated as appropriate.\nWe are sending copies to appropriate congressional committees, the Attorney General, Secretary of Homeland Security, Administrator of the General Services Administration, and Director of the Administrative Office of the U.S. Courts. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-2834 or [email protected]. GAO staff who made major contributions to this report are listed in appendix V.",
"This report focuses on physical security concerns in federal courthouses. This report addresses the following questions:\nTo what extent have federal stakeholders identified security concerns at federal courthouses?\nHow has the Judiciary Capital Security Program (CSP) addressed courthouse security concerns and how, if at all, can the program be improved?\nWhat actions, if any, could federal agencies take to improve courthouse security?\nThis report is a public version of a previously issued report identified by the Department of Homeland Security and the Department of Justice as containing information designated as law enforcement sensitive/limited official use, which must be protected from public disclosure. Therefore, this report omits sensitive information including specific security concerns, the results of the Administrative Office of the U.S. Court’s (AOUSC) security scores, and the names and locations of courthouses we visited or whose information we analyzed. The information provided in this report is more limited in scope, as it excludes such sensitive information, but it addresses the same questions that the law enforcement sensitive/limited official use report does, and the overall methodology used for both reports is the same.\nTo determine the physical security concerns identified by the AOUSC, the U.S. Marshals Service (Marshals Service), and the Federal Protective Service (FPS), we reviewed and analyzed documents from these federal stakeholders, including capital-planning documents, security assessments, information on physical security concerns, and other reports, and interviewed AOUSC, Marshals Service, and FPS officials to understand how they each identify security concerns and what data they collect. We limited our scope to information collected by these federal stakeholders, and we did not independently determine what constitutes a physical security concern. Rather, we relied on these stakeholders to determine physical security concerns as defined in their own standards and guidance. As part of our review of these data, we assessed federal stakeholders’ documentation and written responses about data collection procedures and their views of the quality of the data. We analyzed AOUSC’s March 2016 security scores, but we did not analyze the scores of non-resident courthouses and bankruptcy-only courthouses due to differences in security requirements of the different court operations and facilities, differences that limit the comparability of security scores, leaving 267 courthouses for our analysis. We believe that AOUSC’s security scores, developed as part of the judiciary’s long-range capital-planning process, are sufficiently reliable for our purposes based on answers that AOUSC provided to our questions on data reliability. We also reviewed incident and threat data collected by the Marshals Service and FPS, but based on our assessment, we do not believe these data were sufficiently reliable for describing physical security concerns across courthouses. We based this conclusion primarily on interviews with the Marshals Service and FPS officials who both stated that there were significant limitations in these data. We reviewed the methods of collecting information by these federal stakeholders to determine whether it was used to understand security concerns portfolio-wide as defined in our risk management framework.\nTo understand how the CSP has or will address physical security concerns, we visited eight courthouses, which we selected to cover six CSP projects at various stages of implementation (completed, under construction, and pre-construction) as well as two courthouses that were considered but not selected. For each of the six site visit locations that have had or will have a CSP project, we (1) toured the facility to observe security concerns and how these concerns were (or will be) addressed in a CSP project; (2) reviewed documentation including CSP concept plans, security assessments and scores, and other reports indicating security concerns; and (3) interviewed local officials from the General Services Administration (GSA), Marshals Service, and FPS as well as local judiciary officials, to obtain their views about physical security concerns prior to the projects and how these concerns have or will be addressed by the CSP, and about courthouse security concerns in general. We relied on officials to bring security issues to our attention at the individual courthouses we visited. While we visited six of the ten courthouses selected for a CSP project as of fiscal year 2016, the information we obtained from these site visits cannot be generalized across all CSP locations. However, this information does provide useful examples about a majority of CSP projects selected to date. We also selected two courthouses that were considered but not chosen for the CSP and appeared on AOUSC’s documentation of potential locations that was used to selected projects from fiscal year 2013 to fiscal year 2016. We selected these particular locations because they could be combined with our CSP site visits or were accessible to our field staff. As with the CSP site visits, we toured the facility, reviewed documentation on security concerns, and interviewed federal stakeholders, as discussed above.\nTo understand how federal stakeholders have selected CSP projects and collaborated in planning and implementation efforts, we reviewed and analyzed these stakeholders’ documentation on the CSP, including project concepts and drawings, as well as AOUSC’s summaries of selection criteria, summaries of an interagency summit to improve the CSP, an agenda for an interagency meeting, and spreadsheets used to select projects. We also interviewed relevant officials about methods used to select project locations and collaborate with other stakeholders. We incorporated written and testimonial information from all stakeholders, as was appropriate and was relevant to the issues raised in our report. We compared federal stakeholders’ efforts to select projects and collaborate to criteria in our Standards for Internal Control in the Federal Government and the Office of Management and Budget’s (OMB) directive on open government.\nTo assess other actions federal stakeholders could take to address courthouse security challenges, we examined relevant statutes, memorandums of agreement, and federal stakeholders’ policies and guidance pertaining to roles and responsibilities for physical security at federal courthouses, as well as our prior work regarding courthouse security, including GAO-11-857. Where they were available, we also reviewed the meeting agendas and minutes of the facility security committees for the courthouse locations we visited. We interviewed headquarters and local officials from the GSA, Marshals Service, and FPS and AOUSC officials and local judiciary officials to obtain their views about efforts to address courthouse security challenges. We compared federal stakeholders’ efforts to directives and authorities that have established the federal government’s vision for critical infrastructure protection, including the National Strategy for the Physical Protection of Critical Infrastructures and Key Assets, the National Infrastructure Protection Plan.\nWe conducted this performance audit from June 2015 to February 2017, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.",
"",
"",
"",
"",
"Lori Rectanus, (202) 512-2834 or [email protected].",
"In addition to the contact named above, David Sausville (Assistant Director), Amy Higgins (Analyst in Charge), Geoffrey Hamilton, John Mingus, Kate Perl, Malika Rice, Amy Rosewarne, and Kelly Rubin made key contributions to this report."
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"question": [
"What responsibility does AOUSC, Marshals Service, and FPS share?",
"What differs about AOUSC's role compared to the Marshals Service and FPS?",
"Why do the Marshals Service and FPS's methods of information collection pose a potential problem?",
"What remains unclear regarding these improvements?",
"What has GSA initiated?",
"What is the intention of these projects?",
"What is the purpose of the Judiciary Capital Security Program?",
"What issues have arisen from the implementation of the CSP program?",
"What issues have been addressed by stakeholders?",
"How could the program be further improved?",
"How could agencies further enhance security, according to GAO?",
"What specific recommendation was made by GAO in 2011 to enhance security?",
"What issue did GAO find with the agencies's communication methods?",
"Why was it important that the agencies meet to discuss security issues?",
"Why was the CSP designed?",
"Why may courthouses need these extra security features?",
"How has Congress contributed to the CSP?",
"What does GAO discuss in their report?",
"What methods did GAO use to create their report?",
"Why might GAO benefit from visiting courthouse locations despite not visiting a large number of locations?"
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"summary": [
"Three federal agencies—the Administrative Office of the U.S. Courts (AOUSC), the U.S. Marshals Service (Marshals Service), and the Federal Protective Service (FPS)—collect information about security concerns at federal courthouses related to the agencies' respective missions.",
"However, only AOUSC develops information that can be used to understand security concerns across the courthouse portfolio.",
"In contrast, the Marshals Service and FPS collect information on security concerns on a building-by-building basis in varied ways, but the manner in which the information is collected prevents it from being used to understand portfolio-wide security concerns. This is inconsistent with GAO's risk management framework.",
"Both agencies are taking steps to improve their information, but it is not clear whether these improvements will provide the portfolio-wide information stakeholders need to make risk-informed decisions.",
"The General Services Administration (GSA) has initiated 11 projects at 10 courthouse locations nationwide, as part of its Judiciary Capital Security Program (CSP); two projects have been completed.",
"Local officials said that these projects have already improved or will improve security at the selected courthouses once completed.",
"CSP improvements have been aimed at separating the paths of judges, prisoners, and the public, so that trial participants only meet in the courtroom.",
"Transparency and collaboration issues have emerged among federal stakeholders as the program has been implemented. For example, not all key stakeholders GAO spoke to were clear on the eligibility of specific locations for CSP projects and varied in their views about how collaborative the process to select CSP projects has been.",
"Although stakeholders have taken some steps to improve CSP transparency and collaboration as the program has evolved, some issues remain.",
"Taking additional steps to improve documentation of decision-making and sharing this document with stakeholders could further enhance transparency and collaboration and better assure that all of the agencies and policy makers have the same understanding of how the program is supposed to work, that it is addressing the most urgent courthouse security needs, and that the expertise of all stakeholders is being used to ensure program efficiency.",
"GAO found that agencies could take additional actions to enhance security at federal courthouses by addressing a related GAO open recommendation, and establishing a formal mechanism such as a working group or forum to enhance coordination and information sharing.",
"Specifically, in 2011, GAO recommended that the agencies update a 1997 memorandum of agreement to clarify their roles and responsibilities.",
"In addition, GAO found that GSA, AOUSC, the Marshals Service, and FPS had not routinely met to address courthouse security issues at a national level where decision-making authority exists.",
"This lack of a formal meeting mechanism inhibits their ability to communicate regularly about their roles and responsibilities and share information about security concerns.",
"The CSP was started in 2012 and was designed to be a less costly alternative to building new federal courthouses by adding key security features to existing courthouses.",
"The variety of civil and criminal cases tried in 400-plus federal courthouses can pose security risks.",
"Congress has provided $20 million in obligational authority for the program in each of the fiscal years that it has been funded.",
"This report discusses (1) the extent to which federal stakeholders have identified security concerns; (2) how the CSP addresses courthouse security concerns; and (3) what actions federal agencies could take, if any, to improve courthouse security.",
"GAO reviewed agency documents, AOUSC security scores, and interviewed officials from the Marshals Service, FPS, GSA, and AOUSC. GAO also visited eight courthouses to include six locations selected for CSP projects, and two that were considered but not selected.",
"Although these site visits cannot be generalized to all CSP project locations or all federal courthouses, they provide insight into federal agencies' practices to secure courthouses."
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GAO_GAO-17-191
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{
"title": [
"Background",
"2016 Census Test Highlighted Data Collection Challenges",
"The Bureau Needs to Better Understand Factors Contributing to NRFU Non-interviews",
"Enumerators Faced Challenges Implementing New Procedures",
"The Bureau Can Better Leverage Enumerator- Collected Information on Respondent Availability",
"Conclusions",
"Recommendations for Executive Action",
"Agency Comments and Our Evaluation",
"Appendix I: Comments from the Department of Commerce",
"Appendix II: GAO Contact and Staff Acknowledgements",
"GAO Contact",
"Staff Acknowledgements"
],
"paragraphs": [
"For the 2020 Census, the Bureau intends to limit its per-household cost to not more than that of the 2010 Census, adjusted for inflation. To achieve this goal, the Bureau is significantly changing how it conducts the census, in part by re-engineering key census-taking methods and infrastructure. The Bureau’s innovations include (1) using the Internet as a self-response option; (2) verifying most housing unit addresses using “in-office” procedures rather than costly field canvassing; (3) in certain instances, replacing enumerator-collected data with administrative records (information already provided to federal and state governments as they administer other programs) and, (4) re-engineering field data collection methods.\nThe Bureau’s various initiatives have the potential to make major contributions toward limiting cost increases. In October 2015, the Bureau estimated that with its new approach it can conduct the 2020 Census for a life-cycle cost of $12.5 billion, $5.2 billion less than if it were to repeat the design and methods of the 2010 Census (both in constant 2020 dollars). Table 1 below shows the Bureau’s estimated cost savings it hopes to achieve in 4 innovation areas.\nSufficient testing, while important to the success of any census, is even more critical for the Bureau’s preparations for 2020. To help control costs and maintain accuracy, the 2020 Census design includes new procedures and technology that have not been used extensively in earlier decennials, if at all. While these innovations show promise for a more cost-effective head count, they also introduce new risks. As we have noted in our prior work, it will be important to thoroughly test the operations planned for 2020 to ensure they will (1) produce needed cost savings, (2) function in concert with other census operations, and (3) work at the scale needed for the national head count. The Bureau’s failure to fully test some key operations prior to the 2010 Census was a key factor that led us to designate that decennial as one of our high-risk areas.\nThe 2016 test was the latest major test of NRFU in the Bureau’s testing program. In 2014, the Bureau tested new methods for conducting NRFU in the Maryland and Washington, D.C., area. In 2015, the Bureau assessed NRFU operations in Maricopa County, Arizona. In 2018, the Bureau plans to conduct a final “End-to-End” Test which is essentially a dress rehearsal for the actual decennial. The Bureau needs to finalize the census design by the end of fiscal year 2017 so that key activities can be included in the End-to-End Test.\nThe Bureau plans to conduct additional research and testing through 2018 in order to further refine the design of the 2020 Census but recently decided to alter its approach. On October 18, 2016, the Bureau announced plans to stop two field test operations planned for fiscal year 2017 to mitigate risks from funding uncertainty. The Bureau said it would stop all planned field activity, including local outreach and hiring, at its test sites in Puerto Rico, North and South Dakota, and Washington State. The Bureau will not carry out planned field tests of its mail out strategy and NRFU in Puerto Rico. The Bureau also cancelled plans to update its address list in the Indians lands and surrounding areas in the three states.\nHowever, the Bureau said it will continue with other planned testing in fiscal year 2017, such as that focusing on systems readiness and internet response. Further, the Bureau said it would consider incorporating the stopped field activity elements within the 2018 End-to-End Test. The Bureau maintains that stopping the 2017 Field Test will help prioritize readiness for the 2018 End-to-End Test, and mitigate risk. Nevertheless, as we noted in our November 2016 testimony, it represents a lost opportunity to test, refine, and integrate operations and systems, and puts more pressure on the 2018 End-to-End Test to demonstrate that enumeration activities will function as needed for 2020.",
"",
"NRFU generally proceeded according to the Bureau’s operational plans. For example, the Bureau demonstrated procedures for quality assurance and training. On the other hand, according to preliminary 2016 Census Test data, there were 19,721 NRFU cases coded as non-interviews in Harris County, Texas and 14,026 in L.A. County, California, or about 30 and 20 percent of the test workload respectively.\nAccording to the Bureau, non-interviews are cases where no data or insufficient data were collected, either because enumerators made six attempted visits without success (the maximum number the Bureau allowed), or visits were not completed due to, for example, language barriers or dangerous situations. In such cases for the 2020 Census, the Bureau may have to impute attributes of the household based on the demographic characteristics of surrounding housing units as well as administrative records. According to Bureau officials, they are not certain why there were so many non-interviews for the 2016 Census Test and are researching potential causes. Bureau officials told us that they expect higher numbers of non-interviews during tests in part, because, compared to the actual enumeration the Bureau conducts less outreach and promotion. While the 2016 Census Test interview rate is not necessarily a precursor to the 2020 non-interview rate, because of its relationship to the cost and quality of the census, it will be important for the Bureau to better understand the factors contributing to it.\nBureau officials hypothesized that another contributing factor could be related to NRFU methods used in the 2016 Census Test compared to earlier decennials. For the 2010 and prior censuses, enumerators collected information during NRFU using pencil and paper. Enumerators may have visited a housing unit more than the six maximum allowable visits to obtain an interview but did not record all of their attempts, thus enabling them to achieve a higher completion rate. For the 2020 Census, and as tested in 2016, the Bureau plans to collect data using mobile devices leased from a contractor, and an automated case management system to manage each household visit (see figure 1). The Bureau believes that this approach will provide a faster, more accurate, and more secure means of data collection. Unlike previous censuses and one prior test, enumerators in the 2016 Census Test did not have an assigned set of cases that they alone would work until completion. Instead, the Bureau relied on an enhanced operational control system that was designed to provide daily assignments and street routing of NRFU cases to enumerators in the most optimal and efficient way. At the same time, the mobile device and automated case management system did not allow an enumerator to attempt to visit a housing unit more than once per day, reopen a closed case, or exceed the maximum allowable six attempts.\nOne factor we observed that may have contributed to the non-interview rate was that enumerators did not seem to uniformly understand or follow procedures for completing interviews with proxy respondents (a proxy is someone who is a non-household member, at least 15 years old, and knowledgeable about the NRFU address). According to the 2016 Census Test enumerator training manual, when an eligible respondent at the address cannot be located, the automated case management system on the mobile device will prompt the enumerator when to find a proxy to interview, such as when no one is home or the housing unit appears vacant. In such circumstances, enumerators are to find a neighbor or landlord to interview. However, in the course of our site visits, we observed that enumerators did not always follow these procedures. For example, we observed that one enumerator, when prompted to find a proxy, looked to the left and then right and, finding no one, closed the case. Similarly, another enumerator ignored the prompt to find a proxy and explained that neighbors are usually not responsive or willing to provide information about the neighbor and did not seek to find a proxy. Enumerators we interviewed did not seem to understand the importance of obtaining a successful proxy interview and many appeared to have received little encouragement during training to put in effort to find a proxy.\nProxy data for occupied households are important to the success of the census because the alternative is a non-interview. In 2010 about one- fourth of the NRFU interviews for occupied housing units were conducted using proxy data. We shared our observations with Bureau officials who told us that they are aware that enumerator training for proxies needs to be revised to convey the importance of collecting proxy data when necessary. Converting non-interviews by collecting respondent or proxy data can improve interview completion rates, and ultimately the quality of census data. The Bureau told us it will continue to refine procedures for 2020.",
"According to the Bureau, its plans to automate the assignment of NRFU cases have the potential to deliver significant efficiency gains. At the same time, improving certain enumeration procedures and communicating better could produce additional efficiencies by enabling the Bureau to be more responsive to situations enumerators encounter in the course of their follow-up work.\nEnumerators were unable to access recently closed incomplete cases. Under current procedures, if an enumerator is unable to make contact with a household member, the case management system closes that case to be reattempted at a later date, perhaps by a different enumerator; assuming fewer than six attempts have been made. Decisions on when re-attempts will be made—and by whom—are automated and not designed to be responsive to the immediate circumstances on the ground. This is in contrast to earlier decennials when enumerators, using paper-based data collection procedures, had discretion and control over when to re-attempt cases in the area where they were working. According to the Bureau, leaving cases open for re- attempts can undermine the efficiency gains of automation when enumerators depart significantly from their optimized route, circling back needlessly to previously attempted cases rather than progressing through their scheduled workload.\nDuring our test site observations, however, we found how this approach could lead to inefficiencies in certain circumstances. For example, we observed enumerators start their NRFU visits in the early afternoon as scheduled, when many people are out working or are otherwise away. If no one answered the door, those cases were closed for the day and reassigned later. However, if a household member returned while the enumerator was still around, the enumerator could not reopen the case and attempt an interview. We saw this happen at both test site locations, typically in apartment buildings or at apartment-style gated communities, where enumerators had clear visibility of a large number of housing units and could easily see people arriving home.\nBureau officials acknowledged that closing cases in this fashion represented a missed opportunity and plan to test greater flexibilities as part of the 2018 End-to-End Test. Programming some flexibility into the mobile device—if accompanied with adequate training on how and when to use it—should permit some interviews to be completed without having to deploy staff to the same case on subsequent days. This in turn could reduce the cost of follow-up attempts and improve interview completion rates.\nEnumerators did not understand procedures for visits to property managers. Property managers are a key source of information on non- respondents when enumerators cannot find people at home. They can also facilitate access to locked buildings. Further, developing a rapport with property managers has helped the NRFU process, such as when repeated access to a secured building or residential complex is needed on subsequent days by different enumerators.\nIn response to problems observed during the Bureau’s 2014 and 2015 Census tests and to complaints from property managers about multiple uncoordinated visits by enumerators, the Bureau’s 2016 Census Test introduced specific procedures to conduct initial visits to property managers in large multi-unit apartment buildings. The procedures sought to identify up front which, if any, units needing follow-up were vacant, eliminating the need for enumerators to collect this information from property managers with subsequent visits on a case-by-case basis. According to Bureau officials, the automated case management system was designed to allow for an enumerator to make up to three visits to property managers to remove vacant units.\nAccording to the Bureau, the 2016 Census Test demonstrated that vacant units could quickly be removed from the NRFU workload using these procedures in cases where a property manager was readily available; however, in other cases the procedures caused confusion. For example, whenever an initial visit was unsuccessful, all of the cases at that location—up until then collated into only one summary row of the enumerator’s on-screen case list—would suddenly expand and appear as individual cases to be worked, sometimes adding several screens and dozens of cases to the length of the list, which the enumerators we spoke with found confusing. Furthermore, without the knowledge of which units were vacant, enumerators may have unnecessarily visited these units and increased the cost and the time required to complete NRFU.\nDuring debriefing sessions the Bureau held, enumerators and their supervisors identified training in these procedures as an area they felt needed greater attention in the future. Bureau officials said that they are pleased that the test demonstrated their progress in automating case management at multi-unit locations, but at the same time, they recognize the need to better refine the initial property manager contact procedures and integrate multi-unit procedures into the training.",
"During our field visits, we encountered several instances where enumerators had been told by a respondent or otherwise learned that returning at a specific time on a later date would improve their chance of obtaining an interview from either a household respondent or a property manager. According to the Bureau, while there was a mechanism for capturing and using this information, it was not uniformly available to the enumerators, nor did the enumerators always use the mechanism when appropriate. As a result, the Bureau’s 2016 Census Test and automated case management system did not have an efficient way to leverage that information. Attempting to contact non-responding households at times respondents are expected to be available can increase the completion rate and reduce the need to return at a later date or rely on proxy interviews as a source of information.\nThe Bureau’s automated case management system used estimated hour- by-hour probabilities for the best time to contact people when making enumerator assignments. The estimation relied on various administrative records, information from other Bureau surveys that had successful contacts in the past, as well as area characteristics. The 2016 Census Test did not have a way to change or update these estimates when cases were subsequently reassigned. The assigned time windows were intended to result in more productive visits and reduce costs.\nWhen enumerators identified potentially better times to attempt a contact, they were instructed to key this information into their mobile devices. For example, one enumerator keyed in a mother’s request to come back Thursday afternoon when her kids were in camp, while others keyed in information like office hours and telephone contact numbers obtained from signs on the property they had seen for property managers. However, according to the Bureau this updated information went unused, and we met enumerators who had been assigned to enumerate addresses at the same unproductive time after they had written notes documenting other better times to visit. Another enumerator reported visiting a property manager who complained that the enumerator was not honoring the manager’s earlier request made during a prior enumeration attempt that an enumerator return during a specified time window. Such repeat visits can waste enumerator time (and miles driven), and contribute to respondent burden or reduced data quality when respondents become annoyed and may become less cooperative.\nWe discussed our preliminary observation with Bureau managers at the test sites, who expressed frustration that the automated case management system did not allow them to use the locally-obtained data on when to contact people whom they found in enumerator notes in a way to affect future case assignment. Headquarters staff told us that while they have not fully evaluated this yet, they are concerned that providing local managers with too much flexibility to override the results of optimized case and time assignments would undermine the efficiency gains achievable by the automation. They also explained that enumerators were provided the capability to record what day or what time of day for follow-up. This information could have been used by the automated case management system to better target the timing of future assignments. However, they acknowledged that this procedure may not have been explained during enumerator training. Reviewing the enumerator training manual, we confirmed that there were no procedures to allow enumerators to systematically record what day or what time of day to follow-up at a housing unit. Bureau officials have said that this is another area they are looking into and plan to address.",
"The key innovations the Bureau plans for 2020 show promise for controlling costs and maintaining accuracy, although there are significant risks involved. The Bureau is aware of these risks, and robust testing can help manage them by assessing the feasibility of key activities, their capacity to deliver desired outcomes, and their ability to work in concert with one another under operational conditions.\nGoing forward, to help ensure a cost-effective enumeration, it will be important for the Bureau to improve its NRFU procedures by addressing the challenges identified during the 2016 Test, updating related training materials as needed, and completing these efforts in time to be included in the Bureau’s End-to-End Test scheduled for 2018. The challenges we observed include (1) reducing high non-interview rates, (2) difficulty accessing recently closed, incomplete cases, (3) the need to improve coordination with managers of multi-unit properties, and (4) the need to better leverage operational information collected by enumerators. Resolving these issues should help the Bureau improve its ability to collect quality data and reduce the cost of unnecessary follow-up visits during NRFU.",
"We recommend that the Secretary of Commerce and Under Secretary for Economic Affairs direct the Census Bureau to take the following actions: 1. Determine the cause(s) for non-interviews experienced during the non-response follow-up operation and revise and test what, if any, changes need to be made to operational procedures, training, or both, including making contact with proxy respondents. 2. Revise and test operational procedures for accessing incomplete closed cases and revise and test training material to reflect when this flexibility to access incomplete closed cases should be used by the enumerator. 3. Revise and test operational procedures and relevant training materials for initial property manager visits to ensure procedures and training material are communicated to and understood by enumerators and their supervisors. 4. Revise and test procedures on how to better leverage enumerator- collected information on the best time or day to conduct interviews, and ensure enumerators are properly trained on these procedures.",
"We provided a draft of this report to the Secretary of the Department of Commerce for comment. In its written comments, reproduced in appendix I, the Department of Commerce agreed with our findings and recommendations. The Census Bureau also provided technical comments that we incorporated, as appropriate.\nWe are sending copies of this report to the Secretary of Commerce, the Counselor to the Secretary with Delegated Duties of the Undersecretary of Commerce for Economic Affairs, the Director of the U.S. Census Bureau, and interested congressional committees. The report also will be available at no charge on our website at http://www.gao.gov.\nIf you have any questions about this report please contact me at (202) 512-2757 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. The GAO staff that made major contributions to this report are listed in appendix II.",
"",
"",
"Robert Goldenkoff, (202) 512-2757 or [email protected].",
"In addition to the contact named above, Lisa Pearson, Assistant Director; Mark Abraham, Shea Bader, Richard Hung, Donna Miller, Ty Mitchell, Cynthia Saunders; A.J. Stephens, and Timothy Wexler made significant contributions to this report."
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"question": [
"What was a primary focus of the 2016 Census Test?",
"What are non-interviews?",
"Why might there have been so many non-interviews?",
"Why must the reason behind the large number of non-interviews be researched?",
"How would the Bureau benefit from refining enumeration procedures and training enumerators?",
"What were enumerators unable to do?",
"What was the problem with this?",
"How would enumerators benefit if flexibility was programmed into the mobile device?",
"What is an example of a procedure that enumerators lack training in?",
"Why would the Bureau benefit from training and educating enumerators on these procedures?",
"How could enumerators improve their chances of obtaining an interview?",
"How did the Bureau make use of such information?",
"Why is it in the best interest of the Bureau to leverage such information?",
"What was the cost of the 2010 Census?",
"How will the 2020 Census cut down on costs?",
"What issue is there with the design?",
"What must be done to tackle this issue?"
],
"summary": [
"One primary focus of the test was to assess the methodology for non-response follow-up (NRFU), where enumerators personally visit households that do not self-respond to the census.",
"Non-interviews are cases where either no data or insufficient data are collected.",
"Bureau officials are not certain why there were so many non-interviews for the 2016 Census Test and are researching potential causes.",
"Going forward, it will be important for the Bureau to better understand the factors that contributed to the non-interview rate because of its relationship to the cost and quality of the census.",
"GAO also found that refining certain enumeration procedures and training enumerators better could produce additional efficiencies by enabling the Bureau to be more responsive to situations enumerators encounter on the ground.",
"For example, enumerators, by design, were unable to access on the mobile device recently closed, incomplete cases.",
"Bureau officials acknowledged that closing cases in this fashion represented a missed opportunity and plan to test greater flexibilities as part of the 2018 End-to-End Test.",
"Programming some flexibility into the mobile device—if accompanied with adequate training on how and when to use it—should permit enumerators to complete some interviews and reduce the cost of follow-up attempts.",
"Further, enumerators did not always understand procedures for visiting property managers in multi-unit buildings. Specifically, the 2016 Census Test demonstrated that vacant units could quickly be removed from the NRFU workload where a property manager was readily available to provide that information; however, in other cases the procedures confused enumerators and they did not understand how to proceed.",
"Without the knowledge of which units were vacant, enumerators may have unnecessarily visited some vacant units and thereby increased the cost of NRFU.",
"During GAO's field visits, GAO encountered several instances where enumerators learned that returning at a specific time on a later date would improve their chance of obtaining an interview from either a household respondent or a property manager.",
"However, the Bureau's 2016 Census Test and automated case management system did not have an efficient way to leverage that information.",
"Attempting contact at non-responding households at times respondents are expected to be available increases the completion rate and reduces the need to return.",
"With a life-cycle cost of about $12.3 billion, the 2010 Census was the most expensive enumeration in U.S. history.",
"To help control costs and maintain accuracy, the 2020 Census design includes new procedures and technology that have not been used extensively in earlier decennials, if at all.",
"While these innovations show promise for a more cost-effective head count, they also introduce risks.",
"As a result, it will be important to thoroughly test the operations planned for 2020."
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CRS_R41099
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{
"title": [
"",
"Overview of Charitable Choice Legislation and the Faith-Based Initiative",
"Constitutional Requirements for Public Funding of Religious Organizations",
"Direct Funding",
"Indirect Funding",
"Legal Protections for Faith-Based Funding Recipients and for Program Beneficiaries",
"Selectivity in Employment of Religious Organizations Receiving Public Funds",
"Title VII of the Civil Rights Act of 1964",
"First Amendment Protections",
"Limitations Applicable to Government Contractors: Executive Orders 11246 and 13279",
"Preemption of State and Local Civil Rights Laws",
"Protections for Beneficiaries of Services Provided by Religious Organizations Receiving Public Funds",
"Judicial Challenges of Publicly Funded Faith-Based Programs",
"Legal Standing to Challenge Faith-Based Funding Programs",
"Constitutional Analysis in Challenges to Faith-Based Funding Programs",
"Religious Organizations' Participation in Public Funding Programs",
"Permissibility of Selectivity in Employment Decisions",
"Remedies for Violations of Charitable Choice Rules",
"Monitoring of Requirements Imposed on Religious Providers"
],
"paragraphs": [
"Beginning in 1996, Congress enacted several pieces of legislation that included provisions that have become known as charitable choice rules. Included in legislation for various federally funded social service programs, charitable choice rules were aimed at ensuring that faith-based organizations could participate in federally funded social service programs like other nongovernmental providers. The rules allow religious organizations to receive public funding to offer social services without abandoning their religious character or infringing on the religious freedom of program beneficiaries. No new legislation has been enacted since 2000, but Congress continues to consider the issues associated with charitable choice as the related programs are reauthorized.\nMuch of the controversy that has surrounded these programs has centered on the constitutionality of the federal government funding faith-based social service programs and so-called religious hiring rights, the term often used to refer to religious organizations' selectivity in employment decisions. Supporters of faith-based funding argue that religious organizations have a constitutional right to retain their preferences for co-religionists in hiring as a matter of religious identity and exercise. Opponents argue that allowing organizations that receive public funding to discriminate based on religion violates principles of neutrality guaranteed by the U.S. Constitution.\nThis report will briefly discuss the history of charitable choice provisions and the implementation of the Faith-Based Initiative which extended similar rules to certain executive agencies. It will also analyze the constitutional issues associated with funding faith-based organizations, services, and programs, including the distinction of financial assistance provided directly and indirectly to religious organizations. The report will also detail the legal protections for religious organizations that receive funds under these programs and for the beneficiaries of the services they provide, with particular focus on civil rights and discrimination prohibitions in current law. Finally, the report will analyze who is able to raise judicial challenges to publicly funded faith-based programs and how such lawsuits have been resolved.",
"Charitable choice rules generally direct that religious organizations receiving public funding retain control over their religious identity; prohibit discrimination in awarding funds to applicants based on the organization's religious character; prohibit the government from requiring an organization to alter its internal governance or remove religious symbols as a condition of eligibility; and prohibit the use of public funds received directly by religious organizations for sectarian activities. The rules also specify that receipt of public funds does not alter the exemption that religious organizations have under Title VII of the Civil Rights Act of 1964, which allows such organizations to discriminate based on religion in their employment decisions. The charitable choice provisions also prohibit religious organizations receiving public funds from discriminating against beneficiaries on the basis of religion and provide that the programs must be implemented in a manner consistent with the Establishment Clause of the First Amendment of the U.S. Constitution.\nCharitable choice rules were included in programs like Temporary Assistance for Needy Families (TANF), the Community Service Block Grant (CSBG), and substance abuse prevention and treatment programs. In 2001, when Congress did not enact legislation to expand charitable choice rules to other programs, President George W. Bush established the Faith-Based Initiative through a series of executive orders directing a wide range of social programs to follow the rubric of charitable choice. Upon taking office in 2009, President Barack Obama issued an executive order which amended President Bush's initial order but essentially retained the core principles of the initiative. Congress continues to review charitable choice rules when the associated programs are due for reauthorization.",
"Constitutional questions arise in the context of charitable choice because of potential Establishment Clause conflicts associated with the government providing public assistance to private religious organizations. The Establishment Clause of the First Amendment provides that \"Congress shall make no law respecting an establishment of religion....\" The U.S. Supreme Court has construed the Establishment Clause, in general, to mean that the government is prohibited from sponsoring or financing religious instruction or indoctrination. But the Court has drawn a constitutional distinction between aid that flows directly to religious organizations and aid that benefits such organizations indirectly as the result of voucher or tax benefit programs. Thus, the permissibility of government aid to religious organizations generally depends on the purpose for which the aid is distributed and the manner in which it is distributed.",
"Generally, the government may not provide direct aid to religious organizations that use the aid for religious purposes, but the Supreme Court has allowed aid for non-religious purposes. It appears that the purpose of the aid and the types of programs that it was used to fund are the critical factor in the constitutional analysis of direct aid programs, not the type of organization that received and administered the public funds. In other words, the cases challenging charitable choice expenditures likely will depend on the content of the organization's publicly funded program. The extent to which the organization can demonstrate that the funds are restricted to secular uses likely will determine whether the expenditure was constitutionally permissible.\nWith respect to direct aid, the Court has typically applied the tripartite test it first articulated in Lemon v. Kurtzman . The Lemon test requires that an aid program (1) serve a secular legislative purpose; (2) have a primary effect that neither advances nor inhibits religion; and (3) not foster an excessive entanglement with religion. Historically, the primary effect and entanglement prongs were substantial barriers to religious organizations receiving public funds. To avoid a primary effect of advancing religion, the Court had required direct aid programs to be limited to secular use and struck them down if they were not so limited. But even if the aid was limited in such a way, the Court often found the primary effect prong violated anyway because it presumed that some institutions were so \"pervasively sectarian\" that it was impossible for public aid to be limited to secular use. Alternatively, it often held that direct aid programs benefiting pervasively sectarian institutions were unconstitutional because government had to so closely monitor the institutions' use of the aid to be sure the limitation to secular use was honored that it became excessively entangled with the institutions.\nThe Court's decisions in Agostini v. Felton and Mitchell v. Helms , however, have recast these tests in a manner that has lowered the constitutional barriers to direct aid to sectarian organizations. The Court has abandoned the presumption that organizations are so pervasively sectarian that direct aid either results in the advancement of religion or fosters excessive entanglement. It has also abandoned the assumption that government must engage in an intrusive monitoring of such institutions' use of direct aid. The Court still requires that direct aid serve a secular purpose and not lead to excessive entanglement. But it has recast the primary effect test to require that the aid be secular in nature, that its distribution be based on religiously neutral criteria, and that it not be used for religious indoctrination. For example, under the current interpretation, public resources such as teachers, instructional materials, or equipment may be provided to religious schools if the resources are used for secular educational purposes.\nThe Court's previous assumption that religious organizations were pervasively sectarian implied a belief that any financial assistance to the organization would inevitably support the religious elements of the organization. The Court's abandonment of the presumption indicates a relaxation on the constraints imposed and assumptions made regarding the constitutional permissibility of public funding of certain secular elements of religious organizations, which may be very significant in considering the outcome of future charitable choice cases that may come before the Court.",
"Indirect aid to religious organizations, such as voucher programs where participants use government funds to obtain services from participating providers, has a lesser extent of governmental control than direct aid programs that provide public funds directly to the providers. Accordingly, the Court's jurisprudence has imposed fewer restraints on indirect aid programs and has held aid to be constitutional when the distribution reflects the individual beneficiary's choice. The Court still requires such aid programs to serve a secular purpose; but it does not apply the secular use and entanglement tests applicable to direct aid. The key constitutional question for indirect aid has been whether the initial beneficiaries of the aid had a genuinely independent choice about whether to use the aid for services from secular or religious providers. For example, in the case of school vouchers, the initial beneficiary (typically parents or students) receives a voucher for public funds and makes a choice of which school to attend using the voucher. If the individual who receives the funds can be seen as intervening in the chain of distribution of the funds from the government to a religious organization that is providing services, the aid is considered to be given by the individual beneficiary, rather than the government, thereby negating a threat of establishment.\nIn past indirect aid decisions relating to voucher programs, the Court has held that, if the universe of private choices available was almost entirely religious, the program was unconstitutional because the government, in effect, dictated by the design of the program that a religious option be chosen. But if religious options did not predominate, the Court held the program constitutional even if, in the case of a school voucher program, parents chose to receive services from religious schools. In a 2002 decision also regarding school vouchers, the Court legitimated an even broader range of indirect aid programs by holding that the evaluation of the universe of choices available is not confined to the private providers at which the voucher aid can be used but includes all of the public providers available as well.\nOverall, the Court has upheld aid programs in which the aid was distributed to the initial recipients on a religion-neutral basis and the initial recipients had a \"genuine choice among options public and private, secular and religious.\" Furthermore, unlike constitutional requirements for direct aid, programs implemented through indirect aid may include religious organizations that offer services that include religious content. Thus, in the context of charitable choice programs, it appears that, although indirect aid programs may include more religious content than direct aid programs, the indirect aid programs are no more susceptible to constitutional challenges so long as beneficiaries have a variety of choices of secular and religious service providers.",
"Much of the attention generated by the Faith-Based Initiative has revolved around two general issues: selectivity in employment by service providers (i.e., hiring rights) and protections for beneficiaries of the programs that religious organizations administer. The issue of selectivity in employment (e.g . , a religious school preferring to hire teachers of the same denomination) may be the most controversial aspect of the faith-based funding debate. The \"hiring rights\" of religious organizations that participate in social programs covered under charitable choice provisions had been advanced under the Bush Administration's implementation of the Faith-Based Initiative. In 2007, the Department of Justice indicated that it would follow a broad interpretation of the legal protections for religious organizations to hire employees that would administer these programs. The Obama Administration does not appear to have issued guidance related to hiring rights in these programs.\nIn November 2010, however, President Obama modified the implementation of faith-based funding programs that President Bush had originally created. The amended principles and criteria clarified and expanded the protections for beneficiaries of programs offered by religious organizations with two notable changes. Under the new principles, organizations receiving public funds under these programs must offer referrals to alternative providers if the beneficiary objects to an organization's religious character. The order also requires federal agencies that provide funding for social service programs to make a list of organizations receiving assistance available on the Internet to increase transparency and accountability in the funding process.",
"Federal law provides protection to employees to ensure that neither the government nor private employers discriminate on the basis of religion. In some cases, however, an employer's preferences in hiring are protected by the First Amendment. The First Amendment ensures the right of religious organizations to exercise their religion without governmental interference, which has led to some exceptions in employment nondiscrimination laws for religious organizations. The Civil Rights Act of 1964 and the First Amendment govern the rights of religious organizations to consider religion in employment decisions.",
"The Civil Rights Act of 1964 created protections for civil rights across a wide spectrum, including religion. Title VII of the act prohibits discrimination in employment on the basis of race, color, religion, national origin, or sex. Title VII prohibits discriminatory treatment of employees (including applicants for jobs) on the basis of their religious beliefs and requires employers to make reasonable accommodations for employees' religious practices.\nTitle VII is not an absolute prohibition on religious discrimination, however. It includes an exemption for religious organizations that allows them to consider religion in employment decisions. Title VII's prohibition against religious discrimination does not apply to \"a religious corporation, association, educational institution, or society with respect to employment [i.e., hiring and retention] of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.\" The U.S. Supreme Court unanimously upheld this exemption in 1987, allowing a religiously affiliated, non-profit entity to make employment decisions based on religion, even if the position related to non-religious activity of the organization. The Court held that Title VII's exemption allowing a private religious organization to discriminate on the basis of religion was constitutional under the Establishment Clause. However, neither the act, nor the Court decision, addresses whether the exemption applies to entities receiving public funds which may be used to fund the position.",
"The Establishment Clause and Free Exercise Clause of the First Amendment prevent the government from interfering with the affairs of religious organizations, whether that interference dictates what the religious organization must do or what it cannot do. The Establishment Clause ensures that the government does not control practices of religious groups because the government is prohibited from becoming intertwined with religion. The Free Exercise Clause guarantees that religious groups will not be controlled by government actions. These principles have been held by the Supreme Court to protect certain hiring decisions by religious groups as a constitutional matter separate from Title VII. The Court held that the \"freedom to select the clergy\" has \"federal constitutional protection as part of the free exercise of religion against state interference.\" Without this recognition, Title VII's prohibition on the use of religion in employment decisions would appear to interfere with the constitutional freedom regarding religion.\nThe judicially created \"ministerial exception,\" as this protection to select clergy has become known, reconciles Title VII with the First Amendment. It allows religious organizations to select clergy without regard to any of Title VII's restrictions, but requires that employment decisions made regarding other positions within the organization comply with Title VII's prohibitions or exemptions. However, the lack of definitive case law regarding issues of faith-based funding and employment leaves the impact of the receipt of public funds on the ministerial exception uncertain. Because the ministerial exception is a constitutional protection, it may be argued that a funding recipient has heightened protection if public funds are used to hire clergy who also provide services under charitable choice.",
"Executive Order 11246, in effect since 1965, requires that all federal procurement contracts (Part II) and federally assisted construction contracts (Part III) include provisions that prohibit employment discrimination based on religion. Section 202 of the Order provides:\nDuring the performance of this contract, the contractor agrees as follows: (1) The contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin.\nE.O. 11246 also requires that the same provisions be included in all federally assisted construction contracts.\nIn 2002, President Bush issued Executive Order 13279, which amends E.O. 11246 with respect to the prohibition on religious discrimination as it applies to religious organizations. The amendment adds the following language to E.O. 11246:\nSection 202 of this Order shall not apply to a Government contractor or subcontractor that is a religious corporation, association, educational institution, or society, with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities. Such contractors and subcontractors are not exempted or excused from complying with the other requirements contained in this Order.\nThe amendment mirrors Title VII's exemption for religious organizations. Thus, like the Title VII exemption, the exemption it affords covered religious entities is broad. It applies to all of the activities of the covered organizations regardless of whether an employee's functions are secular or religious. But covered religious entities must still comply with the other requirements of the executive order regarding employment nondiscrimination on the bases of race, color, sex, and national origin.\nThis amendment may not have substantial significance for religious organizations, as it amends part of E.O. 11246 that concerns federal procurement contracts (i.e., contracts for the provision of goods and services directly to the federal government). This part of E.O. 11246 is not applicable to the federal grant and cooperative agreement programs subsidizing the provision of social services that have been the primary focus of debate about charitable choice and religious discrimination by faith-based organizations. Such contracts can range from food services to office supplies to military items and can, obviously, involve substantial sums of money. But it is not at all clear that religious organizations have historically played a significant role in such federal procurement contracts.",
"Another issue that has raised concerns related to charitable choice is the preemptive effect of federal charitable choice provisions on state and local civil rights laws that bar forms of discrimination that are not barred by federal law, such as discrimination based on sexual orientation or marital status. The preemption doctrine derives from the Supremacy Clause of the U.S. Constitution, which establishes that the laws of the United States \"shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.\" Under the Supremacy Clause, state or local laws that conflict with valid federal laws may be preempted in favor of the federal law under certain conditions.\nThere has been much debate regarding whether charitable choice statutes preempt state and local civil rights laws relating to employment discrimination, but this debate has been largely limited to the policy arena, rather than legal challenges. The debate centers on the charitable choice provision that requires that a participating religious organization \"shall retain its independence from Federal, State, and local government, including such organization's control over the definition, development, practice, and expression of its religious beliefs.\" Similarly, all of the charitable choice statutes to date have barred the government from requiring that a religious provider \"alter its form of internal governance\" and have explicitly provided that a religious organization's exemption under Title VII \"shall not be affected by its participation in, or receipt of funds from, a designated program.\"\nAlthough some have argued that these provisions may be read to imply some degree of preemption, it is not clear on the face of the statute whether Congress intended to preempt state nondiscrimination laws. Noted scholars in the field have asserted that allowing organizations to retain independence does not translate to immunity from any government controls by means of preemption. Rather, they suggest that the \"provision should be read to mean that agencies of government must not assert leverage or control over the [organization] in matters extraneous to the contract\" and do not relate to the effect of the federal statute on state nondiscrimination laws. Furthermore, the charitable choice statutes generally do not indicate the necessary intent of Congress that would be required to find preemption related to employment discrimination laws. The only provision of the charitable choice statute concerning substance abuse programs that expressly addresses the issue states that \"nothing in this section shall be construed to modify or affect the provisions of any other Federal or State law or regulation that relates to discrimination in employment.\"",
"Under charitable choice, one of the major questions is the extent to which beneficiaries of the social service programs are protected in their own constitutional right to religious freedom. That is, the beneficiaries of services provided by religious organizations using funds under charitable choice must be afforded the right to practice their own religious (or non-religious) beliefs without being unconstitutionally influenced by a religious organization providing services through a government program.\nFederal law imposes a number of civil rights obligations on the provision of services in programs and activities that receive federal financial assistance. Various civil rights laws bar discrimination on the bases of race, color, national origin, handicap, age, sex, or blindness. These prohibitions on discrimination apply generally and are triggered by the receipt of federal funds, but most of them apply only to the delivery of services and not to the employment practices of the entities that receive federal funds. The applicability of these statutes to federally financed programs and activities is not altered by charitable choice provisions.\nIn contrast, there is no comparable federal statute that generally bars religious discrimination in federally funded programs and activities. Individual programs, however, may sometimes contain such a prohibition. Likewise, charitable choice legislation has included provisions that bar religious organizations from discriminating against beneficiaries on religious grounds. It also has required the government to make an alternate provider available to any beneficiary who objects to the religious character of a given provider. All of the existing charitable choice statutes, with the exception of the Community Service Block Grants, bar a religious organization that receives assistance from discriminating against beneficiaries on the basis of religion or a religious belief. Three of the four statutes (excluding one of the substance abuse statutes) also bar such discrimination on the basis of a \"refusal to actively participate in a religious practice.\"",
"Because of the many questions that have been raised regarding funding faith-based organizations under charitable choice rules, a plethora of legal challenges have been filed, with varying results. The only case challenging faith-based funding programs to reach the Supreme Court did not address the constitutionality of providing public funding to religious organizations for social programs. Instead, the case addressed the threshold litigation issue of standing—defining the scope of possible litigants who were legally able to challenge programs under the Faith-Based Initiative. Other cases in lower courts in which the litigants had standing to challenge charitable choice rules have had mixed results, indicating that no clear answer has prevailed for the many questions relating to funding of programs implemented by religious organizations.",
"Standing is a constitutional principle that serves as a restraint on the power of federal courts to render decisions. Under general standing rules that apply to any case, an individual must have an individualized interest that has actually been harmed under the law or by its application to bring that case to court. In some instances, such as the Establishment Clause, an individual may wish to challenge a governmental action that injures the individual as a member of society (e.g., the individual as a taxpayer challenges the expenditure of funds under charitable choice). The U.S. Supreme Court has construed the requirements to raise such challenges narrowly.\nAs discussed earlier, the Faith-Based Initiative implemented charitable choice provisions at the agency level through executive orders, rather than through statutory programs authorized by Congress. Although the provisions of the congressional authorizations were very similar to those implemented through agency regulations, the Supreme Court drew an important legal distinction between the two. According to a plurality of the Court in a 2007 decision, Hein v. Freedom From Religion Foundation , only taxpayers challenging the expenditure of funds through charitable choice provisions authorized by Congress have standing to litigate related lawsuits under the Establishment Clause. In other words, taxpayers cannot challenge expenditures made through general disbursements to the executive branch, including some that funded programs under the Faith-Based Initiative.\nIn Hein , a group of taxpayers challenged the constitutionality of events held for programs under the White House Office of Faith-Based and Community Initiatives, an executive office created to remove barriers to religious and community groups seeking federal assistance. The Court found that the taxpayers did not have standing to challenge the actions, in contrast to precedent known as the Flast exception, which conferred standing to taxpayers challenging specific congressional appropriations pursuant to a direct congressional mandate. The taxpayers in Hein were not challenging \"any specific congressional action or appropriation; nor [were they asking] the Court to invalidate any congressional enactment or legislatively created program as unconstitutional.\" Rather, the expenditures challenged in Hein were \"general appropriations to the Executive Branch to fund its day-to-day activities\" and \"resulted from executive discretion, not congressional action.\"\nThe Court held that the expenditures by the executive branch alleged to violate the Establishment Clause could be treated differently than legislative actions. The Hein opinion noted the broad impact that a decision to the contrary would have, stating that \"because almost all Executive Branch activity is ultimately funded by some congressional appropriation, extending the Flast exception to purely executive expenditures would effectively subject every federal action—be it a conference, proclamation, or speech—to Establishment Clause challenge by any taxpayer in federal court.\" Furthermore, the Court stated that the \"relaxation of standing requirements is directly related to the expansion of judicial power, and lowering the taxpayer standing bar to permit challenges of purely executive actions would significantly alter the allocation of power at the national level, with a shift away from a democratic form of government.\" In other words, if the Court were to broaden taxpayer standing requirements, individual litigants could effect changes in the courts rather than through the national political process.\nThe Hein decision has had a notable impact on charitable choice litigation. Many recent charitable choice lawsuits have challenged executive branch programs that provide funding to religious organizations under the Faith-Based Initiative. The Hein decision has left the probability of reaching the merits in such lawsuits uncertain. Several courts have dismissed such lawsuits, ruling that the litigants lacked standing in light of Hein . Other litigants have voluntarily dropped their lawsuits, expecting that Hein would cast skepticism on their standing to bring the case. However, some lawsuits have proceeded successfully.",
"Although many of the questions related to charitable choice have not been resolved, some courts have addressed specific questions on some of the issues of concern in the charitable choice debate. Among the issues addressed to at least some extent in court decisions are the constitutionality of certain aid programs, the proper remedies for programs that violate legal church-state requirements, and monitoring requirements necessary for programs operated under charitable choice.",
"One of the leading concerns about charitable choice programs is the role of religious organizations in government-funded programs—whether their participation is required, permitted, or prohibited. Since charitable choice and the Faith-Based Initiative were implemented, the Supreme Court has indicated that religious organizations may receive public assistance in some circumstances. In a 2004 decision that had general implications for the charitable choice debate, the Court held that the Establishment Clause of the U.S. Constitution permitted participation of religious organizations in public programs, while noting that state law may impose higher restrictions and even ban the inclusion of religious participation. At the same time, the Court indicated that the Free Exercise Clause does not require the government to include religious organizations in public assistance programs.\nAs discussed earlier, the requirements for ensuring that public funds provided to religious organizations differ depending on the manner in which the aid is distributed. Indirect aid (e.g., vouchers) has fewer constitutional concerns compared with direct aid programs. The Supreme Court's interpretation of the Establishment Clause indicates that indirect aid can ultimately flow even to religious providers who exercise selectivity in hiring and whose programs include religious content, so long as the initial recipient of the voucher (the beneficiary) has a true choice among service providers. Thus, the critical question for indirect aid is whether there is a genuinely independent decision maker between the government and the entity that ultimately receives the funding. All of the charitable choice measures, with the exception of the Community Service Block Grants, require that those who object to a particular religious provider be given an alternative that is either secular or not religiously objectionable. However, they may not require that a voucher recipient have a choice of secular and religious providers initially. Whether this is sufficient to meet the Court's standards seems uncertain.\nWhether direct aid to religious entities that consider religion in their hiring practices, as allowed by all charitable choice statutes, can pass constitutional muster seems more complex but still likely. Although the Court sometimes used such employment practices in determining whether an entity was eligible for direct aid, it had never relied on that factor alone; other factors entered into the constitutional analysis. Thus, it seems that religious discrimination in employment, by itself, might not be enough to render a direct aid program unconstitutional. Mitchell seems to strengthen that possibility, at least for certain kinds of direct aid like in-kind assistance. In that case, the Court upheld a direct aid program providing educational supplies and equipment to entities that the Court had previously held to be constitutionally barred from receiving such aid—sectarian elementary and secondary schools. The resulting shift in focus from the nature of the organization receiving the aid to whether the aid is distributed in a religiously neutral manner and whether it is used for religious indoctrination appears not to be impacted by whether the entity bases its hiring decisions on religion.\nThe more critical question concerns the role of faith in carrying out social services programs that are directly subsidized. The Court's decisions make clear that direct public aid cannot be used for religious indoctrination, and all of the charitable choice measures seem to meet this requirement by explicitly prohibiting direct aid from being used for religious worship, instruction, or proselytizing. However, the underlying assumption of charitable choice has been that religious organizations ought to be able to retain their religious character and employ their religious faiths in carrying out the subsidized programs. That, it is said, is what makes their programs distinctive and more effective. Thus, given this assumption and the various possibilities for how particular subsidized programs might be implemented, it seems likely that constitutional questions will inevitably arise in the implementation of direct aid programs under charitable choice, notwithstanding its prohibitions on the use of direct aid for religious worship, instruction, and proselytization.\nIn addition, it should be noted that Mitchell involved an in-kind aid program—educational supplies and equipment—whereas charitable choice programs appear to contemplate direct grants of money to religious organizations. All of the Justices in Mitchell expressed doubt that direct grants of money to religious entities could pass constitutional muster even under the Court's loosened standards for direct aid programs. Because these doubts were not part of the holding of the case, they do not indicate with any certainty how the Court might rule on a case involving a particular grant or cooperative agreement, but they do provide additional insight into possible considerations that the Court may make in future cases on this issue.",
"Although the matter of selectivity in employment decisions is perhaps the most contentious of any issue associated with charitable choice, there is little case law addressing the question specifically. The leading case on the issue is a 2005 federal district court decision, Lown v. Salvation Army , which held that selectivity by the religious provider could not be attributed as a government action. Thus, the leading precedent on this issue indicates that selectivity by religious organizations receiving government assistance may be constitutionally permissible.\nIn Lown , various employees of the Salvation Army sued the organization after it implemented a policy which permitted discrimination based on religion in employment, which the employees claimed created a hostile environment and permitted use of government funds for religious purposes. The court rejected the argument that, by allowing religious organizations that receive public funds to consider religion in hiring, the government is advancing religion in violation of the Establishment Clause. Instead, the court noted that religious organizations may exercise their faith in their employment decisions, yet offer programs that are implemented in a secular manner from the perspective of beneficiaries and in line with the objectives of the authorization of funds. The court noted that Congress was free to decide not to accommodate the employment practices at issue when authorizing publicly funded service programs. Because current law protects such hiring practices, and Congress did not exercise its discretion to limit such actions by religious organizations receiving public funds, the practices were upheld as lawful.",
"One case in particular has been cited in the legal debate over charitable choice regarding how to remedy violations that occur after religious organizations receive government funding. In 2008, the U.S. Court of Appeals for the 8 th Circuit held that the religious organization providing services under the charitable choice program was not required to repay funds used in good faith that the program was constitutional. The court clarified that the organization was required to repay funds used after an initial injunction was ordered in the case regarding the constitutionality of the use of funds.\nThe lawsuit challenged an anti-recidivism program in an Iowa state prison operated by the InnerChange Freedom Initiative. At the trial level, the district court declared the program to be unconstitutional and ordered that InnerChange return all money received since the program began. On appeal, the 8 th Circuit agreed that the distribution of funds was unconstitutional because the program included an evangelical Christian perspective and offered special privileges to inmates who participated. However, the 8 th Circuit held that the authorization of funds for charitable choice programs such as the one InnerChange offered were presumptively valid. Therefore, InnerChange's receipt of money was not clearly unlawful from the outset of the program. After the district court ruled the program unconstitutional and enjoined future assistance, InnerChange could not properly rely on the funds as constitutional assistance for the program and according to the court, could be required to repay that portion of the aid received.",
"The adequacy of oversight of religious organizations using government funds under charitable choice programs has been questioned throughout the debate on charitable choice. Constitutionality of public aid to such organizations in many cases depends on the extent to which the organizations prevent the improper use of funds for religious purposes (in the direct aid context). In 2006, the U.S. Government Accountability Office (GAO) issued a report examining the practices of various religious organizations receiving funds under charitable choice programs. The report raised questions regarding the adequacy of information about restrictions on the use of funds provided to organizations that receive aid under charitable choice and recommended guidance for the government to monitor the implementation of the programs. The report noted arguments that special attention paid to religious organizations may imply unequal treatment based on religion. However, the report stated that \"creating a level playing field for [faith-based organizations] does not mean that agencies should be relieved of their oversight responsibilities relating to the equal treatment regulations.\"\nThe most significant guidance for monitoring the use of funds and content of programs under charitable choice has come from the Department of Health and Human Services (HHS). In 2005, a lawsuit was filed to challenge charitable choice grants to an organization called Silver Ring Thing, which conducted sexual abstinence programs for teens. The lawsuit alleged that the programs included religious content in violation of charitable choice rules and constitutional requirements. No issue was resolved by a court, however, because the parties settled the case in 2006. Shortly after the complaint was filed in the lawsuit and HHS determined that the program lacked adequate safeguards, HHS issued a list of safeguards that would be required for religious organizations to qualify for aid from the agency, and the list was later incorporated into the settlement agreement. The safeguards required by the agency included separate and distinct programs, separate presentations, elimination of religious materials from the funded program, development of cost allocation recordkeeping, broad scope in advertising for beneficiaries, etc."
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"question": [
"What legislation made use of charitable choice rules?",
"How do charitable choice rules benefit religious organizations?",
"How do charitable choice rules affect Congress now?",
"What controversy has stemmed from such programs?",
"What argument do supporters of faith-based funding give?",
"What argument does the opposition give in response?",
"What is the purpose of this report?",
"What constitutional issues are discussed?",
"What do the legal protections for religious organizations focus on?",
"Why might legal protections need to be in place for religious organizations?"
],
"summary": [
"Included in legislation for various federally funded social service programs, charitable choice rules were aimed at ensuring that faith-based organizations could participate in federally funded social service programs like other nongovernmental providers.",
"The rules allow religious organizations to receive public funding to offer social services without abandoning their religious character or infringing on the religious freedom of program beneficiaries.",
"The rules allow religious organizations to receive public funding to offer social services without abandoning their religious character or infringing on the religious freedom of program beneficiaries.",
"Much of the controversy that has surrounded these programs has centered on the constitutionality of the federal government funding faith-based social service programs and so-called religious hiring rights, the term often used to refer to religious organizations' selectivity in employment decisions.",
"Supporters of faith-based funding argue that religious organizations have a constitutional right to retain their preferences for co-religionists in hiring as a matter of religious identity and exercise.",
"Opponents argue that allowing organizations that receive public funding to discriminate based on religion violates principles of neutrality guaranteed by the U.S. Constitution.",
"This report will briefly discuss the history of charitable choice provisions and the implementation of the Faith-Based Initiative which extended similar rules to certain executive agencies.",
"It will also analyze the constitutional issues associated with funding faith-based organizations, services, and programs, including the distinction of financial assistance provided directly and indirectly to religious organizations.",
"The report will also detail the legal protections for religious organizations that receive funds under these programs and for the beneficiaries of the services they provide, with particular focus on civil rights and discrimination prohibitions in current law.",
"Finally, the report will analyze who is able to raise judicial challenges to publicly funded faith-based programs and how such lawsuits have been resolved."
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